Monte Carlo Analysis for Earthquake Mitigation at Refinery complex
Ari Pramono
Pertamina
Merdeka Timur 1A
Jakarta Indonesia
1.
INDONESIA : THE RING OF FIRE
Geologically, Indonesia is located in a very unstable area. It lays in an area known as “The Ring of Fire”, a
zone of frequent earthquakes and volcanic eruptions that encircles the basin of the Pacific Ocean. It
stretches as a horseshoe-like area of about 40,000 km long, which hosts more than 90% of the world’s
largest earthquakes.
fig-1 : the ring of fire
The Ring of fire is a direct consequences of a phenomenon known as ‘plate techtonics’. According to this
theory the outermost earth crust (lithosphere) is broken up into several plates, and they floats and move in
relation to each other.
One plate meets another along a plate boundary, and plate boundaries are commonly associated with
geological events such as earthquakes and the creation of topographic features like mountains, volcanoes
and oceanic trenches. The majority of the world's active volcanoes occur along plate boundaries, with the
Pacific Plate's Ring of Fire being most active and famous.
The major plates in the worlds are described in the the next figure ;
fig-2 major plates
The major earthquake and tsunami in December 2004, was originated in the north-western tip of Sumatera
Island (Java-sunda trench) as a result of the mix subduction & collision between India-australian plate,
pacific plate and Eurasian Plate.
Because of those circumstances, most part Indonesia is quite exposed to the risk of major earthquakes. For
example in the period of March’05 to April’ 05 alone, we were experiencing a total of 1061 earthquakes,
which 40% of them has significant scale (> 6 Richter Scale), level of scale that could create damage in
construction.
Earthquake Occurrence in Indonesia
(march-April 2005)
300
100.00%
90.00%
250
Frequency
80.00%
Cumulative %
70.00%
Frequency
200
60.00%
150
50.00%
40.00%
100
30.00%
20.00%
50
10.00%
0
.00%
4
4.5
5
Graph-1 : Earthquake
5.5
6
6.5
Richter data
Scale
occurrence
7
7.5
More
As one of the significant oil producing region, Indonesia has several oil refineries, which all are operated
by the Oil & Gas state-owned company – PERTAMINA. As part of the Security of oil Supply and
Distribution strategy, the refineries are distributed in all major islands of the Archipelago. The total refining
capacity of the country is about 1 million bopd. There are two main considerations in the selection of the
Refinery location, i.e. the proximity to the oil producing field and/or the proximity to the market/demand
center.
Fig-3 map of Indonesia
Eurasian Plate
Pacific Plate
India-Australian plate
active area
(collision / subduction zone)
Most of Indonesia’s refineries is located in proximity to the oil field, therefore they have less risk of
earthquake, since due to the geological factor, the oil producing area are is usually not in the
tectonic/volcanic active. However, there are 2 refineries, Refinery –4 and 7, are actually located near the
tectonic active area in southern coast of central java and northern tip of Papua. Therefore, based on the
location, there is significant probability that an earthquake with significant scale could strike those
refineries. The paper will be discussing the profile the risk, in term of financial lost, faced by the refinery as
a result of the occurrence of earthquake with significant scale. The study will use Refinery 4 as pilot
project, based on main reason that the refinery has the biggest refining capacity in the country (120 000
MBOPD) or 12 % of the national capacity.
The quantitative modeling of the earthquake.
To model (quantitatively) the risk exposed by the refinery caused by an earthquake, one should built the
relation between the quantitative parameter of the earthquake’s severity and the impact on the refinery
construction and operation. There are 2 measures of the severity of an earthquake; i.e. Magnitude and
Intensity. The magnitude of an earthquake is a measure of the amount of energy released during the epoch
of the earthquake, which recorded by a seismograph and usually presented as in a Richter Scale, whereas
the intensity of an earthquake is a measure of the observed impact of the ground shaking movement on the
people, building and natural features, Mercalli Modified Intensity (MMI) Scale is an example of such
measure.
In order to model the risk in an applicable manner, one should build the quantitave relationship between
these two measures. However one should remember that such relationship is a stochastic relation, since
there are some degree of uncertainties remain (e.g the distance between the impacted area and the epicenter
(the center of the quake) and also the general condition of people, buildings & natural features in the area).
