Environmental Solutions

Mining Sector Award
 

In December, KBC was engaged to perform work at First Quantum Minerals' (FQM) Kansanshi Mine, located approximately 250km from the town of Ndola, Zambia. The project consisted of an environmental compliance audit and Equator Principles gap analyses (required for funding) of the mine's 420 tonne/day sulphuric acid plant and sewage stabilisation ponds. In addition to the reports, KBC was able to introduce FQM to certain other KBC services such as energy and organisational solutions. The advantages of entering into the environmental consulting business is twofold: (1) Round the existing KBC service portfolio for our existing client base and (2) Enter other client sectors such as mining and minerals, a key experience of this newly formed group.
 

Environmental Solutions

Permitting and Best Practice Advice
 

KBC was engaged as an adviser to help rationalise the overall design of a greenfield refinery announced by a Mexican refiner. The scope of work also included procedures to assess the overall regulatory framework. With respect to these procedures, KBC consultants had a threefold task: (1) Review Mexican environmental legislation relating to refinery practises, (2) Review comparable international guidance, and (3) Advise on best international industrial practice. The impact of both current and future regulatory standards can be most economically addressed in the initial design phases. Our deliverable for this phase was a comprehensive report that described the permitting landscape for the initial design, followed by a two-day intensive workshop in Mexico City supported by the KBC technical team. Environmental consulting opportunities can be cultivated very early within capital project work, since the most cost-effective to address compliance is within the project planning phase.

In terms of emerging markets, environmental compliance has become increasingly important, because in order to obtain international funding, organisations must achieve compliance with Equator Principles versus solely local regulatory standards. Historically, KBC has worked with third-party service providers to address this component of a capital project. With the establishment of the environmental consulting business, such work can now be done in-house.
 

Capital Solutions

New Refinery Construction Study

 

In July, KBC was awarded a subcontract arrangement with SK Engineering and Construction associated with procurement and construction of a new refining and petrochemical complex to be built in the Manabi province of Ecuador. The facility is being built by Refineria del Pacifico (RDP), a joint venture between PetroEcuador and Petróleos de Venezuela S.A. (PdVSA). This is the second major for KBC associated with this particular project. The first involved a feasibility study and development of various scenarios. This second contract is to expand the development of the designs associated with the two selected scenarios to support budgets for capital construction. All such analysis was done using the KBC process simulation software, Petro-SIM. The scope also included an assessment of environmental regulations to evaluate compliance with "equator principles." The RDP project is reflective of a number of new refinery construction projects in emerging market with the objective of satisfying local demand as well as capture export market share. Opportunities for feasibility studies, procurement and construction support, environmental impact assessments and regulatory reviews, operations and maintenance arrangements, and development of local workforce will remain robust in emerging markets.
 

Strategic Solutions

Transaction Due Diligence and Integration Assistance

 

KBC was awarded an opportunity to provide transaction support to a significant merger between two international oil companies. During the due diligence phase of the transaction, as part of integration planning, KBC was asked to develop certain planning and processing models and scenarios using a linear plan programme and confidential refinery data. Since the appropriate regulatory approvals had not yet been received, the modelling was performed in a "clean-room" environment. Having such information prepared in advance allowed the management of the combined organisation to accelerate its integration process once regulatory approvals had been received and the transaction closed. Throughout the year, as an independent consultancy, KBC has provided significant support to international and national oil companies involved in acquiring refining assets as well as private equity firms interested in acquiring refinery assets. This includes due diligence related to the assets being acquired and integration assistance related to optimising all assets within the client's portfolio.
 

Strategic Solutions

Asset Valuation Project
 

KBC helped an international refining/petrochemical operation save over $10 million in local taxes. Using certified expertise in valuation and knowledge of refining/petrochemical markets, our experts were able to put forth the case to taxing authorities that the facilities were overvalued compared to current market conditions, which in turn aided the client in obtaining substantial reductions in their facility taxes. The benefit to cost ratio was over 80:1. This area of valuation, which was added to the core offering in the KBC Strategic Services group in 2009, provides the potential for significant business in the future.

Operating Solutions

Contract Refinery Management Engagement
 

KBC was awarded a contract in September to provide personnel for key management positions at the Binh Son Refinery located in Dung Quat, Vietnam and to train local personnel on refinery operations and site optimisation. This work is provided under a subcontract arrangement with SK Energy, by which the entire operations and maintenance contract encompasses all aspects of operating this new oil refinery. This is one of several refineries planned by PetroVietnam, and KBC is playing an important role in developing the local workforce. There will continue to be demand for these types of services as new refineries come online in emerging markets.

Operating Solutions

Simulation Software Award
 

In December, KBC was awarded a new three-year software contract with Petróleo Brasileiro S.A. (Petrobras) for the licensing of our refinery simulation software, Petro-SIM™. The contract encompasses KBC's state-of-the-art reactor models, the Petro-SIM engineering flowsheet, and support for the development of models. The scope includes all of Petrobras' domestic refineries, certain international sites, and head office operations in Rio de Janeiro. This represents the upgrading to the latest technology of simulation software provided to Petrobras during the first half of the decade when KBC performed several large profit improvement projects. Petrobras continues to upgrade its existing refining capabilities as well as focus on construction of new capacity to meet domestic demand as well as capture export market opportunities. Emerging market refineries will continue to influence the export markets and, thus, a focus on maintaining globally competitive operating cost structures is a priority. Our Petro-SIM product is recognised in the sector as one of the leading process simulation packages, and it is used both by clients and KBC consultants in the execution of capital and operating solutions projects.

Organisational Solutions

Addressing Behavioural Change
 

A national oil company had two identical process facilities located approximately five kilometres apart - Plant A and Plant B. The client initiated a value improvement programme (VIP) with KBC assistance, starting at Plant A. While the overall VIP at Plant A was successful, a team studied the lessons learnt from the exercise, and they decided to address some of the behavioural aspects of the change initiative as part of the scope of the VIP at Plant B. Specific actions were identified and implemented, beginning with a management alignment workshop, which communicated the importance of the programme to overall future operations. The initiatives included delineating roles and responsibilities and reinforcing senior executive support for the programme. Other efforts designed to support the desired behaviours (such as the rewards and incentives) cascaded from the initial alignment workshop.

Both initiatives were successful; however, the realised profit at Plant B was in excess of 100 percent greater than Plant A. Regardless of geography or type of work, a key enabler to implementing and sustaining improvement opportunities is addressing potential behavioural barriers or issues as part of the overall process. Having the ability to offer behavioural and organisational solutions places KBC at a distinct competitive advantage above other competitors, and this assists us in addressing one of our clients' primary concerns: effectively implementing and sustaining improvement opportunities after they have identified.