HYDROCARBON PROCESSING AUGUST 2013

Originally appeared in:August 2013, pgs 76-81.Used with permission.

| Bonus Report

LNG DeveLopmeNtsLiquefied natural gas (LNG) is receiving much attention as a green and abundant source of energy, as the shale gas revolution in North America paves the way for new LNG exports from the US and Canada. Gas-to-liquids (GTL) projects are also ramping up around the world, providing natural gas-derived liquid fuels to high-demand regions. This month’s bonus report explores technological developments to improve operations at LNG terminals with planning and scheduling programs, and at GTL facilities with information management systems.

Bonus Report LNG Developments M. Fahl, Honeywell Process Solutions, Frankfurt, Germany; P. Kelly, Honeywell Process Solutions, Phoenix, Arizona; and N. Blair, National Grid, Isle of Grain, UK

Take a collaborative approach to improving LNG terminal performance

Liquefied natural gas (LNG), the fastest-growing sec-tor of today’s gas business, is adding to the diversity of en-ergy supplies across the globe. By some estimates, LNG now accounts for more than 10% of the world’s gas re-sources and more than 25% of all internationally traded gas (Fig. 1).

The growth of the LNG market has resulted in the con-struction of numerous gas terminal operations worldwide. One such facility is National Grid’s LNG import terminal and regasification plant on the Isle of Grain in Southeast England.

A collaborative approach to terminal planning and scheduling solutions was implemented to improve the operational and business performance of the Grain LNG operation.

Background. In industrialized nations such as the UK, demand for natural gas is on the rise. Gas consumption is expected to increase by at least 15% over the next 10 years. Traditionally, the UK has met commercial and consumer demand with gas sources in the North Sea, but these sup-plies are in decline.

Due to this supply shortfall, approximately 50% of the UK’s gas is now imported from other regions. Importing natural gas in the form of LNG makes economic sense when transporting over long distances.

An LNG import terminal has several key functions in the natural gas supply chain:

• Receive LNG ships and unload cargo• Store LNG in cryogenic tanks• Manage gas quality• Regasify LNG to meet customer needs

and demands• Supply gas to the national transmission system.Worldwide, there are 91 LNG regasification termi-

nals onstream, both onshore and offshore, as well as 67 regasification terminal projects either planned or under construction.

Grain LNG. A global electricity and gas company, and one of the largest investor-owned energy con-cerns in the world, National Grid delivers gas and electricity to millions of people across England and the US Northeast.

National Grid Grain LNG (Fig. 2) is a wholly owned subsidiary of National Grid and the first commercial LNG import terminal/regasification facility in operation in the UK. The facility is estimated to import over 20% of the UK’s total gas supply.

Fig. 1. LNG accounts for more than 10% of the world’s gas resources.

Fig. 2. National Grid’s LNG import terminal and regasification plant on the Isle of Grain.

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LNG Developments

Originally constructed in 1980, the Grain LNG opera-tion delivers gas into the UK national transmission and local distribution systems in accordance with customer nominations. The terminal receives ships carrying LNG, typically from North Africa, the Middle East and the Ca-ribbean. Each vessel can carry up to 265,000 cubic meters (cm) of LNG. The liquefied gas is pumped to the site’s storage tanks via a cryogenic pipeline, where it is stored at low pressure.

The Grain facility includes two LNG unloading jet-ties. One jetty is capable of unloading LNG tankers with a cargo capacity of 70,000 cm–225,000 cm, and the other can handle LNG tankers of 125,000 cm–265,000 cm. Site storage tanks have an approximate capacity of 1 million cm (MMcm).

The terminal’s regasification equipment consists of submerged combustion vaporizers (SCVs) capable of regasifying 644 gigawatt hours per day (GWhd), or 2.1 billion cubic feet per day (Bcfd). Facilities also are pro-vided for propane storage and injection. There are two liquid nitrogen plants with a total of four air-separation units providing a storage capacity for 5,000 metric tons of liquid nitrogen.

