Ageing plant: Avoiding the point of no returns
1 Aug 2008
A staggering 400 million tonnes of chemicals are produced by the UK chemical industry every year, making it the UK's largest manufacturing sector. Collectively it employs over 400,000 people and generates an estimated turnover of £41 billion. However, it still falls far short of Asia, which remains the industry leader in terms of plant size and turnover, with the EU in a close second place.
Many UK chemical companies are facing increasing pressure on margins as a result of overseas competition and in a mature market, with rising labour costs, the knock-on effect, for some, is that it is becoming increasingly difficult to justify investment in new plant and equipment.
The decision of whether to invest, modernise or improve the efficiency of existing processes can be a difficult one. Clearly there are competing issues: the lifetime of the product being manufactured, the efficiency of the process, the technology used, and the needs of the customer all have to be considered.
The decision process is further complicated when the operation involves hazardous materials where unexpected failures could have significant repercussions for people and the environment - around 900 sites are now regulated under COMAH, and many more are storing or handling hazardous materials, albeit below the qualifying threshold quantities.
Modern risk-based legislation requires operators to question what more can reasonably be done to improve safety. Although cost benefit analysis can be taken into consideration, more often than not costs tend to be pushed upwards.
Additional pressures come to bear on companies that have multi-site activities since internal competition for investment will often be driven by benchmarking between locations. Hence, if the demand for capital is high for a business, then it is more likely to favour the best business case in a location where local labour costs are lower, for example, or where the cost of compliance is less of a burden.
The business risk assessment will therefore need to consider a wide range of issues; it will need to address the risk of failure for the entire operation, including the potential loss of output, customers and reputation driven by disturbances to the supply chain. Once again in the high hazard industries, risks to people and the environment will factor highly - the last thing we want is another Bhopal, Piper Alpha or Texas City.
Concern is also growing over the issue of ageing plant, but just because an asset is old it does not mean that it is no longer safe to operate. The term 'ageing' refers to a specific condition: equipment is said to be ageing if it has accumulated some damage and the likelihood of failure is increasing with time.
Whilst this condition is usually associated with time in service it is not always the case since there is no defined time for the onset of ageing - even new plant and equipment can exhibit ageing if the design is not suited to the process or the environmental conditions.
But in cases where the degradation mechanisms are well understood and the inspection and maintenance strategies are matched to the life stage of the equipment, there is no reason why such equipment cannot be pushed way beyond its planned retirement date.
Responsibility for safe operation ultimately rests with the senior decision-makers within the company. Those in charge must demonstrate that all risks are, and will continue to remain, as low as reasonably practicable.
New guidelines on process safety management and the development of key performance indicators following the Baker Panel Report on the Texas City incident should enable senior management to manage and control their risks accordingly.
At the higher level, the strategy for dealing with risk will need to capture a wider range of issues. For example, with older installations the knowledge and the understanding of the original design intent may be lost over time, so the correct method of restoration, repair or replacement may therefore be critical.
When assets are approaching the end of their economic life, one or more of the following becomes significant:
- Reliability is poor
- Costs are higher than competitors
- Customers are not satisfied with the product
- Skills not available to repair or operate
- Integrity of assets is failing and health, safety or the environment are under threat
- Legislation is driving the need to upgrade the facilities
- Margins are falling because maintenance and repair costs are too high
- Technology is outdated
In each of these cases a reasoned argument must be made for change based on the business economics at the time.
There are cases where the original design and operation of the plant are no longer appropriate and yet the operational standards have continued without reference to the changing materials or customer needs.
In such cases, a root and branch review of operations can reveal the underlying problems, and significant improvements can often be achieved by making relatively simple changes to the operational process, often without the need for major investment. Advances in technology can be another trigger for change. New materials such as those with better heat transfer properties or more efficient membrane materials can help drive the economic argument. Innovative equipment designs can be equally important. For example, spinning disc reactors offering higher heat and mass transfer coefficients and shorter residence times may become a more economically desirable option.
Increased efficiency of existing processes may also be possible through automation upgrades. If better control can result in improved repeatability, improved customer service and enhanced product quality then other, as yet untapped, markets may be opened up. Improvements in automation may also lead to inherently safer processes - for example by allowing older batch processes to be replaced by more efficient continuous systems. In summary, there is a compelling need for a regular review of the longer term business risks encompassing a review of best technology, improving standards for health and safety, market size and product margins.
