By Joe Nassif, Director, Terminal Industry Programs, Emerson
Leveraging Digital Technologies to Improve Efficiency, Reduce Costs and Enhance Safety
Like most oil and gas operations in the U.S., storage terminals are facing a multitude of challenges to keep pace with increasing customer demand and the ever-changing technology landscape. To effectively navigate these challenges, terminal operators must consider a strategic approach to increasing the performance, efficiency and safety of their facilities, with flexibility to adapt quickly to changes and a willingness to embrace automation as a catalyst for optimization. As an end-to-end solutions provider for the oil and gas industry, Emerson Automation Solutions has developed a methodology that can steer companies toward operational excellence using benchmarks of top industry performers to improve efficiency, reduce costs and enhance safety measures.
The Business Case for Digital Transformation in Storage Terminals
As the U.S. has become a more prolific producer of raw and refined hydrocarbons (second-largest exporter of petrochemicals behind Saudi Arabia), the demand for additional infrastructure and storage capacity has increased dramatically. The oil and gas industry as a whole is taking significant steps to fulfill the energy export potential of domestic feedstocks through operational enhancements, but many businesses in the midstream sector have been slow to adopt these measures often because of the perceived complexity of upgrading legacy systems.
Migrating from manual operations to a more controlled environment is one thing, but integrating advanced sensors and data-driven analytics for more predictive functionality can be a daunting task without a clear business case and strategic direction. In fact, most digitalization initiatives that are undertaken without an achievable and sustainable strategy to improve performance fall short of success. According to the 2018 McKinsey Global Survey on digital transformations, the success rate of these initiatives is only about 16 percent, and for traditional industries like oil and gas, the rate drops even further.
Emerson’s Operational Certainty approach provides companies a strategic roadmap to successfully navigate digital transformation based on key performance indicators of businesses operating within the top 25 percent of industry peers – or what is commonly known as Top Quartile performance. According to a recent benchmark study conducted by Emerson, Top Quartile performers in the storage terminals industry experience an increase in earnings before interest, tax, depreciation and amortization of up to 23% over average performers by applying better practices (e.g., digitalization) in four benchmark areas: reliability, capacity, safety and energy efficiency.
By working with Emerson, terminal operators can apply Operational Certainty principles and industrial automation to their own operations to reduce complexity and improve performance in these areas for sustained business success.
Predictive Maintenance to Ensure Asset Reliability
Because many of today’s storage terminal facilities were built a long time ago with expansions implemented incrementally over several years, operators are doing everything they can to monitor equipment assets and processes to avoid unplanned downtime – a major impediment to profitability. But ensuring reliability of these assets and processes can be near impossible if relying solely upon operational data provided by manual and periodic inspections. Such inefficient practices lead to maintenance practices that are more reactive (than proactive) and, ultimately, more expensive.
However, strategic integration of digital technologies and networks can allow operators the opportunity to manage this data on a proactive basis to ensure their facilities continue to operate more reliably, compliantly and profitably. For instance, wireless sensors and transmitters can provide a wealth of health and performance data from vital equipment (e.g., pumps, valves and piping) in real time from remote or inaccessible locations so abnormal performance can be recognized as it happens. When combined with a comprehensive asset monitoring and analytics program, such as Emerson’s Plantweb™ Optics or AMS Asset Management Software, this data can be converted to actionable information for more optimized maintenance practices.
Other digital solutions adopted by Top Quartile terminal performers for enhanced reliability include: automated isolation valves in product transfer lines; corrosion detection and prevention systems for pipelines and tank walks; floating roof level monitoring systems; and tank radar level gauges and overfill protection devices to mitigate product releases. Many of these functions can be tested prior to integration and installation through a digital twin simulation in Emerson’s TerminalManager application, which maps the existing infrastructure and allows for simulated operations to be done in real time.
Advanced Software for Maximizing Capacity Yield
Terminals operating within Top Quartile benchmarks are also the most profitable because they are often sufficiently equipped to optimize order fulfillment practices and maximize the amount of useable commercial storage capacity. These terminals utilize strict practices and automation solutions that not only capture product movement, measurement and yield data, but also process and analyze that data to produce actionable information that often results in greater volume deployment, inventory turnover and revenue capture.
Various software platforms have emerged in recent years that maximize labor and asset utilization by tracking shipper progress, managing tank volumes, determining flow routes, planning movement schedules over assets, and generating accurate pumping and work orders. Emerson, for instance, offers an entire suite of applications that can help operators manage planning and scheduling activities, operational workflows and processes, inventory calculations and capacity tracking all through a simple and intuitive web browser interface.
By integrating advanced nominations and invoicing applications with existing tank management systems, terminal operators can more easily realize volume productivity at a higher effective profit margin rate. In addition, the integration of inventory management software with the terminal control system, can significantly enhance visibility of tank and movement assets for more efficient inventory monitoring, loss prevention and product movement traceability. When combined with digital devices, such as wireless monitors and transmitters, these applications can help increase yield and enhance product movement traceability.
