Hpcl Operations Mgmt

A

Project Report on

‘Operation Management’

SUBMITTED BY:

Anushree Kulkarni Ashmita Mahakul

Deepak Doddamani Dinky Chhabria

Pankaj Dashmukhe Rahul Mahadik

Rohini Varadkar Sonal Jog

Submitted in partial

fulfillment of the requirement

of Ist Semester of MMS course,

Mumbai University

Bharti Vidyapeeth’s Institute of Management Studies and Research 2008-2009

OPERATIONS MANAGEMENT
PROJECT REPORT

HINDUSTAN PETROLEUM CORPORATION LIMITED

By
Sonal Jog

Rohini Varadkar

Dinky Chhabria

Asmita Mahakul

Anushree Kulkarni

Pankaj Dashmukhe

Deepak Doddamani

Rahul Mahadik

Operations Management Project Report

ACKNOWLEDGEMENT

We wish to express our deep gratitude towards all the persons who contributed
for this project and helped develop ideas and approach in report writing.

We thank Mr. Shailendra Thasale, Senior Engineer, Honeywell, and all officials of
HPCL Mahul refinery who guided us in this project.

We are grateful to Professor N. K. Agarwal, Faculty of subject Operations
Management, MMS-I, B.V.I.M.S.R. (Belapur, Navi Mumbai), for his guidance
throughout our project work.

We would like to thank Prof. Dr. D.Y Patil, the director of Bharti Vidyapeeth’s
institute of management studies and research, Belapur, Navi Mumbai for his
kind permission to carry on our project work and his cooperation.

Last but not the least we would like to thanks all our college friends for their
encouragement and morale support.

Sonal Jog : (19)

Rohini Varadkar : (07)

Dinky Chhabria : (08)

Asmita Mahakul : (30)

Anushree Kulkarni : (26)

Pankaj Dashmukhe : (09)

Deepak Doddamani : (11)

Rahul Mahadik : (29)

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Table of Contents

1 INTRODUCTION..................................................................................................................4
2 HPCL – COMPANY AND OPERATIONS..............................................................................5
2.1 Profile..............................................................................................................................5
2.2 Background of company and operations..........................................................................5
2.3 Type of Industry..............................................................................................................5
2.4 Capacity...........................................................................................................................6
2.5 Location selection criteria................................................................................................6
2.6 Functional Groups...........................................................................................................9
2.7 Production strategy: ......................................................................................................11
2.8 PLANT LAYOUT:........................................................................................................12
2.9 PROCESS LAYOUT:....................................................................................................14
2.10 Production Planning and Scheduling...........................................................................15
2.11 Materials management.................................................................................................16

3 ENTERPRISE RESOURCE PLANNING AT HPCL...................................................................18
3.1 Boosting Service to Customers and Vendors ................................................................19
3.2 Streamlining Distribution Workflows ...........................................................................19
3.3 Training Encourages Greater User Acceptance ............................................................19

4 QUALITY MANAGEMENT..................................................................................................21
4.1 Quality Control & Maintenance.....................................................................................21
4.2 Asset Integrity Management (AIM)...............................................................................22
4.3 High tech infrastructure and stringent quality control....................................................22
4.4 Fully AUTOMATION...................................................................................................22
4.5 Import and Storage facilities:.........................................................................................23
4.6 Quality Assurance..........................................................................................................23

5 WORK MEASUREMENT.....................................................................................................25
5.1 WORK MEASUREMENT:..........................................................................................25
5.2 LABOR STANDARDS:................................................................................................25
5.3 RECRUITMENTS AND PROMOTIONS:....................................................................26

6 ENVIRONMENTAL MANAGEMENT......................................................................................28
6.1 Effluents and Solid Waste Analysis in HPCL Petrochemical Refinery: ........................29
6.2 Analysis of Waste Water and Effluent Treatment Methods:..........................................30
6.3 Safety and Hazards Management:..................................................................................31

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7 VALUE ENGINEERING........................................................................................................33
7.1 Feasibility Phase ...........................................................................................................33
7.2 Conceptual Phase ..........................................................................................................33
7.3 Basic Engineering .........................................................................................................34
7.4 Detailed Engineering and Construction ........................................................................34
7.5 Commissioning and Start-Up ........................................................................................35

8 KEY FINANCIALS..............................................................................................................36
8.1 Fixed Assets...................................................................................................................36
8.2 Current Assets, Loans and advances..............................................................................36
8.3 Income ..........................................................................................................................36
8.4 Return on investment.....................................................................................................36

9 BIBLOGRAPHY..................................................................................................................38

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1 INTRODUCTION

Operations management is understood as the process whereby resources or
inputs are converted into more useful products.

A petrochemical industry basically converts petroleum and natural gas in useful
products. Petroleum refinery use crude petroleum as a raw material and converts
it into different products like petrol, kerosene, diesel, low-density oils,
hydrocarbons like propane and propylene, butane and butylene, pentane,
hexane, toluene, benzene, and other products like tar, lubricants base, etc.

HPCL REFINERY

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2 HPCL – COMPANY AND OPERATIONS

2.1 PROFILE

Name : Hindustan Petroleum Corporation Limited (HPCL)

Incorporation : 1974

Constitution : Public Limited Company

Sector : Petroleum Refinery

Industry : Petroleum

Activities : Bitumen, LPG, CNG, and downstream petroleum products.

