Clockwise from left, Chet Thompson of AFPM, Daniel Coombs of LyondellBasell, Michael Coyle of Chevron Corp. USA, Robert Herman of Phillips 66 and Michael Nagle of INEOS Olefins and Polymers USA participate in a panel of the state of the industry during the 2020 AFPM Summit.
2020 has brought dramatic change to the oil and gas and petrochemical industries, largely due to the COVID-19 crisis. The demand for durable goods and fuels has dropped considerably, while demand for food packaging and medical equipment and patient products is markedly up.
This has caused many sites in the industry to change production in order to make products they wouldn't normally produce.
According to Daniel Coombs, executive vice president of global manufacturing, projects and refining for LyondellBasell, this challenge has prompted industry leaders to sharpen their focus on maintaining peak work performance while operating at 80 percent capacity.
"We certainly don't want to build up a lot of inventory," Coombs said. "We want to be sure to manage inventory well, because that's cash. So running at low inventory levels puts more stress on reliability, even though you're not running at peak rate because you just don't have the safety stock in place."
This emphasis on running at lower rates, Coombs noted, is far from the norm for LyondellBasell.
"Most of our efforts in the past have always been about running at higher efficiencies and higher rates, so we had to adapt, especially on those lines where the demand is down to figure out better ways to operate more efficiently," Coombs said, participating in an online panel of leading industry executives during the 2020 AFPM Summit.
Digital technologies and other tools like advanced process control "that have been around forever" are transforming optimizers into ways to operate better and at better rates.
"I know a lot of people in the industry are doing that," Coombs said. "We have had really good success at figuring out how to operate more efficiently at lower rates, which has been a new emphasis [this year]."
Safety and the workforce
Joining Coombs on the panel, Michael Coyle, president of manufacturing for Chevron Corp. USA, said it's "all well and good that the demand defines what production level you're at," but in order to "get into the game," industry must do everything it can to anticipate and eliminate process safety events.
"When I think about the risks that are going to prevent us from achieving peak performance, something that could knock any of us down is a significant process safety event," he said. "Focusing on that -- whether it's a fire, explosion or lawsuit engagement -- is fairly large. Making sure we have the right assets where we have safeguards in place to take the human element out of it so that we could shut down safely if we need to, and knowing that those safeguards are designed right and they'll operate right when needed, are things that are really important for us to operate at peak performance."
Avoiding significant threats to safety is merely the first step toward operating at top efficiency, Coyle explained.
"Then, we must make sure our equipment reliability is where it needs to be on turnarounds. Taking the plants down on their maintenance cycle [must be] thoughtfully done and executed well," he said. "And the cleanup and preparation for the turnaround must be done really well. Startup [must be] done well, then maintenance and project activity during the turnaround [must be] executed with excellence to minimize the amount of downtime and increase the availability."
Michael Nagle, president and CEO for INEOS Olefins and Polymers USA, said he believes another key to peak reliability and performance is having the mechanisms in place to capture workforce learnings from the past.
"As our workforce continues to turn over, how do we learn from the folks that have been around the units for a long time, who have maintained them and operated them?" Nagle posited. "This is the place where technology can help. There are a lot of AI systems out there that can capture those learnings."
Nagle emphasized the importance of training and developing new workers "to make sure we learn from the past and are driving for improvement going forward. Capturing that ability and knowledge and, again, learning from the past are keys to continuing to drive this industry forward."
Co-panelist Robert Herman, executive vice president of refining for Phillips 66, agreed with Nagle.
"If you have a process safety event, it takes your complete attention away, and maybe your entire organization gets focused on something other than driving excellence every day," he said.
Herman further noted that any time the industry faces global change, it steps up to the challenge by adapting.
"I think our industry is good at that," he said.
The industry's "biggest opportunity going forward" relates to the human factor, Herman said.
"I think we understand the equipment. We understand the corrosion mechanisms and the failure mechanisms, and we know where we're going with that as an industry," he said. "But as we look at our workforce turnover for the past few years and capturing the lessons of the past, I think we, as an industry, have gotten a lot better at operating."
But the lessons learned continue to happen frequently, Herman admitted.
"We have process safety operators coming in who have never seen a process safety event in their lives. I think it's easy for them to get complacent and think those things happen somewhere else," he said.
Continually upgrading training and expectations around how well and how detailed operators must be in their processes is another challenge going forward, Herman said.
"There's technology coming along that's helping, but we have to have better procedures and we have to write those procedures, so people understand them," he said. "And we've got to keep everybody on the same page between the field and the board. I think all of those things [are essential] so we, as an industry, operate on more uptime and less on events."
Diversity and inclusion
Herman noted that Phillips 66 started its journey toward implementing inclusivity and diversity years ago.
"You have to have inclusivity first to get diversity as time goes forward," he said, adding that Phillips 66 "works very hard across all of our sites with our employee resource groups and affinity groups. The idea early on was to help them feel like they belong at our facility and belong to our company. We've been very, very successful in being able to retain the talent we've attracted."
The number of Phillips 66's resource and affinity groups has increased over the years, Herman said.
"We have an African-American network, an Asian-American network, a veterans' network, a gay pride network and others," he said. "We use these resource groups as sounding boards to reach a wider, more diverse group of people for hiring and increasing diversity in our company."
Diversity leads to better conversation, diversity of thought, better decisions and better strategic thinking in the company, Herman said, "and it starts at the top with our diversity council that's chaired by our chief executive officer. We are striving from the top and working with our resource groups to expand our reach for a more diverse workforce in our industry."
Coyle added that he spoke about a program called Men Advocating for Real Change at Chevron's annual meeting in 2019.
"It was set up by a women's employee network to help with the inclusivity of women in our workforce and try to foster relationships," Coyle said. "The foundation of the concept of diversity and inclusion is about advocating for change.
"It's gender, it's ethnicity, it's race. With all the social unrest, and the George Floyd incident, we've had some very, very difficult discussions and really deep learning discussions at our executive level and through the employee networks and various work organizations."
Coyle reiterated the need for companies to have a foundation that's an inclusive environment along with employee networks that have the purpose of helping its members feel like part of the organization and have a platform that advocates for change.
"This has allowed us to have a deeper conversation about what it is we need to do to continue to change and make our work environments more diverse," he said. "You can have more diversity, and that's fine. But if you don't have diversity and inclusion, you're not going to achieve the value from all those buyins into diversity we all need."
Looking ahead
As the industry plans for the future in a post-COVID-19 world, Coombs said LyondellBasell has viewed the impact of COVID-19 as a long-term issue from the beginning.
"We did not see an immediate recovery or an instant snap-back, so our company has always been built for this kind of thing as a cost-efficient operation. We expect a tough business environment to continue," he said.
Like most people, Coombs said he is "disappointed but not surprised" that the pandemic has not slowed at a more consistent pace.
"But we are built for a longer economic impact, in any case," he said. "We hope and pray for improved medical results and a reduction of the pandemic, like everybody does. But from the economic side, I think our company is built so that we've made the adjustment from capital spending to operating efficiency at all of our sites to get through this."
Coombs referred to LyondellBasell CEO Bob Patel's analogy of "building a bridge" to span the impact of COVID-19.
"We're on this side of the pandemic, and eventually we'll build this bridge over to the other side," Coombs concluded. "Our goal is to have all of our talent and capabilities in place when we get there, because we believe there's great opportunities there."
Chet Thompson, president and CEO of AFPM, moderated the discussion.
