Product Installations – they should be easier

Making the decision to buy a natural gas application, whether it be to replace an existing system or to make the leap from spreadsheets can be tough. Not only for the energy company making the decision, but also for the vendor companies trying to provide solutions. In a perfect world, you buy an application, install it, add your data, and you are up and running. How hard could it be? Of course, the issue of the “slight configurations” often get in the way.

Companies buying products want to pay for a product, receive the upgrades, and not have to worry about customizations. Nor do they want to have to worry about either maintaining large IT staffs to run the application or having to go to the vendor every time an add or change needs to be made. One problem comes when companies aren’t willing to step back and look at different ways to do things. That leads to customizations that might not be necessary. When it comes to unique specifications, many might think, “You might as well add it to the product. It will make your product better and more flexible. Heck, you should pay me since you’re going to make all this money re-selling it.” The other mistake companies make is assuming that their business process will change. While it certainly makes sense to go to an “industry standard” way of doing things, it is often a very difficult task to convince the folks actually doing the daily work that the ‘the way we’ve always done it” needs to be changed.

One area where I see vendors and their clients getting into trouble is as follows. The vendor can comply and usually does provide a solution to a certain business requirement. However, the way it works in the application may not be acceptable to the customer for whatever reason. At that point, who needs to change? The company, because their requirement is not standard, or the vendor who said they complied? This can often lead to contentious discussions that no one really wants to get into. As a side note, in my personal opinion, if a vendor complies with everything you ask for in your Request for Proposal (RFP), with no comments, be careful.

The solution is to spend more time up front during the RFP process and the Functional Design Specification (FDS) once the deal is signed. Set expectations correctly, and everyone will be happy.

So, where does this leave us? It seems that vendors should provide solutions that offer flexibility without having to be everything to everybody. Trying to capture everything is a recipe for an application that is either continually being “debugged”, won’t have very many new releases, or won’t last very long. Energy companies should be realistic in their expectations as to what they expect and what their staffs will accept. Working together and spending a little more time up front will cause a lot less pain at the end of the process.

At the end, you just might end up with an application you are happy with that actually meets your business needs and keeps you and your customers happy. Then all you have to worry about is interfacing the application to the rest of your systems. Now those are really easy, right?

Robert W. Young
Product Manager

May 2007 Update

In the news...

• Alaska Gasline Inducement Act bill passes (5/11/2007) - Governor Sarah Palin's Alaska Gasline Inducement Act or AGIA has been passed by both houses of the Alaskan legislature. The bill will be finalized by the Senate Finance Committee to reconcile slight differences in versions passed by the Senate and House. AGIA establishes guidelines and inducements for companies desiring to compete for the rights to build a gas line in Alaska. On July 1st a request for applications to a competitive bidding process for the right to build a North Slope gas line will be issued. The winning bidder will have the right to construct a natural gas pipeline to the North Slope, which has an estimated 35 trillion cubic feet of gas. The line may eventually transport 4.5 billion cubic feet of natural gas a day, which is approximately 7 percent of the current U.S. demand. [More here]

• Ethanol: Boom or Bust? (5/8/2007) - As the market grows for U.S. produced ethanol products, skeptics wonder if the demand will be there in the future. In 2006 American farmers harvested its third largest corn crop ever of 10.5 billion bushels of which an estimate 3.2 billion bushels will go into ethanol production. Although this amount allocated to ethanol is 49% more than the previous year, skeptics worry about ethanol's efficiency (worse than petrol), economic benefits and effect on the environment and food prices. [More here]

• Gas line project could establish new standards for financing (5/8/2007) - Up to now most gas line projects required funding of well under $10 billion, according Frederic Rich of the New York law firm Sullivan and Cromwell. However the projected cost for a new Alaska gas pipeline could reach $30 billion. This unprecedented amount presents numerous challenges to obtaining necessary financing. Funding will have to be customized to the risk profile of the project before construction can begin. Risk will need to be allocated between numerous stakeholders including lenders, the project builder, and the owner each, with funds at risk as well as federal loan guarantees to have a successful project completion. [More here]
  

• Official pushes joint gas line with Alaska (5/3/2007) - As cost estimates to construct gas pipelines southward from the Arctic continue to escalate, a Canadian official called again for a single line serving both North Slope Alaska and northern Canada. The proposal recommends first building a line to Mackenzie River delta reserves on the Arctic seacoast of Canada, then adding another leg westward linking up Alaska, instead of building a separate Alaska-U.S. line. While not new, the proposal has renewed urgency because estimates to build the Mackenzie pipeline have risen from $7.5-billion three years ago to $16-billion today, said Brendan Bell, Northwest Territories industry minister. [More here]
  

• National Energy Board participates in Operation NARWHAL 07 in Norman Wells, NWT (4/24/2007) - The National Energy Board (NEB) of Canada participated in Operation NARWHAL 07 in Norman Wells, Northwest Territories. The NEB regulates gas and oil operations in the North and since 2005 has been responsible for the security of pipeline infrastructure. The training exercise involved military troops, aircraft assisting the Royal Canadian Mounted Police (RCMP) and other northern civilian agencies in response to a simulated threat to Canadian oil production and transportation infrastructure in the Northwest Territories. [More here]

• Transportation Safety Administration (TSA) Joins Private Firms in Securing 2.4 Million Miles of Energy Pipelines (4/2007) - In 2004 the TSA's Pipeline Security Division began its assessment of a 3,300 mile cross-border pipeline system responsible for carrying 2 million barrels of oil a day between the U.S. and Canada. From that assessment came two reports – one classified, one unclassified – on vulnerabilities, risk-based strategies for addressing them, and options as threat levels change. Critical information was shared with the Canadian government as well as the pipeline company. Cross-border assessments represent just one of the division’s initiatives. Others are domestic corporate reviews, monthly conference calls with company officials, a weekly suspicious incidents update shared with the companies, an annual pipeline security forum, and security training assistance. [More here]
  

Online Applications Offered as Standard Products

Installing online pipeline application software has always been seen as a major project (writing specs, testing applications, generating project specific documentation etc.). Naturally, this approach is often rather costly (since you pay for the software and a fairly large amount of overhead as well). In many cases this makes sense - but in the past years many pipeline software packages have matured tremendously and are today offered as more or less standard software packages.

A good example is leak detection and location software. Today Energy Solutions offer standard leak detection software that is easy to configure and install and yet provide superior performance. The latest innovations in User Interfaces also makes it extremely easy to use, so the need for training has diminished significantly. It is therefore possible to install this software using a completely new approach:

A sale includes software license as a minimum. The configuration and interface to a SCADA system can be done by the customer or by Energy Solutions (or typically as a joint effort). With the latest graphical configuration environment and standard communication protocols like OPC, this phase is rather easy and often takes just a few weeks.

Since the software is a standard product, detailed Factory Acceptance Testing and custom documentation can be bypassed, so within a fairly short time frame the system can be installed on site. The only thing remaining is a brief Site Acceptance Test where the data interface and configuration details are tested and validated.

This approach has been taken successfully for several customers and I highly recommend it for "standard" applications like leak detection. The benefit is a much shorter time frame and associated lower cost. The problem is getting pipeline operators used to this approach - it has been done differently for many years, and I realize this approach is drastically different!

Would you like to try this on your pipeline? You will be positively surprised. No more writing huge specifications, project management, weekly meetings, having contractors in your control room for months etc. Doesn't that sound nice?

Morten Kristiansen, Product Manager