Spotlight - Siemens

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Spotlight - Siemens

Spotlight

18 Venture May 2009


Spotlight

New ‘VOIS’ for South Korea’s

oil and gas giant

SK Energy, one of the largest oil and gas companies in the Asia-

Pacific region, is continuing to expand on a global scale. As part of

the company’s multi-million-USD strategic plans to boost productivity

and operational efficiency, the company recently installed a

comprehensive Visualized Operations Intelligence System (VOIS)

at its principal refinery and production complex at Ulsan, based on

Siemens’ SIMATIC IT XHQ. In full operation since February this year,

the new VOIS has already proved so successful that SK Energy is looking

to extend the system to its other business units.

With a history spanning more than 40 years

in the oil, gas and petrochemicals industry, this

South Korean-based company, originally

founded as a state-owned enterprise, not only

established the country’s very first oil refinery

but has grown massively over the past four

decades. Operating in the private sector since

1980, SK Energy has become Korea’s leading

private-sector producer and supplier of olefins

and petrochemical products. The company

manufactures well in excess of 240 million

barrels per year of refined petroleum products,

in addition to supplying 35 percent of the

domestic demand; around 100 million barrels

are directly exported, to a value in 2007 equivalent

to more than 16 billion USD (€12 billion).

Currently one of the largest primary energy

companies in the Asia-Pacific region, SK Energy

is now operating on an increasingly global

scale. The company is currently either exploring

or producing from wells in 27 oil and gas

‘blocks’ in 15 countries worldwide and has

proven reserves exceeding 500 million barrels

of oil-equivalent (mboe).

Going for growth

The company’s principal refining and petrochemical

processing operations are based at

its refinery complex at Ulsan. Located on the

coast 70 km north of Busan in the southeast of

the country, the refinery, one of the largest of

its kind in the world, with production peaking

in excess of 840,000 barrels per day, forms

a major part of the country’s main industrial

area — the Ulsan Industrial District. In

addition, SK Energy also owns and operates a

second major refinery at Incheon, on the

opposite coast some 315 km northwest of the

Ulsan complex, having acquired Incheon Oil in

2006. SK Energy is currently undertaking the

third phase, from 2008–2010, of its long-term

strategic plans for international expansion,

increasing its competitiveness in key petroleum

and petrochemicals businesses in global

markets. It is already supplying markets in

China, the US and Europe. This expansion,

maximizing shareholder value and laying the

groundwork for this latest phase of rapid

growth, is based on the optimization of the

May 2009 Venture 19


Spotlight

Ulsan Complex Overview

Offsite Overview

From tanker jetty through processing to storage and offloading, VOIS aggregates operational data from

just about any unit at SK Energy's vast Ulsan Complex.

Inventory Overview

Product Inventory

Tag Details

company’s petroleum and petrochemical

businesses, which includes raising productivity

and operating efficiency at its Ulsan Complex.

Raising the game

Although extensive IT, business and process

monitoring systems were in place throughout

the complex, these comprised discrete, individual

‘point’ or ‘silo’-type applications, each

designed to provide data covering a specific

function or area of application. Although the

information was recorded, these disparate

systems were unable to provide timely information

to operate as decision-making tools,

either for operators or for managers. Time

taken for the extraction, aggregation and

physical interpretation of data from discrete

systems made it both unreliable and unsuitable

for real-time intervention. The existing

scheme of things was good for ‘post-mortem’

analysis only. As SK Energy’s Senior Vice

President Mr. Sung observed, “In order to

become a world-class company we realized we

had to implement industry best-practices by

removing the functional and informational

‘silo’. In addition, we needed to communicate

corporate objectives to our engineers and

support them with accurate and timely information.”

“Our people are smart and giving them

the right tools empowers them to take the

right decisions at the right time. This helps to

improve efficiency, productivity and profitability.”

Profit generator

Before making the necessary significant

investment in any new state-of-the-art system,

the company evaluated a variety of competing

20 Venture May 2009


Spotlight

Ulsan Complex Overview

Area Overview

Should any unit run out of spec, VOIS issues an SMS or e-mail alert to ensure immediate response and

problem-solving.

Tag Details

VOIS enables the user to penetrate

information from the top-level screens

by virtually drilling down to field-instrumentation

level in order to identify

the root of a potential problem.

products against its specific criteria, looking

particularly at existing successful installations

at other companies in the industry. It became

clear that Siemens’ Operations Intelligence

suite (XHQ,) is the most widely used and “best

in the class”. Starting with Chevron Texaco's

implementation in 2002, XHQ has become the

system of choice for an increasing number of

industry-majors worldwide. These include

Exxon Mobil, Saudi Aramco, Hovensa, Caltex,

Singapore Refinery and Idemitsu Kosan. In all

these instances the new operations intelligence

solution from Siemens was shown to have

provided fundamental and sustained operational

improvements. According to Idemitsu,

one of the largest refinery and petrochemical

companies in Japan, additional profits

amounting to 800 million Yen (€ 6.1 million)

were reported from its Hokkaido refinery

within one year of implementation of XHQ

solution and attributable directly to it. In

recognition of the outstanding value generated

by the solution, in 2007 the Japanese Institute

of Information Technology (JIIT) presented

Idemitsu with its highest award.