National Grid’s first customers received a 20-year con-tract for 3.3 MM metric tons per year (metric MMtpy)

of LNG throughput capacity. With the terminal’s subse-quent increase in capacity to 14.8 metric MMtpy, addi-tional long-term contracts were awarded.

Operational challenges. As demand for LNG in-creases worldwide, energy producers face seemingly con-flicting challenges. They must expand capacity in differ-ent regions, make business and production as agile and adaptive as possible, and improve operational efficiency while also increasing operating margins and upholding contractual obligations.

The LNG industry also seeks to design assets for minimal staffing, inventory, energy efficiency and car-bon footprint, as well as improve production flexibility to capitalize on spot trade opportunities.

As a result of these challenges, owners and operators require “intelligent terminals” maximizing the use of business systems and information technology (IT) appli-cations to achieve operational excellence (Fig. 3).

Traditional approaches to managing LNG terminal operations are now becoming obsolete. Although soft-ware models may be used to predict future inventory and gas distribution strategies, these tool-like models are not integrated and require manual workflows to communi-cate schedules and activities.

The increasing complexity of terminal business pro-cesses led Grain LNG to seek an alternative to spread-sheets, which historically have been used to coordinate a wide variety of business processes across functions. A solution was needed to ensure a single version of the truth in operating and business data. This would eliminate problems associated with multiple versions of spreadsheets being shared by the commercial opera-tions department, the gas quality team and other groups throughout the facility.

Complex LNG logistical problems can only be solved by mastering the entire production chain, according to the company. For terminal owners and operators, this means having a transparent overview of functions such as ship unloading, storage and regasification.

Technology solution. Like other LNG import termi-nals and regasification facilities, the Grain LNG terminal sought continual improvement of production and busi-ness processes to add value for both staff and customers. The operators also wanted to build on existing knowl-edge to provide consistently excellent performance across operations.

Without a clear technology direction on the horizon, Grain LNG first tried prototyping different spreadsheet-based solutions to provide a benchmark for future im-provements. The company soon realized it would still be faced with manually updating spreadsheets with input

Fig. 3. The LNG industry requires smart terminal operations, due to today’s business challenges.

Fig. 4. Capacity and distribution planning application.

HYDROCARBON PROCESSING AUGUST 2013

LNG Developments

from different teams—a laborious task requiring signifi-cant back-office support.

After considering alternative approaches, Grain LNG identified a proprietary capacity and distribution plan-ning (CDP) software program as the best answer to op-timizing its operational and business workflows. This application, which serves as the foundation for various supply chain solutions and which integrates with other systems, provides an interactive and structured environ-ment for improved decision support.

The Grain LNG terminal also uses a proprietary knowledge-management software system for plant automation and field-level processes. This system in-terfaces with a process history database and the CDP application at the third and fourth levels of the system hierarchy. CDP data is also shared with an enterprise resource planning (ERP) solution for cost-allocation and invoicing purposes.

At the heart of the CDP application is a workflow en-gine that supports best practices in business processes. This solution offers the familiarity of a spreadsheet en-vironment, without the inherent limitations and consis-tency problems. Meanwhile, the workflow engine guides the planning process through a series of logical steps. In addition, calculations are configured similarly to those in a spreadsheet, and views can be added for specific users.

The application is specifically intended to automate and streamline a wide range of business processes. For example, personnel at the Grain LNG terminal utilize the CDP tool to create flexible forecasting models and access daily predictions for key operating values. They can also manage plan revisions and related approval workflows.

From Grain LNG’s perspective, one of the most valu-able features of the new technology is its ability to fa-cilitate enterprise-wide collaboration. Data integrity and consistency are ensured via a single common repository for planning information and reporting. Site personnel work within a structured planning environment with predefined workflows. These workflows facilitate com-munications between organizational functions, encour-aging coordination and integration (Fig. 5).

Despite its open, collaborative environment, the CDP solution maintains a high level of data security, access control and change management. The single system of authority consolidates all relevant operational and ship-ping data into a common database that is auditable and visible to all involved parties. This decreases potential risks from demurrage and other operational issues.

