10.

0 Blending
Optimization:
A Complex Problem

Potential benefits

Each refinery, from the simplest to the

most complex, shares one important
characteristic regardless of the decisions
affecting the selection and processing of
crude and intermediate streams, the
blending operation is the refiner's last
chance to increase profit margins.

Good blending decisions can, in fact,

improve margins by a range of $ 0.05/bbl
to more than $1/bbl.

Figure 1 illustrates areas where

improvements can occur, as follows:
Assigning component process cuts and
costs to match product grade demand.
Buying/selling components to minimize
costs.

Blending economically (minimize

component costs or giveaway costs).
Allocating component rundown to tanks.
Minimizing inventory levels.
Changing product mix or product lifting
schedules to match component
production.

Figure 1
Areas
of
Improve
ment

To reap the benefits of good blending

decisions, while simultaneously
considering all of these areas, a multiperiod, multi-product optimization tool is a
requirement; for example, it may be
necessary to use higher cost components
for a blend order today in order to meet
overall blending requirements over a two
week schedule.

Without the benefit of such an optimization

tool, the blender is unlikely to identify this
need.
Additionally, such a tool enables the
blender to react to short-term changes in
blending requirements.

10.1 A simple case of economics

To appreciate the complexity of the

blending problem, first consider the simple
blending of a single product to
specification given unlimited quantities of
the components available, as depicted in
Table 1.

Table 1

Mathematically, an infinite number of

blends will satisfy the specs, and any
experienced blender could produce some
'good' recipes that meet specs while
reducing quality `giveaway' for some of
the specs
(quality giveaway is the difference
between the spec limit and the measured
quality of the blend).

However, without the benefit of a

mathematical technique such as linear
programming (LP), and without the proper
criteria for measuring how `good' a recipe
is, the blender cannot know if the recipe
has reduced quality giveaway for the
appropriate qualities, or even if the recipe
has reduced quality giveaway as much as
possible.

In order to measure how good a blend is,

the blender and the LP formulation must
have an estimate of either the component
costs or the quality giveaway costs that
must be reduced in addition to satisfying
the specs.
In other words, there must be some
economic basis for evaluating one set of
blending decisions versus another set.

Table 2 presents one of any number of

recipes that meet the product
specifications, disregarding both the cost
of the components and the cost of quality
giveaway.

Table 2

It so happens that this recipe was up

against the minimum (R+M)/2 octane
specification of 87.15 and the maximum
RVP specification of 7.6; in other words,
there was no quality giveaway for either
octane or RVP.

Table 3 presents a recipe based on

minimizing quality giveaway.
In this case, the cost of giveaway for each
quality was set to the same value (an
arbitrary value of US$ 1 per quality barrel).
This recipe, as the one above, also had no
quality giveaway for (R+M)/2 octane and
RVP.

Table 3

Table 4 represents a recipe designed to

minimize the cost of the blend based on
the component costs shown in Table 1.
This recipe had no quality giveaway for
(R+M)/2 octane, RVP, and the %
evaporated at 158.

Table 4

In summary, Table 5 shows the different

recipes under the three conditions, and
the costs of those recipes based on the
original component costs.

Table 5

It is seen that the barrel cost per blend

ranges from a low of US$1 6.89 to a high
of US$ 17.67, a difference of nearly US$ 1
per barrel, and yet all three blends have
zero giveaway on octane and RVP.

From these results, it can be determined

that it is not enough for the blender merely
to keep giveaway on a few important
specs at a minimum.
Either component costs or quality barrel
costs must be used to develop recipes
that will help increase refinery margins.

These values can come from a refinery

wide planning model, coupled with market
values for components that can be
purchased and sold by the refinery.

Limiting or constraining specs are known

as the `critical' specs.
Giveaway for other specs can only be
reduced at the cost of violating the critical
specs, or by giving away quality on one or
more of these specs.
But, given no change in the underlying
economics, any recipes that move the
refiner away from these critical specs will
cost more.

10.2 Complex blend economics

When multiple products and multiple time
periods are considered, the problem
becomes more complex, because each
product may have different spec limits on
common qualities, and in some cases,
even a different set of quality specs.
Thus, the critical specs for one product
may not be the same as for another
product.

Additionally, the blender must consider the

following:
Daily changes to the schedule of product
liftings.
Market driven product price changes.
Component production changes in volume
and quality.

Options to buy and/or sell blend

components.
Market and production driven changes in
component costs.
Product/component exchange
agreements.
Inventory and other operational
constraints.