2.2 BACKGROUND OF COMPANY AND OPERATIONS

HPCL is the second largest player in Indian Oil sector and in highly competitive
lubricants market. It was formed in 1974 on nationalization of ESSO India operations.

HPCL has two refineries producing a wide variety of petroleum products-one in
Mumbai (West Coast) and the other in Visakhapatnam (East Coast). The HPCL refinery
in Mumbai is situated in Mahul, west coast. It is in an M.I.D.C. area, which also has other
big industries like Indian Oil Corporation limited (IOCL), Bharat Petroleum Corporation
limited (BPCL), Tata power plant etc.

The Corporation also holds major equity in Mangalore Refinery and Petrochemicals
Limited, and is proposing to set up a refinery in the state of Punjab.

2.3 TYPE OF INDUSTRY
HPCL refinery can be classified as an analytical type of industry. It is petrochemical
industry i.e. broadly speaking chemical engineering industry.
Petroleum refinery is a production industry where raw material crude petroleum is
transformed into various useful products using some chemical processes.

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2.4 CAPACITY

HPCL Mumbai refinery has a capacity 5.5MMPTA.HPCL Mumbai is operating one of
the largest lube oil refinery in the country which has a capacity of 335TMT. This Lube
Refinery accounts for over 40% of the India's total Lube Base Oil production. The
refining capacity steadily increased from 5.5 million tonnes in 1984/85 to 13.70 million
metric tonnes (MMT) presently.

According to Auto Fuel Policy, EURO-IV norms are to be followed in metro cities by
2010.To supply it in future additional capacity planning is being done. Diesel hydro
treating (DHT) of about 2.2MMTPA will be introduced in HPCL. Majority of EURO-IV
HSD will be produced in HPCL, Mumbai.

2.5 LOCATION SELECTION CRITERIA

Oil Refineries process millions of gallons of oil that have been drilled from the Earth’s
crust. Choosing the location of an oil refinery is not an easy task because a number of
environmental and safety concerns need to be taken into account.

India does not have high crude oil reserves, and hence it depends totally on import of
petroleum crude oil. Gulf countries are the main suppliers to India.

Transportations and refining costs are very high for any refinery and hence these factors
take priority in considering plant location.

Refinery (west coast)
Mumbai.

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Oil Refineries are often located on the coast and away from busy cities. When choosing
the location for an oil refinery, the following factors need to be taken into consideration:

Coast: HPCL is located at its Chembur in Mumbai and Vizag in Andhra Pradesh because
of the proximity of sea routes from the plant location. As for transportation purpose, the
raw material used in the production in HPCL i.e. crude oil can be easily transported via
the sea routes. There is a rail route specially built for transportation of coal, from vadala
to refinery area. Almost all oil refineries like BPCL, IOCL are situated at the Mahul gaon
location at Chembur in Mumbai. HPCL petroleum refinery is on Mumbai west coast
because generally refining is carried on along the coast, where low cost water
transportation can be used.

Transportation: – The oil refinery must be near to rail, road or sea links and close to the
site the oil has been drilled. HPCL has port near to it.

Available workforce: – It may be tempting to build an oil refinery in a remote location
where no people or animals can be affected. However, a refinery needs workers living
relatively nearby. Even though HPCL refinery is far from residential area transport
facilities from workers quarters is available.

Available customers: – Oil refineries need to be within easy reach of customers. It is
essential to have good transport links. Some refineries are pipelines as a method of
transportation.

Air pollution: – Although industries are regulated by strict controls regarding the
amount of pollution they release into the atmosphere, oil refineries emit number of
polluting gases. To reduce the effects of air pollution on people, refineries should be
built away from the built-up areas. Care should be also taken to position the refinery so
that prevailing winds do not carry pollution in the direction of towns and cities. One can
see boards specifying height from sea level in entire HPCL refinery area.

Water pollution: – Some refineries use water from local rivers and streams for cooling
purposes. This means that the water is pumped out of the river or stream, circulated
around a cooling tower and returned to the river at a higher temperature. This increase
in water temperature is called thermal pollution. Some species of fish are unable to

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survive in these conditions. Waste products from refinery may also be washed into local
rivers and streams.

Noise Pollution: – Machinery that operates 24 hours a day can make a lot of noise for
people living nearby. Lorries and trains that come to pick up refined products also
contribute to the noise.

Special sites of interest: – Like other buildings, oil refineries must avoid areas of special
scientific interests. These can include regions where rare animals are being protected.

Top view of HPCL refinery, Mahul Mumbai on Google earth

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2.6 FUNCTIONAL GROUPS

HPCL refinery is spread over a very large area. It has many plants within its campus
area. So management of such a big organization becomes very challenging. HPCL has
managed it very well till now by organizing itself into appropriate functional
departments.

The various departments are as under:

Human resource: HPCL HR department has taken number of HR initiatives to make the
Corporation a great place to work. The ‘Balanced Scorecard’ tool to set up performance
targets and evaluation, Competency Mapping and Development Centers to enhance
employee capabilities. Six Sigma for quality improvement have yielded rich dividends
and are being constantly upgraded to higher levels of sophistication. A significant HR
event of the period was the conduct of an International Program on ‘Emotional
Intelligence’ in association with TISS wherein a large number of professionals and
students participated and appreciated the program.