Project scope. In the summer of 2010, Grain LNG management considered the best way forward to optimize terminal business processes. This effort would require alignment of site objectives with National Grid’s vision

of innovation and efficiency, coupled with strategies for achieving and supporting overall operational excellence.

Around this initiative, Grain LNG engaged a technol-ogy solutions firm to scope potential planning models to interface with its inventory system and its nomina-tion and shipper information system. The two organi-zations worked together to develop a project strategy involving staged implementation of the solution for:

• Commercial operations (e.g., cost allocation, heat pipe forecasting and annual unloading planning)

• Environmental reporting• Gas quality (utilities tracking and plant configura-

tion)• Marine operations (vessel unloading, scheduling

and tracking)• Shift teams (heat nominations).

Grain inventory andnomination system

CDP model 1

CDP model 2

CDP model 3

Grain shipper information system

Production control center

PHD

SAP

CDP model ...

Fig. 5. Grain LNG system architecture.

Fig. 6. Heat nomination process.

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LNG Developments

A model scoping study conducted in June 2010 identi-fied multiple areas of emphasis affecting terminal man-agers, planners, engineers and operators. Stage 1 of the project officially commenced in December of that year to address heat nomination forecasting and the terminal’s annual unloading plan.

In January 2011, Grain LNG undertook Stage 2, which included a host of marine vessel unloading, sched-uling and tracking activities. Stage 3 of the project was launched in July 2012 to cover cost allocation and cus-tomer invoicing functions.

Collaborative approach. Grain LNG’s project ini-tially addressed the forecasting of heat nominations for the combined heat and power (CHP) process at its ter-minal. This work was based on an external collaborative approach with a nearby power and gas company, which brought together two separate companies and processes based on common goals.

Grain LNG uses excess heat (up to 340 MW) from the nearby 1.2-GW combined cycle gas turbine (CCGT) power station’s condensing units to heat wa-ter for LNG vaporization. The vaporization process requires a large amount of energy—up to 1.6% of the vaporized LNG.

The success of the CHP project was dependent on a wide variety of operational factors and data, some of which spanned the course of a year. Heat nomination forecasting had to encompass all relevant information and meet the requirements of both companies’ operating teams.

In particular, it was essential that daily processes in-volving heat nominations and renominations were in agreement with heat and delivery requirements. This included day-ahead nominations (indicative/firm/final) and in-day renominations (up to every hour). Relevant decisions ranged from the use of heat pipe and fuel gas, heat amount and water temperature, to the number of SCVs in CHP mode.

Collaboration between Grain LNG and the power and gas company on heat nomination forecasting for the CHP scheme has the potential to save up to 300,000 metric tons of CO2/yr. Additionally, the power and gas company benefited from levy exemption certificates for cleaner power generation, while Grain LNG can save up to 170 MMcm/yr of customer gas.

The Grain LNG project was also required to support internal collaboration among various departments, in-cluding commercial operations, marine operations and gas quality. This effort encompassed the terminal’s ac-ceptable use policy (AUP), which provides a calendar in-dicating when shippers are allowed to bring in a cargo, as well as various marine scheduling activities. With expan-sion of the Grain LNG site in December 2010, the termi-nal has two jetties with different limitations on the vessel sizes they can accommodate (Fig. 7).

In the past, terminal planners relied on manually in-tensive workflows for allocating berthing slots to terminal customers based on heuristic rules:

• Number of slots (per contract)• Spacing between slots (per contract)• Specific shipper-to-shipper relationships, so as to

minimize excursions from established guidelines.The workflow for AUP creation previously includ-

ed spreadsheet-based calculations, manual tuning and “what-if ” analysis, followed by the publication of results. This approach was replaced by an automated workflow where spreadsheet logic is encapsulated in CDP calcula-tions. The initial AUP is now available at the click of a button, and plan updates and “what-if ” analysis are han-dled by application-planning scenarios. Data are readily available to users across the organization due to integra-

Fig. 7. Vessel berthing at the Grain LNG site.

Fig. 8. LNG cargo-unloading model.

