TPC Group is a $2B petrochemical company, with energy costs being the second largest contributor to the Cost of Goods Sold (COGS). The company has taken a multigenerational approach to manage energy consumption and costs.
Three generations of the multigenerational approach have been completed, and Generation 4 is in progress. Generation 1 increased general awareness at a single plant level and included some optimization. Generation 2 optimized energy across multiple plant sites and used external benchmarking to set a path forward for Generation 3. Generation 3 consisted of adding energy's cost and impact to the company's profit/loss model in order to include energy as part of business decisions, plus implementation of a robust home grown system for monitoring and displaying information across all levels of the organization. The purpose of Generation 4 is to incorporate energy optimization into the overall company sustainability program, and to move to commercial solutions. High level work within Generations 3 and 4 is discussed, as well as some examples of value returned from the program.
The multigenerational approach to energy management has been in place at TPC Group for over ten years. By taking a multigenerational approach, even a small company with limited resources can successfully implement a robust energy management program and return value to the company.
The cost components of energy and utilities have become increasingly more significant to the overall costs of goods sold (COGS) for the domestic United States petrochemical industry. Several of the drivers for this include the fluctuation of natural gas prices, deregulation of electricity in parts of the country, increased demand outpacing "new build" for utility supply industries, and the overall aging of facility related infrastructure that provides the energy and utilities.
For these reasons, there is an increased focus in both optimization of the energy and utilities consumed and concentration on controlling and reducing the costs affiliated. Companies of all sizes can benefit from a focused multigenerational approach to managing the impact of energy costs to their business. A 10 year multigenerational plan for a $2B petrochemical company is discussed. The results show there is a good return in paying attention to and devoting resources to optimizing energy and utility use in a planned way.