LOTO Automation in the Midstream Market – Throughput vs. Production

Most of my experience in the petrochemical industry is in the midstream market, from years of providing operations and regulatory programming to the pipeline division of one of the major oil companies.  The mindset in midstream is very different from downstream, although they also go to lunch as early as they can.  Behavior in the midstream market, like in the downstream market, is driven by revenue generation.  However, the revenue generation method is drastically different.

In the downstream market, raw materials go in one side of a processing unit and finished goods come out the other side.  The raw materials are a cost of goods sold, and the sales of the finished goods represent the revenue.  If the ratio between these two numbers is good, then profit is generated.  Market forces may demand more or less of the product, but the reality is that in downstream, it is all about production, the act of completing the processing actions on sufficiently large quantities of raw materials to meet market demand, hopefully at a profit.  Obviously volumes can vary wildly but the overriding truth is that the unit is producing or not producing.  If no finished goods are produced, then it is guaranteed that the unit is not making any money.  The implication this has on LOTO is that the lockout scenarios can be oversimplified as two conditions: stop and go.  The benefit of LOTO automation becomes clear since the time to lockout is reduced.  That is, hurry up with the stopping so we can get back to going.  This line of thought breaks down in the midstream market.

In the midstream market, there are two major revenue sources: storage and throughput.  Storage is the act of occupying space in tankage.  That sounds simple, but thanks to API Volumetric Analysis calculations for things like temperature correction, shell vessel expansion factors, and floating roof corrections, it is not all that simple.  But the reality is that if there is someone else’s product in our tank (the third-party “for hire” scenario), we are making money per barrel per day.  Or, if our product is in our tank, we are at least utilizing our asset, and it can be considered “in production”, even if in use by the internal customer.  LOTO situations apply, but that is not where the midstream LOTO complexity can be found.  The real complexity of LOTO in the midstream market is when we begin to affect throughput.

Another significant revenue source in the midstream market is throughput.  Renting storage in a tank farm can make money, but most tank farms also have a terminal capability, that is connectivity between multiple modes of transportation in one tidy spot.  So, my trucks and railcars can come in from West Texas, and get unloaded at the terminal’s racks that are connected to a pipeline that services my refinery.  The product may or may not get buffered into tankage.  Either way, the terminal is providing this connectivity, which is typically billed on “throughput”, or the number of barrels that go through the connections.  When I am making a few cents on each barrel that goes through my terminal, I want to be sure that the maximum amount is going through at all times.  The product coming in is not raw material other than a physical presence.  The product coming out is not a finished good, other than being delivered to a desired location.  This is more of a service-based revenue than a manufacturing-based revenue, and this is what sets midstream apart from downstream.  The desired lockout scenario now is: keep going and never stop.  It may sound impossible, but all you need is a network of piping systems that provide multiple paths through the terminal.  For a basic example, let’s look at a smaller network: a piping manifold.  An oversimplified explanation of a manifold would be a crisscrossed set of pipes with valves at the intersections.  By opening some valves and closing others, you can come up with many different throughput flows.  There may very well be multiple paths between the same input and outputs.  So now, when we lock out a valve, we have the ability to open others and maintain throughput.  Flow patterns are typically named by the systems or products they serve, so our choices of open and closed valves could be described as maintaining throughput for “tank system 110” or maybe “crude”.  This “always on” methodology is where LOTO automation can succeed, or utterly fail.

As always, the devil is in the details.  When I am maintaining flow to tank system 110, then I have most likely closed off other valves that represent other flow, let’s say tank system 215.  The opposite is also conceivable.  So, before I isolate a valve in a manifold, I review what flow is critical right now (let’s say today it is 110 system), and attempt to lockout in a manner that preserves throughput on that flow (110 system).  When I lockout the same valve tomorrow, tank system 215 may be the critical flow path.  Now I am locking out the manifold in a completely different method to maintain today’s critical flow.  These two very different scenarios are both designed to facilitate work on the exact same valve.  It is a complicated concept, but I can assure you there are operators in the midstream market that evaluate situations and make these decisions off the top of their heads every day.  For LOTO automation to work in the midstream market this complexity must be handled or the whole process falls apart.  This key flexibility can be handled in a very precise and easy-to-use manner, yet it is commonly overlooked in packaged and internally developed LOTO systems.  If you would like to learn more about a comprehensive automated system, request information at www.dangertags.com

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