The Corporation continues to give utmost importance to training by nominating
employees both for in-house and external programs.

HPCL has bagged DMA Erehwon Innovative HR Award because it has successfully
taken an HR idea from concept to reality and has sustained results.

They also got Amity HR Excellence Award for achieving enviable position of one of the
best and most admired companies due to innovative strategies for Human Resource
Management and Development

Finance: The finance function involves keeping record of financial data related to fixed
assets, intangible assets, which forms most important part of a refinery operation.
Additionally it also monitors the construction period expenses on projects occurring on
monthly and quarterly basis and keeps record of other important financial depreciation,
impairment of assets, foreign transactions, investments, inventories, duties on bonded
stocks, Grants provision, exploration and production expenses, employee benefit, sales
of products, research and development., Taxes on income, contingent liabilities and
commitment capitals, accounting, classification of expenditure and income.etc.

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Marketing: LPG Marketing in India has traditionally been confined to domestic & non-
domestic consumers in urban/semi urban markets and all efforts till date have been in
meeting the demands of these markets. With the saturation of urban and semi urban
markets and the adequate availability of LPG in India, there is a need to look for
alternative markets. Rural India presents a big opportunity for growth of LPG in India.

HPCL is a major bunker fuel supplier to the ships (vessels) at major Indian ports viz
Calcutta, Haldia, Visakhapatnam, Kakinada, Chennai, Cochin, Mangalore, Goa-Vasco,
Mumbai, Kandla.

HPCL also supplies other petrochemicals like hydrocarbons, lube base oils, tar, petrol,
and diesel, ATF etc. Hence it has very good chain of distributors.

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2.7 PRODUCTION STRATEGY:

A very high priority is attached by the Government of India to conservation of
petroleum products in view of the need to reduce gap between demand of petroleum
products and indigenous supply of crude oil.

Sporadic tension in the Middle East region that is the main source of our oil imports as
well as a heavy import bill is a potent reason for continued emphasis on conservation
and sparing use of petroleum products.

Accordingly, strategic storage of crude oil becomes very important. HPCL, Mumbai
plant has high capacity tanks for storage of crude oil as well as finished products. Every
shipment of raw materials is after 15 days. But continuous production is carried out to
make-to-stock the products.

HPCL has trying to do backward integration by taking part in exploration and
production process in country and outside country in joint ventures with some of the big
companies. But more emphasize is given to production of high products length which
are kept in stocks.

HPCL, in partnership with consortium, currently has 20 E & P blocks in India and two
overseas, including a service contract for the western offshore marginal fields under
cluster-7 near Mumbai High.

Its upstream JVC Prize Petroleum Company, which was formed in 1998, currently
operates marginal fields in Gujarat and Mumbai High and onshore blocks in Gujarat and
Madhya Pradesh.

HPCL has been participating in the new exploration licensing policy’s (NELP) fourth
round. During NELP-VI, HPCL participated along with major operators like ONGC,
OIL, GSPC and GAIL.

The Centre has awarded 15 blocks in which HPCL’s participation interest ranges from 10
to 20%. The 15 blocks include 11 deepwater ones in Krishna Godavari and Cauvery
basins, two shallow water blocks in Mumbai High and two onshore blocks in Rajasthan.

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2.8 PLANT LAYOUT:

DHDS LR

CPP
B
GF FR OMS QM

TA LPG
F&G
LAYOUT OF HPCL REFINERY, MUMBAI
DHPS : De-hydrocarbonaton de-sulphurisation
LR : Lube Refinery
CPP : Captive Power Plant
GF : Green Fuel
FR : Fuel Refinery
OMS : Oil Management & Supply
QM : Quality management
F&G : Fire and Gas
TA : Tank Area
LPG : LPG Storage and Supply

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GHASLET GHASLET

STORAGE AREA OVERVIEW

SOLVENT CRUDE OIL

STORAGE AREA OVERVIEW

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2.9 PROCESS LAYOUT:

♦ PROCESSES IN HPCL:

There are many different units in petroleum refineries, for carrying out different
processes like distillation, separation, filteration etc. Depending on the products
produced by the refineries process HPCL layout in a such way that
a) There be very short distance between reactors or units of plant that has to be
followed according to requirement.
b) Less piping and cooling, heating expenses.
c) Pumps, valves and other materials required between successive processes
should be limited and controllable in number.
d) Waiting time for the next process should be minimum.
e) Very little manual labor is required and automation and instrumentation can
be done effectively.
f) Planning and scheduling of specific product can be done accurately and
storage and distribution should be properly maintained.

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2.10 PRODUCTION PLANNING AND SCHEDULING

The main objective of this work is to discuss planning and scheduling applications for
refinery operations in HPCL, Mumbai.

Major Steps Involved In Planning:

STEP 1: Nonlinear planning model for refinery production is developed. The model
represents a general refinery topology and allows the implementation of nonlinear
process models as well as blending relations.

STEP 2: Optimization model is developed considering the market limitations for each oil
derivative usually supplied by the refinery. The optimization model defines all
operating points, thus increasing the production of more valuable products, while
satisfying all specification constraints.

