Site: Kenai, Alaska

Description of the Site: The Kenai Refinery was built in 1969 to refine hydrocarbons. The raw product is purchased from various suppliers in Alaska. It is a "small" refinery relatively speaking as it is rated at 50,000 barrels per day. The geographical location of Kenai means that the refinery experiences true winter conditions from October until May on a consistent basis.

Nature of the Opportunity: When the project started, Tesoro was operating three refineries in Alaska, Washington and Hawaii. The corporation has an eye for expansion and has since added refineries in Utah and North Dakota. Since each original refinery was situated in a remote location, as time progressed, a maintenance process developed to fit individual situations. In retrospect, the process was very reactionary in nature. There are some reliability elements to the process, but they are sporadic in nature.

The corporation had several aims. The first goal was to make the maintenance process more pro-active than it was. A secondary goal was for all their refineries to incorporate the same basic process. A third, and perhaps more important goal, was to reduce overall maintenance costs. The long-range benefit was aimed at future acquisitions. They were looking to have "a work management process" that could be implemented at newly purchased locations. This would ensure that a consistent work management process exists for all or their properties. The bottom-line goal was to reduce maintenance costs while implementing a pro-active work management process.

The Kenai site was chosen for an assessment to evaluate their existing work management process against "best practices." The Kenai refinery manager volunteered his site. He just wanted his refinery to get better than they were -- in compliance to their commitment for "continuous improvement."

What We Did: We began our work with an assessment of the current process in October and November of 2000. This included looking at the maintenance cost for the refinery. As suspected, we found reactive maintenance to be the norm, with no planning and little scheduling. Backlog management was based on volume of Work Orders. None of the Work Orders had estimated times assigned to them nor were any estimated times ever made as expectations to the craftsmen assigned to do the work. Work closeout was very inconsistent and spotty. The backlog was inflated by work not properly closed or work that was just forgotten.

Overtime was extremely low. While on the surface this appears as a positive, the reason it was so low was due to contractors being called out for most night and weekend emergencies. And while this practice made overtime results look favorable, it was a point of distress for the Operations personnel who made the requests: emergency responses were made by people Operations did not perceive to have a vested interest in the refinery.

We found that over 35% of the work requests were of an "urgent" nature. Operations personnel had determined that "less urgent" work would often disappear to never be addressed again. Therefore, if the work requested was "urgent," then Maintenance might actually do the work. Non-Operations personnel could virtually request any work they wanted without a Supervisor's approval. Therefore, a task like changing a light bulb was "urgent." Having a custom bookshelf built was typical.

In July 1999, the corporation implemented a different CMMS -- SAP. Since it was new and since the refinery is so removed geographically from corporate headquarters, many people using the system had difficulty. Work requests very often were incomplete or vague. This "newness" was also part of the work close-out problem. Every Friday -- a skeleton-crew day for all non-Operations personnel -- non-Maintenance personnel made personal requests of the working Maintenance personnel. This resulted in breaking into the work they were doing and doing work for which there was no accounting.

On the positive side, there was a good PM program and compliance was high. Another positive aspect was work history. For the most part it was fairly well documented, however, the process was inconsistent from one Maintenance Shop to the next.

Refinery management picked individuals to form process design teams. One team focused on the Work Management Process the other team focused on the Materials Management Process. Working with these teams we developed and installed the following processes, practices and philosophies:

• A new process for processing maintenance requests
• A directive that no work would be done without a written work request
• Maintenance Shops assigning estimated hours to all Work Orders
• Maintenance Shops scheduling their available resources one week in advance
• An enhanced, daily Operations/Maintenance Coordination Meeting providing direct interaction between Operations and the Maintenance Shop Supervisors for work requests
• A Weekly Scheduling Meeting where Operations, Maintenance, Safety, Projects, and Environmental discuss, review, and coordinate activities for the next week
• Backlog management control is now a fact of life and based on estimated hours by craft and shop
• Work close-out is standardized across all three shops
• Work is planned prior to being scheduled or assigned to an individual for completion

Results: The work at Kenai has resulted in the following benefits:

• More activities are being planned and scheduled.
• This year, we are consistently below the number of contractors for the same periods the previous year.
• Due to a published schedule, Operations has been able to prepare in advance for Maintenance working on their equipment.
• The "urgent" emergency work has decreased and the hours of actual wrench time have increased.
• The Kenai Refinery has a system to measure Maintenance costs and performance.
• Workers now know what they will be working on at least a week in advance.
• Maintenance costs have been dramatically reduced.
• All personnel involved in the work management process have a better understanding of their CMMS tool (SAP).
• Materials are being staged for planned and scheduled maintenance activities.