In March 23, 2005, an explosion ripped through BP's 1,200-acre refinery in Texas City, TX, about 30 miles southeast of Houston, killing 15 plant workers. The explosion, which will cost BP plc approximately $1 billion in rebuilding, $21 million in fines, and untold millions in lawsuits, was caused by unenforced and undefined procedures for managing environmental compliance.
As environmental issues move to the political fore worldwide, governments are not only increasing the amount of environmental health and safety (EH&S) regulations on chemicals manufacturers, they are making the cost of non-compliance prohibitive.
Two trends are driving the chemicals industry toward investment in advanced systems that ensure regulatory compliance in emissions tracking and reduction. First, there are ongoing clean air and water initiatives designed to reduce pollution, including the European Union's Registration, Evaluation, and Authorization of Chemicals (REACH) requirements, which call for chemicals manufacturers to gather information on the properties of their substances and to register the information in a central database. Second, treaties such as the Kyoto Protocol have set up emissions trading systems that create an economic incentive for chemicals companies to manage their emissions.
As a result, companies in chemicals manufacturing, ranging from oil and gas to commercial fluids and solvents, to consumer products that run from lawn fertilizer to laundry detergent, have begun to explore new ways to track pollutants and emissions in real time.
"The emissions area is unique. There's an opportunity for a company to have a financial benefit from compliance," says Simon Jacobson, research analyst for manufacturing operations at AMR Research. That benefit can come via cap-and-trade programs, whereby companies that cut their emissions to below their allotted amount can sell the remainder of that allotment to companies that need cushion. That, Jacobson says, can create "a million-dollar business without a lot of extra cost." But, he adds, "you do need tight control of the processes to predict and analyze where the [compliance] risks are."
Companies such as Pavilion Technologies Inc. and TechniData AG, Jacobson says, are moving into the compliance area with tools that track, measure, and manage plant emissions, predicting potential violations and allowing plant operators to make appropriate adjustments in advance. For the most part, these new systems are replacing homegrown systems that have been stitched together over the years by plant managers who are now reaching retirement age.
Tracking and Reducing Emissions
"Manufacturers are asking, 'How can we make changes to our process that will reduce emissions?'" says Donald Hart, director of solutions marketing at Pavilion. Of paramount concern is spotting a potential problem before it becomes a compliance issue. "You don't want to learn about emissions violations when it's too late to do something about it," Hart says.
Current techniques, which rely on aging sensors set atop smokestacks and decentralized and incompatible hardware and software, are prone to significant time lags between measurement and subsequent reporting and analysis, and create too much of a cost burden. Hart cites the example of Valero Energy Corp., the U.S.'s largest oil refiner, which recently was fined $700,000 because its emissions reports were late and inaccurate.
Pavilion's Predictive Emissions Monitoring System (PEMS) is part of release 2.0 of its Pavilion8 compliance software, which rolled out in September. The system is designed to replace the continuous emissions monitoring systems (CEMS) now in use in most chemicals plants.
Operating in real time, PEMS monitors the relationship between process operations at a given moment and the ambient conditions of the emissions. From this, it can predict emissions levels and advise plant operators when necessary. The system also validates predictive analysis against actual emissions data collected from a sensor-validation system. Users get up-to-the-minute active compliance assurance, Hart says.
Not only does this offer immediate information on environmental compliance, the data can be used to project potential emissions problems much more accurately. This can pay off in the new cap-and-trade markets. "If you know early in the month that you are going to exceed the limit for the month, you can take some action to minimize the problem," Hart notes. "If you know you are going to exceed limits for the year, you will know early enough to buy credits when they are less expensive."
PEMS provides data in 15-minute increments, or "roll ups." A reverse/fast forward/pause interface lets users view historical data across a week, month, or quarter, for example. Reports can be printed in EPA-required formats, Hart says. The software is SAP-certified, but will work on top of any SQL server.
The cost of a PEMS implementation depends on the size of the operation and the number of emission sources. The cost for small plants can be as low as $75,000 to $100,000; for major plants and facilities the price tag can reach
$1 million or more. Customers include BP, Sterling Chemicals Inc., 3M Corp., and Weyerhauser Co.
Dealing with REACH
The EU's REACH initiative is one of the most stringent environmental regulations enacted thus far. If companies cannot detail and register the various chemicals in their products as well as their potential risks to the environment, those products, be they petroleum or shampoo, cannot be manufactured in or imported into the EU. "No data, no market," says Karl-Franz Torges, solution manager at TechniData. "You have to detail a lot of data -- environmental, toxic, carcinogenic -- it depends on the usage and quantity. But the data can't be historical, it must be real time," Torges says.
"All chemical companies are searching for IT tools to create and manage this data," Torges continues. TechniData offers its CLEO software platform for chemicals safety management, which integrates into SAP's mySAP ERP and is based on SAP EH&S modules. Users can also tailor the system to individual EH&S processes they may use. The product has reached version 2006-2.
The system creates a single source database of registered chemicals that a company uses or produces. That database is then tied to other business process systems that involve manufacturing and distribution. Should a U.S. manufacturer want to export to Europe a chemical product made in the U.S., the system will instantly inform management of the chemical nature of the product, whether or not those chemicals are registered in the EU, and whether or not the product itself is compliant. Compliance reports can be immediately generated to meet EU documentation requirements, Torges says.
Predictive analytics are part of the package, Torges notes. "You can track [chemicals] as they are used or as they are predicted to be used. You can find out in real time your produced volume of substances versus expected volume."
TechniData customers include E.I. du Pont de Nemours and Co., Eastman Chemical Co., Dow Corning Corp., and General Mills. The price of the system varies with the size of the deployment. Corporate-wide installation can take three to nine months, depending on the size and geographic scope of the customer, Torges says.
The good news for chemicals manufacturers is that there is enough commonality among REACH and other EU regulations such as the Gothenburg Protocol, Europe's Globally Harmonized Systems (GHS) for classification and labeling of chemicals and waste, and the Waste Electrical and Electronic Equipment (WEEE) standard that large databases can be applied to all. Similarly in the U.S., EPA federal regulations often key off of state regulations and initiatives, such as those from the Texas Commission on Environmental Quality (TCEQ).
On the other hand, regulations keep changing, so manufacturers are always playing catch-up with their business processes. "Compliance regulations keep moving forward, says AMR's Jacobson. "No one's ever going to be where they need to be."