VALUE ENGINEERING

1. VALUE ENGINEERING REFINERY FACILITY Mohammed A. Us Shan Saleh H. Al-Mutairi Sagar M. Al-Anazi Samir A. Sulaiman Saleh S. Al-Abbas

2. VE is an intelligent option, when ? • Existing part/product cost is high • Existing technology is complex/old though simpler means are available • There is a need to release a cheaper product by cutting down some of the existing feature • The existing customer demands a minimal increment in product features that are in use • There is a need to cut down the manufacturing cycle time/cost

3. BENEFITS OF VE • Decreasing costs • Increasing profits • Improving quality • Expanding market share • Saving time • Solving problems • Using resources more effectively

4. OUTLINE • INTRODUCTION • FAST DIAGRAMS • COST/WORTH MODEL • RECOMMENDATIONS • Layout • Process • Mech/Elec/Piping • RESULTS

5. PROJECT OVERVIEW • In 1993 a value engineering study was performed at a refinery facility in California. • Three teams comprised of 15 professionals: • Layout • Process • Electrical/Piping/Mechanical • On final implementation • 60% (approximately $ 35,000,000) in savings were realized, representing an 11% reduction. • Follow-on annual savings were $ 500,000/year.

6. TEAMS Team1: Project Layout • FAST diagram to understand the present design • 4 out of 64 ideas • 12 design suggestions • The principal proposals were to • Consolidate the site to reduce interface cost and reduce the size. • Consolidate buildings to reflect required rather than desired future requirements. • $ 8.5 million

7. TEAMS Team2: Process • FAST diagram to review the process flow • 4 proposals and 5 design suggestions out of 44 ideas • $ 38 million life cycle present worth savings • An additional $ 1 million • The principal proposals were to • Combine or delete the excessively redundant type tanks • Use seawater for process cooling • Reduce the number of seawater pumps • Eliminate pipeline scrapers

8. TEAMS Team3: Electrical/Piping/Mechanical • FAST analysis • Focus on piping and electrical as well • 5 out of 32 ideas, estimated savings of $ 7.6 million • 24 mechanical and electrical design suggestions, estimated at $ 2.2 million • Among the principal proposals the most crucial were to • Install the main electrical distribution line aboveground. • Eliminate the 15% over design for tanks.

9. <<< Why? How? >>> Ship Products Load Ship Transport Product Manufacture Products Transport Feedstock Receive Feedstock Avoid Demurrage Store Products Ship Products Transport Product # 1 Store Off-Test Transport Product # 2 Store Product # 1 Transport Product # 3 Store Product # 3 Store Product # 2 Team 1-Layout

10. <<< Why? How? >>> Recycle Liquid Process Liquid Convey Liquid Project People, Plant, & Environment Handle Vapor Relief Load Meet Regulations Burn Vapor Separate Lads Accumulate Loads Collect Loads Ignite Vapor Maintain Seal Promote Clean Combustion Add Fuel Team 2-Process

11. <<< Why? How? >>> Reconfigure Power System Energize Substations Improve Operation Reduce Risk Improve Distribution System Optimize Transformer Capacity Stepdown Voltage Receive 220 KV Power Distribute Power Co-generate Power Install Equipment Meter Usage Size Equipment Economically Increase Circuit Bar Bus Capacity Support Conductors Team 3a-Electrical Distribution

12. Cost/Worth Model Item Cost Worth Seawater/Cooling water 9,520,000 9,520,000 Treated Water 514,000 14,000 UTILITIES Recommendation: Use seawater for process cooling Eliminate/Reduce seawater pumps Raw Water 1,097,000 1,097,000 Fire Water 3,000 3,000 Nitrogen Supply 284,000 284,000 Natural Gas System 296,000 296,000 Flare System 1,638,000 1,200,000 TOTAL 13,352,000 12,414,000

13. Cost/Worth Model Item Cost Worth Recommendation: Combine Waste water and Off-plot Tank-feed Electrical 20,947,000 10,000,000 Communications 0 0 ELECTRICAL Tank & Spheres 14,496,000 10,000,000 Interconnecting Rack 5,403,000 4,000,000 Underground Piping 3,724,000 2,600,000 Storm Water System 123,000 123,000 Wastewater System 2,060,000 1,600,000 Plant Infrastructure 4,703,000 3,500,000 TOTAL 20,947,000 10,000,000

14. Cost/Worth Model Item Cost Worth Administration 4,947,000 2,500,000 Recommendation: Reduce Size of Admin Building Cafeteria/Training 1,500,000 1,500,000 BUILDINGS Prayer Shelter 155,000 155,000 Security/Firehouse 556,000 556,000 Warehouse 3,092,000 2,300,000 Gatehouse 124,000 124,000 Main Substation 464,000 464,000 Port Substation 46,000 46,000 TOTAL 11,007,000 7,768,000

15. Cost/Worth Model Construction 167,041,000 93,542,960 Overhead 312,927,030 7,242,000 International Transportation 45,101,070 Escalation & Contingency

16. LAYOUT CASE ITEM : Revise Layout of Site • Original Layout • Feed enters the plant. • Goes to Tank • Back to Refinery • Product flow from Refinery to Mixing area. • The products flow from Mixing area to shipping area. • The Utilities facilities located in east.

