Last week, I attended the 2025 Reuters Downstream USA conference, where a central theme resonated deeply across discussions: the critical importance of reliability in the refining and chemicals sectors. While chemical engineers often define reliability as a system’s probability of functioning without failure for a set time under given conditions, its broader, transformative impact on operational success, financial performance, and market competitiveness is frequently underestimated.
The steep cost of unreliability
The financial implications of neglecting reliability are staggering. Consider this: top-quartile performers in our industry spend 4% or less of replacement costs on reliability, whereas other operators can spend as much as 8%. This efficiency isn’t just a minor saving; it translates into significant financial gains. For a 250,000 barrel per day (bpd) refiner on the U.S. Gulf Coast, this efficiency could mean an annual EBITDA uplift of $100 million to $150 million.
Conversely, unreliability directly inflates costs for equipment replacement and maintenance. Unplanned outages, a persistent pain point, can lead to a staggering $25 million to $50 million in lost profits annually for mid-sized refineries. Beyond direct costs, these disruptions can ripple through the market, driving up product prices and margins during the outage period. For plants operating at high utilization, reliability ensures they capture their full revenue potential. In oversupplied markets, it enables the low-cost operations essential for competitive advantage. The average cost of unplanned downtime per incident can be around $2 million, with large industrial facilities losing an estimated $175 million annually due to machine failures.
Building a resilient foundation
ADI Analytics benchmarks reliability best practices in refining and chemical assets, revealing that establishing a top-tier program is challenging but strategically essential. Our work shows it’s a crucial imperative for operational success. It demands robust processes embedded not just in maintenance, but right from the equipment design phase. This includes designing for maintainability, ensuring components are modular, accessible, and standardized to facilitate easier repairs and reduce downtime. A strong sense of ownership across all organizational levels is also crucial, fostering a culture where everyone understands their role in maintaining operational integrity.
Key elements of such a program include strategic asset management, which involves prioritizing assets based on their criticality and potential impact of failure. Continuous health monitoring, often powered by advanced digital tools, allows for real-time assessment of equipment conditions. This enables proactive interventions, preventing minor issues from escalating into major failures. Advanced maintenance strategies, such as Reliability-Centered Maintenance (RCM), focus on preventing or mitigating failures with significant consequences. Meanwhile, Predictive Maintenance (PdM) uses real-time data and analytics to forecast equipment failures, enabling proactive maintenance scheduling.
The digital edge in reliability
Digital transformation is revolutionizing how we approach reliability. Artificial Intelligence (AI) and Machine Learning (ML) are at the forefront, analyzing vast datasets from refinery operations to enable predictive maintenance, optimize processes, and enhance quality control. AI-powered predictive maintenance, for instance, can lead to a 20-30% reduction in maintenance costs and a 10-20% decrease in unplanned downtime (see Exhibit 1). The Internet of Things (IoT) provides the backbone for these insights, with sensors and devices monitoring equipment conditions in real-time, from tank levels to pipeline composition. This real-time data allows for swift responses to changing operating conditions and early detection of anomalies. Digital twins, virtual replicas of physical assets, take this a step further by simulating real-world conditions to predict failures, test scenarios, and optimize performance without impacting live operations.
Exhibit 1. Key applications of AI in chemical manufacturing
Cultivating a reliability culture
Ultimately, reliability improvement is profoundly human-centric; it’s often said to be “90% about people”. This means that while technology provides powerful tools, the success of a reliability program hinges on cultivating a proactive culture. Strong leadership is paramount, driving the initiative and communicating a clear vision for long-term sustainable reliability. This involves establishing common beliefs about reliability, fostering a partnership between operations and maintenance, and ensuring continuous training and competency development for the workforce. Addressing “maintenance debts”—the costs of neglected equipment—proactively, rather than reactively, is also a critical cultural shift that leaders must champion. Exhibit 2 shares some ideas on how to build a sustainable reliability program.
Exhibit 2. Steps for implementing a sustainable reliability program
A strategic imperative
Reliability is no longer merely a technical concern; it is a fundamental driver of a plant’s safety, profitability, and competitive standing. By strategically integrating advanced maintenance practices, design excellence, digital technologies, and a robust, people-centric culture, the refining and chemicals industry can build truly resilient operations, ensuring long-term success in an ever-evolving global market.
– Uday Turaga
About ADI Analytics
ADI is a prestigious, boutique consulting firm specializing in oil and gas, energy transition, and chemicals since 2009. We bring deep expertise in a broad range of markets where we support Fortune 500, mid-sized and early-stage companies, and investors with consulting services, research reports, and data and analytics, with the goal of delivering actionable outcomes to help our clients achieve tangible results.
We also host the ADI Forum that brings c-suite executives together for meaningful dialogue and strategic insights across the oil & gas, energy transition, and chemicals value chains. Learn more about the ADI Forum.
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