Interview with Derek Lawler
Q1 What is your single biggest concern for 2016 and beyond?
My main concern for the future is one that has been with the industry at all times, finding the people and training them to understand and implement the continuously changing Refining Technology in a safe and effective way. In my opinion Oil Refining in developed countries is no longer a glamorous industry full of ways to apply expensive technology to make fuels better and more economical so I think students in Europe no longer consider joining Esso as one the best jobs in the world. Esso may still be one of the largest companies but the glamour has gone. Refining in Europe and the USA is a mature industry with limited potential where the target is to avoid variation and downtime. This lack of glamour will probably reduce the quality of people developing Refining Technology in Europe and America. However in China and the developing countries such as Pakistan there is still a huge amount work to be done to make Oil Refineries safe, efficient and fit for purpose. I am concerned that solutions that were viable for the developed world will be bolted on to existing developing Refineries in an inappropriate way but I don’t yet see the Indian or Chinese equivalent of UOP emerging. I think there are shortages already in all disciplines, even moving from Analogue to Digital to Computer Control requires more than competent Instrument Technicians. It requires trained Process Control Engineers and Panel Operators with a suitable set of skills. A traditional Refinery runs like a bus and requires operators with the skills similar to a Bus Driver. A DCS/Computer Controlled Refinery requires Operators with the skills similar to an Airline Pilot and Flight Engineer. The Bus Drivers have rarely managed to make the transition to Pilot. In Pakistan the Oil Ministry has asked the existing Refineries to consider joining together to make one large new Refinery that can start from new as a modern and sophisticated facility to meet the needs of the country. This is one way to manage the change but I doubt that this solution will be followed and the Hydroskimmers will try and grow into full conversion Refineries using their existing management and workforce, bolting on American Technology and learning by making mistakes. Out of those mistakes may grow the realisation that the key to making successful changes is to have the people, training and support in place to design, implement and manage the change.
Q2 Over the next five years what will be the key supply and demand trends shaping the industry
I see that in developing countries the market demand for road fuels will continue to increase over the next five to ten years and there will be a demand by the Governments of those countries for more indigenous Oil Refining capacity so that they are less dependent on imports. India, Pakistan, Vietnam will all continue to expand and improve their Oil Refineries and will have some protection from their Governments to do so. Crude Oil will not run out. The price will stabilise and margins for Refining will shrink to a just sustainable level.
Q3 How can Asian refiners and petrochemical producers enhance their operational excellence and improve cost-efficiency
Asia has some of the most advanced Refineries and even more of the least advanced Refineries. In all of them the key to making them work safely and to move towards operational excellence is to keep on improving their human assets. Refinery Process Units do not think. Even Refineries fitted with super computers are only as smart as the people running them. The people in Refineries are the part of the machine that will achieve excellence. They will only do this if they are trained and continuously motivated towards excellence themselves. Each Refinery that I have visited has a different style of management and a different culture. The management and culture has to demand excellence and invest in training to achieve operational excellence and the benefits it brings.
Q4 How much of a challenge do current and future regulations provide
Oil Refineries work within the country and community where they are located. As such they have to meet regulations and they do so or go out of business. The challenge is to meet the requirements of the regulations in a cost effective manner. This becomes more difficult if the regulations and targets keep changing. I consider that lobbying to get stable regulation is more effective for an Oil Refinery than lobbying to get less stringent regulation.
Q5 What changes have you seen in refining as a result of the low oil prices
In Pakistan the Government is fast-tracking the introduction of Euro Grade Fuels whilst the oil price is low and there will be little consumer reaction. This will require the local Refineries to find ways of upgrading their Gasoline and Diesel.
Q6How important are energy costs and efficiency to refiners and petrochemical producers
Fuel is the largest expense item in a Refinery. Optimisation of a mature Refinery using an LP is all about finding the way to make the same products using the least amount of Fuel. Smart Operation balancing all the Fuel Inputs should be a continuous Technical goal. Smart Design to reduce overall Fuel Use utilising existing and enhanced equipment should be a constant Engineering goal. Refining is competitive, if I can make Gasoline for one cent per barrel less than the Refineries I compete with then I will be counted as successful.
Q7 Why do you think events such as ARTC Annual Meeting are important for the industry? What do you find most beneficial about attending?
I have been to conferences over the last 30 years and to me the benefit and fun has always been a mix of the old and the new. When I was a new Engineer I used to talk to and challenge the older Engineers at the conference. I would form opinions and look for relevant questions to which they may have the answers. I would test those answers and if they made sense I would make a proposal to my Refinery Management. Whilst having fun I got to respect those who responded to the challenge and had good answers. Some time ago I became one of the older Engineers and also part of Refinery Management. Now it is my turn to be challenged at conferences and to assess proposals.