The Competitive Edge The Integration of PI into the Business Process

1. The Competitive EdgeThe Integration of PI into theBusiness Process “Balancing Risk and Reward” Professor Keith Guy PI Workshop at the RI

2. Overview • Introduction • Product Development Cycles • Integration of PI and Conventional • Changing the batch culture • Flexible versus Dedicated Processing • Distributed Processing • Examples PI Workshop at the RI

3. Introduction • Basic Business Objectives • Profitable growth in the long term • Acceptable profits in the short term • Acceptable risks • Don’t bet the company on one roll unless you have no choice • Signposts • Chemistry Europe and the Future (1998) • Processing the Future (1998) • We’re from the Government we are here to help you! • Sometimes it is true! • The price of inertia • Is like the wages of sin • Lessons from the past • Are not always valid nor always invalid PI Workshop at the RI

4. Chemistry Europe and the Future • “Chemical jobs will migrate overseas unless the following exist” • Excellent scientific and educational facilities • Strong and continuous support from public funds for exploratory research in the strategic domain and for technology developments in strong areas of social need • Public acceptance of scientific goals and willingness to accept new technologies and products • Science-based and realistic requirements and guidelines • Key areas: Life Sciences, Mastering Molecules, Energy and Processing, Caring for Our Planet • Final Conclusions • Need for well trained imaginative molecule makers • Better understanding of the properties of matter and the way in which and speed at which processes occur. PI Workshop at the RI

5. Processing the Future • The bottom line • Business will fail unless it pays more attention to the needs of customers and can bring products to market more quickly. • The new business model, rather than one based solely on the pursuit of ever grater process efficiency, must be the driving force behind innovation – technology, marketing and so on. • Decentralised production in smaller, more environmentally acceptable and responsive process plant may be the best way to meet customers needs • Under the new model of the process industries there will be immense opportunities for equipment makers, especially those outside the traditional suppliers to the sector, to establish the UK as the design shop of the world. • The research needed for the new process industry is very different from that which now feeds the traditional technologies. R&D needs a revolution that is just as dramatic as that facing Industry. PI Workshop at the RI

6. Common Themes and Challenges • The BIN revolution • The synergies of Bio-, Nano- and Information Technologies • New products and new process challenges • Sustainability • Quality, JIT and so forth • Molecules or Solutions • Competition • Public Opinion PI Workshop at the RI

7. Definition of Industrial Gas Industry The industrial gases industry is more effectively defined as a service industry: • although classified in the chemical sector, there is a high service element • the business is about the supply mode and the applications of gases • Three supply modes: • Packaged (Cylinders) • Bulk Liquids and Tube Trailers (Bulk) • On Site & Pipeline Supply (OSP) • Three broad market segments • Industrial – Metals, CPI, Food, Glass, General • Medical – Hospital and Homecare • Hi-tech (Speciality gases) • Operated and managed by a variety of players; • “7” major gas players • Several thousand smaller players (gas cos. and distributors) Forits size, the industry is very service, capital, and management intensive and it has grown profitably at 1.5 to 2 times GDP for 50 years PI Workshop at the RI

8. Development of Industrial Gas Industry • Original delivery mechanism 1890’s –1940’s was mainly cylinders • Suited to small volumes and costly • New concept in 1950’s – the On-Site • Build plant next to customer and supply them on long-term contract • New concept in 1960’s – Piggy-back liquefiers for LOX / LIN • Add liquid production to an On-site and share production costs. • Challenges of 1970’s – ever increasing size and efficiency • Excellence in Thermodynamic and Economic analysis • Lower unit costs of products • AR&D to develop new uses • Challenges of 1980’s – extending the pipeline networks • Building franchises in “clusters” • Challenges of the 1990’s and onwards • Customer focus and distributed production Always driving to be the low cost producer PI Workshop at the RI

9. COOLING WATER TOWER Hydrogen Production Unit SMR POX H2 HYDROCARBON FEED (CH4, C2, C3, C4, Naphtha, Offgas Fuel) STEAM POWER Air Separation Unit O2/N2/Ar CUSTOMER OXYGEN PSA MAIN AIR COMPRESSOR NITROGEN MEMBRANE AIR AIR SEPARATION - CRYOGENIC LIQUEFACTION CYLINDERS LIN/LOX LIQUID STORAGE CRYOGENIC TANKER INDUSTRIAL GASESSUPPLY AND INTEGRATION SCHEMES TAILORED TO CUSTOMER’S NEEDS PI Workshop at the RI