Major Steps Involved In Scheduling:

STEP 1: To overcome scheduling problems in oil refineries mixed integer optimization
models are formulated that rely on both continuous and discrete time representations.
This model takes care of the problem of crude oil inventory management that involves
the optimal operation of crude oil unloading from pipelines, transfer to storage tanks
and the charging schedule for each crude oil distillation unit.

STEP 2: Development and solution of optimization models for short-term scheduling of
a set of operations that includes: product receiving from processing units, storage and
inventory management in intermediate tanks, blending in order to attend oil
specifications and demands, and transport sequencing in oil pipelines.

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2.11 MATERIALS MANAGEMENT

HPCL has emerged a front-runner, in providing excellent services to the
customers, and also delivering state - of - art - products.

Various products of HPCL are as under:

• Bitumen: Bitumen is one such product being manufactured and marketed
at HPCL refineries at Mumbai. They produce and market all the three
grades of bitumen viz., 80/100, 60/70 & 30/40. The quality control
measures are observed very stringently, and the bitumen is tested as per
the requirement of the BIS. HPCL has made a foray into newer products
such as rubberized and polymerized bitumen.

• Fuels: HPCL produces variety of fuels. Some of them are listed below.

o Petrol (MS), EURO-II, EURO-III

o High Speed Diesel (HSD)

o Furnace Oil (FO)

o Light Diesel Oil (LDO)

o Low Sulphur Heavy Stock (LSHS)

o Naphtha

o Lube base oils

o ATF

• Marine – Bunker Fuels: The bunker fuels offered are:

o Heavy oil 180 cst (fuel oil: FO)

o Marine diesel oil (light diesel oil: LDO)

o Marine gas oil (high flash diesel: HFHSD)

• Marine Lubes: HPCL is the Marine Lube partner of Total Lubricants,
France and manufactures TOTAL brand primary marine Lube grades.
Secondary grades are of HPCL formulations and are certified by TOTAL

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as equivalents. Bunker lubes are supplied duty free & duty paid for
international and coastal - run vessels respectively. ELF marine lubes
offered are:

o Atlanta Marine D3005

o Talusia HR 70

o Disola M 3015 & M 4015

o Aurelia 3030 & 4030

o Aurelia XT 4040 & XT 4055

• Special Products: The products include:

o Hexane

o Propylene LUBE REFINERY OF HPCL

o Jute Batch Oil

o Solvent 1425

o Turpentine Oil (MTO 2445)

o Carbon Black Feed Stock (CBFS)

o Molten Sulphur

• LPG & ATF: LPG is the very important product produced by HPCL.HP
gas has large customer base and very large distribution network. LPG is
sold at very subsidized rate that is loss for the company. But it recovers
that loss by selling ATF at very high margin.

• HYDROCARBONS: HPCL also produces solvents like propane, hexane,
benzene, toluene, and many other hydrocarbons, which are separated by
distillation.

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3 ENTERPRISE RESOURCE PLANNING AT HPCL

To strengthen business management and improve customer service, HPCL
implemented an advanced enterprise resource planning (ERP) system based on
range of JD Edwards Enterprise One application from Oracle.

The ERP system was implemented at more than 430 locations across India from
2003 to 2005, and is used by over 2,000 employees. HPCL is continuously looking
at innovative ways of enhancing customer satisfaction by leveraging technology.

The real time, on-line availability of information from across all the
geographically spread locations of the corporation on a centralized system, has
enabled HPCL to improve efficiencies in the Ares of tracking and monitoring
customer receivables, credit management, inventory management and provide
enhanced service to customers and other stake holders.

Upgrading to an integrated business management platform gave HPCL an
enterprise-wide view of its finance, manufacturing human resources, and sales
and distribution processes. Online access to information ensured managers could
keep track of procurement, inventory, production schedules, and customer
orders.

The company also standardized business practices, ensuring process consistency
across multiple locations. A document archival system is an integral part of the
ERP system, allowing HPCL to store invoices, purchase orders, checks, and other
material. This ensures the company can locate critical documents quickly and
efficiently.

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3.1 BOOSTING SERVICE TO CUSTOMERS AND VENDORS

In keeping with HPCL’s aim of enhancing customer satisfaction, the company
designed portals that draw on information gathered by its ERP system to provide
clients with dispatch details, account statements, and a history of sales
transactions completed over the past three years. Customers log in to the portal
using a secure user ID and password. Separate portals for aviation, direct sales,
LPG, and retail customers were established.

HPCL also developed an electronic payment system to promote smoother and
faster payments to its vendors, contractors, transporters, and other service
providers. The system is integrated with the company’s banking institution,
enabling payment information to be seamlessly transmitted between the two
organizations and ensuring timely payment to suppliers.

3.2 STREAMLINING DISTRIBUTION WORKFLOWS

HPCL realized another efficiency improvement when it streamlined its
distribution processes and implemented new notification alerts. For example, the
company’s dealers and distributors now receive e-mails and text messages via
their cell phones informing them of impending shipments. This information is
sent to dealers and distributors immediately following the generation of an
invoice, enabling them to keep track of their orders.

3.3 TRAINING ENCOURAGES GREATER USER ACCEPTANCE

A change management program was established to facilitate a smooth transition
to the new system for employees. Comprehensive training was provided to staff
during the implementation, followed by refresher courses post-deployment.

