Conoco Refineries Use Benchmarking to Develop World-Class Operations.

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Oct. 2, 2000

Competition, deregulation amidst new regulations, e-commerce and an onslaught of changing customer needs demand the attention of today's refinery operators. Conoco (NYSE:COCA) (NYSE:COCB) has developed cutting-edge benchmarking metrics to help manage this change and drive significant refining improvements.

"By benchmarking Conoco's operations against the best practices of our competitors, we have been able to greatly improve plant reliability and reduce routine maintenance costs by over $100 million since early 1997," said George W. Paczkowski, Conoco's president for refining and marketing in Asia Pacific.

"The difference in Conoco's refining operations today versus three years ago is amazing," Paczkowski reported. "Financial analysts struggle to understand how our plants can yield the results we have achieved given the economic factors the industry faces. Since 1996, Conoco's crude throughput is up 15 percent with little or no capital expenditures. We have also been able to improve after-tax earnings by an estimated $50 million annually."

Paczkowski revealed these findings during remarks before the Petronas-sponsored 11th annual Inter-Plant Workshop and Exhibition held outside Kuala Lumpur, Malaysia, on Sept. 30.

Conoco's five wholly owned refineries have achieved greater energy efficiency, higher reliability, decreased downtime and more efficient maintenance as a result of benchmarking and other efficiency improvements.

"Perhaps the greatest benefit is that our people are now able to focus on reliable customer service, all because we are actively listening, learning and implementing new ways to improve our plants," he added. "Conoco's multi-step approach to benchmarking and our rate of change rivals the best in the oil industry."

In 1999, Wood Mackenzie, an independent organization that evaluates the performance of European refineries, ranked Conoco first among 19 operators on the basis of net cash margin per barrel processed (the average profit margin, excluding depreciation, on each barrel of feedstock processed). The evaluation concluded that three of Conoco's four facilities in Europe are among the top 10 percent of all refineries in the region.

"Benchmarking can be simplified into three parts: look at yourself, look at others and adapt the learnings," Paczkowski said. "With the pulls and pressures of today's fast paced world, we can be blind to what others in the industry are doing unless we intentionally search out the information. Also, be prepared to invest time because a benchmarking study can take three to 18 months, depending on the size of the process being benchmarked."

Conoco is a major, integrated energy company active in more than 40 countries.