Investment &Operating CostRevenuesSalariesSkilled LabourWasteKnow-how

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Presented: July 1^st, 2003

Vermelding onderdeel organisatie

1

Industry and Infrastructure Co-Evolution

TRANSITION MANAGEMENT IN ROTTERDAM-RIJNMOND?

ISIE’03, Ann-Arbor, Michigan

Gerard P.J. Dijkema

Adapted for spm9539, 2006

Faculty of Technology, Policy and Management Industry an Energy Group

PO Box 5015, 2600 GA Delft, The Netherlands

www.portofrotterdam.com • PortIndustry

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Outline

• Introduction

– Technology, Policy and Management – Rotterdam-Rijnmond

• System Thinking

– System Representation

– System Technology & Characteristics

• Transition Towards Sustainability?

– Concerns / drivers – Research question

• Decision Support for Industrial Development

– Site Selection; Active and Passive Co-Siting;

– Process System Engineering (PSE) – Optimisation & Case Study

– Industrial Ecology and PSE

• Conclusion & Outlook

Outline

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Technology, Policy and Management

Resource Cycle - Energy

- Metals Life Cycle

Products/Society/Environment/Economics

Technology Cycle -Science

-Design & Engineering -Operation

Energy and Industry Group

Public policy, organisation and management

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Rotterdam-Rijnmond

Introduction

www.portofrotterdam.com • PortMaps

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Rotterdam-Rijnmond

Introduction

www.portofrotterdam.com • PortMaps

4 Worldscale Oil Refineries

13 Tank Terminal / Distribution

>10 Utilities Sites

44 Chemicals Manufacturers

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Local, Regional, National and

International Linkages by Pipeline

System Thinking

Crude oil / products Ethylene / Propylene

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System Representation

• System Elements

– Refineries, Chemical Plants – Utility Plants, Storage

• System Linkages

– Pipeline, truck, rail, ship

• System Inputs/Outputs

– Resources, Products – Emissions, Waste – Utilities and Services

– Investments, Information

• System Surroundings

– Economy, ecology, society

• System Stakeholders

– Operating Companies & their mothers, Knowledge & Service providers – Regional Development Agency, Government, NGO’s, Residents

System Thinking

Surroundings System

The Rotterdam Industrial Cluster Feedstock

Products Investment & Operating Cost Revenues Salaries

Emissions

Skilled Labour

Utilities

WasteKnow-how

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System Elements & Surroundings

System Thinking

Chemical Industry

Agriculture Polymer Industry Industry Sectors Petrochemical industry

Refining Industry

Food Transport

Other

Farming Building Materials

Paper Textile Oil Refineries

Winning

Steam- Cracker Complexes

Production network

Polym.

Monomers

Aromatics Olefins

Naphtha Gasoil

Moulding

Shaping

Etc.

Packaging Electronics Automobiles

Winning

Methanol & Deriviatives

Production network Proces-

Polym. sing

Fertiliser Industry Production network Natural

Gas

Consumers / Households

Machinery Fuels

Lubricants

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System economic & dynamic characteristics

• Economics

– Capital intensive, huge investments

• 1990-Today Σ > 7 bn. US$; Total >30 bn. US$;

– Labor extensive, high skill-level

• 12,000 direct FTE, 60,000 indirect FTE

– Long lifespan, low margins

• Payout 10-15 years; Installations: 20-30 years; sites > 90 years

– Science-based;

• Technological know-how is key

• Resulting Dynamics

– Discrete events (e.g. Lyondell PO-11, Shell Hycon, CoGen projects) – Slow / intermittent

– Entrapment & interdependencies

• Infrastructure dependent; mutual dependent (e.g. closure of Kemira)

System Thinking

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System Stakeholders

• Companies

– Production locations;

• No authority for major investment decisions

• No control of technology, R&D, innovation

– Service Companies: infra, utility, storage, cleaning, EPC, ICT etc.

