Apr 16

Hydrocarbon Processing: US Petrochem Construction is Booming, Refineries are Profitable

The always excellent Hydrocarbon Processing has a very good article by Adrienne Blume about the current Ethylene and petrochemical construction boom in the US, and how the supply of shale oil and cheap gas is driving the trend.  It’s a great article that sums up a lot of what is driving current automation project growth.

From the article:

In recent years, US refinery profitability has been directly correlated with the ability to source shale oil from US and Canadian plays. Pricing incentives will favor the continuation of this trend. Refiners are anticipated to add more than 500 Mbpd of new refining capacity by 2020 to capitalize on the increasing supply of shale oil and on growing distillate demand.

Most of the new investment will be in refineries in PADDs 2 and 3. PADD 3 includes the US Gulf Coast (USGC) refining system, which has 52 refineries with 9 MMbpd of capacity—half of the US’ total refining capacity. The USGC is a key supplier of refined products to the rest of the nation and is a major export center.

Hydrocarbon Processing: US petrochemical construction boom and refining margins cushion profits

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Apr 16

ARC Publishes New Buyer’s Guide for Analytics and Business Intelligence

ARC Senior Analyst David White has just completed our new Buyer’s Guide for Analytics and Business Intelligence.  You can download the brochure for the guide here. ARC is introducing a whole new series of Buyer’s Guides and this is just the latest installment.  You can see more about our entire series of Buyer’s Guides here at our web site.  

ARC Senior Analyst David White

ARC Senior Analyst David White

From the press release.  :

The devil is in the detail – every company has somewhat unique needs when it comes to analytics and business intelligence (BI) solutions. However, at the heart of any selection and procurement cycle lie a set of core technologies, processes, and best practices. ARC’s new selection guide provides that core foundation of selection criteria, to cut the time and cost of selecting analytics and business intelligence solutions.

In the past, BI solutions have been costly both to license and implement. However, new approaches to deployment – such as Software-as-a-Service, the cloud, and self-service – change that. “There’s enormous growth in demand for analytics. That demand is fuelled by three things.

First, new approaches have lowered the barriers to entry. Suddenly, that long tail of dormant projects that could not be tackled cost effectively are now viable. Second, there’s growing awareness that analytics can provide a sustainable competitive advantage. Third, the emergence of the Industrial Internet of Things (IIoT) is starting to generate massive amounts of data that enterprises can exploit,” according to ARC Senior Research Analyst David White (dwhite@arcweb.com), the principal author of ARC’s “Analytics and Business Intelligence Technology Evaluation and Selection Guide.

ARC’s guide covers all key areas of identifying and selecting an analytics or business intelligence supplier, including vendor background, software platform, technical support, solution implementation and features, as well as total cost of solution ownership.

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Apr 09

New NTSB Safety Recommendations for Oil Trains

ARC Senior Analyst Paula Hollywood just sent me this blog post about new safety recommendations from NTSB for rail tank cars.  I am sure most of you have seen coverage of recent rail car explosions, and there have already been several in 2015 as you can read in the NTSB report.  While these recent incidents did not result in loss of life, several incidents last year unfortunately did.  Clearly we need to do more to make these rail tank cars safe.  These recent rail car accidents are the big reason that we are champions of new pipeline construction.

ARC Service Director for Supply Chain Management Steve Banker also has a blog on Forbes where he includes a broader writeup and an interview with Paula Hollywood, ARC Senior Analyst Peter Reynolds, and myself.

ARC Senior Analyst Paula Hollywood

ARC Senior Analyst Paula Hollywood

On April 3, 2015, the National Transportation Safety Board (NTSB) issued a Safety Recommendation urging the Pipeline and Hazardous Materials Safety Administration (PHMSA) to mandate installation of thermal protection systems for tanks cars transporting Class 3 flammable liquids. The recommendation comes after examination of damaged tanks cars involved in the Mount Carbon, WV accident in February and three others in 2015 alone.
ARC has been following efforts to improve oil train safety. A blog posted February 25 (http://automation2.com), questioned whether improved safety recommendations would ever be realized as the railroad industry retreated from previous commitments to improve safety and proposed rulings delayed. This most recent and more stringent recommendation calling for thermal protection systems adds new energy to the oil train safety debate.

