Valero Energy Corporation Gaining Sustainable Benefits with Greater Transparency

VALERO ENERGY CORPORATION GAINING SUSTAINABLE BENEFITS WITH GREATER TRANSPARENCY

QUICK FACTS

Key Challenges Why SAP Was Selected Industry • Standardize metrics across refineries • Single-vendor approach Oil and gas – refining • Provide headquarters real-time visibility of • Core business processes run by SAP® Revenue operations and inventory at all locations software US$68 billion (2009) • Support industry leadership in worker safe- • Solution that brings financial, planning, and ty and energy stewardship operational worlds together Employees • Optimize operations and validate results • Best package of connectors for integration 21,000 • Integrate operational and financial data to multiple automation systems at Valero’s Headquarters • Support effective decision making with refineries San Antonio, Texas timely and consistent information Web Site www.valero.com Implementation Best Practices Low Total Cost of Ownership • Strong sponsorship and support at CEO • Common systems across refineries SAP® Solutions and Services level eliminating duplicated efforts Consolidating enterprise-wide opera- • Solid governance model • Total IT spend around 0.15% of revenue tional data with SAP® Manufacturing • SAP Manufacturing Integration and • Leveraging 1 set of IT development skills Integration and Intelligence application Intelligence application project made a • Integrated 36 different systems, including top company priority transportation scheduling systems, data- Leading oil refiner Valero Energy • Single blueprint guided rollouts at each base historians, laboratory systems, and refinery multiple legacy applications Corporation used a distributed net- work of the SAP® Manufacturing Financial and Strategic Beneﬁ ts Operational Beneﬁ ts Integration and Intelligence applica- • US$120 million in annual energy savings in • Cross-comparison of all refineries with 2009 – goal is US$200 million in 2010 common dashboards and key operational tion at its many refineries to gain • Ability to trace financial impact of operation- metrics greater visibility into operations al changes • Optimization of refinery operations – such • Real-time visibility at multiple levels, such as refinery run rates and tank pressures such as safety, energy usage, unit as refinery, process unit, and energy type • 63% reduction in environmental incidents performance, and inventory. This • Better integration of planning, operational, since 2006 real-time view helped Valero realize and financial information • Reduction of total recordable incident rates • Improved energy stewardship by almost 30% since 2004 benefits that include better optimiza- • Ability to model optimization efforts • Real-time visibility that supports preemptive tion of refinery operations and safety measures and faster corrective actions US$120 million in energy savings in • More accurate and timely visibility into the first year alone. vendor-managed inventory • Improved preventative maintenance and avoidance of unplanned shutdowns

SAP Business Transformation Study Oil and Gas – Reﬁ ning “Our energy cost reductions are big. Green is not just about sustainability, it is also www.sap.com/contactsap the color of the money we are saving.”

Hal Zesch, CIO, Valero Energy Corporation

Thirty Years of Refining Excellence of new acquisitions while helping deliver a ing a process safety parameter.” Proac- total cost of ownership of only 0.15% of tive action helps Valero ensure a safe In only a few decades, Valero Energy revenue. work environment and avoid unplanned Corporation has become North Ameri- downtime. Environmental incidents, for ca’s largest independent oil refiner, with The oil company used a single blueprint to example, have been reduced 63% since 15 refineries and 10 ethanol plants now roll out SAP MII at refineries from Califor- 2006. dotting the continent. Valero’s dramatic nia to Canada. The project had strong sup- growth is fueled in part by strategic port at the CEO level and was managed But perhaps the most dramatic impact acquisitions and a corporate policy of through a formal governance office that has been on Valero’s energy steward- implementing a rock-solid SAP® software shepherds all Valero’s IT initiatives. ship. In addition to real-time monitoring of foundation across locations. gas, steam, and electric usage, the com- Texas-Size Benefits Save Millions pany can model the effect of proposed This standardization helps Valero main- changes to specific operations. By opti- tain safe and efficient operations with Valero is using this new pipeline of informa- mizing parameters such as tank tempera- timely access to consistent information. tion from 20,000 continuous data streams tures and pressures, Valero significantly “Information that is slow or after the fact to improve decision making and optimize its lowered its total energy consumption. is useless for decision making,” points refining operations. Data gathered through This one application of the technology out CIO Hal Zesch from Valero’s San SAP MII serves as the centerpiece of resulted in an astounding annual savings Antonio headquarters. “It’s like trying to Valero’s Emergency Operations Center, of US$120 million in the first year alone. drive while looking in the rearview where large-screen dashboards present And Valero expects the second-year mirror.” enterprise-wide results of all key perfor- return in energy cost savings to exceed mance indicators for operations, safety, US$200 million! “We saw a total project With this plainspoken philosophy in mind, energy use, and inventories. Using these payback in less than one month of bene- Valero chose the SAP Manufacturing dashboards, Valero’s COO and officials fits from our energy optimization,” notes Integration and Intelligence (SAP MII) from each refinery meet every morning to an enthusiastic Zesch. application to consolidate up-to-the- review operations and identify opportuni- minute operating information from each ties and issues that require immediate A Sustainable Future of its refineries. attention. The ability to compare real-time and historical metrics across all plants – Saving energy is only one way that The Rewards of Integration coupled with drill-down details to specific Valero is delivering quality fuels efficient- locations and process units – greatly ly and responsibly. The refiner has also SAP MII was a logical choice. The solu- enhances operational decision support. expanded into renewable energy sources tion offers integration with other SAP such as biofuels. Not surprisingly, the software and connectors for third-party The solution also supports the oil compa- company is also rolling out SAP MII at its applications in use at the refineries; ny’s industry-leading commitment to occu- 10 ethanol plants as well. Valero is a Zesch notes that it “brings together the pational and process safety. “At Valero, company that clearly understands how financial, planning, and operational people’s health and safety is our way of new technology can help shape the worlds.” In addition, Valero’s one-vendor doing business,” Zesch says. “Our system future. approach has accelerated the integration lets us see very quickly if we are approach-

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