IMPROVED, INTEGRATED YIELD-ACCOUNTING SYSTEM SAVES TIME AND MONEY

Pete Bayard
Cit-Con Corp.
Lake Charles, La.

Cit-Con Corp.'s Lake Charles, La., lube plant has improved operating efficiency by employing a computerized yield-accounting process that uses new balancing methods and reconciles plant data.

Cit-Con produces high-quality lubricating oils and paraffin waxes using modern refining methods. The yield-accounting task, therefore, is particularly critical because:

Cit-Con is jointly owned 65% by Citgo Petroleum Corp. and 35% by Conoco Inc. Accurate yield accounting thus is essential for the owners and for tax purposes.
Cit-Con produces 9,000 b/d of lube oil basestocks and 300,000 lb/day of fully refined waxes, and has an estimated replacement value of $356 million.

LUBE PRODUCTION

The refineries of Cit-Con's parent companies, Citgo and Conoco, provide feedstock for the lube plant, and receive products and by-products from it, in accordance with their ownership percentages. The parent companies pump reduced crude-about 25% of the original crude-to Cit-Con's feedstock tanks.

The reduced crude, or residual oil, flows into Cit-Con's vacuum distillation units, where it is fractionated into six base cuts: vacuum gas oil; four distillates with endpoints at 90 F., 195 F., 340 F., and 650 F.; and resid (see flow diagram). Vacuum tower operation is such that these separations can be effected without cracking.

Vacuum gas oil is returned to the parent companies as a by-product, and the other five fractions are retained for further processing. All subsequent operations are arranged so that there is no mixing of the different grades of oil after initial separation.

Following separation, the cuts are sent to the extraction units where their nonlubricating components are removed. The light-oil distillates (90, 195, and 340 F. fractions) are solvent treated by the Furfural extraction process to produce a raffinate.

The heavy oils (650 F. distillate and resid) are solvent treated by the Duo-Sol extraction process. Propane is used to dissolve and carry out the raffinate, or desirable portion of the oil, and also to precipitate the asphaltic (nonlube) materials.

The second solvent, Selecto, dissolves and removes the extract or naphthenic constituents from the oil. Together, these solvents produce a raffinate.

The next operation-methyl ethyl ketone (MEK) dewaxing-separates the waxes from the oils. Cit-Con has two MEK dewaxing units, which process light and heavy raffinates separately. In the solvent dewaxing process, the raffinate is mixed with solvent (MEK) and chilled to a temperature that will yield a filtered (dewaxed) oil having a 10 F. pour point.

Fully refined wax is produced at the wax-finishing unit. This process percolates hot, crude wax from the five base streams through a static bed of bauxite clay.

Cit-Con uses a computer system to control all of these process units from a central control room.

The-Cit-Con tank farm has 166 storage tanks with a total capacity of 2.5 million bbl. Finished lubricating-oil pipelines extend 2 miles to dock facilities on the Calcasieu River, 28 miles upstream of the Gulf of Mexico.

The facility also has its own steam-generating plant and a complete waste water treating facility.

ACCOUNTING CONCERNS

Cit-Con assessed its accounting and tracking practices, based on its processing scheme, and determined three key areas:

Tracking feedstocks throughout the plant
Reporting yield-accounting results to operations personnel
Using yield-accounting results to monitor operations.

TRACKING FEEDS

Because the lube plant is jointly owned, accurate reporting of yields is particularly important. The ability of a yield-accounting system to track feedstock compositions through the plant is thus critical in providing accurate accounting for the owners.

Cit-Con ultimately depends on yield-accounting information to assign financial value to feedstocks, by-products, and finished products, which go back to the parent companies. Additionally, the yield data often are used to do long-range planning for budgeting and marketing purposes.

REPORTING YIELDS

Yield-accounting reports are the foundation on which operations personnel base their decisions. At the Cit-Con plant, inventory reports for the previous 24-hr period typically are available to operations personnel by 8:00 a.m. each day. These reports are used within the lube coordination group to help schedule various operations within the plant.

One such operation is the almost-daily function called "block operations," in which feedstocks are changed. Timing and executing block operations properly mean that the plant does not have to reprocess an intermediate product, thus incurring additional processing expenses and reduced throughput.

Laboratory results included in yield-accounting reports also are important to operations personnel. From the laboratory and tank data, the quality of intermediate blending components can be verified before the components reach the final product.

This information also is used to determine whether a product meets required specifications before the product is shipped. Making adjustments in these critical areas means not only improved profitability, but also improved product quality.

MONITORING OPERATIONS

Operations personnel also use information from the yield accounting system to help them keep an eve on the operating facility. For instance, reconciled tank inventory information could indicate that a tank holds more volume than the tank-gauging system indicates. Early detection of this situation could prevent a costly overflow of the tank.

Other advantages of using yield-accounting results include:

The ability to detect when intermediate products have been sent to the wrong blending tank
The ability to adjust production conditions to improve yields.

The key to using these data to achieve optimal results is having the reconciled yield data available on a timely basis so that decisions can be made and action taken while the data are still relevant.

YIELD ACCOUNTING

Before the new accounting system was implemented, the configuration at Cit-Con clearly left room for errors. For example, incorrect data could easily enter the information system as the result of manual entry of tank readings or laboratory data. And even if the error was detected a few days after the fact, there was no simple way to adjust the data to reflect the correction.

The problem was exaggerated by the fact that Cit-Con's tank-gauging system, process-control computer, and laboratory-information system resided on separate hardware platforms. The challenge, then, was getting all the data to a central location so that maximum accuracy could be achieved, and so that the data could be reconciled with the data coming from other systems in the plant.