All four 2015 derailments examined involved violent explosions followed by significant fires of tank contents. The WV accident necessitated evacuation of surrounding communities and interrupted the supply of municipal water in the affected area. Fortunately, none of these accidents involved any fatalities, but at the time appeared to have little influence on railroad safety stakeholders. Post-accident investigations concluded that heat flux from the explosion due to overpressurization of tank contents caused ruptures in the steel containers independent of any damage from accident impact.

The new recommendation calls for bare steel DOT-111 and jacketed CPC-1232 model tank cars be equipped with thermal protection systems for tank cars carrying Class 3 flammable liquids. The recommended systems are similar to those required for tank cars transporting flammable gases under Title 49 Code of Federal Regulations (CFR) Section 179.18. This regulation requires tank cars to have sufficient thermal resistance such that exposure to a pool fire for 100 minutes or torch fire for 30 minutes will not release any tank contents except what is discharged through the pressure relief device. The Board contends that thermal protection systems will safeguard tank contents from temperature and vapor increases and limit the volume of material required to be evacuated through the pressure relief device, further stating dangerous overpressurization would be limited. Section 179.15 of the code requires pressure relief devices on all tank cars transporting flammable materials.

All 2015 accidents involved trains carrying Bakken crude, considered to be more volatile than other types of oil due to the amount of entrained natural gas. In attempt to minimize the volatility of Bakken crude in transport, the North Dakota Industrial Commission unanimously approved an order on December 9, 2014 requiring all oil producers in the state to install oil-conditioning systems to separate the natural gas from the oil to reduce the vapor pressure of all Bakken crude. The order was effective April 1 of this year. No accidents have been reported since this date to test the effectiveness of the measure.

Although the NTSB is calling for an aggressive schedule to replace/upgrade older cars, as of this writing the railroad industry has not responded to this new recommendation. Addition of thermal safety systems will undoubtedly increase the costs to upgrade existing cars above and beyond previously recommended safety improvements, likely causing the industry to react negatively. Given past behavior, this analyst anticipates US stakeholders will take a wait and see position to determine the effectiveness of the North Dakota Order to condition Bakken crude before making any commitments.

Forbes Logistics and Supply Chain Blog: New NTSB Safety Recommendations For Oil Trains: Too Little, Too Late?

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Apr 09

Check out the ARC/Control Magazine Podcast Series

ARC has been quite active with our longtime partner Control Magazine in developing a series of podcasts focused on a wide range of topics in the world of process automation.  Here is a link to the podcast archive.  

I just completed a podcast with Jim Montague of Control on the future of process automation systems, which will appear soon.  Other topics covered include STEM training, fieldbus, remote operations, wireless, and more.



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Apr 08

Next Generation I/O Roundup

Everyone is talking about the next generation of process automation system I/O.  New technologies such as configurable and characterizable I/O can greatly reduce installed project cost and better accommodate late changes to the project, as well as providing a smaller footprint. Leading automation suppliers have “stepped up to the plate” with new I/O that is either characterizable, configurable, or a combination of the two. Characterizable I/O includes hardware nodules that plug into a rack and can represent analog input, analog output, digital input, digital output, etc. The type of module plugged into the rack determines the type of signal. Modules can be plugged anywhere in the rack and are location independent.

Anyway if you are like me it makes sense to start with some YouTube tutorials on what these new solutions are, how they work, and what they can do for you.  First on the list is the new Foxboro/Schneider Evo Intelligent Marshalling. Here we can see Thad Frost of Schneider giving us a pretty good rundown on how the new Universal I/O.


Here is a nice video that has a “white board” format and explains Emerson Process Management’s CHARMs approach and Electronic Marshalling:


Honeywell’s new Orion release of Experion includes Universal I/O that allows each point to be configured.  You can download a free ebook and white paper on the Honeywell Process Solutions web site here.  Universal I/O is part of an overall campaign that Honeywell has to reduce automation project costs called LEAP or Lean Execution of Automation Projects.