Competency development programs for specific user groups such as regional
managers, finance staff, heads of terminal/depot/LPG plants, sales officers,
project engineers, HR officers and clerical staff are also conducted regularly.

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HPCL organizes virtual training sessions from time to time to allow staff in
remote locations to learn about new system features. This reduces travel time and
cost for participants and enables quick dissemination of new information to
users.

A state-of-the-art data center at HPCL’s head office at Mumbai houses powerful
IBM enterprise servers that run the database and applications. The company uses
a virtual private network (VPN), dedicated telephone lines, very small aperture
terminals (VSATs),

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4 QUALITY MANAGEMENT

Quality refers to the sum of the attributes of properties that describe a product.

In petrochemical industry quality is generally expressed in terms of specific
product characteristics such as color, specific gravity, viscosity etc.

HPCL have latest quality control technology that is mandatory for improvement
of refinery throughput, quality and yield.

Its quality control department has been successful in carrying out improvement
in crude oil viscosity, API gravity, and reduction /removal of sulfur, increase
crude distillation yield and overcome other operational problems from time to
time using upgraded technologies in petroleum refineries.

4.1 QUALITY CONTROL & MAINTENANCE

Quality control is achieved in HPCL by following ways:

1) All material supplies are affected from approved suppliers and
manufactures only.

2) All items procured are inspected /tested.

3) Sampling of the products is done thrice a day and analysis at each stage is
carried out. Strict quality control is ensured.

4) Stage wise inspection and certification of jobs by inspectors.

5) In HPCL highly experienced and higly skilled craftsmen handle jobs.
Prequalified and highly skilled Engineers inspect quality departments.
Even refinery workers, welders etc are tested and certified for job.

Maintenance plays a crucial role in the production process in the Refineries /
Petrochemical plants. A plant may be regarded as successful when it operates
without interruptions, which can however be achieved only when its facilities are
in perfect working order at all times. The strategic importance of maintenance

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increases with increasing sophistication. The overall objective is to maximize
production output at minimum total cost.

4.2 ASSET INTEGRITY MANAGEMENT (AIM)

This type of program involves world-class standards of inspection and
maintenance of refinery facilities and pipelines to ensure the uninterrupted,
reliable and efficient operation. This program, which utilizes advanced
technologies and methodologies, is vital to minimize the risks and vulnerabilities
of large scale petroleum operations, protect the safety of the workforce and
neighboring population, and to maximize energy security for India. HPCL will
be adopting it in near future.

4.3 HIGH TECH INFRASTRUCTURE AND STRINGENT QUALITY
CONTROL

HP the second largest integrated oil company of India has 40 well spread out
bottling plants and 2 tap off points on Jamnagar Loni LPG pipeline of GAIL with
online automatic quality control equipment ensures total quality checks of
cylinders at bottling plants. These equipments are upgraded from time to time.

4.4 FULLY AUTOMATION

HPCL has adopted a strategy of complex pipelines so as to decrease the idle
times of plants and machineries. It is highly automated. Controlling of process is
done from control rooms of HPCL.

HPCL have 20 electronic carousel of automatic type which fills cylinders
automatically basis. Filling of cylinders are interlocked in the system.

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4.5 IMPORT AND STORAGE FACILITIES:

HPCL have LPG storage facility of 65000 tons of LPG bottling plants and import
terminals.

Storage facilities of three types:

1) Above grounds bullets of capacity 50 MT TO 150 MT each.

2) Spheres of capacity 600 MT TO 1400 MT each.

3) Mounded storage of capacity 200 MT to 1000 MT each.

4.6 QUALITY ASSURANCE

Refinery crude processing is based on crude with all impurities as input. Step by
step it tries to reduce impurities by changing it to less harmful component or
remove after converting to separable component. Processes like desulfurization,
hydrogenation, hydro cracking etc. are used to achieve this.

1) Viscosity

Viscosity reduction is achieved by removing impurities that contributes to higher
viscosity, which includes polycyclic aromatics.

Reduction of viscosity is carried out using some chemical processing which
enables more rapid and uniform feedstock management, improved heat transfer,
faster mixing and shorter residence time ensuring consistent quality.

2) API Gravity

API gravity is the most frequently used measure to estimate the quality of a
crude oil. It is one of the parameters focused for determining the price of crude
oil, the thickness of oil is reduced and fluidity is increased.

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3) Sulphur

De-sulphurization unit in HPCL removes sulfur with complex molecules
selectively from crude oil. These are normally high boiling sulfur compounds, i.e.
boiling at 565oC and ends up partly in residue and gas oils. Lower boiling sulfur
compounds are separated and treated. Removal of sulfur from crude is mainly
done in gaseous form.

Quality control and quality assurance both are very important aspects of quality
management in refineries. It helps reduce production cost and increase
productivity. At the same time quality is the main weapon in competition. HPCL
has high customer loyalty due to its high quality products.

CONTROL ROOM OF HPCL,MAHUL

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5 WORK MEASUREMENT

Work measurement is a process of establishing a time that a given task would
take when performed by a qualified worker working at a defined level of perfor-
mance.

5.1 WORK MEASUREMENT:

Work measurement is the process of establishing the time that a given task would
take when performed by a qualified worker working at a defined level of
performance.

