VALUE ENGINEERING Mohammed A. Us Shan Saleh H. Al-Mutairi Sagar M. Al-Anazi Samir A. Sulaiman Saleh S. Al-Abbas REFINERY FACILITY

VE is an intelligent option, when ? Existing part/product cost is high Existing part/product cost is high Existing technology is complex/old though simpler means are available Existing technology is complex/old though simpler means are available There is a need to release a cheaper product by cutting down some of the existing feature There is a need to release a cheaper product by cutting down some of the existing feature The existing customer demands a minimal increment in product features that are in use The existing customer demands a minimal increment in product features that are in use There is a need to cut down the manufacturing cycle time/cost There is a need to cut down the manufacturing cycle time/cost

BENEFITS OF VE Decreasing costs Decreasing costs Increasing profits Increasing profits Improving quality Improving quality Expanding market share Expanding market share Saving time Saving time Solving problems Solving problems Using resources more effectively Using resources more effectively

INTRODUCTION INTRODUCTION FAST DIAGRAMS FAST DIAGRAMS COST/WORTH MODEL COST/WORTH MODEL RECOMMENDATIONS RECOMMENDATIONS Layout Layout Process Process Mech/Elec/Piping Mech/Elec/Piping RESULTS RESULTS OUTLINE

PROJECT OVERVIEW In 1993 a value engineering study was performed at a refinery facility in California. In 1993 a value engineering study was performed at a refinery facility in California. Three teams comprised of 15 professionals: Three teams comprised of 15 professionals: Layout Layout Process Process Electrical/Piping/Mechanical Electrical/Piping/Mechanical On final implementation On final implementation 60% (approximately $ 35,000,000) in savings were realized, representing an 11% reduction. 60% (approximately $ 35,000,000) in savings were realized, representing an 11% reduction. Follow-on annual savings were $ 500,000/year. Follow-on annual savings were $ 500,000/year.

TEAMS Team1: Project Layout FAST diagram to understand the present design FAST diagram to understand the present design 4 out of 64 ideas 4 out of 64 ideas 12 design suggestions 12 design suggestions The principal proposals were to The principal proposals were to Consolidate the site to reduce interface cost and reduce the size. Consolidate the site to reduce interface cost and reduce the size. Consolidate buildings to reflect required rather than desired future requirements. Consolidate buildings to reflect required rather than desired future requirements. $ 8.5 million $ 8.5 million

Team2: Process FAST diagram to review the process flow FAST diagram to review the process flow 4 proposals and 5 design suggestions out of 44 ideas 4 proposals and 5 design suggestions out of 44 ideas $ 38 million life cycle present worth savings $ 38 million life cycle present worth savings An additional $ 1 million An additional $ 1 million The principal proposals were to The principal proposals were to Combine or delete the excessively redundant type tanks Combine or delete the excessively redundant type tanks Use seawater for process cooling Use seawater for process cooling Reduce the number of seawater pumps Reduce the number of seawater pumps Eliminate pipeline scrapers Eliminate pipeline scrapers TEAMS

Team3: Electrical/Piping/Mechanical FAST analysis FAST analysis Focus on piping and electrical as well Focus on piping and electrical as well 5 out of 32 ideas, estimated savings of $ 7.6 million 5 out of 32 ideas, estimated savings of $ 7.6 million 24 mechanical and electrical design suggestions, estimated at $ 2.2 million 24 mechanical and electrical design suggestions, estimated at $ 2.2 million Among the principal proposals the most crucial were to Among the principal proposals the most crucial were to Install the main electrical distribution line aboveground. Install the main electrical distribution line aboveground. Eliminate the 15% over design for tanks. Eliminate the 15% over design for tanks. TEAMS

Ship Products Load Ship Avoid Demurrage Store Products Transport Product Transport Product # 1 Transport Product # 2 Transport Product # 3 Store Product # 2 Store Off-Test Store Product # 1 Store Product # 3 Manufacture Products Transport Feedstock Ship Products Receive Feedstock How? >>> <<< Why? Team 1-Layout

Meet Regulations Project People, Plant, & Environment Burn Vapor Ignite Vapor Promote Clean Combustion Add Fuel Maintain Seal Separate Lads Accumulate Loads Collect Loads How? >>> <<< Why? Team 2-Process Handle Vapor Relief Load Recycle Liquid Process Liquid Convey Liquid

Improve Operation Reduce Risk Improve Distribution System Install Equipment Size Equipment Economically Support Conductors Reconfigure Power System Stepdown Voltage Increase Circuit Bar Bus Capacity Receive 220 KV Power How? >>> <<< Why? Team 3a-Electrical Distribution Distribute Power Energize Substations Co-generate Power Optimize Transformer Capacity Meter Usage