Fig-4 Severity modelling
Intensity
Level
Distance to
epicenter
general
condition
Magnitude
level
MMI Scale
Richter Scale
In the case of refinery, the first thing that one should do is to ‘translate’ the ‘’general’ magnitude level to
the refinery environment, which means that each ‘general’ magnitude level should be projected to each
refinery facility units. One should estimates the destruction level of each refinery unit which corresponds to
each magnitude (and by that also the intensity) level of earthquake.
2.
THE MODELING OF EARTHQUAKE RISK IN REFINERY - 4
The Refinery
The Refinery-4 is located in the southern coast of Cilacap district, in Central Java. The refinery is
considered as the most important oil processing facility in the country, with the installed crude processing
capacity of 120,000 Million Barrel Oil per operating day. The refinery processes an Arabian light Crude
imported from Saudi Arabia. In briefs, the refinery produces 3 product types, i.e. Fuel Products (Kerosene,
unleaded & leaded gasoline, Aviation fuel and Diesel Fuel), Petrochemical products & intermedia
(Lubricants, Naphta, Paraxylene, Benzene, asphalt and LSWR) and associated gas by products (LPG).
Graph-2 Refinery products
Gas by products
3%
Fuel products
20%
Petrochemical
products & intermedia
77%
The refinery supplies fuel for most of the eastern part of the most populated and industrial heavy Java
Island, therefore it plays an important role in the country’s economy. Not only that , the refinery is the main
producer for petrochemical products in Indonesia.
Most Refinery has 3 main parts; The (Product/crude) storage, Production Units, and Utility Unit. In our
case, the production unit is devided into 6 complexes; 2 units of Fuel Oil Complexes (FOC I & II), 3 units
of Lube Oil Complexes (LOC I,II & III) and 1 Petrochemical Complex (PX), 2 Utility Units (UTL I & II)
and 2 Storage Units ; Product Storage (PRS) and Crude Oil Storage (COS). The lay out of The refinery is
attached in the appendix
The Model
The Risk is quantified as the total financial lost suffered by the Refinery in case of earthquake occurrence
in the region. The Total Financial Loss is comprised of Potential Loss (caused by production stoppage
during the earthquake and the repairing days), Inventory Loss (Because of the leakages or collapsed of
producing facilities) and the Repair Cost incurred as a result of the earthquakes.
Total Financial Loss = Potential Loss + Inventory Loss + Repair Cost
Where;
 Potential Lost = f ( Repair time estimates (i), Product Price(j))
Inventory Loss = f ( Inventory level(i) , Product Price (j))

Repair cost = f (Repair time estimates(i) , Unit cost (i) )

Repair time estimates = f (Earthquake Magnitude, Reliability Factor (i), Destruction
o
Level(i))
i = index of Refinery complexes (i = 1 .. 6)
j = index of Refinery Product (including Crude Oil) (j = 1 .. 28)
The Parameters
Earthquake Magnitude
The earthquake Magnitude is distributed based on the regional earthquake historical data in Richter Scale .
The distribution is for above impacting level ( > 6 Richter scale) , since below that level there will be very
insignificant observable impact.
Earthquake Intensity.
The magnitude (or impact) of the earthquake is estimated for each refinery complexes, based on the
customization of MMI scale for each range of earthquake intensities in the refinery complexes. The impact,
then tabulated in a customized MMI scale designed specifically for Refinery – 4 environments, as shown
below.
Distance to epicenter
In order to simplify the model, the uncertainty regarding distance to epicenter is modeled
As the Destruction Level (DL), which range from 0 to 1.1. DL is used as multiplication factor for the
tabulated Magnitude scale. The DL value of 0 represents the earthquake whose epicenter is far out of the
geological range from the refinery, which create no observed damage in the refinery, regardless the
magnitude. On the contrary, the DL value of 1.1 represents earthquake which centered right in the refinery
location, which creates damages even larger than the commonly projected for the intended magnitude.
General Condition.
Another parameter is the general condition of each refinery complexes. As mentioned earlier, the level of
magnitude is also depend on the general condition of the impacted area, area with stronger constructions,
will have lesser level of magnitude compare to the area with higher level of fragility. In the case of
Refinery the general condition is represented by Reliability Factor (RF), which is scaled 0 to 1, the RF
value is derived from the thorough and routine inspection of all units in the complex . The complex with
stronger (or newer) construction will have higher reliability factor, which also means less vulnerability
when the earthquake strikes, compare to the other.
