The Oil and gas industry is no stranger to the power of Industry 4.0 solutions that aggregate sensor and planning/forecasting data into a single shared view, as well as deliver valuable analytics and real-time alerting capabilities. These solutions can be used to track and trace the life cycle of a subsea tree monitor, or to control production of a subsea well. They can help boost offshore platform productivity, identify and improve equipment maintenance scheduling, and predict asset problems before they occur.
But nowhere is Industry 4.0’s potential for new efficiencies greater than at the terminal, where operators are under more pressure than ever to squeeze the highest possible product volumes through their supply chain and transportation infrastructure. The pressure will not ease up any time soon as exports continue to climb.
In its November 2017 white paper, “US Downstream Capital Projects, Turnaround & Maintenance – Market Outlook 2018,” research firm Petrochemical Update said that major oil and gas developments currently underway will cause the U.S. to shift the entire trajectory of the global energy system over the next few years as it becomes a major exporter of petroleum products. The firm noted that the American Chemical Council (ACC) estimated there were 310 projects under construction or planned and $185 billion in potential capital investment as of mid-2017, up from the 97 projects and $72 billion in March 2013. At the same time, however, consulting firm PwC says that most oil giants are still cautious about new initiatives with major capital expenditures. In its “2017 Engineering and Construction Trends” report, the firm said that, while investments are projected to increase through 2018, in line with a projected rise in oil prices, overall spending levels will remain far below the historic highs of 2012.
Maximizing the efficiency of existing infrastructure will be critical during this period of growing exports and careful investing. Organizations need accurate real-time data to make the best possible decisions at all stages of the supply chain – from upstream exploration and petroleum production; through midstream transportation to refineries for conversion and storage; and to downstream processing and the transportation, marketing, and distribution of refined products by pipeline, vessels, rail, and trucks.
Industry 4.0 tools will play a critical role in helping terminal operators navigate this transition. This includes terminal optimization platforms that have already been instrumental in helping liquid storage terminals absorb massive growth in crude oil transportation traffic from onshore shale finds over the past few years. Initially deployed at the dock, these web-based collaborative process-optimization tools have enabled users to reduce dock delay times an average of 35 percent within the first few months of their adoption, and to complete approximately 15 percent more vessel calls within the first year. More recently, these tools have evolved to provide planning, reporting, forecasting, analytics, and alerting capabilities across all terminal logistics operations, thus setting the stage for new ways to manage multi-modal product movements.
A New Way to Manage Terminal Logistics
There are numerous reasons why terminal operators are adopting transformative process-optimization platforms. First, they improve supply chain visibility so operators know what is happening across the entire supply chain and with all product movements from the dock to tanks, trucks, rail, and pipelines.
Second, terminal optimization platforms enable collaborative troubleshooting and decision making. Multiple stakeholders and vendors must work more closely together than ever, so they can solve scheduling and other problems and understand how actions in one part of the operation affect what is going on elsewhere.
Third, terminal operators need more consistent asset-utilization reporting. Until now, users typically had to manually create spreadsheets and handle all communications in person or by phone or email. Today’s Industry 4.0 tools automate event logging activities while ensuring that diverse stakeholders can collaborate anywhere, anytime, to improve a wide variety of dock and terminal activities. For example, they can build tank-to-tank lineups on the fly and keep them for future use – creating them in a consistent fashion so that operators can understand throughput for every line and route, identify bottlenecks, and build business cases for additional infrastructure.
Terminal operators also have a critical need to keep operations within best-practices performance envelopes. Without real-time and historical operational data, operators cannot set and manage measurable key performance indicators (KPIs), improve and standardize productivity, or alert users when corrective action is needed.
Finally, terminals need more effective tools for validating capital and outsourcing investments. This includes comparing the effectiveness of third-party resources, analyzing investments in additional owned assets, and evaluating a combination of both approaches.
Today’s terminal optimization tools solve each of these challenges. Introduced at the dock more than a decade ago, they use a combination of real-time and historical Automatic Identification System (AIS) data to improve visibility into vessel operations and help cut liquid-cargo transportation costs while improving safety and security. These tools vastly improve processes like demurrage calculation, ensuring that all parties have the same information about demurrage costs and who is responsible for penalties. They also ensure that everyone can discuss and dispute issues by using the same information about real-time and historical vessel movements and can collaborate to identify and correct root causes of delays.
Now these tools can also be used to improve real-time operational planning and reporting across all terminal product movements from the dock to tanks, trucks, rail, and pipelines. Stakeholders can collaborate on an extensive range of logistics operations ranging from pipeline transfer scheduling, tasking, and line management functions to historical reporting for performance tracking, optimization, and trending analysis. Today’s tools also deliver new forecasting capabilities across all transportation modes and serve as the most consistently accurate source of information, all available from a single shared source.
Collaboration and KPIs
Today’s tools are revolutionizing terminals through two major innovations: collaborative asset allocation, and the use of KPIs to keep operations within the desired efficiency envelopes.
