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Refinery Performance Improvement

Refinery Performance Improvement. Case Study. Background. 50,000 BPD refinery Approximately 300 employees Unionized hourly workforce Expenses too high Volume/yield too low Operating loss of approximately $1.5 million/month Project initiated to improve performance. Project Objectives.

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Refinery Performance Improvement

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  1. Refinery Performance Improvement Case Study

  2. Background • 50,000 BPD refinery • Approximately 300 employees • Unionized hourly workforce • Expenses too high • Volume/yield too low • Operating loss of approximately $1.5 million/month • Project initiated to improve performance

  3. Project Objectives • Improve refinery bottom-line performance by $26,000,000 vs. previous year • Reduce ongoing expenses by $15,000,000 • One-time expense reductions would not count against the target • Expense reductions must be sustainable • Improve volume/yield by $11,000,000 • Previous year’s margins were used as a basis for calculating volume/yield performance • Would not be hurt by falling prices by rising prices • Would not be helped by rising prices

  4. Project Results • Financial performance improved by $26.812 million relative to previous year’s levels • $18.616 million from expense reductions • $8.196 million from increased volume/yield • At the same time, average overtime was reduced from 23.5% to 8.8%

  5. Key Expense Savings Categoriesvs. Previous Year $ in Millions Compensation * $ 6.5 Catalyst & Chemicals 3.8 Contract Services 2.4 Turnaround Accrual 1.9 Materials 1.4 Other 2.6 Total $ 18.6 * This was achieved without a reduction in force.

  6. Keys to Success • Management team commitment to the project • Management team “owned” the project • Ongoing focus on Key Performance Indicators (financial and non-financial) • Extensive employee involvement • Idea generation – Over 1300 ideas, resulting in over 110 improvement projects • Participation in project implementation • Ongoing focus on non-financial Key Performance Indicators

  7. Keys to Success • Structured implementation process with an emphasis on achieving sustainable bottom-line results – not just projections • Project tracking and follow-up • Project database placed on the network • Regularly scheduled project update meetings between project managers and management team • Work process improvement • Increased efficiency through revising, adding, or deleting individual work processes

  8. Keys to Success • Ongoing communication • Multiple methods and media • Incentive award based on project success • External, dedicated project manager • Served as a catalyst for change • Provided an independent perspective • Maintained momentum

  9. For More Information, Contact: • The McCollum Group, LLC • Consultants to Management • Robert M. Robinson, Ph.D. • (281) 578-1495 1503 Leatherwood • rrobinson@themccollumgroup.comKaty, Texas 77450

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