Product/ Crude Uncertainties
As mentioned earlier, the risk is modeled in term of total financial lost, including the lost of production
days (which means revenue potential lost) and product loss (through leakages and unit collapsing). There
are 2 uncertainties related to this factor that should be taken into account, i.e. The product price volatilities
and the inventory level at the time of disaster.
Correlating factors
Deterministic (100%) correlation
Based on the operational process flow of the refinery, there are several deterministic correlation occurs.
First is the correlation between the Utility Units with the production complexes. Each Utility Units (UTL I
and 2) supply both energy and water needed in the production complexes, therefore the initiation of
operation in any production units are absolutely depended to the availability of the associated Utility Units’
operation. It means that there are 100 % correlation between stoppage days in any production units with the
stoppage days in each associated Utility units.
Stochastic correlation
The magnitude of Earthquake is much depend on the geographical position of the object relative to the
epicenter. Therefore, it is quite logic to assume that there will be strong correlation in Destruction Level
(DL) value between adjacent complexes. The correlation will be reduce between complexes which are far
apart in spatial sense.
3.
THE SIMULATION RESULT
After put all parameters and correlations in the model, one could employ special program to perform Monte
Carlo Analysis in profiling the Total Financial Lost as the output of the model.
From our simulation, by using data and information available to us regarding Refinery–4, we came up with
the result as follows;
Graph -3 : Risk Profile
Distribution for Real Lost/P74
X <=0
X <=582286976
5%
95%
8
Mean = 1.726401E+08
7
Values in 10^ -11
6
5
@RISK Trial Version
4
For Evaluation Purposes Only
3
2
1
0
Graph-3 : Total Financial Lost
0
2.666666667
5.333333333
8
Values in Billions
From the profile, one could deduct that the most probable loss suffered by the refinery will be
approximately US $ 0.17 Billion should an Earthquake with Intensity > 6 occurs in the area. The
cumulative graph shows that more 80 % probability of loss of more US $ 100 millions will occur should
that disaster occur.
From the sensitivity analysis, the simulation gives information about the relative importance of each
parameter in the form of correlation value between each parameter with the total lost.
Graph 4 : Sensitivity Chart
Sensitivity Chart
Target Forecast: Total Financial Loss
-1.000
-0.800
-0.600
-0.400
-0.200
0.000
0.200
0.400
0.600
0.800
1.000
magnitude
RF UTL 1
DL UTL 1
DL UTL 2
DL FOC 2
DL FOC1
DL LOC 1
DL PX
DL LOC 3
DL LOC 2
RF UTL 2
DL COS
RF FOC 2
RF LOC 2
RF PRS
RF FOC 1
RF PX
RF COS
Graph – 4 : Tornado chart
RF LOC 3
DL PRS
RF LOC 1
As predicted, the magnitude of the earthquake is the most important parameter , with correlation value of
nearly 80%. The more interesting thing is to analyze the correlation between the Reliability Factor (RF) &
Destruction Level (DL) of each complexes with the Total Lost. From the graph one could see that the RF
and DL values of Utility-1 are the most important parameters, which logically means that the management
should put more attention to better prepared this unit in order to minimize Loss. Increase in Reliability
Factor in Utility – I complex will significantly reduce the risk of high loss should an earthquake occur.
Based on this graph, one could develop a list, which ranks the Criticality of all complexes in the refinery,
by applying new parameter :
Criticality Factor = Correlation (Total Lost, DL) x (1- Correlation (Total Lost, RF))
Criticality Factor will be used as a based on management decision in Earthquake Mitigation policy and
actions for reducing the risk faced by the refinery.
The criticality factor for all complexes in Refinery-4 are as follows;
Table-1 : criticality Factor
Facility
Utility 1
Utility 2
Fuel Oil Complex 2
Fuel Oil Complex 1
Lube Oil Complex 1
Paraxylene Complex
Lube Oil Complex 3
Lube Oil Complex 2
Crude Storage
Product Storage
Criticality Factor
29.54%
17.27%
15.61%
14.72%
13.97%
11.55%
11.13%
10.96%
8.14%
0.15%
By using such table, the management could do better resources allocation and put more attentions to the
most critical part of the refinery in relation with Earthquake Mitigation Policy and actions.