Energy Management Strategies for Operational Excellence @ ARC's 2011 Industry Forum by Dick Hill. 10 Energy Optimization Recommendations 1.Secure Management‟s Full Support 2.Plant-level Energy Teams –Include Automation 3.Build an Energy Strategic Plan 4.Perform Energy Audits –Current Reality 5.Establish Energy Metrics 6.Benchmark: Other Plants & Other Companies 7.Energy KPIs –Not just for Management 8.On-Line Energy Measurements –Fill Gaps 9.Automate to Optimize 10.Empower the Worker

1. Energy Management Strategies for
Operational Excellence
Dick Hill
Vice President
ARC Advisory Group
dhill@arcweb.com

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Why is Energy Management so Important?
Business
Drivers
Energy
Volatility
Operations
Cost
Regulatory
Compliance
Investor
Confidence
Energy Issues Impacts
The Ability to Sustain Your Business

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Global Energy Demand will Double by 2050
Source: World Energy Council
Non-OECD countries account for the majority of the nearly
50% projected increase in global energy used by 2035
Source: EIA, International Energy Outlook 2010

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Manufacturing‟s
Energy Footprint

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Industry‟s Role in Energy Consumption
Industry is #1 Consumer of Energy
But, is trending down.
31%
28%
22%
19%
Source: EIA Annual Energy Review 2008
0
5
10
15
20
25
30
35
40
2008 2013 2018 2023 2028 2033
2010 2020 2030
31%
28%
20%
21%
114 QBTUs
2035
100 QBTUs
2008
US Data

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The Cost of Energy Projected to Rise
Source: US Energy Information Administration
Prices (2009 dollars per unit) 2009 2035 CAGR
Low Sulfur Light Price ($ per
barrel) 61.66 125.03 2.8%
Imported Crude Oil Price ($ per
barrel) 59.04 114.05 2.6%
Gas Wellhead Price ($ / Mcf) 3.71 6.53 2.2%
Coal Minemouth Price ($ / ton) 33.26 34.11 0.1%
Electricity (cents per kilowatt-
hour) 9.8 9.2 -0.2%

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US Manufacturing Energy Footprint
Source: US Department of Energy
Losses amount to several quadrillion BTUs and
billions of dollars in lost revenues every year.

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Where is Energy Consumed?
 Process Heating (Fired
Heaters) is Number
One Energy Consumer
 Machine Drive is
Number Two
Source: EIA Annual Energy Review 2008
5.8
2.8
1.2
0.2 0.1 0.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
QuadrillionBtu
0.1
0.2
0.2
0.2
0.7
1.6
3.6
0.0 1.0 2.0 3.0 4.0
Conventional Electricity
Generation
Electrochemical Processes
Process Cooling and
Refrigeration
Facility Lighting
Facility HVAC
Machine Drive
Process Heating
Quadrillion Btu
W.A.G.E.S
Water
Air
Gas
(Fuel)
Electric
Steam

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Process Industries are the Most Energy Intensive
(Amount of Energy Used Per Unit of Activity)
Energy Consumption (Trillion Btu)
Petroleum
Chemicals
PaperPrimary
Metals
Food Processing
Nonmetallic
Minerals
Tobacco/Beverages
Furniture
Leather Machinery and Computers
Wood
Transportation
Fabricated Metals
Textiles/Apparel
Plastics/
Rubber
Electrical
Printing
Miscellaneous
1
10
100
1000
10 100 1000 10000
EnergyIntensity
(ThousandBtu/$GDP)
Energy-Intensive
Industries
Industrial Energy Intensity vs. Energy Consumption
Mining
Source: US Department of Energy

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Energy Management
Current Realities

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Where is your Energy Leadership?
9%
27%
15%
36%
12%
Corporate BU Plant None Don't Know
1. Corporate Leader – “Energy Czar” v
2. Business Units have their own v
3. Plants have their own v
4. None v
5. Not sure v

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2010 Survey: Management Commitment
25.6%
17.4%
15.1%
41.9%
Corporate
Business Unit
Plant
No Energy
Czar
Does your Company have an "Energy Czar"
(e.g.Energy Leader)?
Company
Energy Leadership
Over 40% Responded: No Energy Leader
Source: ARC Energy Management Survey 2010

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Do you have “Energy Management Teams”
at your Plants?
Yes No Don't Know
19% 19%
63%
1. Yes
2. No
3. Don‟t Know

