FIG. 6 PROJECT BUDGET, DELEK TYLER EXPANSION
ISBL, 73%
OSBL 8%
Owner improvements* 8%
NHT, saturate gas
expansion 8%
Crude, vacuum distillation
expansion 18%
DHT expansion 38%
Coker expansion 1%
Contingency 12%
Owner’s costs 6%
* The fnal detailed design for the Tyler expansion project was structured for Delek to bring forward nonexpan-sion-related modifcations and improvements under the LSTK package ahead of the refnery’s scheduled turnaround in January 2015.
A few long-lead items
had been ordered, on an
item-by-item basis, during
fourth-quarter 2013, prior
to full completion of the
The DHT work, which determined
the project’s path, carried into February 2015, but still finished before
completion of the refinery’s scheduled
T/A. Project work that could only be
performed during the T/A would be
executed on a reimbursable basis by
Delek’s T/A contractors under the direction of Delek’s in-house project
team. The required OSBL modifications were to be executed under the
same approach but by contractors that
Delek typically employed for small
jobs.
TM&C continued to act on Delek’s
behalf throughout project execution
by assisting Delek’s in-house project
management team, resolving certain
project issues with KPE, participating
in hazard and operability reviews, and
assisting in the design and execution
of the OSBL work.
TM&C also helped Delek:
• Update its operating procedures.
• Train employees on upcoming
changes.
• Commission and start-up post-project.
Tyler refinery project differed considerably from the traditional route taken
by operators. Under the more traditional approach, operators establish a
design basis and prepare a process design package, after which they obtain
a front-end engineering and design
(FEED) package, develop a more definitive cost estimate, and finally solicit competitive bids.
Fig. 3 shows the traditional approach.
By obtaining an LSTK proposal
from KPE for the pre-T/A portion of
the work, which was something KPE
agreed to submit upon completion of
the Phase 3 study, Delek shortened the
schedule needed to execute the project while retaining sufficient cost certainty.
TM&C advocated that there was
greater potential economic benefit to
Delek by shortening the schedule than
executing the project in a traditional
manner. This fast-track, nontraditional approach also allowed for completion of any relevant tie-in work needed
ahead of the T/A (Fig. 4).
The placing of purchase orders followed tentative project approval.
• Utility balances.
• Outside battery limits
(OSBL) needs.
• Project schedule.
• Cost estimate.
Because Delek had a
turnaround (T/A) scheduled to begin end-January
2015, the detailed design
work needed to incorporate
the ability to bring certain
modifications on-stream
independently of the existing units in the event
equipment deliveries and
the construction schedule
didn’t allow completion by
the end of the T/A.
Final design included
two parts: pre-T/A and T/A.
To limit cost and ensure
good control of the project,
final design maximized the
amount of pre-T/A work that could be
executed independent of refinery operations, avoiding the more intense atmosphere (and higher cost) associated
with T/A activity. This approach would
also maximize the amount of work
that could be executed, if desired, on a
lump-sum turnkey (LSTK) basis.
The design effort also sought to
minimize the burden a 20% capacity
increase would have on the refinery’s
existing utility provider and infrastructure, bearing in mind how exceeding the tipping point on ancillary
equipment could significantly increase
OSBL costs.
Project execution
From project inception, TM&C encouraged Delek to sole-source an
LSTK agreement with KPE because of
the companies’ collaborative experiences with each other on several similar projects at the Wynnewood refinery, one of which was executed on a
sole-source basis. Based on the success
of that project, TM&C was convinced
that this would be the most cost-effective approach for Delek.
The execution plan chosen for the