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LNG Developments

tion with other models and external applications.With the enhanced modeling capability for vessel-

unloading scheduling and tracking, Grain LNG person-nel have AUP and tide information readily available. The solution also supports vessel selection from the vessel database, input of vessel arrival information and actual cargo-unloading information. The resulting outputs pro-vide detailed timing of cargo unloading based on vessel-performance information and constraint evaluations with respect to back-to-back unloading, jetty assignment, ship-offloading reports (forecast vs. actual), etc. Therefore, portions of the AUP process that previously required sev-eral days of manual labor can now be completed in around an hour.

Stage 3 of the Grain LNG project involves a highly com-plicated model for cost allocation calculations to support the invoicing process. The goal is to reduce its typical in-voicing time for customer transactions from 6–7 days, to 3 days or less. This improvement would have a direct impact on operational excellence initiatives.

Business benefits. Grain LNG has deployed ad-vanced technology to improve the modeling of its termi-nal operating processes, expand the view of annual de-livery plans, and better understand how changes to the plan impact the way the terminal runs. It also uses the technology for “what-if ” assessments to address short-term changes in operations.

The overall advantages associated with this solution include:

• Greater visibility of the end-to-end supply chain• Faster identification of opportunities and potential

problems• Proactive business management (e.g., less firefighting)• Synchronization of business, production and logistics• Enforcement of best practices in electronic workflows• Fewer inefficiencies and penalties, and less demurrage• Elimination of data reentry, report creation and oth-

er activities that do not add value.As demonstrated by Grain LNG, energy producers are

anxious to close the gap between the ERP and manufactur-ing execution systems. One way to optimize production and business processes is to implement solutions eliminat-ing the use of time-consuming, error-prone spreadsheets in

favor of a single version of the data that is maintained in a central information repository. Such solutions have proven useful in addressing a wide range of problems across indus-trial facilities.

Takeaway. The LNG industry must continue to develop new practices to manage increasing competition with oth-er fuel sources, competition within the industry itself, and growing pricing volatility. For LNG terminal owners and operators, this means striving for operational excellence resulting from automated workflows, efficient processes, improved data consistency and easier information access.

Grain LNG found the capacity and distribution planning system to be an ideal platform for managing its CHP scheme and other planning/reporting aspects of operations support. Personnel are now able to make the right decisions at the right time, and then execute appropriately. The CDP solu-tion is seen as an area for growth and integration throughout the Grain LNG operation.

Marco Fahl is a senior consultant and technical project lead for Honeywell Process Solutions in the areas of supply chain optimization and production management for the oil and gas industry. Dr. Fahl studied mathematics and economics, and holds a PhD in mathematics. After working several years for another major automation and manufacturing execution system provider, he joined Honeywell’s Center of Excellence for Advanced Planning

and Scheduling in Germany in October 2006.

Patrick kelly is responsible for Honeywell Process Solutions’ production management solutions, including planning and scheduling, supply chain and production accounting solutions for the process industries. These solutions drive improved business performance by optimizing the balance of demand, capacity and supply to maximize profits for the enterprise. Mr. Kelly is focused on identifying customer needs and translating these needs into

products, solutions and services that deliver measurable results. Mr. Kelly has been with Honeywell Process Solutions for 30 years and has a BEng degree in systems engineering from Carleton University in Canada.

Nick Blair is the commercial operations team leader for National Grid UK LNG—a role he has held since January 2012. Mr. Blair joined National Grid in September 2009 on a graduate development program. From September 2009 to January 2012, he worked in several key operational areas at the Grain LNG terminal, including the commissioning of Phase 3 of the plant. Building on his experience with spreadsheet and database

modeling, combined with his engineering background, Mr. Blair was made responsible for the technical requirements for the development of the CDP at Grain LNG, and has been the technical lead for the various forms of the project over the last two years. His present responsibilities include managing Grain LNG and the Avonmouth LNG storage facility’s interactions between customers and terminal operations teams. Mr. Blair is based in England and holds an engineering degree from the University of Oxford.

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