The operations team at Citgo Petroleum never stops pushing for improvement.

If one had to sum up the operations team at Citgo Petroleum Corp. in a word, it would be “proactive.” Not content to simply take advantage of a steady supply of petroleum from parent company Petróleos de Venezuela and the consistent reliability of its three US refineries, the team is instead firing on all cylinders to improve safety, environmental compliance, reliability, and employee development.

Taking a cue from top manufacturers, COO Frank Gygax and vice president of refining Bob Kostelnik have been using continuous improvement and employee empowerment methods for about 10 years. “Our employees have no problem shutting a unit down to stop work activity of any kind or question an activity with their supervisor,” said Kostelnik, who is in charge of refining activities at the company’s facilities in Lake Charles, La.; Corpus Christi, Texas; and Lemont, Ill.

“Our main focus is to make the personnel in charge of the operations units fully responsible to carry out all activities in a safe and environmentally friendly manner,” said Gygax, who is based in the company’s Houston headquarters. Gygax leads all operational functions, including refining; supply and distribution; marketing of light oils, lubricants, petrochemicals, and industrial products; centers of excellence; and the Citgo Asphalt Refining Company.

In fact, Gygax noted, each location has a safety team made up of both hourly and staff employees that determines the direction of the overall safety program and runs the incentive and recognition programs.

This empowerment strategy certainly seems to be working for the company, with Kostelnik noting that Citgo employees are known for going above and beyond. “I know everyone says their employees are the best,” he said. “But we have guys who have to check units 15 stories in the air at 2:00 a.m. in Lemont, and it’s four or five below zero with 25-mile-per-hour winds—and they don’t miss a beat.”

The continuous improvement portion of Citgo’s strategy has also borne fruit, with 2006 proving the company’s best year in safety. According to Kostelnik, the company saw OSHA incident rates of zero lost workdays for contractors and .07 lost workdays for employees. Although such a low number is remarkable, considering that the work being done involves heavy equipment and extreme weather conditions, Kostelnik said he and his team won’t be satisfied until there are no incidents at all.

Fix it before it breaks
The operations team also takes an active approach to maintenance, developing a well thought out program designed to eliminate unplanned outages. “We want to perform preventative maintenance rather than wait for something to break,” said Kostelnik, adding that the program began with the development of center-of-excellence teams in which experts from each facility worked together to establish best practices.

Today, those teams focus on information sharing. “When mechanical failures or other incidents occur, we ask everyone to comment, and the team provides the results of all investigations,” Kostelnik said.

The company’s approach to maintenance is part of a large reliability program that involves 61 measures. “We have a champion in each facility who is a senior member of the management team,” said Kostelnik. Each refinery’s reliability measures are reviewed monthly, and an in-depth review is conducted yearly by corporate senior management.

Kostelnik noted that although refining margins have been good the last couple of years, he’s been around long enough to know they won’t stay that way. “The only way to be successful in this business is to have a reliable operation,” he said. “Even in the worst market conditions, there will be opportunities, but your hardware has to be ready to capture them.”

Technology is becoming an increasingly important part of ensuring reliability, and Kostelnik said the company has started using portable electronic data gatherers that technicians can take with them to the field. The devices automatically download data to a central processor. “The data is tracked and analyzed, and they’re given notification of deviation,” he said.

Mistakes are inevitable in any industry, but Citgo’s operations team focuses on making sure they never happen twice. “Our number one strategy is not to forget what we already know,” said Kostelnik. Reaching that goal involves creating a culture of acceptance, he said.

“If you’re doing your job and making decisions, and things don’t go your way, that’s okay. As long as you did the best job you could, we’re fine with that,” he said. “But if we did something that caused a unit upset two years ago, we’re not going to do the same thing again—ever. We don’t care if it’s two months or two years or 10 years from now. We’re working to ingrain the experiences we’ve had and pass those from one generation of workers to the next.”

Upgrades and sponsorships
True to form, Citgo is ahead of the curve when it comes to making improvements to meet coming environmental and product quality standards. According to Gygax, the company will spend about $1.2 billion in the next few years on environmentally driven upgrades to all three facilities.

Citgo is also known for its expenditures on community programs, programs that provide heating oil to those in need, and national programs such as the Muscular Dystrophy Association (better known as Jerry’s Kids). According to Gygax, the company and its network of independent marketers has contributed more than $83 million to MDA in the last 21 years.

Gygax cited as another example of Citgo’s efforts to give back to the community the Citgo-Venezuela discounted heating oil program. In its second year, the program aims to distribute 100 million gallons of heating oil at a 40% discount to up to 1.2 million low-income Americans. “Corporate giving is a core value of the company as much as our commitment to safe, reliable operations, and environmental stewardship,” he said.

Citgo employees are proud of their company’s involvement in such causes and tend to jump in with both feet when asked to contribute their time to community projects such as Habitat for Humanity. Kostelnik noted that each refinery has a team that organizes such projects and is authorized to provide supplies or food for volunteers. “Our employees are grateful to be part of the community and are happy to give back to those in need,” he said.