When all of the above factors are

considered in developing a blending
schedule, a problem arises which is too
complex to be 'optimized' without the aid
of a multi-product, multi-period
optimization tool.

It should also be noted that when blending

to a quality spec such as a minimum
(R+M)/2 octane, the blender will set the
blend target quality a bit higher in order to
compensate for inaccuracies in operations
and lab analyses.

Implicit in setting blend quality targets is

an attempt to balance quality giveaway
costs against the costs of re-blending, or
incurring demurrage, or shipping off-spec
product.

In practice, the blender tries to reduce the

incidents of reblending (or corrective
blending) and to eliminate situations that
incur demurrage costs.

Koch's blending objectives

Koch's objectives in blending are to

maximize margins due to daily blending
decisions in accordance with the overall
refinery operating plan while
simultaneously considering the multiproduct, multi-period blending
requirements.

To meet these goals, Koch wanted to

make blending decisions that considered
all the areas where improvements could
occur, versus decisions that might
optimize on a single blend or be based on
a feasible blending schedule that was not
developed using optimization techniques.

A complex operating
environment

While it can be argued that even the

simplest blending operations can benefit
from an offline blending optimization tool,
complex blending operations demand an
optimization tool.

This situation was well illustrated at the

Corpus Christi refinery, where factors
which added to the complexity of its
blending operations including the
following:

Changing market economics for

components and products.
Reformulated and conventional grades of
gasoline.
Numerous component streams and
component tanks.
Purchase and sale of components.

Purchases or sales of finished products to

balance supply/demand.
Tight lifting schedules via ship and
pipeline outlets.
Nearly 24 hour a day blending operations.
Operational integration of the west and
east plants.

10.3 Selection of blend

To meet its objectives, Koch chose Bonner

& Moore's BLEND software, an application
specifically designed to support optimal
blending decisions for complex blending
environments.

BLEND has the added ability to optimize

blending decisions with the forecast of
operating conditions and requirements as
input, versus starting with a non-optimized
blend schedule.

BLEND finds an 'optimal' schedule every

time using linear and non-linear
programming techniques in one 'solve'
step.
This optimal schedule maximizes blending
margins while simultaneously meeting
inventory, quality, supply/demand, and
operational constraints.

The resulting schedule (generated on a

daily basis) can be fine tuned, if
necessary, on a continuous time basis.
If the basis for the schedule changes (e.g.
if a product lifting must be moved forward
three days), that change can be easily
input and the solver run to produce a new
`optimal' blend schedule.

BLEND generates the optimal cost blends

that must be run next in sequence, not
only to satisfy inventory, flow rates, and
lifting schedule feasibility, but also to
balance with the refinery wide plan and
the operational requirements over the
blending horizon (defined by the blender;
for example, 31 days).

Specific requirements considered in the

optimization step include
component purchases and sales, inventory
and flow rate constraints,
multi-product lifting (demand) schedule,

product exchange agreements,

component volume and quality production
rates and changes over time,
and blend recipe composition constraints
(e.g. minimum or maximum quantities of a
component required in a blend).

BLEND includes an interface to the online

blend control system in order to download the
starting

recipe,
component high/low limits to correct the blend,
component costs (actual or incremental costs for
the blend),
blend volume,

 blend

tank heel and quality,

blender rate,
product spec,
spec high/low limits
and component quality blend values.

BLEND helps the blender to see potential

problems such as component shortage
versus the future product-lifting schedule
ahead of time.
The blender can also run cases to see if

an

increase in reformer severity,

a change in the product-lifting schedule,
or other adjustments will correct the problem.

The ease of running these 'what if' cases

has proven useful to Koch for a variety of
short -term planning and analysis
purposes.

10.4 Blending technology

architecture
Figure 2 depicts the architecture that
guides how blending technology fits in with
the objectives and operational procedures
at Koch.
Included in this architecture are the
following:

Refinery wide operating planning basis.

Offline multi-product, multi-period blend
optimizer.
For monthly supply/demand balance (30
day model).

Figure 2 Architecture for

blending technology

For a weekly blend schedule (12 day

models).
Online, realtime, single blend optimizer.

The advantage of this architecture is that

the offline blend optimizer can translate
the operating planning basis in terms of
target recipes per product grade and
relative production costs for components.
Component costs must be adjusted for
market related costs associated with the
purchase and sale of components.

The offline 30 day model is used primarily

to balance component availability with
demand for products.
This model fine tunes economics and
identifies increased margin opportunities
through changes in the product mix and
options for buying and selling both
components and products.

The basis for the monthly plan is passed

to the 12 day models to develop recipes
for the daily blending schedule.

