Operations performance

A refinery’s operations performance is typically the one major driver of profitability that is in the refiner’s control.

From a refining standpoint, the major areas of refinery operations performance are:

  • Reliability – Reliability is a measure of a refiner’s ability to keep the equipment available for use by maintaining mechanical integrity
  • Operating costs – Operating costs typically refer to the non-hydrocarbon costs associated with running the refinery, including labor, equipment, energy, and catalyst/chemicals
  • Optimization – Optimization is the economic decision-making around which crude to run, which products to make, and how to run the refining units (utilization and severity) to achieve this
  • Yield – Yield is a measure of the outputs achieved (product mix and quality) for a given crude slate. A better yield would be one with more high-valued products (e.g., gasoline and diesel) of higher quality (e.g., high-octane gasoline, high-cetane diesel)
  • Commercial performance – is the effectiveness of sourcing crude and selling products. Good performance entails getting the optimal crude at the lowest possible price and selling the optimal product slate at the highest possible price
  • Capital employed – The capital employed in the refinery primarily consists of capital invested in the plant itself (process units and supporting infrastructure), hydrocarbon inventories (crude and products), and equipment inventories (pumps, valves, etc)

Refiners rely heavily on industry benchmarks to gauge their operations performance versus peers and to prioritize areas for improvement.

McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. By using this Site or clicking on "OK", you consent to the use of cookies.