Seawater/Cooling water WorthItemCost 9,520,000 Treated Water514,00014,000 Raw Water1,097,000 Fire Water3,000 Nitrogen Supply284,000 Natural Gas System296,000 Flare System1,638,0001,200,000 TOTAL13,352,00012,414,000 UTILITIES Cost/Worth Model Recommendation: Use seawater for process cooling Eliminate/Reduce seawater pumps

ItemCostWorth Communications00 Tank & Spheres14,496,00010,000,000 Interconnecting Rack5,403,0004,000,000 Underground Piping3,724,0002,600,000 Storm Water System123,000 Wastewater System2,060,0001,600,000 Plant Infrastructure4,703,0003,500,000 TOTAL20,947,00010,000,000 ELECTRICAL Cost/Worth Model Electrical20,947,00010,000,000 Recommendation: Combine Waste water and Off-plot Tank-feed

ItemCostWorth Cafeteria/Training1,500,000 Prayer Shelter155,000 Security/Firehouse556,000 Warehouse3,092,0002,300,000 Gatehouse124,000 Main Substation464,000 Port Substation46,000 TOTAL11,007,0007,768,000 BUILDINGS Cost/Worth Model Administration4,947,0002,500,000 Recommendation: Reduce Size of Admin Building

45,101,070 7,242,000 93,542, ,041,000 Cost/Worth Model Construction Overhead International Transportation Escalation & Contingency 312,927,030

I.Original Layout 1.Feed enters the plant. 2.Goes to Tank 3.Back to Refinery 4.Product flow from Refinery to Mixing area. 5.The products flow from Mixing area to shipping area. 6.The Utilities facilities located in east. LAYOUT CASE ITEM : Revise Layout of Site

Tank Feed Shipment area Refinery Mixing Area Personnel an Utility Facilities ORIGINAL LAYOUT

II. Proposed Layout 1.Move the tanks to the south of Refinery. 2.Moving all hydrocarbon products facilities to the east. 3.Moving most of personnel and utility facilities to the west near the site center. 4.All the future siting is moved to the far west. LAYOUT CASE ITEM : Revise Layout of Site

Feed Shipment area Refinery Mixing Area Personnel an Utility Facilities Tank ORIGINAL LAYOUT

The primary drive for this proposal was to minimize the piping to carry the back and forth flow sequences. The primary drive for this proposal was to minimize the piping to carry the back and forth flow sequences. The result was Reduction in on-site piping from 7,847 m to 4,499 m. The result was Reduction in on-site piping from 7,847 m to 4,499 m. DISCUSSION

Advantage of new idea More safety layout. More safety layout. Less piping in the project. Less piping in the project. Reliable operation. Reliable operation.

I.Original process flow design 1.FEED STORAGE TANKS 2.INTRIM TANKS 3.SHIPMENT TANKS PROCESS CASE ITEM : Combine/Reduce Size Storage / Port Tanks

FEED Loading Arm FEED STOCK TANKSINTRIM TANKSPRODUCT SHIPMENT TANKS 1 23 FUNCTION: FEED PROCESS FUNCTION: CHECK QUALITY FUNCTION: SHIP PRODUCT

II. Proposed process flow design 1.FEED STORAGE TANKS (Multi functions) 2.ONLINE SAMPLING 3.DIRECT PIPELINES PROCESS CASE ITEM : Combine/Reduce Size Storage / Port Tanks

FEED Loading Arm FEED STOCK TANKS INTRIM TANKSPRODUCT SHIPMENT TANKS 1 23 FUNCTION: 1-Keep plant online 2-Provide surge in case plant offline 3- Catch off spec for rerun FUNCTION: CHECK QUALITY FUNCTION: SHIP PRODUCT ONLINE SAMPLING

Reduce excess tanks, pumps, and large piping diameter Reduce excess tanks, pumps, and large piping diameter Improve reliability Improve reliability Low initial cost * Low initial cost ** Less maintenance * (Pumps, Instrumentation, tanks, Monitoring wells) Less maintenance * (Pumps, Instrumentation, tanks, Monitoring wells)* Less energy cost Less energy cost ADVANTAGE OF NEW IDEA

COST WORKSHEET Savings = 25,183,000

LIFE CYCLE COST WORKSHEET Savings = 39,629,000

ORIGINAL LAYOUT

PROPOSED LAYOUT

WEIGHTED EVALUATION

VE Recommendation 3 Revise 115 KV Plant Feed from Underground to Above Ground (No. E-3) Original design: install plant feed underground at a distance of 4.3 kms from main substation. Original design: install plant feed underground at a distance of 4.3 kms from main substation. Proposed design: install plant feed above ground. Proposed design: install plant feed above ground. Discussion: VE team feels above ground would be less expensive and is suitable for an industrial area. Discussion: VE team feels above ground would be less expensive and is suitable for an industrial area.