• Authorities

– Facilitating: Regional Development Agency (RMPM) – ‘Permitting’: Local, Regional & National Authorities

– ‘With an Interest’: Economic Affairs, Environment, Employment

• ‘the Public’

– Jobs

– Environmental & Safety concerns

– Consumers (energy products exported from the region) System Thinking

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Transition towards Sustainability?

Sustainability?

www.shell.com.com

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Industry / Infrastructure Co-Evolution?

• Concerns for Rotterdam-Rijnmond

– ‘Monoculture’ of large-scale process industry

– Mainly crude-oil and natural gas-based (finite resources) – CO₂-emission of the region’s industry

• How to foster…

– Evolution of system content?

• Industry, infrastructures, transport

• A recovery / recycling hub (metals, polymers, plastics?)

– Favourable decisions by stakeholders involved?

• Rotterdam-Rijnmond selected as plant location

• Regulatory/legislative arrangements Sustainability?

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Industry / Infrastructure Co-Evolution?

Current Developments & Activities

• Developments

– ‘Passive Co-Siting’ through fragmentation of company-sites

• single-owner --> asset transfer --> multi-owner site

– Region-Wide ‘Shared Services’

• Education & Training, fire-fighting, security etc.

• Activities

– ‘Active co-siting’

• RDA-team, information via website

– Industrial Symbiosis in Production & Utility / Industrial Gas

• Creation of onsite utility islands - Utility Company owned

• Large-scale off-site investments, dedicated to single plants Decision Support

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Industry / Infrastructure co-evolution?

Decision Support of the RDA

Research Question

"how can interactive decision- making on industry- and

infrastructure development for industrial complexes be supported by technology-based system

models and system design".

Decision Support

Existing

Energy-Infrastructures Existing

Industries

New

Energy-Infrastructures

'Business-as- usual'

'Autonomous development' 'Brownfield'

Rejuvenation of Rotterdam

Cluster

'Greenfield' Choices

for 2^e Maasvlakte

New Industries

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Complex Decision-making

Timing & interdependencies between OpCo / RDA decisons

LongList ShortList Execution

Phase Strategic

Decision

Market Development

Profile to be ShortListed Profile

to be LongListed

Close Deal

Marketing tools / activities market research

business case development provision of information negotiation

make, maintain and develop contacts Chemical Manufacturer

Site-Selection Process

RDA Activities

Decision Support

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Process System Engineering A useful body-of-knowledge

• System Modeling & Performance Evaluation

– Development of Agro-Industrial Complex

– Support tool for Methanol-Supply-Chain/cluster development

• Dynamic modelling of interconnected metal cycles

– Technological / Dynamic model of interconnected metal extraction, production, consumption, recycling

• System Modeling and Optimisation

– (MI) LP-model of part of Rotterdam Cluster around PET

• Optimisation of cluster content/structure w.r.t. total revenue

• Enables evaluation of prospective new developments

Process System Engineering

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An Optimisation Problem

• ‘Brownfield’ --> model + constraints

– Known cluster structure, I/O; capacities, performance etc.

– Land is available for cluster-modification

• Which addition is optimal?

– From the RDA’s perspective

• Objectives: land-use, jobs, CO₂, added-value)

– From the Investor’s perspective

• investment, operational costs; time-to-start-up, risk

– From Other Perspectives

• Safety, environmental, economic, societal, sustainability

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Optimisation Approach

– Our Focus: Problem Formulation

– Implementation: Excel, MatLab, GAMS, gPROMS / (MI)(N)LP

ECONOMY

SUPPLY DEMAND

ENVIRONMENT

OPTIMISER _FEE

D PRODUCT

S

INVEST MENT S

PROFITS WASTE

$

$ $

$

CONSTRAINTS OPTIMAL NETWORK

CONFIGURATION OBJECTIVE

FUNCTION

mass / energy / economy/ ecology

CO2

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Optimisation problem formulation in standard form:

• System model: y = Ac

– Where a(i,j) ; c(i) = plant capacity for product i

• Objective: min f(x,y)

