The Natural Gas Industry Lags When it Comes to Integrating Data

Even with all the technological advances over the last ten years, the natural gas industry still struggles when it comes to integrating operational and commercial data. The industry is state-of-the-art in tracking SCADA and real time operational data. Much can also be said about the commercial side of the business with its scheduling, nomination, and allocation processes. However, when it comes to merging real-time operational data with commercial accounting data in order to get a real-time financial look at a pipeline, the industry lags.

Departments within an organization are often very distinct and operate with different priorities. Operations focuses on running the pipeline and would like to have commercial/accounting data to make better decisions. Commercial and accounting focus on revenue and need to see how they are doing right now (before official measurement close). While they both need each other’s data, they are often hesitant to share it based on the fear that it may be misinterpreted. It’s not uncommon to have two different numbers being reported because the data was viewed differently. That just causes frustrating reconciliations – and often finger pointing – all trying to get to the “real” number.

Recent software advances make this integrated data more readily available – without the grinding behind-the-scenes effort historically needed to consolidate the information. However, companies need to commit to a process, tear down the silos within the organization, and do some up-front work without grousing about “how this didn’t work in the past.”

The result will be a world class organization that can have its data available to all concerned parties – without worrying about whether the number is right, or whose data is better. It will all be consistent.

Robert W. Young
Product Manager – Commercial Applications

Is the Natural Gas Market Ready for Hourly Nominations?

Marketers, traders, and power generators would like the natural gas market to be as fluid as the electric market. Pipeline companies trying to efficiently manage their assets want to assure that if markets pull all their gas in a few hours per day, that they keep the integrity of their pipelines safe, as well as collect money from those using their pipelines in such a manner.

The problem in moving the natural gas market towards the electric market lies in the fact that electricity literally moves at the flick of a switch, while natural gas takes a bit of time to move from the producing fields to the end use markets.

Frankly, power generators don’t necessarily care what it takes to get the gas there; they just want it available when they need it. Pipelines are often more interested in selling capacity and maintaining steady throughput and linepack.

To manage this hourly, transactions will need to be scheduled on an hourly or series of hourly basis. This would result in up to twenty-four scheduling cycles in which the pipeline would need to assign capacity and make cuts each hour. Great in theory, but not realistic from a scheduling and accounting view.

The logical step is to continue scheduling under the current cycles and utilize hourly nominations for flow profile calculations so that pipelines can manage their assets – and maybe even come up with a simple billing mechanism that does not call for massive manual spreadsheets, or re-writes of existing business systems.

Until all the camps come together and put themselves in each others shoes, a solution determined by the regulatory agencies trying to mediate the selfish concerns of the different camps will result. That could lead to disastrous results – or at least leaving no one happy.

Robert Young
Product Manager – Commercial Applications

Dashboard Web Applications

Pipeline applications are becoming more and more advanced offering more and more information to different groups of people within the pipeline companies. Todays software applications provide a wealth of information ranging from design to commercial information, with lots of operational information in between.

All this information can be overwhelming, so efficient data management and presentation is very important. Different groups of personnel needs different data and the timing requirements are quite different as well. For example, you need to know immediately if there is an integrity issue on the pipeline. Often you want to know ahead of time of any upcoming contract violations etc.

All this information can be tied together in a Dashboard application that allows each specific user to select exactly what data to show. This application can be accessed via the web and will show information from a wide range of applications. Basically only your imagination limits what information you can include here.

This dashboard is currently under development and you will soon be able to see a live demonstration of this. If you have any comments as to what type of data that should be included within the dashboard or how this should be presented, please feel free to post your comments.

Thanks,

Morten Kristiansen
Product Manager - online operational applications

How Dynamic will the LNG Market Become?

LNG imports to the U.S. are set to surge over the next ten years (50+ onshore terminals being built or going through the approval process), resulting in a new set of trading points being generated.