Offline simulation tools can also be used to optimize supply chain management, which is often one of the more overlooked aspects of maximizing terminal capacity. By using offline simulations to schedule certain assets within the supply chain, operators can maximize resource allocation and demand optimization by identifying truck/rail/ship loading and unloading inefficiencies and taking prescriptive actions to address them quickly and effectively.
Digital Measures to Minimize Safety Risks
With the increased size and complexity of today’s storage terminals, mitigating risks for employees, assets and facilities is quickly becoming a major focus among terminal operators. The handling and storage of hazardous liquids has always been inherently risky, but the rapid industry growth has resulted in increased health, safety and environmental regulation, making it difficult for many terminals to keep pace with Top Quartile performers in this area. However, developing strategies that leverage digital technologies for operational efficiency can effectively reduce the likelihood of recordable events, permit exceedances and loss of primary containment – all KPIs that determine Top Quartile safety performance.
The emergence of advanced remote sensing and operation technologies, like wireless valve position monitors, is now allowing employees to monitor conditions and contamination risks from a control room setting in real time. Non-intrusive corrosion detection wireless devices (both continuous and remote) and leak detection systems can now alert operators of potential hazards well in advance of critical failures. Similar devices such as radar-based floating roof level monitors help prevent tilting, which can lead to exposure of flammable liquids above the roof line. Adding these technologies to a comprehensive asset management system that can be monitored remotely via cloud-based architectures can streamline safety protocols and minimize risk.
Digital technologies can also support enhanced personnel safety strategies by providing real-time location monitoring of employees with wearable tags that can link to geofencing, safety mustering and man-down alerts. Emerson also offers training for terminal personnel to upskill them on digital devices and applications like electronic logbooks or even on more comprehensive platforms to take advantage of predictive analytics and promote a more digitally aware workforce.
Enhanced Visibility for Optimized Energy Utilization
Industry growth has also affected the way terminals approach energy utilization efficiencies within their operations. Increased regulation and higher utilities costs have caused many operators to consider more effective energy management practices that allow their operations to become more sustainable and, in the long run, more competitive. Top Quartile performing facilities typically leverage digital technologies to achieve lower energy consumption levels, reduced emissions and lower utility costs, and when deployed as part of a well-conceived energy efficiency strategy, the results can be much more impactful on the facility’s overall performance.
Planned digitalization initiatives can be an effective driver for consumption optimization, particularly when they are aimed at achieving accurate measurement and increased visibility. Pervasive sensing technologies, for instance, can be strategically located at different points where energy is being consumed to detect anomalies in temperature, pressure and flow that can provide real-time insight into sub-optimal conditions that can inform maintenance and minimize energy use. These can also be integrated as part of a continuous emissions monitoring solution to minimize emissions from daily terminal operations and maintain compliance with federal regulations.
Terminal operators can also use an energy management information system to better identify inefficiencies and gain a strategic perspective on their energy use through real-time data and analytics. For example, while steam traps that get stuck in open positions can be detected by remote wireless sensing technologies and repaired in real-time, a comprehensive energy management solution can detect patterns and perform predictive analytics for optimized maintenance.
Keys to Successful Implementation and Continued Digital Transformation
In order to meet future market demands, storage terminal operators must recognize digitalization as a strategic growth initiative and maximize the flexibility within their own operations to successfully adjust to emerging dynamics of the marketplace. This also means being receptive to technological innovations that can address those dynamics and laying the groundwork for a continued digital transformation that allows for sustained competitive advantage.
Successful implementation is often determined by executive sponsorship and buy-in, which requires an understanding that these technologies are mission-critical initiatives – catalysts for higher operational and financial performance. But perhaps the most significant factor is for the company to foster a culture of change among its personnel, allowing their workforce the opportunity and flexibility to learn and adapt to new processes in which these technologies can be utilized
It is also imperative for terminal operators to take a strategic approach that is not only aggressive enough to stay ahead of competitors, but also scalable to fit the specific needs of their business. Some technology partners offer comprehensive terminal management solutions that can be adjusted to facility size and growth projections. Emerson’s Plantweb™ digital ecosystem, for instance, is a scalable portfolio of solutions that can be customized to help facilities digitally enhance their operations based on their specific business needs and existing infrastructures. It can be implemented with the least amount of risk and provide a more sure-footed way to begin a digital transformation journey.
Today’s integrated terminal management systems give operators the digital tools they need to reach new levels of business performance, customer satisfaction and overall profitability. When aligned with a proven methodology (e.g. Operational Certainty) to improve efficiency, reduce costs and enhance safety, these systems can help storage terminals achieve Top Quartile performance and sustain it for the foreseeable future.