This will help process operators to ensure that their assets and technology are refreshed before they are allowed to pass the point of economic upgrade - the point after which the decision to stop using the asset altogether is likely to come sooner rather than later!
Many UK chemical companies are facing increasing pressure on margins as a result of overseas competition and in a mature market, with rising labour costs, the knock-on effect, for some, is that it is becoming increasingly difficult to justify investment in new plant and equipment.
The decision of whether to invest, modernise or improve the efficiency of existing processes can be a difficult one. Clearly there are competing issues: the lifetime of the product being manufactured, the efficiency of the process, the technology used, and the needs of the customer all have to be considered.
The decision process is further complicated when the operation involves hazardous materials where unexpected failures could have significant repercussions for people and the environment - around 900 sites are now regulated under COMAH, and many more are storing or handling hazardous materials, albeit below the qualifying threshold quantities.
Modern risk-based legislation requires operators to question what more can reasonably be done to improve safety. Although cost benefit analysis can be taken into consideration, more often than not costs tend to be pushed upwards.
Additional pressures come to bear on companies that have multi-site activities since internal competition for investment will often be driven by benchmarking between locations. Hence, if the demand for capital is high for a business, then it is more likely to favour the best business case in a location where local labour costs are lower, for example, or where the cost of compliance is less of a burden.
The business risk assessment will therefore need to consider a wide range of issues; it will need to address the risk of failure for the entire operation, including the potential loss of output, customers and reputation driven by disturbances to the supply chain. Once again in the high hazard industries, risks to people and the environment will factor highly - the last thing we want is another Bhopal, Piper Alpha or Texas City.
Concern is also growing over the issue of ageing plant, but just because an asset is old it does not mean that it is no longer safe to operate. The term 'ageing' refers to a specific condition: equipment is said to be ageing if it has accumulated some damage and the likelihood of failure is increasing with time.
Whilst this condition is usually associated with time in service it is not always the case since there is no defined time for the onset of ageing - even new plant and equipment can exhibit ageing if the design is not suited to the process or the environmental conditions.
But in cases where the degradation mechanisms are well understood and the inspection and maintenance strategies are matched to the life stage of the equipment, there is no reason why such equipment cannot be pushed way beyond its planned retirement date.
Responsibility for safe operation ultimately rests with the senior decision-makers within the company. Those in charge must demonstrate that all risks are, and will continue to remain, as low as reasonably practicable.
New guidelines on process safety management and the development of key performance indicators following the Baker Panel Report on the Texas City incident should enable senior management to manage and control their risks accordingly.
At the higher level, the strategy for dealing with risk will need to capture a wider range of issues. For example, with older installations the knowledge and the understanding of the original design intent may be lost over time, so the correct method of restoration, repair or replacement may therefore be critical.
When assets are approaching the end of their economic life, one or more of the following becomes significant:
- Reliability is poor
- Costs are higher than competitors
- Customers are not satisfied with the product
- Skills not available to repair or operate
- Integrity of assets is failing and health, safety or the environment are under threat
- Legislation is driving the need to upgrade the facilities
- Margins are falling because maintenance and repair costs are too high
- Technology is outdated
In each of these cases a reasoned argument must be made for change based on the business economics at the time.
There are cases where the original design and operation of the plant are no longer appropriate and yet the operational standards have continued without reference to the changing materials or customer needs.
In such cases, a root and branch review of operations can reveal the underlying problems, and significant improvements can often be achieved by making relatively simple changes to the operational process, often without the need for major investment. Advances in technology can be another trigger for change. New materials such as those with better heat transfer properties or more efficient membrane materials can help drive the economic argument. Innovative equipment designs can be equally important. For example, spinning disc reactors offering higher heat and mass transfer coefficients and shorter residence times may become a more economically desirable option.
Increased efficiency of existing processes may also be possible through automation upgrades. If better control can result in improved repeatability, improved customer service and enhanced product quality then other, as yet untapped, markets may be opened up. Improvements in automation may also lead to inherently safer processes - for example by allowing older batch processes to be replaced by more efficient continuous systems. In summary, there is a compelling need for a regular review of the longer term business risks encompassing a review of best technology, improving standards for health and safety, market size and product margins.
This will help process operators to ensure that their assets and technology are refreshed before they are allowed to pass the point of economic upgrade - the point after which the decision to stop using the asset altogether is likely to come sooner rather than later!