Asset-allocation errors are increasingly problematic. The most common problems that operators report are when multiple products must go through the same pump, and when there is incoming product that requires special handling or needs more time to transport than others. They are now preempting planning oversights and associated scheduling conflicts by giving teams the necessary logistics information to collectively make complex asset-utilization decisions. All operational and scheduling data are consolidated in one place, so users have complete real-time visibility across many steps of multiple processes that can often overlap and affect each other. They can collaborate on tank-level forecasting, see conflicts and schedule necessary responsive actions accordingly, and implement proactive alerting to prevent over- and under-fill situations and other scheduling conflicts (Fig. 1).
Real-time KPIs and trending analytics are an equally important innovation. KPIs have traditionally been used to make capital expenditure decisions related to maritime dock expansion projects. They have also enabled operators to demonstrate that existing dock capacity was being fully utilized. Now, operators are using these tools to plan more effectively for investments in new tanks and other storage and transportation infrastructure. These tools are generating reports on a variety of terminal-wide task metrics and tracking measurable KPIs ranging from how long it takes to complete one task and launch another, to whether they are complying with emissions regulations.
KPIs in Action
Several major petrochemical companies have adopted KPIs at the dock to maximize the performance of existing assets as they simultaneously plan for and add new transportation and storage capacity. Some KPIs are monitored on a weekly or monthly basis, and others require that measurements be captured on a more frequent basis.
At one U.S. Gulf Coast (USGC) operation, each vessel call event time is accurately and consistently captured for accurate trending information on vessel berthing and turnarounds – everything from the time spent on multiple pre-berthing operations to the expected and actual times each vessel spent at the dock (Fig. 2). Data is gathered across the entire vessel call – from the pre-transfer period through all transfer and post-transfer activities.
Having both real-time and historical data gave the operator the clearest possible picture of the entire process. It learned that one of its dock’s shifts was routinely exceeding the benchmark time between Hoses Off and Vessel Ready status. The operator’s next step was to gather comparative data across all shifts. It also encouraged bottom-up recommendations so it could define and implement new best practices across the entire organization.
In other examples, an operator compared the performance of its third-party service providers in areas like call-out times, and scheduled customer service reviews to explore how processes could be improved. A third company is focusing its KPIs primarily on reducing delays. It learned that waiting time for tank space was a root cause of delays that could be resolved by ensuring that customers were ready for each transfer.
Problems frequently lie beyond the dock in other sections of the supply chain. During 2017, there was widespread news coverage of railroad service problems, which caused at least one major petrochemical company to choose plant locations based primarily on whether they were served by both multiple rail carriers and access to barge transportation. Other companies have rerouted their rail shipments to trucks, but this move has not necessarily proved to be a reliable solution either, since, in December 2017, the U.S. Department of Transportation (DOT) instituted its Electronic Logging Device (ELD) rule, which strictly regulates commercial driving hours. By enforcing how many hours that drivers can safely be on the road and, in turn, how much money they can earn, this rule has reportedly spurred many employees to exit the driver pool – thus creating a shortage of drivers, especially for more strictly regulated tanker trucks. Even when there is ample driver supply, many terminal schedulers are only given the monthly nominated amount and do not have visibility into how many trucks will arrive on any given date.
KPIs help to mitigate these and other supply chain risks by enabling all stakeholders to understand root causes of delays. They can create benchmarks for improving and standardizing their best practices, alert users before deviations from the target KPI benchmarks exceed accepted thresholds, and collaborate on the best courses of action for remaining within the KPI best-practices envelope.
Taking the Leap
The first step in reorganizing and enhancing terminal supply chain logistics is to identify all opportunities where aggregating sensor and planning/forecasting data can deliver efficiency gains. Several USGC operators have begun analyzing scheduling conflicts for each product lineup in the terminal. They are forecasting tank levels, customer inventory, and line fills by using the same set of shared information across all product flows – from tank-to-tank transfers to inbound and outbound pipeline, ship, barge, railcar, and truck movements.
The next step is to determine what output is needed to attain these efficiency gains. This might include dashboards for sharing trending reports and real-time scheduling information. It will also likely include operational terminal status information and KPIs for improving logistical decisions while standardizing best practices and analyzing root causes of delays.
Next, operators need to assess what data input is required to develop the output, such as real-time and historical flow rates, movement schedules, and product movement logs. It is also critical that a secure infrastructure be developed for collecting and aggregating data from sensors, both internal and external to the facility. Operators embracing Industry 4.0 capabilities should understand how and why to voluntarily comply with the USCG’s initiative to protect critical maritime bulk liquids transfer (MBLT) operations from cybersecurity threats. It should be possible to ingest data flows in multiple ways that ensure that both data and communication are protected.
Finally, operators must leverage stakeholders and third-party subject matter experts to incorporate best practices into the terminal optimization program. KPIs are well-defined and widely adopted at the dock and are now emerging across other transportation modes as Industry 4.0 platforms become the logistics hub for all terminal product movements.
Industry 4.0 has arrived at the terminal in the form of collaborative process-optimization tools that are quickly becoming the logistics hub for all product movements – whether they are tank-to-tank transfers or a variety of inbound and outbound pipeline, railcar, and truck movements. These tools are changing how terminals operate by automating significantly more of the supply chain management process. They are also introducing real-time KPIs and trending analytics into capital investment decision making and into the increasingly critical process of improving and standardizing efficiency best practices and benchmarking.
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