17. Refinery Feed Shipment area Mixing Area ORIGINAL LAYOUT Tank Personnel an Utility Facilities

19. LAYOUT CASE ITEM : Revise Layout of Site • Proposed Layout • Move the tanks to the south of Refinery. • Moving all hydrocarbon products facilities to the east. • Moving most of personnel and utility facilities to the west near the site center. • All the future siting is moved to the far west.

20. Refinery Shipment area Mixing Area ORIGINAL LAYOUT Feed Personnel an Utility Facilities Tank

22. DISCUSSION • The primary drive for this proposal was to minimize the piping to carry the back and forth flow sequences. • The result was Reduction in on-site piping from 7,847 m to 4,499 m.

23. Advantage of new idea • More safety layout. • Less piping in the project. • Reliable operation.

28. PROCESS CASE ITEM : Combine/Reduce Size Storage / Port Tanks • Original process flow design • FEED STORAGE TANKS • INTRIM TANKS • SHIPMENT TANKS

29. 1 2 3 FEED Loading Arm FEED STOCK TANKS INTRIM TANKS PRODUCT SHIPMENT TANKS FUNCTION: CHECK QUALITY FUNCTION: FEED PROCESS FUNCTION: SHIP PRODUCT

30. PROCESS CASE ITEM : Combine/Reduce Size Storage / Port Tanks • Proposed process flow design • FEED STORAGE TANKS (Multi functions) • ONLINE SAMPLING • DIRECT PIPELINES

31. 1 2 3 ONLINE SAMPLING FEED Loading Arm FEED STOCK TANKS FUNCTION: 1-Keep plant online 2-Provide surge in case plant offline 3- Catch off spec for rerun INTRIM TANKS PRODUCT SHIPMENT TANKS FUNCTION: CHECK QUALITY FUNCTION: SHIP PRODUCT

32. ADVANTAGE OF NEW IDEA • Reduce excess tanks, pumps, and large piping diameter • Improve reliability • Low initial cost * • Less maintenance * (Pumps, Instrumentation, tanks, Monitoring wells) • Less energy cost

33. COST WORKSHEET Savings = 25,183,000

34. LIFE CYCLE COST WORKSHEET Savings = 39,629,000

35. ORIGINAL LAYOUT

36. PROPOSED LAYOUT

37. WEIGHTED EVALUATION

38. VE Recommendation 3 Revise 115 KV Plant Feed from Underground to Above Ground (No. E-3) • Original design: install plant feed underground at a distance of 4.3 kms from main substation. • Proposed design: install plant feed above ground. • Discussion: VE team feels above ground would be less expensive and is suitable for an industrial area.

39. Original Design 2 feeders, 3” cable each (use $25/lf/cable x 6 units) 84,624 lf 25.00 $ 2,115,600 Installation (use $ 100/lf) 14,104 lf 100.00 $ 1,410,400 Subtotal markup indirects (.8) 3,526,000 $ .8 $ 3,526,000 $ 2,820,800 Total $ 6,346,800 Proposed Design 2 feeders, 3” cable each (use $10/lf/cable x 6 units) 84,624 lf 10.00 $ 846,240 Tower at 500’ spacing 30 ea 5000.00 $ 150,000 Installation (use $ 10/lf) 14,104 lf 10.00 $ 141,040 Subtotal markup indirects (.8) 1,137,280 $ .8 $ 1,137,280 $ 909,824 Total $ 2,047,104 Savings $ 4,299,696 VE Recommendation 3 Item Quantity Measure Unit Cost Total

40. SUMMARY OF RESULTS • 13 VE proposals and 41 design suggestions. • Initial cost savings $60 mil & PW LCC savings $68 mil. • Proposal (P-44)1 not included in totals. An alternate not fully developed & affects ROI. 1 Reconfigure plant to make no Benzene

41. SUMMARY OF RESULTS SUMMARY OF RESULTS VE PROPOSALS Process 38,700,000 47,177,000 74.3 VE savings = 92.5% Grand Total PW Cost Savings

42. SUMMARY OF RESULTS DESIGN SUGGESTIONS Layout 2,900,000 2,900,000 56.5 Mech/Elec 2,180,0002,180,000 42.5 Design Suggestions savings = 7.5% Grand Total PW Cost Savings

43. SUMMARY OF RESULTS LAYOUT TEAM

44. SUMMARY OF RESULTS PROCESS TEAM

45. SUMMARY OF RESULTS PROCESS TEAM (CONT.) 1 Idea is not fully evaluated, needs further study, and is not included in the totals

46. SUMMARY OF RESULTS MECHANICAL/PIPING TEAM

47. SUMMARY OF RESULTS MECHANICAL/PIPING TEAM (CONT.) GRAND TOTALS $60,007,000 $913,000 $68,598,800

48. SUMMARY Total Impact of VE • Potential savings were identified in initial costs of about $ 55 million which reduced 17% of the planned investment. • Another $ 1 million in annual operation and maintenance savings if all ideas were implemented. • Careful follow-on study should be given to the design suggestions that have a potential additional savings in excess of $ 2 million.

49. THANK YOU