Honeywell Universal I/O (Source: Honeywell)

Honeywell Universal I/O
(Source: Honeywell)

Yokogawa recently released its Network I/O solution for Centum VP Version 6 and you can read more about that here in this Centum VP white paper.  Network I/O combines configurable capabilities with flexible hardware modules, so it is something of a combination of the characterizable I/O approach adopted by Emerson and the software configurable approach embraced by Honeywell and Schneider.

Yokogawa Network-IO

Yokogawa Network-IO


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Apr 08

Impact of falling oil prices: Shell acquiring BG for $70 billion

ARC Senior Analyst Tim Shea submitted this post today regarding the acquisition of BG Group by Shell.

Tim Shea

ARC Senior Analyst Tim Shea

ARC has been opining that one of the impacts of falling oil prices would be an increase in mergers and acquisition activity and/or an increasing number of partnerships or joint ventures. One of the biggest M&A deals in recent history was recently announced as Royal Dutch Shell plc has agreed to acquire BG Group PLC in a $70.1-billion cash and shares deal intended to sharpen Shell’s focus on integrated gas projects and deep water. If the transaction is approved by shareholders and completed, existing BG shareholders will own about 19% of Shell. It means Shell would be buying the company at a major premium of 50% based on the Reading, UK based company’s share price on April 7.

The merger, the largest this year, consolidates the UK’s largest and third largest gas companies into one; with a market capitalization of $246 billion.

Shell said the acquisition would increase its proved oil and gas reserves by about 25% and its production by 20%. In its 2014 annual report, BG estimated its natural gas reserves at 11.55 Tcf proved, 5.8 Tcf proved and developed, and 9.25 Tcf probable under the Society of Petroleum Engineers assessment method. It estimated oil reserves at 1.69 billion bbl proved, 537 million bbl proved and developed, and 1.37 billion bbl probable. BG in 2014 produced 606,000 boe/d of oil and gas in Australia, Bolivia, Brazil, Egypt, India, Kazakhstan, Norway, Thailand, Trinidad and Tobago, Tunisia, the UK, and the US.

The deal materialized against a background of falling gas and crude oil prices; over 50% since June 2014. It’s expected to eliminate overlapping costs and help safeguard the companies against declining commodity prices. Shell would also break into Australia and countries in east Africa, Latin America, and central Asia.

The merger would help to stabilize both companies, especially BG, who would benefit from having the support of a stronger partner. While Shell was able to operate, pay dividends and maintain capital at a price of $75 per barrel of crude, BG found it more difficult. The deal is now expected to generate pre-tax synergies of around £2.5 billion. Shell aims to sell assets worth $30 billion during between 2016 and 2018.

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Apr 06

New Study Release: CPAS Version 3.0

You are probably familiar with ARC’s market research reports that quantify and forecast various markets from automation systems, software, and instrumentation to automation services.  Not all of our studies are quantitative market shares/market forecast reports, however.  Last month, ARC released Version 3.0 of our Collaborative Process Automation System (CPAS) study.  The CPAS study is ARC’s view of what a process automation system can do and, more importantly, how the CPAS vision can help end users and owner-operators reach a state of Operational Excellence (OpX).  Today’s process automation systems are becoming more and more complex and even more complex is evaluating the increasing value that automation brings to the business.  Is your current automation a hindrance to reaching your business goals?  Does it provide the proper level of safety and reliability?  Does it incorporate manufacturing operations management (MOM) level III applications?

Many process automation systems in use today — including many being installed in new plants — incorporate large amounts of customization, suffer from project delays and cost overruns.  Furthermore, they provide poor integration with many MOM applications ranging from plant asset management systems to production planning systems.  Many of these systems also suffer from artificial barriers to the open flow of information throughout the system to the people that need it.   CPAS discusses many principals that if followed will help to remove these barriers.

CPAS Functional View

CPAS Functional View

Of course, all of this must be done in a secure fashion and also must support many of the emerging technologies that we see making their way into systems today, such as virtualization, cloud computing, and the Industrial Internet of Things (IIoT).  These topics are more than just buzzwords for process automation today, they are a part of many systems that are already available and end users must consider various levels of functionality and potential security risks offered by these new technologies.  Most importantly, however, the business value must be determined.

