'Australia's Best' Magazine Features Exclusive Article on Caltex in Australia's Best Manufacturing

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The popular series of magazines, Australia's Best, has confirmed an in-depth editorial feature on Caltex in the July edition of 'Australia's Best Manufacturing'.

The much-hyped series of publications called 'Australia's Best' have added another feather to their fast-growing bow with the inclusion of an editorial feature on Caltex in Australia. The article appeared in Australia's Best Manufacturing - published by Bean Media Group in July 2008. The editorial reads as follows:

In the face of the long-term threat from refineries overseas, Caltex needs bigger ships, bigger storage tanks and bigger investments in infrastructure to cut costs and make its supply system more secure.

On a cool morning in June 2007, the biggest ship ever to arrive in Sydney's Botany Bay moored off Kurnell at the end of an epic journey. Energy Sprinter, almost 300 metres long and 50 wide, had travelled from the N'kossa oilfield off the Congo Republic in West Africa carrying 875,000 barrels (140 million litres) of crude oil. It was
Caltex's biggest ever shipment. The cargo represented Caltex's first foray into the West African light sweet crude market and signalled a new phase in the development of our crude supply strategy. It arrived at the Lytton refinery in Brisbane where 61 million litres of its cargo was unloaded before continuing its journey to the Kurnell refinery. Violent coastal storms delayed it by several days before it could enter Botany Bay where the rest of the cargo was finally unloaded without incident.

Production of light sweet crudes - oil with low density and low sulfur content well suited to our refineries - in our region is declining and demand for them from other refiners is increasing, so Caltex is looking further afield and ordering bigger cargoes to achieve economies of scale.

Despite the 14,000 kilometres Energy Sprinter had to travel, its $72 million cargo was landed in Australia at a lower cost than a regional cargo of equivalent quality.

Bigger ships operating over greater distances are the way of the future. Many of the world's large producers of crude that suit our refineries are in places like Angola and Congo Republic in West Africa and Algeria in North Africa. These sources present options to reduce our dependence on declining regional oil fields.

"These are from time to time cheaper than regional crudes of similar quality," said Manager Supply Operations Ken James. "By using larger Suezmax vessels Caltex can tap into this source and make savings. They're called Suezmax because they're the largest tankers capable of moving through the Suez Canal."

Demand for Caltex fuel products is increasing as the Australian economy continues to expand. This means better and bigger terminals and storage tanks. No visitor to Kurnell could fail to notice a new structure that was steadily rising on the northern side of refinery during the winter months in 2007. While unmistakably a new tank, its dimensions made it unusual. The structure is a staggering 78 metres in diameter and 20 metres high, much larger than any of the refinery's existing crude oil tanks. It is able to store 88 million litres of crude, representing another important step in boosting the reliability of the company's supply system, says Refinery Performance Improvement Program Major Projects Leader Gary Edgar.

The tank will ensure Kurnell can store more crude to cover situations when bad weather prevents ships from berthing for days. Maintaining the higher inventory will allow the refinery to run longer before operations must be slowed to cope with such supply delays.

"It will bring other benefits," explained Gary. "By being able to store more of different types of crude we can run selected percentages of each so that what goes to the crude distillation units is blended closer to the 'design crude composition' for which the units were designed. Maximising the utilisation of our crude unit equipment like this allows us to achieve higher throughputs. It also allows us to purchase a wider basket of crudes, thus lowering our crude costs."

In addition, a greater amount of crude storage means Caltex can reduce the cost of having ships waiting offshore for storage space to become available.

Also newly constructed at Kurnell is an 18 million litre diesel tank 40 metres in diameter and 15 metres high. It was completed in time to provide diesel storage during the maintenance shutdown of the Kurnell diesel hydrotreater unit and sulfur recovery unit in February 2008. "The diesel tank will improve supply reliability by providing extra storage for diesel imports during planned shutdowns," says Gary. In addition, the extra capacity will allow diesel to be shipped from Kurnell for further processing at the new Lytton refinery diesel hydrotreater currently under construction.

Once crude arrives, the next priority in securing the supply chain is to obtain most value from it. "Flexibility is the key here," explains Ken James. Caltex's Supply Chain Improvement Project set up in 2005, delivered a set of new planning tools and software. These help the supply planning teams at Lytton and Kurnell adjust production of diesel, jet fuel or petrol products on a day-to-day basis, and allow them to better plan the way crudes are processed.

The new scheduling program gives planning teams instant detailed information about how a crude mix will perform so they can process it at high rates while delivering the correct product yield and quality. "We could never do this with manually generated spreadsheets," said Operations Planning Manager Greg Southwell.

The program is already making a difference: record throughputs were recently achieved at Kurnell. "While we're pleased with progress we're still in the learning stage with these tools," said Ken. "I'm confident there are more good things to come."

A huge amount of other work and expenditure has already gone into upgrading terminals and providing more storage capacity to strengthen the reliability of Caltex's supply system. The recent upgrade to the pipeline network at Newport, Melbourne, for example means ships can be unloaded much quicker, while a new diesel tank at Gladstone helps ensure unbroken supplies to customers in Central Queensland, where demand for diesel is especially strong.

Ultimately what matters most in securing the long term future of Caltex is the customer. They will keep doing business with Caltex if they know they always deliver quality products on time, on specification, safely and efficiently.

"Our ability to receive, store and distribute petroleum products in the right quantities and at the right times is critical to meeting our customers' needs," said Mike Raleigh, National Manager Distribution. "Most Australians' jobs and livelihoods depend on the oil industry getting quality petroleum products to them safely and reliably."

Caltex forges a number of relationships with key suppliers, including VIP Packaging and Schutz.


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