VE Recommendation 3 $ 4,299,696Savings $ 2,047,104Total $ 1,137,280 $ 909,824.8$1,137,280 Subtotal markup indirects (.8) $ 141, lf14,104Installation (use $ 10/lf) $ 150, ea30Tower at 500 spacing $ 846, lf84,624 2 feeders, 3 cable each (use $10/lf/cable x 6 units) Proposed Design $ 6,346,800Total $ 3,526,000 $ 2,820,800.8$3,526,000 Subtotal markup indirects (.8) $ 1,410, lf14,104Installation (use $ 100/lf) $ 2,115, lf84,624 2 feeders, 3 cable each (use $25/lf/cable x 6 units) Original Design TotalUnit CostMeasureQuantityItem

13 VE proposals and 41 design suggestions. 13 VE proposals and 41 design suggestions. Initial cost savings $60 mil & PW LCC savings $68 mil. Initial cost savings $60 mil & PW LCC savings $68 mil. Proposal (P-44) 1 not included in totals. An alternate not fully developed & affects ROI. Proposal (P-44) 1 not included in totals. An alternate not fully developed & affects ROI. 1 Reconfigure plant to make no Benzene SUMMARY OF RESULTS

Recommendation Category Initial Cost Savings Total PW Cost Savings % of PW Cost Savings Total Layout8,540,0008,422, Process38,700,00047,177, Mechanical7,622,0007,874, TOTALS54,902,00063,473, VE PROPOSALS Process 38,700,000 47,177, VE savings = 92.5% Grand Total PW Cost Savings

SUMMARY OF RESULTS Recommendation Category Initial Cost Savings Total PW Cost Savings % of PW Cost Savings Total Layout2,900, Process25,00045, Mech/Elec2,180, TOTALS5,105,0005,125, DESIGN SUGGESTIONS Layout 2,900,000 2,900, Mech/Elec 2,180,000 2,180, Design Suggestions savings = 7.5% Grand Total PW Cost Savings

SUMMARY OF RESULTS Recommendation Category Initial Cost Savings Annual O&M Cost Savings Total PW Cost Savings % of PW Cost Savings Total Reduce Size of Admin. Bldg. 4,590,000(21,000)4,010, Combine Buildings990,00011,0001,118, Revise Layout of Site 2,660,00026,0002,940,00026 Combine MCC & Control Room 300,0005,000354, Design Suggestions2,900, LAYOUT TOTALS$11,440,000$21,000$11,322, LAYOUT TEAM

SUMMARY OF RESULTS Recommendation Category Initial Cost Savings Annual O&M Cost Savings Total PW Cost Savings % of PW Cost Savings Total Use Sea Water for Process Cooling 3,100,000257,0006,432, Eliminate/Reduce Seawater Pumps 1,500,000(60,000)987, Product Pipeline Scrapers 300,00017,000158, PROCESS TEAM

SUMMARY OF RESULTS Recommendation Category Initial Cost Savings Annual O&M Cost Savings Total PW Cost Savings % of PW Cost Savings Total Combine/Reduce Size of Storage/Port Tanks 33,800,000685,00039,600, Reconfigure Plant to Make no Benzene 1 123,000, ,500, ,000, Design Suggestions 25,0002,00045, Process TOTALS $38,725,000$867,000$47,222, PROCESS TEAM (CONT.) 1 Idea is not fully evaluated, needs further study, and is not included in the totals

SUMMARY OF RESULTS Recommendation Category Initial Cost Savings Annual O&M Cost Savings Total PW Cost Savings % of PW Cost Savings Total Eliminate One Loading Arm 1,980,000(50,000)1,555, Combine Wastewater & Off-Plot Tankfeed 118,00080,000798, Eliminate Tank Area Fill 400,000(5,000)357, Reevaluate Substation$864, MECHANICAL/PIPING TEAM

Recommendation Category Initial Cost Savings Annual O&M Cost Savings Total PW Cost Savings % of PW Cost Savings Total Revise 115 KV Plant Feed 4,300, Design Suggestions2,180, Electrical Design Suggestion ND Mechanical/Piping TOTALS $9,842,000$25,000$10,054, SUMMARY OF RESULTS GRAND TOTALS $60,007,000 $913,000 $68,598,800 MECHANICAL/PIPING TEAM (CONT.)

Total Impact of VE Potential savings were identified in initial costs of about $ 55 million which reduced 17% of the planned investment. Potential savings were identified in initial costs of about $ 55 million which reduced 17% of the planned investment. Another $ 1 million in annual operation and maintenance savings if all ideas were implemented. Another $ 1 million in annual operation and maintenance savings if all ideas were implemented. Careful follow-on study should be given to the design suggestions that have a potential additional savings in excess of $ 2 million. Careful follow-on study should be given to the design suggestions that have a potential additional savings in excess of $ 2 million. SUMMARY

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