Reducing Energy Intensity Helping a major energy company reduce greenhouse gas emissions and energy costs. Situation To reduce its environmental footprint, a multi-billion dollar energy company sets a corporate goal to reduce energy intensity (EI) by an aggressive 10% within 6 years. At the corporation’s largest production site, employees have many ideas for reducing EI (defined as units of energy per units of output), many requiring capital investment. However, this complex organization lacks meaningful data on the biggest drivers of energy consumption and does not fully understand what affects those drivers. Without that understanding, the company has developed a long list of energy initiatives and capital projects, but has struggled to reach alignment on what to work on first. The company will have a tough time achieving the target and predicting the capital and resource costs. Prevailing Mindsets Increase Uncertainty Energy intensity appears to vary widely depending on production rate and equipment configuration, creating uncertainty around improvements. Rough data suggests that, in general, the higher the production rate, the lower the energy intensity. This has caused many to shrug off the 10% goal, thinking that the EI target is “out of our control,” and that as production increases as expected over the next few years “we will just grow our way to the target.” A Zero-Based Approach Accelerates Results The Zero-Based Analysis team challenged the “no control” mindset by introducing the concept of “operating modes,” a small set of typical process and equipment configurations. By looking at energy performance by operating mode, the team could see a clear, predictable relationship between production rate and energy intensity. With that data, for any operating mode and any level of production it became possible to gauge energy performance based on historical average, best observed, and theoretical-best cases. For example: Energy Intensity by Operating Mode Measuring Energy Intensity Performance 450 within an Operating Mode Production Rate 400 300 Production Rate 350 250 Energy Intensity 300 “Poor” energy performance Energy Intensity 200 250 Mode 1 “Average “ energy performance 200 Mode 2 150 Mode 1 Actual Opportunity 150 Mode 3 100 Mode 1 Best Observed 100 Mode 4 Mode 1 Theoretical 50 50 “Above-average” energy performance 0 5500 6000 7000 8000 9000 Production Production We can reduce Energy Intensity by operating in the most We can also reduce Energy Intensity by improving energy energy efficient operating mode, given a certain production intensity within an operating mode. Improvements can be rate. made by repeating past best performance (represented by the 0 “Best Observed” line), and/or by challenging the limits of our 0 current system (“Theoretical” line). Page 1 of 2 Prepared by Stroud International Ltd. With this analysis, a complex, site-wide issue has been dramatically simplified with a straightforward approach. The Zero-Based Analysis method uncovered significant improvement opportunities requiring little to no capital. Now, each operating area has been able to identify and focus on high-impact areas for its energy reduction efforts by optimizing existing assets. The client is using this model to pursue the 10% reduction goal immediately, before turning to capital projects. Page 2 of 2 Prepared by Stroud International Ltd.