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Is Automation & Controls an Active
Member of your Energy Teams?
Yes No Don't Know
19%
33%
48%
1. Yes
2. No
3. Not Sure

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2010 Survey:
Plant-Level Energy Management Teams
54%39%
7%
Does your plant have an active
Energy Management Team?
Yes
No
Don't know
54 % have Active
Energy Team
49%
42%
9%
Is Automation and Controls an active member of
the energy management team?
Yes
No
Don't know
Less than Half Sited Automation
Membership on Management Team
Source: ARC Energy Management Survey 2010

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Monitor “Energy Costs” in Real Time?
30%
11%48%
11%
For Accounting For Ops No Don't Know
1. Yes – For Accounting Purposes v
2. Yes – For Operations Purposes v
3. No Real Time monitoring v
4. Don‟t Know v

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Does you Operators have “Energy KPIs”?
17%
27%50%
7%
Extensive Some None Don't Know
1. Yes – Extensive
2. Yes – Some
3. None
4. Don‟t Know

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27%
52%
15%
6%
Do you monitor the energy costs of your
industrial manufacturing processes?
In real time for operating
purposes
Periodically for accounting
purposes
Do not monitor energy
costs
Don't know
2010 Survey:
Operations-Level Energy Monitoring
47%
43%
8%
2%
Do you provide Console Operators with
Energy-related KPIs?
None
Some
Most
All
27 % Monitor
Energy Costs in
Real-Time
Nearly Half Sited No Energy-Related KPIs
for Operators
Source: ARC Energy Management Survey 2010

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What % of Energy Usage have On-Line
Measurements?
<10% 10-
15%
15-
20%
20-
30%
30-
40%
40-
50%
>50%
10%
15%
20%
5%
10%
15%
25%
1. <10%
2. 10-15%
3. 15-20%
4. 20-30%
5. 30-40%
6. 40-50%
7. >50%

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To What degree is Energy an active
component of your APC Control?
None Some Most All
25%
17%17%
42%
1. None
2. Some
3. Most
4. All

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2010 Survey: Control of Energy
26%
10%
17%8%
7%
6%
26%
What percentage of energy measurements are
online and available?
5% to 10%
11% to 15%
16% to 20%
21% to 30%
31% to 40%
41% to 49%
50% or more
53 % Have 20 %
or less of Energy
Measurements
On-Line
Source: ARC Energy Management Survey 2010
49%
35%
16%
0%
To what degree is energy an active
component of advanced process control
(APC) models?
None
Some
Most
All
For 49 % Energy
is Not an Active
Part of APC

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Do You Benchmark Energy Metrics?
1.Don‟t Know
2.No
3.Yes: Internally Only
4.Yes: Externally Also

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2010 Survey:
Energy Metrics and Benchmarking
0% 10% 20% 30% 40%
Internally
Externally
Not benchmarking
Don't know
Are You Benchmarking Your Energy Efforts?
35 % or More are Not Benchmarking
Source: ARC Energy Management Survey 2010

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10 Recommendations for
Energy Management

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10 Energy Optimization Recommendations
1. Secure Management‟s Full Support
2. Plant-level Energy Teams – Include Automation
3. Build an Energy Strategic Plan
4. Perform Energy Audits – Current Reality
5. Establish Energy Metrics
6. Benchmark: Other Plants & Other Companies
7. Energy KPIs – Not just for Management
8. On-Line Energy Measurements – Fill Gaps
9. Automate to Optimize
10.Empower the Worker
Energy Optimization Requires People,
Process and Technology
Water
Air
Gas
(Fuel)
Electric
Steam

26. Thank You.
For more information, contact the author at
dhill@arcweb.com or visit our web pages at
www.arcweb.com

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Questions for the Panel
 Q: Erik, How do you balance safety requirements with energy optimization?
 Q: Erik (and panel) What are the biggest challenges in bringing about changes
of this nature?
 Q: Erik (and panel) How does one best drive energy optimization as a way of
doing business?
 Q: At Hatch, what has been other experiences in the topic of „Energy
Management and Optimization‟?
 Q: Frank, How do you plan to coordinate energy usage and KPIs for operational
purposes with energy usage and KPIs for accounting/business purposes
 Q: Dave Kay: At Husky Energy, what has been your experience in the topic of
„Energy Management‟?