A qualified worker is one who has acquired the skill, knowledge and other
attributes to carry out the work in hand to satisfactory standards of quantity,
quality and safety

Work measurement also refers to the process of estimating the amount of worker
time required to produce one unit of output.
goal of work measurement is to develop labor standards that can be used
for planning and controlling operations.

5.2 LABOR STANDARDS:

A labor standard is the number of worker-minutes required to complete an
element, operation, or product under ordinary operating conditions.

Labor standards are used in:
Cost estimation
Pricing of products and services
Incentive pay systems
Capacity planning
Production scheduling

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5.3 RECRUITMENTS AND PROMOTIONS:

Upon successful completion of training, OTs are absorbed at the entry level in the
Management Cadre in Salary Grade "A" .

After absorption, the officer is on probation for next 6 months.
On successful completion of probationary period, the officer is confirmed as the
employee of the Corporation.

Officers
Most of the recruitment is made at entry level only. However, HPCL may recruit
Officers at senior levels, through open advertisements, to meet some specific
requirements, like Exploration & Production, R&D etc. for which expertise may not
be available internally.
IT Officers and Accounts Officers are also directly recruited through open
advertisement in S/G ‘A’.

Campus Recruitment:
HPCL also visits Engineering & Management Institutes for campus recruitment of
Engineers – From IITs,NITs, etc.
MBAs – Premier Management Institutions
Chartered Accountants – Institute of Chartered
Accountants of India (ICAI).
All Officers are entitled to other applicable benefits:
Contributory Provident Fund
Contributory Medical Insurance Scheme
Group Savings Linked Insurance Scheme
Group Personal Accident Insurance Scheme
Gratuity and are members of the HPCL Employees Superannuation Benefit
Fund Scheme
DA, HRA, Conveyance etc.
Benefits like Furniture Loan, Vehicle Loan, Housing Loan, Medical, Home
Lease etc. are also available to Officers satisfying minimum service criteria.

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Learning & Development and Career Progression
Systematic & continuous quality Training and Job rotation is provided to all
Employees to gain wider exposure which facilitates overall development of the
Officer.

HPCL believes in pro-active Human Resource Development and nurtures the
internal talent of the organization by practicing the following, to name a few :
Reward and Recognition Schemes
Providing challenging work environment
Balanced Score Card based performance appraisal system along with
Competency Development Programme
Profit sharing and Performance Linked Incentive Scheme

At HPCL the work measurement practice followed is “Standard operating
procedure” (SOP) and Job definition (JD). The process is standardized based on
time and motion studies. It aims to make it a function of time and efforts.

HIGHLY COMPLEX NATURE & AUTOMATION HELPS IN
TIME MINIMIZATION & IDLE TIME REDUCTION

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6 ENVIRONMENTAL MANAGEMENT

Crude oil is a major source of energy and feedstock for petrochemicals. Oily
sludge, bio-sludge and chemical sludge are the major sludges generated from the
processes and effluent treatment plants of the refineries engaged in crude oil
refining operations.

Refineries in India generate about 28,220 tons of sludge per annum. Various types
of pollutants like phenols, heavy metals, etc. are present in the sludges and they
are treated as hazardous waste.

Petrochemical plants generate solid waste and sludges, some of which may be
considered hazardous because of the presence of toxic organics and heavy
metals.

Accidental discharges as a result of abnormal operation can be a major
environmental hazard, releasing large quantities of pollutants and products into
the environment. The presence of objectionable conditions such as offensive
odors and accumulation of debris have been reported to decrease the proper
value and recreational uses of water.

Wastewaters released by petrochemical industries are characterized by the
presence of large quantities of polycyclic and aromatic hydrocarbons, phenols,
metal derivatives, surface-active substances, sulphides, naphthylenic acids and
other chemicals.

Ineffectiveness of purification systems can become seriously dangerous, leading
to the accumulation of toxic products in the receiving water bodies with
potentially serious consequences on the ecosystem. Several investigations have
shown positive correlation between pollutions from petrochemical effluents and
the health of aquatic organisms.

28


6.1 EFFLUENTS AND SOLID WASTE ANALYSIS IN HPCL
PETROCHEMICAL REFINERY:

On regular basis analytical studies of effluents and soil samples where sediments
from the treated effluents are dumped is carried out. These are then analyzed for
physicochemical properties, metallic and non-metallic ions.

These parameters are compared with established international standard (FEPA).
Effluents were classified as:

PROCESS WASTE WATER (PWW): Process waste water (PWW) is water that is
intended to come into contact with hydrocarbons or treated chemicals at the
petrochemical plant.

CLARIFIED WATER (CW): Clarified water (CW) is a combination of PWW and
sewage.

FINAL DISCHARGE (FD): The final discharge water (FD) is the effluent, which
has undergone both chemical and biological treatment to eliminate or reduce
waste contents to acceptable levels.

Some of the Effluent Treatment Methods Used:

The treatment procedure of the effluent in the company is as shown below:

1) Equalization

2) Sedimentation

3) Flocculation

4) Floatation Dissolved Air Basin

5) Biodegradation

29


6.2 ANALYSIS OF WASTE WATER AND EFFLUENT TREATMENT
METHODS:

Waste Water Analysis: Determinations of major parameters are carried out
according to standard methods.

