Reducing Energy Intensity: Helping a major energy company reduce greenhouse gas emissions AND energy costs

Situation

To reduce its environmental footprint, a multi-billion dollar energy company set a corporate goal to decrease energy intensity (EI) by an aggressive 10% within 6 years. At the corporation’s largest production site, employees had many ideas for reducing EI (defined as units of energy per units of output), many of which required capital investment. However, this complex organization lacked meaningful data on the largest drivers of energy consumption and what affected them. Without that understanding, the company developed a long list of potential energy initiatives and capital projects but struggled to reach alignment on what to work on first. Staying with this approach, the company would have had a tough time achieving the target and predicting the capital and resource costs.

Prevailing Mindsets Increase Uncertainty

Energy intensity appeared to vary widely depending on production rate and equipment configuration, creating uncertainty around improvements. Rough data suggested that the higher the production rate, the lower the energy intensity. This caused many to shrug off the 10% goal, thinking that the EI target is “out of our control,” and that as production increased as expected over the next few years “we will just grow our way to the target.”

A Zero-Based Approach Accelerates Results

The energy company chartered a Stroud facilitated team to bring clarity to the opportunity and tackle the mindsets slowing progress.  They used Zero-Based Analysis to challenge the “no control” mindset by introducing the concept of “operating modes,” a small set of typical process and equipment configurations.  By looking at energy performance by operating mode, the team could see a clear, predictable relationship between production rate and energy intensity. The team would be able to reduce Energy Intensity by operating in the most energy efficient operating mode given a certain production rate.

Breaking the perceived “no control” constraint enabled the active pursuit of Energy Intensity reduction, with the team then seeking to understand and improve Energy Intensity within operating modes. It became possible, for any operating mode and any level of production, to gauge energy performance based on historical average, best observed, and theoretical-best cases. For example:

With this analysis, a complex, site-wide issue has been dramatically simplified with a straightforward approach. Improvements could be made by repeating past best performance (represented by the “Best Observed” line), and/or by challenging the limits of the current system (“Theoretical” line).

The Zero-Based Analysis method uncovered significant improvement opportunities requiring little to no capital. Now, each operating area has been able to identify and focus on high-impact areas for its energy reduction efforts by optimizing existing assets. The client was able to use this model to immediately pursue the 10% reduction goal, before requiring investment in capital projects.