• By selection of plant capacities

– c(i) i=1…p; p<=m

• Constraints

– y (i) >= d(i) i = 1….m <system outputs meet demand>

– x (j) <= s(j) j = 1…n <system inputs respect supply>

• Mixed-integer:

– c(i) = c’(i) * k(i); k = 0 or 1

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Casus: expansion of PET-cluster

– PET/PBT: Consumer Single-Service Disposable Container

• PET: ingredient = Ethylene-glycol

• PBT: ingredient = Butylene-glycol

Legend port of Rotterdam PET cluster, 2000 (ref: RMPM, 2000)

Abbrev. Name Type

E Ethylene Feedstock

EO Ethylene Oxide Intermediate

EG Ethylene Glycol Intermediate

MX Mixed-Xylenes Feedstock

PX para-Xylene Intermediate

PTA Purified Terephthalic Acid Intermediate PET Poly(Ethylene Terephthalate) Product

PO Propylene Oxide Feedstock

BDO 1,4-Butanediol Intermediate

PBT Poly(Butylene Terephthalate) Product = Plant (annual production capacity)

125 kton 300

E EO kton EG

MX PX

PTA

BDO

PBT PTA

PO 250 kton

150 kton 290

kton 500

kton

125 kton

? kton

PET

Battery Limits

O₂

2 O₂ 2 H₂

H₂O

2 H₂ CO

2 H₂O

Case Study

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Casus PET/PBT: results

– IRR > 15% is selection-criteria for operating companies – Revenue per hectare is adequate indicator for RDA

Best Case market scenario

0 5 10 15 20 25 30 35 40 45 50

0.0 1.0 2.0 3.0 4.0 5.0 6.0

Added Value per hectare (Mln$/ha) Lowest Internal Rate of Return (IRR) (%)

6

2

4 7

5

9 3

8 1

1 0

Present situation 1

1 PET 2

1 PTA 3

1 EO 4

1 PET + 1 PTA 5

1 PET + 1 PX 6

1 PTA + 1 EO 7

1 PET + 1 EG 8

1 PET + 2 PTA + 3 PX + 1 EO 9 1 PET + 2 PTA + 2 PX + 1 EO 10

Case Study

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Summary of analogies between industrial & natural systems

• Complex, layered, networked, dynamic

– Input / output modelling

– Boundary Selection & Decomposition

• Evolution instead of design

– competition; agents-of-change – innovation/adaptability

• Desired (performance) characteristics

– Stability through Diversity – Closed cycles, solar-powered

Industrial Ecology?

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Industrial Ecology Perspectives:

• Prescriptive

– “industrial systems must mimic natural systems & achieve similar characteristics”

• Reflexive

– “industrial ecology provides the concepts and tools to assess and learn from our past <failures and successes> ”

• Descriptive

– Natural systems provide a rich source of models for design of man-made systems

Industrial Ecology?

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Conclusions

• Industrial Ecology

– … is a multidisciplinary “system-oriented” concept

• Process System Engineering

– … offer theories, methodologies, methods and tools

– … for the synthesis, design and evaluation of industrial systems

• Sustainability requires a Transition

– … understanding of the process of industrial site evolution – … (MI) LP - helps to elucidate optimal network structures

Conclusions & Outlook

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Outlook

• The combination of IE and PSE body-of- knowledge

– would provide IE with solid-footing in quantitative-modelling – provides methods and tools for modelling and validation of

regional industrial development

– Thus would allow real decision-support in a transition towards sustainable industrial regions

• On Rotterdam-Rijnmond

– we are specifying a decision-support tool in conjunction with the RDA

– we intend to include long-term dynamics of cluster development in our models

Conclusions & Outlook

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Industry and Infrastructure Co-Evolution

TRANSITION MANAGEMENT IN ROTTERDAM-RIJNMOND?

Thank you for your attention!

Gerard P.J. Dijkema

Faculty of Technology, Policy and Management Industry an Energy Group

PO Box 5015, 2600 GA Delft, The Netherlands www.portofrotterdam.com • PortIndustry

ISIE’03, Ann-Arbor, Michigan