1. Determination of Biological Oxygen Demand (BOD),

2. Determination of Dissolved Oxygen (DO),

3. Determination of Chemical Oxygen Demand (COD),

4. The determination of Total Dissolved Solid (TDS),

5. Total suspended solid (TSS),

6. Total Hydrocarbon (THC),

7. pH determination

8. H) Level of Cl-, (PO4) 3-, (SO4) 2- and NO3

9. I) Determination of the heavy metals including nickel (Ni), lead (Pb), zinc
(Zn), iron (Fe), copper (Cu), cobalt (Co) and cadmium

Analysis of Sediments: Sediment samples are air-dried by thinly spreading on a
clean laboratory bench surface at room temperature, and brought to a relatively
homogenous state by thoroughly mixing, and sieving with 2 mm mesh before
being treated. In the case of fresh samples, large stones and roots were picked out
before mixing and weighing.

Moisture determination of duplicate samples of the sediment was carried out for
dry weight correction. The sediment samples are then prepared (extraction
method) for the various physicochemical determinations.

Various physicochemical properties are determined by various analytical
methods.

30


6.3 SAFETY AND HAZARDS MANAGEMENT:

Causes of Accidents in Refineries: Refinery accidents are often the result of
unexpected interaction between automated process equipment and operators.
Equipment failures or operator errors can lead to sudden and unexpected
changes in the plant operation. If these disruptions to normal process operation
exceed the capabilities of the operators or the capacity of the safety systems, a
severe accident can occur, potentially producing a devastating fire, explosion, or
toxic release.

Safety Department: Special team of experts is present in HPCL to investigate loss
in such accidents, including material failures, fires, and explosions. These
investigations range from high-loss disasters to small incidents.

In the drive to improve safety and reliability, chemical process facilities tend to
rely heavily on automation using sophisticated instrumentation, computers, and
programmable logic controllers to run their plants. Honeywell does all the
instrumentation work for HPCL Mahul, Mumbai.

In an effort to improve energy efficiency and reduce pollution, various pieces of
equipment are interconnected in ways that complicate their operation.

Safety department of the refinery performs following functions:

1. Accident and incident investigation

2. Root-cause analysis (RCA)

3. Fire and explosion analysis

4. Fire protection engineering

5. Fitness-for-service evaluation

6. Specification, corrosion control, and failure analysis of materials

7. Evaluation of pressure relief systems, vessels, and piping

8. Analysis of atmospheric releases, spills, and environmental fate

31


9. Groundwater and soil remediation support

10. Compliance with standards and regulations

11. Risk and reliability analysis and quantitative risk assessment

12. Process hazards analysis (PHA)

13. Hazard and operability analysis (HAZOP)

14. Failure modes and effects analysis (FMEA)

15. Review of process safety management (PSM) and risk management
program (RMP)

16. Safety and health training

17. Environmental impact and baseline assessments

18. Site security and vulnerability analysis

19. Site investigation and remediation

20. Hydrology and groundwater monitoring

21. Project management, performance, scheduling, and construction delay
analysis

Benefits of Having Safety Department includes better understanding of employee
exposures to potentially hazardous situations, current knowledge of asset
vulnerabilities, identification of opportunities for cost-effective mitigation
measures to reduce potential losses, and better knowledge of loss exposures from
an insurance perspective.

Their experience provides engineers and scientists unique insights in addressing
various risk and reliability issues and assessing environmental and health
impacts, to help increase the safety of workers, processes, and facilities and
minimize operational disruptions and property loss.

32


7 VALUE ENGINEERING

Value engineering at HPCL is carried out in the following steps:
7.1 FEASIBILITY PHASE

During the initial phase, current constraints such as product quality, current
market demand, existing refinery capacity and existing refinery condition are
established. Typically, this type of investigation includes physical on site
examination of equipment as well as a review of inspection and other records. A
process simulation will be performed to obtain a model for use in further design
and to establish the operating constraints.

Existing legislation and product standards, locally and internationally, are
reviewed to establish likely future product requirements. Market research based
on current economic conditions and expected future conditions, are used to
predict demand. This research is often done using the expertise of consultants
with appropriate local experience.

This phase could take 4 to 6 weeks, depending on the complexity of the system.
7.2 CONCEPTUAL PHASE

The predicted future demand is used to establish various revamp scenarios.
Using the simulation and existing equipment data, the extent of revamp required
to reach different demand cases is determined. Using conceptual estimating
techniques, an order-of-magnitude cost estimate for the different scenarios is
obtained. The emphasis for this type of cost estimate is on establishing the
differences between different options.

The cost estimates for different demands are compared with revenue generated
and the information is used to plan a revamp process to meet demand for the
required period into the future.

At this stage, a formal value engineering exercise is carried out to establish where
opportunity exists for increasing value. Typically, a number of alternate designs
or options are generated, the best of which are investigated further. The optimum
alternatives are then incorporated into the design for further engineering. As the
design progresses and more detail and firmer costs become available, it is often
useful to perform another value engineering exercise.