Giving VOIS to Ulsan

Following the evaluation of possible systems,

SK Energy opted to implement the Siemens

Operations Intelligence solution XHQ throughout

its Ulsan Complex in June 2008. Visualized

Operation Intelligence System (VOIS) is the

name of the project which pursues the vision

“No Visualization — No Movement — No

Improvement!” The implementation of the

complex-wide system was completed in

October 2008 within four months, despite

some minor issues, such as the need to

translate some information from Korean into

English as the working language. After internal

reviews and minor modifications, the solution

was formally released to the complete user

community in February 2009. Commenting on

this remarkable achievement, Mr. Sung stated

with understandable pride, “Our SK energy

people, our local partner and the guys from

Siemens formed a dream team!” The system

covered the majority of functional areas and

around 70 process units in both the refinery

and the petrochemical plant, providing

information for more than 1000 users. The

company describes the VOIS as a user-friendly

visualization tool, enabling users to obtain

essential information for day-to-day use for

locations and functional areas including

Offsite, Onsite, Process, Operations and

Product Management. Users range across the

May 2009 Venture 21


Spotlight

"No visualization, no movement, no improvement!" — Hag-Yong Sung, Senior Vice President Production Management & Strategy at SK Energy

entire workforce, with data shared by some

140 board-level directors and senior managers,

to around 1000 supervisors, engineering staff

and plant operators, enabling the whole plant

to be monitored continuously and at many

levels.

Panoramic view

Combining and aggregating data from

multiple sources around the entire refinery

and associated petrochemical process plant,

the new XHQ-based VOIS is designed to present

vital operational information visually in a

meaningful, contextualized manner — on

demand, with appropriate security — at the

right time, to every user at the plant, from

plant operator to CEO. The system is able to

meet the differing needs of the very large

number and variety of users. It provides a

bird’s eye overview of the plant and processes,

with the option to drill down to the lowest level

of detail, through multiple layers of information,

to access necessary details of a functional

area or individual process. It allows the users

to concentrate on their work rather than spend

time creating reports or mining for data.

Wider perspective, better understanding

Allowing information to be shared widely has

also improved interdepartmental communications

and helped users to relate better to each

other, providing greater understanding of

different job-functions. The requirement for

minimal training combined with the ability

of the user-friendly system to paint the user’s

display screen in just seconds, speeds up and

simplifies very significantly the flow of

information throughout the company. It also

allows potential problems to be easily identified

and monitored, decisions to be taken and

actions implemented without delay, preventing

unscheduled downtime, optimizing operations

and increasing overall plant efficiency. Instead

of relying on ‘post-event’ reports to provide

information on alarms, control malfunctions

or set-point excursions, the XHQ-based VOIS

not only provides on-screen information on the

user computer, but also automatically sends

SMS messages or emails to the relevant people,

enabling immediate action to be taken.

Present benefits, future advantages

While the newly installed system has been

extremely well received by the entire user

community of the Ulsan site and is rapidly

becoming a de facto mission-critical application,

its benefits are also becoming more widely

22 Venture May 2009


Spotlight

"Our SK Energy

people, our

local partner

and the guys

from Siemens

formed a

dream team."

apparent. Its ability to provide rapid and visual

display allows the user to both see and understand

what is happening in the next (downstream)

or previous (upstream) process is not

only highly beneficial for operators and

managers within the refinery and petrochemical

plant, but also enables fast and effective

cross-functional communications between

partners throughout the supply chain, such as

the production departments and the marketing

functions. In addition to increasing the

effectiveness and utilization of existing

plant-wide information and business systems,

Siemens’ XHQ has actually reduced their

loading and has made quite significant changes

in the way that the company will undertake

extensions or additions to its existing information

networks. Linking future modifications

to the XHQ-based VOIS will leverage significant

advantages for new projects. A number of

smaller IT projects have already been moved,

integrating them with the VOIS.

Building on success

Although the system is already providing

direct major cost-saving benefits, it has been

up-and-running for only a few months (from

February 2009) so efficiency improvements

and cost-savings have not yet been quantified

with any accuracy. Nonetheless, Mr. Sung

appears to be more than satisfied with results

to date, commenting, “We confidently expect to

achieve returns of many times the capital cost

of the project in these first few months of

operation alone.” In fact, the VOIS project has

proved so successful that the company is now

looking to install a second plant-wide XHQ

system at the Incheon refinery complex and

throughout its headquarters operation in

Seoul. In addition, SK Energy has indicated that

it sees major longer-term advantages in

implementing the system to integrate information

from multiple business units, eliminating

functional and IT-imposed boundaries in

exactly the same way as at the Ulsan Complex.

Clearly, another satisfied customer and another

winning solution from Siemens.

May 2009 Venture 23

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