Owners of facilities who buy LNG from the source, move it to their facility, and then sell it off - either at the tailgate or likely utilizing firm transport to sell downstream - will simply serve as additional supply to the market.

However, some facility owners may stay away from the buy/sell process and simply provide services to its customers who do the trading – acting much like pipelines or NGL plant processors who make their money as service providers – in this case LNG services. Depending on the terminal size and number of pipeline connections, these facilities could become fairly flexible and liquid market points. While it would be prudent for LNG supply owners to have set markets for their gas, if demand continues and LNG becomes a necessary and integral supply source, then the call for this gas could be very dynamic.

Will a company take the calculated risk of bringing in supply on the chance that the market will bid up for it? Envision a tanker on its way in with the marketing sharks and end use facilities starved for supply lying in wait. Assuming that pipelines will have capacity, a facility with a number of pipeline outlets could be a very active trading point. And the demand competition wouldn’t just be in the traditional U.S. markets – the rest of the world is already ingrained in the LNG process – and tankers can change directions.

This competition on a global scale could certainly become very interesting. Of course, the facilities still need to be built, rather than just approved.


Robert Young
Product Manager - Commercial Applications

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

Commercial side vs. Operational side: Pulling in the same direction?

In today’s natural gas pipeline world, it seems like the Commercial aspects of the pipeline are often not in synch with the Operational side. While almost all pipelines adhere to the theme and goal of “moving as much gas as possible, in a safe and efficient manner”, the Operational and Commercial sides of the business may have different ideas about how to accomplish these goals. It all comes down to how much companies are willing to “push their pipelines”.

An Operations Control person normally likes to run the pipeline on a consistent pace, so that compression and linepack are at a steady level. This leads to lower operating costs and more efficient operations. The Commercial side is more motivated by throughput and making sure every last bit of a pipeline’s capacity is utilized. Capturing that extra bit of margin (especially when prices go up) can be the difference between a profit or loss for the month. Although a blanket statement, it often holds true – Operations looks to reduce costs while Commercial looks to increase revenue.

The industry is littered with examples of cases where actual results did not meet projected expectations. Oftentimes new production and compression is brought on line to a gathering system, only to “back off” existing production. How many times has a 10 mm/d well come into a system, but resulted in only a 6 mm/d increase in total throughput? Too many of those can certainly kill an ROI calculation. Another case would be selling the maximum daily capacity at a delivery point. That works fine until there is a two hour upset in the field, with no way to make up the difference during the day – imbalances anyone?

While no one suggests that the Commercial side of the business would ever expect Operations to do anything unsafe, isn’t it fair to ask,”How much more can we move before we get into a bind?” Doing this can impact operating costs negatively, while increasing transportation revenue. Which is better? While the answer to that question can be debated ad nausea, it seems that the key is to make sure that both sides of the coin are looked at.

If the operational side of the business can be pushed to run the pipeline outside of traditional “comfort zones”, the company may, in fact, realize more revenues without sacrificing safety and efficiencies. In return, the Commercial side of the business should be tasked to truly understand the costs of each new deal they make. Increased revenue does not necessarily relate to increased profit – especially if the Commercial side does not realize the cost to move their increments of gas. There should be a Commercial realization that sometimes no new deal is the best deal.

The pipeline companies who manage this conundrum the best way will be those that are around for the duration. This will involve the better day to day management of data and the ability to accurately project different operational conditions based on varying commercial scenarios. And maybe more importantly, it may require different reporting structures within the organization to be accountable to each other.

Many companies keep their operational and commercial arms of the organization under a completely different set of executives. An accurate and sufficient quantity of data is a must in order to bring Commercial and Operations together in their forward looking plans. So, how does a company overlay commercial transactions (taking into account the fact that gas can change hands numerous times before it goes from the receipt point to the delivery point) on top of the operational pipeline and make good decisions? Now that’s a separate discussion for another time…

Robert Young