The conceptual phase takes 6 to 8 weeks depending on the required estimating
accuracy, complexity of solutions/options and the number of scenarios to be
estimated. Typically at the end of this phase the following are available:

• Process flow diagrams, mass and energy balances

• Equipment lists

33


• Preliminary equipment sizing

• Order-of-magnitude cost estimates

• Economic evaluation

7.3 BASIC ENGINEERING

After the concept has been finalised and agreed with the refinery management,
the design proceeds to firm up details. Process conditions are frozen and detailed
equipment specifications are produced. Input from mechanical, piping, control
systems, electrical and civil engineering disciplines is included to complete the
design. Experts are used from other organisations where specialised skills are
required. Detailed Piping and Instrumentation Diagrams (P&ID's) are produced
showing the requirements of all disciplines. Equipment, instrumentation and
material specifications are sent to suppliers to obtain quotations and details of
required items. Global procurement is used to source material in the most
effective manner, from both cost and schedule considerations.

During this phase, which could last about 3 months, reviews are held with
clients, suppliers and internally to ensure the refinery's requirements are met and
that the suppliers understand their requirements. Suppliers are often selected at
this stage, although orders are not yet placed.

At the end of this phase a Hazard and Operability study (HAZOP) is held to
ensure the design is workable and safe. The cost estimate is updated with an
improved accuracy, based on the additional information.

7.4 DETAILED ENGINEERING AND CONSTRUCTION

Once all the planning and analysis is complete, the engineering departments get
into full swing. Orders are placed for equipment, especially long delivery items.
Any items not yet firmed up are defined and engineering completed. Any
changes or updating are extremely tightly controlled to prevent omissions,
schedule threats or escalating costs. The duration of this phase normally depends
on equipment delivery. Careful planning is required to reconcile delivery times
and commissioning and start-up requirements. Material must arrive on site in
time to facilitate construction. Effort is concentrated on expediting and inspection
to ensure that items reach site on time and are correct.

Any delays during engineering can cause an impact on the construction team,
who need the flexibility to respond appropriately. A key consideration during
construction phase is the safety of construction labour and other people in the

34


vicinity of the site. At the end of construction the site is normally handed back to
the owner for commissioning and start-up.

7.5 COMMISSIONING AND START-UP

During this final phase, the process of transferring the revamped refinery back to
the operations department is done.

Designing a plant in cost effective way is also a part of Value engineering

Crude oil pipe line is connected from Alibagh to Mahul, LPG
distribution is from Mahul to Ahemednagar & other cities.

35


8 KEY FINANCIALS

8.1 FIXED ASSETS

Particulars Amount (Rs)
Gross Block 19570.04
Less: Depreciation 7640.77
Net Block 11929.27
Capital Work-in-Progress 3315.95
TOTAL 15245.22

8.2 CURRENT ASSETS, LOANS AND ADVANCES

Inventories 12020.28
Sundry Debtors 1710.66
Cash and Bank Balances 294.01
Other Current Assets 49.46
Loans and Advances 5222.96
TOTAL 19297.37

8.3 INCOME

Sale Of Products 103837.43
Less:Excise Duty Paid 7394.51
Net Sales 96442.92
Recovery Under Subsidy Schemes 8260.84
Other Income 1197.97
TOTAL 105901.73

Book Value of Assets= Fixed Assets + Current Assets
=15245.22 + 19297.37
=Rs.34542.59/-

8.4 RETURN ON INVESTMENT

Return Of Investment (ROI) Of the company= Net Income / Book Value of
Assets
=105901.73 / 34542.59
=3.0658

Other Than Gross Additions Deduc Gross Deprec
Intangible Block At /Reclassifications Tions/Re Block At Iation
Assets Cost As Classifi Cost As At

36


At Cations 31-03-2008
01-04-200
7
Land - 477.68 22.94 - 500.62 -
Freehold
Roads and 771.66 228.05 1.25 998.46 15.58
Culverts
Buildings 1,498.73 333.82 2.73 1,829.82 36.19
Leasehold 90.04 15.36 - 105.40 3.50
Property –
Land
Railway Siding 281.40 0.90 0.43 281.87 12.88
and Rolling
Stock
Plant and 12,043.5 3,227.21 42.55 15,228.17 750.07
equipment 1
Furniture, 321.50 103.31 8.56 416.25 28.93
Fixtures and
Office/Lab
Equipment
Transport 100.50 22.22 2.41 120.31 3.96
Equipment
Unallocated 0.20 - - 0.20 -
capital
Expenditure
on Land
Development

Unallocated Capital Expenditure
and Materials at Site 2,647.14 3,683.14
Advances for Capital Expenditure 372.72 83.68
Capital Stores 19.46 33.44
Capital Stores lying with Contractors 17.07 109.87
Capital goods in transit 24.58 124.62
3,080.96 4,034.75

Construction period expenses pending apportionment
(Net of recovery):
Establishment charges 29.80 57.36
Interest 102.05 130.06
Other Borrowing Cost * 103.06 21.09
Depreciation 0.08 0.30
234.99 208.81
3,315.95 4,243.56

37


9 BIBLOGRAPHY

Refernces:

1. Production and operations management :Ashwathappa/ Bhat

2. Operations management : Roberta Russell/Bernard Taylor

3. Productions operations management : Buffa/Sarin

Website:

1. www.hpcl.com

2. www.hindustanpetroleum.com

3. www.managementarticles.com

4. www.moneycontrol.com

38

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