10. Industrial Gas Examples of PI • Use of Compact Heat Exchangers in 1960’s and 1970’s • Plate-fin aluminium instead of stones and coils • Membrane and Adsorbent based air plants in 1980’s • Small low purity plants for distant customers • Liquid Assist Plants for Nitrogen in 1990’s • Simple plants to leverage imported liquid nitrogen • Ultra high purity for electronics • Compact steam reformers in 1990’s and beyond • Offering smaller customers cheaper hydrogen • Improved PSAs and Membranes in 1990’s • High purity supplies to smaller customers • Distributed processing PI Workshop at the RI

11. The 6T Challenge Targets Temptations Tools Training Triage Technology Timing PI Workshop at the RI

12. Targets • Must haves: • Business Strategy • Strategic Objectives • Short, medium and long term • Stakeholder Buy-in • Stage-Gate Project System • Business Plan • Clear milestones and objectives • Fall-backs and exits PI Workshop at the RI

13. Targets • Product Development Cycles • All products have a finite life • The more complex or regulated the product the shorter the market advantage • The more rapid the underlying technology development the shorter the product life • Competitive advantage will depend on agility as much as efficiency • Production technology is a key component of competitive advantage • The greater the profit the greater the competition to share the market • Current products have to generate the funds to develop new products • Time to market is a key competitive issue • Intensified processes with smaller footprints and lesser environmental impact can shorten the time to market. • Process intensification is a possible mechanism to render difficult processes economically viable. PI Workshop at the RI

14. Temptations of New Technology • Close Eyes and Do nothing or Too Little • Go broke slowly • Panic and Do too much too soon • Go broke quickly • Over hype benefits • Get fired eventually if company survives • Under estimate benefits • Get fired eventually if company survives PI Workshop at the RI

15. Technology • Make versus Buy • One plant or many? • Core technology or general service? • Critical to competitive edge or value improvement? • Retrofit versus New • Windows of opportunity • Product life considerations • Capital, Space and other • Outsourcing as an alternative • What is your real product PI Workshop at the RI

16. Tools • Process Design and Simulation • New challenges for new processes • Optimisation of units and plants • Potential mixing of batch and continuous • Combined activities in one process unit • Reactive distillation • Reactive adsorption • Potential for both Integration and Flexible Plants • Operation • Control and Scheduling challenges PI Workshop at the RI

17. Reactive Distillation of Methyl Acetate Traditional Process 1 Reactor 8 Distillation Columns 1 Extraction Agreda and Parten PI Workshop at the RI

18. Challenges • Process Challenges • Slow equilibrium reaction • Azeotropes • Modelling Challenges • Phase equilibrium • Reaction kinetics • Heat and mass transport phenomena • Design Challenges • Product purity • Conversion • Energy usage • Equipment design • Risk evaluation PI Workshop at the RI

19. Packed column, tray or falling film operations Mass and heat transfer G L Chemical reaction Steady-state and dynamic operation A + B  C Reactive Absorption: CO2 removal with NaOH NaOH + H2O CO2 free gas Process Challenges • complete CO2 removal (~ppms) Modelling Challenges • Phase equilibrium • Reaction kinetics • Interaction of reaction and mass transport • Heat and mass transport phenomena Design Challenges • Product purity Conversion • Equipment design – recycles? • Caustic soda consumption • Risk Assessment CO2 rich gas waste Many other processes such as Adsorption Enhanced Steam-Methane reforming are under development PI Workshop at the RI

20. Timing • Its later than you think …… • First introduction of new technology is a cautious process • “Our company has some legitimate risk aversion” • “Competitors always appear to be less risk averse” • But staging is allowable…… • Testing on one facility is logical • Realistic goals and roll-out to other facilities • Opportunistic introduction…. • Projects ready to install • Clear decision making process • He who hesitates…… • Is late to market • Although sometimes survives PI Workshop at the RI

21. Training • “If you think education is expensive, try ignorance.” • Evaluation needs appropriate human resources and tools • Designers will need new skills • Bid tabulation for novel equipment will be interesting • Fabrication and erection may require new techniques • Operators will need retraining • Selling the advantage • Business leaders and salesmen need training too • New concepts such as PTP, ATP may require new tools • Measuring business advantages is essential PI Workshop at the RI

22. An example of a PI unit Air Products Las Vegas – Hydrogen filling station producing Hydrogen from natural gas in a micro reformer PI Workshop at the RI

23. Conclusions • PI technology can be adopted beneficially • Risks can be evaluated and managed • Introduction of PI is a business imperative for the 21st Century • New products require new processes • Time to market will be ever more critical • Product flexibility will be required for high value markets • Efficiency must come from technology not just from size • Developed economy intolerant of large industrial facilities • Drive for intrinsic safety and foolproof operation • Tools and Techniques for design and control are available • Benefits are more than just operating efficiency they include business survival. PI Workshop at the RI