Shortage of skilled personnel tops refining industry concerns

March 26, 2007
The global refining industry faces huge challenges in keeping up with rising demand for petroleum products in the years to come.

The global refining industry faces huge challenges in keeping up with rising demand for petroleum products in the years to come.

The core issue of refinery maintenance and reliability-already a pressing issue-will be complicated still further by the need to expand capacity in an environment of rising costs, personnel shortages, and ever-changing fuels specifications.

Plans call for another 11.8 million b/d of crude capacity to be added to the world’s refining capacity before 2015, according to a study by Dallas-based consultants Turner, Mason & Co. Asia and the Middle East will account for 60% of that added capacity, with North America accounting for 30%. In addition, refiners will add about 6 million b/d of conversion capacity to upgrade an increasingly heavy crude slate to light products. And a further 8 million b/d of hydrotreating capacity will need to come online to accommodate mandates for cleaner fuels.

Staff shortages

The most pressing concern for refiners today is the same issue that plagues the rest of the petroleum industry: where to find and train the skilled personnel needed to fill the gap caused by massive turnover in an aging workforce.

“The retirement of the baby-boomer workforce has been one of the most talked-about issues in our society as a whole. It carries especially significant implications for the refining industry, though, because these workers have been its backbone for decades,” says Mark Opheim, director of marketing for oil and gas for Honeywell Process Solutions.

“The loss of this workforce means the loss of skills and best practices for building processes to address the challenges of maintenance and reliability. Critical process parameters, symptom/fault information, and maintenance schedules are examples of knowledge that doesn’t reside within technology, but in the minds, notebooks, and files of the facility’s operators, technicians, and engineers.”

Opheim wonders, “How can we retain this knowledge that is slowly seeping out of our refineries?”

Human resources is the “hot” issue that everyone is talking about today, concurs Jeff Hazle, technical director, National Petrochemical & Refiners Association: “Can the owner-operator and/or the contractor hire enough people? Will they be able to find people with industry experience or needed craft skills? Can they retain them once they find them? How much training will they require? How will companies replace workers that will retire in the next 10 years?” These questions apply to craft labor and technical staff, Hazle added.

The lack of skilled personnel is already impacting industry’s ability to cost-effectively support maintenance of refining facilities, according to James Turner, director, process technology & engineering for Fluor Corp.’s energy and chemicals division.

“I believe a big concern is the retirement of experienced engineers and technicians that maintain equipment,” he says. “Owners must be proactive in rebuilding their technical and maintenance expertise. This challenge is made more difficult since the demographics of the country have changed dramatically over the last 50 years. The pool of intelligent, enthusiastic, but nondegreed ‘blue collar’ workers is not as large as it was 30-50 years ago.

“Shortages of experienced staff tend to impact project decision making and, ultimately, schedules of capital projects.”

Technology helps combat ‘brain drain’

Advances in technology, particularly in the areas of information technology and communications, have helped combat the refining industry’s “brain drain,” according to Opheim.

“During the past decade, there have been significant improvements in nearly all areas of technology employed by refiners,” he says. “In today’s digital age, total availability and connectivity of information across all areas has revolutionized the way refineries operate. Refineries can provide operators real-time information and knowledge on how their actions affect a refinery’s profitability, moving traditional process operations functions to the field and providing them with tools such as:

  • Full simulation.
  • Just-in-time training.
  • Context-sensitive information.
  • Real-time collaboration tools.
  • Improved notification.
  • Sequence automation and tracking.”

Opheim contends that refiners can also invest in technologies that:

  • Enable real-time collaboration and knowledge sharing by leveraging standards and new communication technology.
  • Help employees make better decisions by providing the right information to the right people at the right time.
  • Automate their knowledge.

“As the aging workforce retires, solutions that embody knowledge capture and sharing can retain information learned in the past, so that the next generation of workers does not live in a trial-by-fire environment,” Opheim points out. “That in itself improves refinery reliability.”

The best technology won’t be a solution to the challenge of refinery maintenance and reliability unless refiners can internalize, at the organizational level, a holistic approach to the problem.

It isn’t talked about as much as staffing concerns, notes Hazle, but just as critical to the issue of refinery reliability is for “refiners to institutionalize a disciplined approach to maintenance that optimizes the resources devoted to predictive, preventive, and reactive maintenance; assesses risks; inspects; addresses root causes, plans, and schedules; incorporates new technologies; and repairs effectively.”

Operator-contractor relationships

With the refining industry coping with a climate of rising costs and shortages of staff and resources amid growing demand, it becomes increasingly important to have a strong, mutually beneficial relationship between operators and contractors, say contractor company officials.

“In today’s market of growing project resource shortage, it is more important than ever for operators and contractors to work together to reduce risk and meet schedules while providing the highest value possible,” says Opheim. “One of the ways that Honeywell is helping them to do this is through facilitating the sharing of information, such as hosting industry roundtables with operators, suppliers, and contractors who are developing solutions to the problems facing their industries. The three should work together to develop the best value and solutions for facilities.”

Opheim cites a study by the Construction Industry Institute that found when price is the main driver in choosing an engineering contractor, there is a negative correlation with the net value that the contractor delivers to the operating company.

“The best designs are developed when the entire plant life cycle is considered from a total cost of ownership perspective,” he says. “Like any asset, a plant has a life cycle with costs associated with operating, optimizing, maintaining, and upgrading the plant. If a solution is developed with these life cycle costs in mind, the overall total cost of ownership can be reduced by the right project solution. And a large part of this solution is partnering with suppliers that will protect the investment made in the new asset.

“Additionally, to develop the highest-value plant life cycle, it is necessary for contractors and vendors to work together as early as possible to develop the best overall solution at the lowest possible costs. It is a commonly known fact that the earlier in the design cycle a problem is identified, the lower the cost is to resolve the problem.”

Turner concurs that contracting strategy has a big impact on the operator-contractor relationship: “Owners that promote reimbursable and alliance contracts, either with or without incentives, and seriously want to have partnering relationships with contractors will have better relationships. Owners that approach contractor relationships as adversarial and ‘win/lose’ will have strained relationships.”

Good relationships between operators and contractors are crucial to the success of a project, notes Hazle.

“It seems that the driver for operator companies to maintain good relationships with contractors is so that they will have first call on the contractor’s best people or best project team,” he says. “The perception is that project/turnaround performance is driven by key individuals.”

Strong communications efforts are essential for good operator-contractor relationships to thrive, says Odette Eng, vice-president of refining for KBR Energy & Chemicals.

“Operator-contractor relationships can be improved through better communications, more face time, and understanding drivers and motivations of each side,” she points out. “Allowing the contractor to understand the root causes and problems to be solved is what enables us to formulate optimal and fit-for-purpose solutions.”