CPAS also includes guidance on the complex standards environment that exists around today’s systems.  From international prescriptive standards such as the IEC 61508 and 61511 safety standards to the new ISA 108 standard on work processes for intelligent device management, ARC lays out the current standards landscape and how it can affect your automation strategy.  The “Collaborative” aspects of CPAS are also examined in greater detail, with advice on how to set up expert portals in your organization and on prioritizing the use of MOM applications that may already be installed at your plant or facility.

CPAS is a forward thinking report, and may just make you rethink your approach to automation.  It provides an excellent planning tool and foundation for building a truly long-term strategy that will improve your profitability and reduce risk.  You can check out the brochure for the new CPAS study here and the press release here.  You can also see a brief presentation I did at the ARC Forum in 2014 that touches on many of the key themes of CPAS here.

ARC CPAS Version 3.0 Brochure

ARC CPAS Version 3.0 Press Release

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Apr 05

Smart Sensors Shaping Future Landscape of Automation and Physical Security

A well-attended sessions at the recent ARC Industry Forum in Orlando, Florida focused on leveraging smart field systems to create value in process industries. Several presentations provided end user perspectives on employing smart sensors to improve process automation, asset management, safety, and/or physical security for industrial facilities and critical infrastructure.

ARC Advisory Group analysts provided a brief overview on leveraging smart field solutions, both wired and unwired. ARC discussed how smart connected devices relate to the emerging Industrial Internet of Things (IIoT) and the increasing impact made by solutions such as multiphase flow meters and leak detection systems in oil & gas operations across the world. We also covered the progress of the ISA 108 standard for intelligent device management and its potential impact on end users.

Smart Sensors – The Future of Automation
A presentation by ARC Associate, David Lafferty, President of Scientific Technical Services, outlined some examples of emerging smart sensing solutions. Mr. Lafferty discussed how smart sensors are transforming the automation world by improving sensor reliability and increasing plant performance by providing actionable information. According to Mr. Lafferty, as an enabler for IIoT, smart sensors will play an increasingly important role in process automation in the future.

ARC Advisory Group clients can view the complete report at this Link.

If you would like to buy this report or obtain information about how to become a client, please Request ARC Info

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Mar 14

Energy, Infrastructure, and Manufacturing Driving Automation Market in Indonesia

Increasing demands for energy, infrastructure, and manufactured goods will drive the automation technology market in Indonesia as Southeast Asia’s largest economy continues to expand. The automation products, systems and services market is expected to grow strongly over the forecast period (2013-2018), according to a new ARC Advisory Group study.

Aside from 250 million people, Indonesia’s favorable demographics include a young and still-growing population and a rapidly rising middle class. The country also has an abundance of natural resources, including coal, copper, gold, nickel, tin, oil, gas, and palm oil. GDP is predicted to increase by a factor of 10 over the next 15 years to exceed $9 tillion, making Indonesia one of the world’s biggest economies come 2030.

“Consumer-based manufacturing industries such as automotive, food & beverage, and household and personal care are all investing heavily to boost production capacity and meet demands for products previously out of reach of most Indonesians,” said ARC Southeast Asia General Manager Bob Gill, co-author of ARC’s new “Automation Systems Market Outlook for Indonesia” “The new and upgraded plants require modern automation technology to ensure reliable, productive, safe, and secure manufacturing.”

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Mar 14

Despite Challenges, Upstream Oil & Gas Market Expected to Increase Automation Investments

Owner-operators and independent exploration & production (E&P) companies in upstream oil & gas face increasingly difficult operational, environmental, and regulatory challenges as they strive to bring natural gas and other hydrocarbons to market safely, efficiently, and profitably. The recent phenomenon of declining oil prices only adds to these challenges. Advances in drilling technology such as fracking, micro seismic imaging, and horizontal wells led to the successful development of onshore unconventionals. Major operating companies expect to drill tens of thousands of new wells in the next decade to reach these unconventional formations. To achieve such large well numbers and cope with the workload and expected future manpower shortages, well production operations will have to automate wherever possible.

“ARC sees the upstream market offering the greatest growth opportunity for automation going forward. There is a lot of room for improvement in automation in this industry, much of which will be driven by a lack of qualified personnel,” according to analyst Alex Chatha, the principal author of ARC’s “Automation and Software Expenditures in the Oil & Gas Upstream & Midstream Industry Global Market Research Study”.

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