The resulting recipes from the offline 12

day models are thus driven by maximizing
the margins for each blend in line with the
refinery wide operating plan.

Not only are the starting recipes sent to

the online blend optimizer, but the
component blend values and costs are
also downloaded to ensure that
corrections to the starting recipe move in a
direction to minimize blending costs
versus merely staying on-spec and
minimizing giveaway for selected qualities.

Corpus Christi blending model

Figure 3 depicts the Corpus Christi

refinery blending models. Currently,
blending operations for both the east and
west plants are run as two separate but
coordinated operations.

Figure 3 Corpus Christi refinery

blending models

Both models base their economics and

product lifting schedules on the BLEND 30
day model, and targets for product
exchanges and component sales are also
determined using the 30 day model.

The short term blending models import lab

and tank gauging data through pro
gramme interfaces and then generate
optimal recipes and the blending schedule
over a 12 day horizon.

Tank switching service schedules are

changed as required within the model.
For blending and selling selected
components, the Corpus Christi refinery
incorporates potential component market
activity into the model to confirm the
attractiveness of that particular activity.

10.5 Integration of blending

technology

Figure 4 depicts the systems that are

integrated to facilitate Koch's blending
operations.

Figure 4 Integration of blending

technology

A refinery wide operating plan typically

sets target operating conditions for the
month. The offline 30 day model is used
primarily to balance component availability
with demand for products. This model fine
tunes economics and identifies increased
margin opportunities through changes in
the product mix and options for buying
and selling both components and
products.

The basis for the monthly plan is passed

to the 12 day models to develop recipes
for the daily blending schedule.
The resulting recipes from the offline 12
day models are thus driven by maximizing
the margins for each blend in line with the
refinery wide operating plan.

Not only are the starting recipes sent to

the online blend optimizer, but the
component blend values and costs are
also downloaded to ensure that
corrections to the starting recipe move in a
direction to minimize blending costs
versus merely staying on-spec and
minimizing giveaway for selected qualities.

Integration of blending technology Figure

4 depicts the systems that are integrated
to facilitate Koch's blending operations.

Figure 4 Integration of blending

technology

A refinery wide operating plan typically

sets target-operating conditions for the
month, although revisions may be
necessary during the month.

The monthly operating plan can produce

target recipes, which represent the ideal
blend for each grade of gasoline to
balance component volume and quality
production with gasoline product demand.
It may also produce marginal costs for the
blend components.

Target recipes and component costs from

the refinery wide operating plan are input
to the BLEND 12 day models, which then
produce a blending schedule that primarily
maximizes the margins for each blend, but
also attempts to follow the target recipe as
closely as possible.

In any event, the target recipes help

BLEND converge to a solution more rapidly.
At the beginning of each day, the blender
runs a special Windows based utility
designed for BLEND to import the latest
tank level data from a tank gauging system,
as well as lab data for tanks and
component rundown streams from the lab
system.

The blender also reviews any changes to

the product lifting and component
production schedules that could affect
volume or quality requirements over the
schedule horizon

Adjustments for online blending

operations in progress are also made to
ensure that BLEND picks up at the right
time in the future when the next blending
operations can begin.

BLEND is then run to generate the

optimized blending schedule over the blend
horizon.
The solution pinpoints volume or quality
imbalances over the blend horizon, should
they exist.
The blender can then run the BLEND
Scheduler routine, which converts the dayto-day blend schedule from the LP into a
continuous Gantt chart schedule.

This routine sequences the blend orders

to include start times and a check for
inventory feasibility.
If shortages exist in component tanks, the
schedule can be adjusted or blender rates
adjusted in order to eliminate the
shortage.

The blender can also manually adjust

blend orders, including changes in the
blend recipe.
One or more generated blend orders can
be electronically downloaded to the
Honeywell online blend control system.

10.6 Conclusion

The major benefit of integrated blending

and scheduling is that short-term
opportunities to increase operating
margins can be identified and realized,
consistent with the monthly refinery wide
operating plan.

At the same time, this integrated

architecture supports reduced quality
giveaway, minimum cost blends, reduced
re-blend situations, and quick response to
schedule changes and better inventory
management.

Overall, Koch estimates that the

application of the blending technology
presented here amounts to savings in
excess of US$ 0.20 per barrel.
Given the refinery's daily gasoline
production rates, this translates to savings
of approximately US$ 9 million per year.

Finally, the integrated blending and

scheduling system provides several
intangible benefits.
It automates good and consistent blending
procedures, eases staff turn over and
backup of the blender's responsibilities as
well as improving coordination among
blend operations, production, and
marketing groups.