Starting a Digital Transformation Project in the Refining Industry - Six Learned Lessons

Carina Pederiva Laidens and Dr. Marcio Wagner da Silva

Introduction and Context

The digital transformation became essential to the business strategy to any industry and this is not different to the crude oil refining sector. Be capable to convert data in useful information aiming to achieve better decision making processes can be an important competitive advantage.

Henrique Lage Refinery (REVAP) is the third largest refinery in Brazil and is operated by the Brazilian National Oil Company, PETROBRAS. The refinery is capable to process 250.000 barrels of crude oil per day being focused to produce transportation fuels (Diesel, Gasoline, Jet Fuel, etc.), mainly to supply the national market. Figure 1 presents a simplified diagram of the refining scheme adopted by REVAP.  

Figure 1 – Refining Scheme of Henrique Lage Refinery (REVAP)

In 2018, the refinery started a program dedicated to the integration of management and process data. After that, many projects were started and some of them success implemented, increasing the optimization, the interaction between departments, and speeding up the information and decisions. Here we present some lessons we’ve learned so far.

1 - It’s not like buying software

I know it seems obvious, but many projects start with meetings with companies who sell software. This happens because we expect a simple solution to a complex problem. Maybe in the process, you discover you really need new software, but in order to succeed is necessary to understand that digital transformation is about people, not about software. You have to find a way to promote and to engage the users in the process. If your company has corporative programs do develop the culture, use every opportunity to talk about then, and show their results. If not, create small interdepartmental groups to promote the idea and engage the others.

2 - Choose existent problems to solve

The easiest way to sell your project is showing the problem you will be able to solve (or at least minimize). It’s tempting to try to use that new technology or implement the “state of the art” of Digital Transformation. But, in the beginning, you will need fast results to motivate the team and the leadership, and the best way to achieve that is by solving a problem that everybody knows that exists. Figure 2 shows the user interaction with several BI application, with the same data quality and similar presentation. Even though the information is available in the same way, the users will look for the information with more impact in their routine.

Figure 2 - Number of user interaction in BI Dashboards

3 - Move fast is not that easy

The most common slogan in every Digital Transformation campaign is “Think big, start small, move fast”. Maybe this works on small companies or in digital-born companies, but in big old companies, “move fast” is a challenge. You don't have development teams or can create squads to merge knowledge and accelerate the process, you just have to deal with the established organization structure, which usually involves an inaccessible IT department. The best thing to do is start with simple projects, try to involve someone who is from the IT, and prioritize this project for just a part of the team, gaining some agility and guaranteeing that the team also has time for the other necessary tasks.

4 - We are not used to fail

Another concept largely used in this kind of project is the “fail fast” concept. Although this helps allocate the team hours in those projects who actually work, it requires a psychological safety level we don’t normally have in traditional companies. In order to actually implement these concepts, a bigger program of cultural change has to be implemented, and this takes time. I recommend splitting the project into small parts, so the team will not take the impact of a fail, and if happens, make sure that they understand this is part of the journey. 

5 - Sponsorship is important, but not enough

The sponsorship is not important just for the project approval and the budget. The way the leadership uses the results and encourages the digital transformation will motivate the team. More than that, it’s important that the leaders know about the projects and work to remove the obstacles to facilitate development. However, the key to success is to involve the users since the beginning and make them better prepared for the changes. Figure 3 shows how often a tool was used during the initial time of the project. While the use was mandatory in the leadership meetings, we were able to achieve a great information flux, even that information was not used in these meetings. Nevertheless, we couldn’t keep the information flowing, as we weren’t capable to convince the users about the gain of the tool.

Figure 3 - Use history of information flux tool

6 - It will work

But not the way you planned. Regardless of the project size, you will gain agility, make better decisions, and increase the results, but it’s unlikely this happens in the amount of your initial plan. The participants will develop skills and will be more secure for new projects, and your department will be more mature in the Digital Transformation Culture.

Conclusion

It’s important taking into account that there aren’t easy ways to succeed in digital transformation, especially considering a secular industry like the crude oil refining sector. As aforementioned, digital transformation is about strategy and people and requires a cultural change with new problems approach, where technology is an important tool in the process but shouldn't be the focus. The downstream sector crosses a transitive period where the focus of the industry should change following the consumption behavior changes, creating a new competitive environment where agility and efficiency are fundamental to keep the economic sustainability and competitiveness of the operations and, there no doubts, that the digital transformation is essential to achieve these goals.

References

CAMPBELL, J.D.; JARDINE, A.K.S; McGLYNN, J. Fundamentals of Petroleum Refining. 2nd ed. CRC Press, 2011.

WILSON, L. Lean Refining – How to Improve Performance in the Oil Industry . 1st ed. Industrial Press, 2017.

CANN, G.; GOYDAN, R. Bits, Bytes, and Barrels – The Digital Transformation of Oil and Gas. 1st ed. MADCann Press, 2019.

Carina Pederiva Laidens is Process Engineer and Production Manager on a Crude Oil Refining Industry based in S?o José dos Campos, Brazil. She holds a Bachelor's degree in Chemical Engineering from the Federal University of Rio Grande do Sul (UFRGS), Brazil. Has over 10 years of professional experience as a Downstream Process Engineer, focusing on process feasibility and optimization studies, process safety improvements, and, more recently, industrial automation and IoT and an MBA in Digital Transformation from Pontificia Universidade Católica do Rio Grande do Sul, Porto Alegre.

Dr. Marcio Wagner da Silva is Process Engineer and Project Manager focusing on Crude Oil Refining Industry based in S?o José dos Campos, Brazil. Bachelor in Chemical Engineering from University of Maringa (UEM), Brazil, and PhD. in Chemical Engineering from the University of Campinas (UNICAMP), Brazil. Has extensive experience in research, design, and construction to oil and gas industry including developing and coordinating projects to operational improvements and debottlenecking to bottom barrel units, moreover Dr. Marcio Wagner have MBA in Project Management from Federal University of Rio de Janeiro (UFRJ) and is certified in Business from Getulio Vargas Foundation (FGV).