Finally, Cit-Con determined that the typical approach to yield accounting-a mere tank-to-tank balance-did not achieve true yield-accounting. Cit-Con wanted to incorporate data from the tanks and process units to determine what actually was happening in the plant.

To accomplish the goals outlined previously, Cit-Con combined its knowledge of the yield-accounting process at the lube plant with the software technology of Bonner & Moore Associates Inc., Houston. Cit-Con used Bonner & Moore's Apply 2000 system to produce accurate, reconciled accounting results in less time than ever before.

NETWORK SETUP

To setup the yield-accounting system, Cit-Con defined the network environment in which products flowed by naming all receipts and shipment terminals, process units, tanks, and junctions (collectively known as nodes) in specially prepared tables. (A network is a simplified flow sheet of the facility from boundary to boundary.)

Product streams were identified uniquely by a name tag and their source and destination nodes. Once the network was established, the daily information could be understood and analyzed easily.

The plant uses all types of nodes for its network. The daily task is to calculate the volumes and weights stored in the nodes or flowing between the nodes.

Four types of measurements are allowed in the yield-accounting system:

Tank gauges or gauge differentials
Meter information
Specified volumes and weights
Estimated volumes and weights.

Data entering the system may be manually entered or input through a data-import facility. Importing data into the yield accounting system generally is a straight-forward procedures.

The data are organized into several individual data tables rather than a single data base, greatly simplifying importation. Files in ASCII and Lotus 1-2-3 formats can be loaded automatically, provided that the row/column structure of the field matches that of the target yield-accounting application spreadsheet.

Tank-gauge readings are converted to net volumes at standard temperature using internally stored strapping tables and API standard gravity-correction tables. Of course, gravity, product type, temperature, and water and sediment content are required to perform these calculations.

The yield-accounting system uses meter information to correct meter readings and, if provided with its design specifications, to calculate the corresponding volume and weight. The data used include meter reading, local temperature and pressure, and the gravity and heat content of the last product flowing through the meter.

DATA INTEGRATION

The successful implementation of Apply 2000 initially-and perhaps most critically-resulted in integrated retrieval from Cit-Con's tank-gauging system, process-control computer, and laboratory-information system.

Through the use of Bonner & Moore's Basys software-integration system data are now transferred from these systems to a personal computer and translated into the format required by the yield-accounting application. The data are then transformed into the form required by the tank-gauging system, the process-control computers, and the laboratory-information system, respectively.

When data are integrated in this manner, the reporting function is diminished to a simple task. In fact, most days, reports that used to be generated typically by 3:00 p.m., are generated with the new application by 1:00 p.m.

DATA RECONCILIATION

Another key element lies in the technology used to reconcile the data. Data reconciliation is a necessary step because of the myriad ways data conflicts can result. For example, conflicts can result from multiple meters on the same line, from a volume imbalance around a storage tank, or from a weight imbalance around a process unit.

In the past, a typical approach to data reconciliation was an attempt to find the "best fit." This approach used error-distribution techniques and adjusted all conflicting data.

Cit-Con found, however, that the error-distribution approach, while academically appealing, resulted in adjustments to correct data as well as erroneous data. An approach that identified erroneous data was chosen rather than one that changed correct data.

This expert-system technology employs a "precedence" approach to determine which conflicting data records are erroneous. At the user's discretion, the precedence rules can be general (for example, 'always use tank inventory data in preference to the level gauge in T-113') or specific ('use meter FR-318 in preference the the level gauge in T-113').

The expert-system technology in the application uses a knowledge base that will calculate balances not only around tanks, but also around process units, with minimal use input. This is a critical step which clearly indicates the loss of opportunities. For example, tank-to-tank balances typically are calculated as: Delta product = ending-period inventory -beginning-period inventory - receipts + shipments.

Cit-Con, on the other hand, has realized greater opportunities for increasing profitability by using a different method for tank-to-tank transfers and transfers from process units. These methods are, respectively: Delta product from tanks = ending-period inventory - beginning-period inventory - receipts + shipments + transfers from tank to tank; and delta product from process units = sum of process-unit streams containing that product, coming from or going to tanks.

One of the most powerful features of the data-reconciliation module is the user-interactive reconciliation of data errors that are outside the defined tolerance for automatic correction under the procedure rules.

Furthermore, the interactive graphics capabilities within the expert system provide quick and easy access for analyzing results. This means that, in addition to generating accurate results for current conditions, keeping up with changes in the plant is not a problem for the yield accounting staff.

As the plant itself changes, modifications to the plant representation in the yield-accounting system can be made easily. Operations personnel can see what happens and take necessary actions.

COST SAVINGS

Of course, Cit-Con's quest to upgrade the yield-accounting procedure has at its core the goal of saving money. And while it is very difficult to quantify the results of improving this process, there were some good indicators within the first full month of operation of the new system.

Yield-accounting department personnel estimated that they are saving 1-2 man-hr/day (roughly 22-24 man-hr/month) using the new yield-accounting procedures, as compared to the previous system.

In addition to the savings in personnel time, the people who need the information have much more rapid access to it. This ability results in the potential for discovering lost product quickly, while the details are fresh.

The accuracy of the system also was validated at the end-of-the-month close-out. Using the results from the system, Cit-Con discovered that the month-end production figures for the first month of operation were within 50 bbl of the data calculated from using receipt and shipment invoices.

Cit-Con also can run the application in a prospective mode to project changes in tank inventories, based on a proposed operating plan. Using previously logged data and additional input on such items as deliveries, shipments, and blending orders, the system simulates inventory movement, limited by constraints such as maximum tank inventory and pumping capacities.

And finally, the Cit-Con staff can use the yield-accounting results to schedule inventory and minimize unfinished products-leading to important tax benefits. With better inventory management, monthly targets are met and unfinished products are reduced-and both parent companies realize greater profits.