Offsites

Last week, we cautioned about the use of obsolescence in developing an automation modernization project justification. Sticking on the theme of justification, I received a copy of a presentation, Tank Farm and Terminal Automation: Developing a Business Case. Emerson's Patrick Truesdale gave this presentation at the 2008 NPRA Annual Meeting.

For those not familiar with tank farms and terminals, they are known as Offsites operations in the industry vernacular. These Offsites operations provide receiving, shipping, and storage facilities for hydrocarbon liquids and gases processed or produced by refineries and petrochemical complexes.

Typical units include tank farms, blenders, and terminals. The terminals handle truck, rail, marine, and/or pipeline-based transport. For a consumer product like gasoline, the terminals are the spot where the gasoline tankers fill up before delivering the gasoline to the gas stations where you fill up your automobile.

Historically, these Offsites have had a piecemeal approach to automation with disparate controls for custody transfer, loading and unloading, blending, and vapor recovery to name a few processes. Making decisions requires tracking down information from many places. Also, for these Offsites facilities in mature markets, operations personnel with this knowledge are approaching retirement age.

Other challenges are the increasing regulatory compliance reporting such as Sarbanes-Oxley in the U.S. and greenhouse emissions regulations in many countries. These regulations have also increased the number of fuel additives and alternative fuel mixes such as ethanol and biodiesel.

Patrick sees the justification opportunity for taking an integrated Offsites operations in increased revenues, reduced working capital, increased capacity, and reduced direct and variable costs. The integrated approach streamlines the business process from production planning where the production orders occur to the work preparation phase where these production orders are prepared. The work details that come out feed the work execution phase where the production orders are executed, followed by the production accounting phase where the production order is completed and performance monitoring steps taken.

These business processes can be integrated based on the ISA95 enterprise-control system integration model, which helps eliminate many of the manual operations including manual data collection and reporting. This integrated approach adds movement control and gentry control on top of the automation system performing the regulatory control across all the processing units. Hydrocarbon movement scheduling is performed above the movement control level. It connects with the order management and production accounting systems. Likewise, slot-blocking operations are performed above the gentry control. They also connect with the order and accounting applications.

The justification process begins by benchmarking current performance in the areas of process unit, tankage, and loading/unloading asset utilization rates. Revenues can be improved by integrating the flow of information on process units such as crude units, cokers, FCCs, HCUs, and Reformers as well as tankage and loading/unloading areas.

Margins can be improved by increasing yields especially on high-value products. Reducing losses in better custody transfer measurement, unaccounted losses, quality giveaway, and lower contamination also improves margins. Improved schedules also reduces demurrage costs.

Soft costs to aid in the justification can be found in reduced fuel and hydrogen consumption, increased staff productivity, and improved supplier/customer relations through more efficient and effective scheduling. Once the benchmarking and expected benefits are tabulated, they should be broken into distinct project phases and prioritized base on projected return on investment. This helps manage the scope and execution of these modernization efforts.

For Offsites operations with piecemeal regulatory controls and manual work processes, Patrick has seen terminal handling efficiency increase 20%, truck turnaround times reduced 33%, annual maintenance costs reduced 60% compared to industry average, and equipment availability exceed 99.7%.

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The ever-increasing global demand for energy requires tremendous daily global movements of crude and refined products. Offsite operations play a vital role in the hydrocarbon supply chain. These offsite operations provide the receiving, shipping and storage facilities for handling bulk liquid or gas products. These sites typically include tank farms, blenders and terminals for handling truck, rail, and marine transport.

Tank farms and terminals are found at various stages along the production process from oil & gas collection terminals to refinery terminals and depots, to primary depots where refined products are loaded and transported to your local gas station.

I caught up with Patrick Truesdale, a senior consultant, in Emerson's advanced automation services team. Patrick will be co-presenting with Emerson's Gerrie Benjert at the upcoming Emerson Exchange. Their topic is developing a business case for tank farm and terminal automation.

The biggest business challenge Patrick finds from his work with offsite operators is the lack of spare capacity throughout the global distribution system. Capacity utilization is at a maximum and assets in many of the established markets like North America and Western Europe are aging. This increases the chances for unplanned shutdowns. These facilities often lack flexibility to deal with changes in market demand.

Other challenges include increasing safety and environmental requirements and increasing compliance reporting. In addition, new regulatory mandates for ultra low sulphur fuels, biofuels and other additives increase the number of products to manage through the distribution chain.

Overcoming these challenges is the basis for the business case that Patrick helps offsite operators build. If the case for improvement justifies capital investment, an important step will be reviewing the key components in an offsite automation system. These components include automatic tank gauging and inventory management, goods movement automation and control, blend control and optimization, and terminal management systems.

The more these components are integrated, the better the efficiency of the offsite operations can be. Automated data collection, correlation, and reporting help streamline the regulatory reporting challenge and provide a better data to make process improvements. In addition, custody transfer of the liquids and gas can be more accurately measured, accounted, and billed.

In his presentation, Patrick and Gerrie will discuss some of the quantified benefits that some offsite operations have been able to achieve. It is important to establish a continuous improvement loop to collect data before and after these offsite automation system components are added or modernized. This is so the data can be analyzed and used to generate additional projects to further integrate and streamline operations, based upon quantified results.