May 22

My Interview with Chet Mroz at ARC Forum 2015

Here’s our YouTube video of my interview with Chet Mroz of Yokogawa.  Chet is one of the true luminaries in the automation business and was responsible for reinvigorating Yokogawa’s business in North America for the past several years as president and CEO of Yokogawa Corporation of America.  Chet discusses how Yokogawa is responding to changing market conditions and customer demands in process automation.  Market conditions in oil and gas are also discussed.

Chester Mroz, President & CEO Yokogawa N. America @ 2015 ARC Industry Forum Orlando

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May 01

GSE Systems Brings Fresh Approach to Address Shortage of Skilled Operators

ARC Director of Consulting Peter Reynolds recently sent me this blog post about GSE Systems!

ARC Director of Consulting Peter Reynolds

ARC Director of Consulting Peter Reynolds

The shortage of skilled workers in operations, process engineering and maintenance represents a significant challenge for the oil & gas, refining, chemicals, and all other process industry sectors.

According to a report published earlier this year by oil & gas industry personnel specialist, Air Energi, “Not being able to get the right people at the right time for the right cost could inevitably threaten the overall de-livery of oil and gas projects on time and within budget.” For owner-operators the “graying” or retiring of experienced workers also creates concern for the sustainability of existing plant operations. Due to the high turnover, as high as 30 percent in many cases, we’re seeing growing demand for skilled operators and process engineers.

In a recent briefing, operator training specialists, GSE Systems, updated ARC Advisory Group on the company’s unique approach to training workers. This combines human resources with learning management strategies and appropriate simulation and other technology to provide what the company believes is a necessary “reboot” of the industrial workforce development and training solutions currently used to train workers.

  • Key findings from our briefing include:
    • GSE Systems’ holistic approach extends beyond training simulator technology
    • GSE Systems’ “Entry to Expert” program appears to dovetail well with the industry model for engineering and plant design.
    • GSE Systems’ approach encompasses a comprehensive training pro-gram for both console operators and field operators.

Filling the Boots of Experienced Retirees

GSE Systems believes that the current turnover problem in operations can be characterized by an old pair of boots. A pair of boots can tell us a lot about where someone has been and what they do.

The well-worn boots in the picture on this page, for example, belonged to Paul, a hypothetical senior operator. Serving as a field operator, board operator, and shift supervisor for the past 35 years, he knows the process technologies inside out. He’s traced every line in the plant. He spent his entire career operating various process units and maintaining plant pro-cess equipment such as compressors and separators, helping to ensure safe and continuous production of on-spec product. In his career, he handled multiple process incidents, passing on that knowledge to other operations, maintenance, and engineering personnel. He also mentored and trained dozens of new operators and engineers over those 35 years… but, now he’s gone. He left his boots, and has retired.

So how is industry going to find the right people to fill Paul’s boots? And once we find him or her, how are we going to make them experts and how long will that take? Who will handle the big problems until then? Can we quickly replace the vast knowledge and experience that was lost when Paul left? How do we quickly on-board the next generation that must wear these boots? After all, Paul’s boots contain no history of all that Paul learned over his long career.

Traditional Simulation-Based Training is Limited

The most common approach to dealing with training operations is to design and build a process simulator during the engineering design of the plant or facility. Process simulators are built by control system or automation suppliers for varying fidelity needs and match the operating graphics and control system. Delivery tends to match the schedule of the plant FEED commissioning and startup activities. The traditional simulation-based approach tends to focus more on commissioning and operator readiness at a single point of time, rather than addressing the full scope and lifecycle development of workers and staff. According to GSE Systems, the result usually ends up as a very expensive piece of technology stored in the back room, rather than providing a return on investment.
GSE Systems’ solution for employee on-boarding and skills development begins well before the automation system for a project is designed. The company has applied its simulation and other technologies to address workforce development, plant operations, engineering and process controls.

Entry to Expert (E2E) Approach

  • GSE Systems calls its overall approach, “called Entry to Expert,” an integrated training process that begins with tools to help in the workforce screening and selection process. E2E adds the necessary tools and technologies throughout the lifecycle of the plant or facility in a way that also match human development needs. Key components include:
    • Screening and selection tools to help find the right candidate and provide a process for evaluating technical aptitude and personality traits that match those of the organization
    • Instructional design to develop continuous improvement programs for workers and staff using the ADDIE model for instructional design (analysis-design-development-implementation-evaluation)
    • Web-based training on fundamental equipment and controls to familiarize trainees with more basic concepts prior to more complex learn-ing
    • Web-based training on process fundamentals covering the basic de-sign and operations of plant components and networks. (The module capture subject matter expertise from projects for major energy clients).
    • Applied learning through universal simulations of equipment de-signed to reinforce knowledge and retention with hands-on practice.
    • Web-based training for plant systems continuously build on the fundamentals.
    • Instructor-led integrated training programs provide real-world knowledge transfer and mentoring.
    • Universal simulations of unit operations to provide training on typical plant evolutions, startups, shutdowns, and troubleshooting.
    • Custom plant simulators to help drive experiential learning and develop behaviors and procedures
    • Refresher training and upskilling to help maintain operator proficiency and plant performance

GSE Systems is providing a fresh approach to meet the need for trained and skilled workers for process industries. Applying a variety of tools and technologies at different stages of career development to speed transfer of knowledge and expertise to new operators could clearly help improve transitions and normal operations alike and potentially avoid major incidents. Likewise, GSE Systems’ lifecycle approach to training also appears to make a lot of sense.

ARC Advisory Group recognizes that the needs for skills development solutions is changing. Studies have shown that younger people now entering the workforce have different requirements and learning styles than previous generations. No longer does training and education take place solely in the classroom. Training now takes place in a variety of locations using a variety of methods, all supported by modern technologies with high visual content, virtual reality immersion-based or 3D technologies. To replace the knowledge and expertise lost by retiring workers, these methods and technologies should work in concert with workforce development and career development strategies.

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May 01

More Information and Tweets from Siemens Oil & Gas Innovations Summit

As I stated yesterday, I was fortunate to attend the Siemens Oil & Gas Innovations Summit last week at Minute Maid Park in Houston.  The meeting set attendance records for Siemens in its third year, with around 500 attendees.  A good sign in a tough environment of reduced prices and capital investment.

The keynote addresses were quite good and I already talked about the presentations delivered by Raj Batra of Siemens and Dan Norman of MAPI in my previous post.

Erlend Engum of National Oilwell Varco gave a very good presentation on the increasingly sophisticated automation approaches for the exploration and production side of the business. The company is increasingly automating its drilling processes with multi-protocol support, advanced HMI solutions for smart machines, and integration of third party equipment.

The drilling industry wants more reliability, safety, and automated rig processes. Robust networks, simulator testing. and smart rig design and layout are all key requirements, as are better software lifecycle management and reduced unplanned downtime. These are all similar requirements to other process that are more closely related to fluidic flow and control in production processes and the downstream and it is reflective of the increasing convergence of automation requirements for all applications in the oil and gas supply chain. Mr. Engum also spoke about the role of big data and the need to make sense of millions of data points to make sound business decisions.

Avoiding Cyber Security Pitfalls in Upstream Oil & Gas

Alice G. Barnett, Manager, Information Technology Audit for ConocoPhillips spoke about cyber security pitfalls to avoid in oil and gas. Al-ice spoke about “Black Swan” events that cannot be predicted and are totally unexpected but can be rationalized in hindsight. Although you cannot predict these events but you can design to prevent these events from having an impact on your business. Cyberattacks are also becoming more successful, and success rates of cyberattacks doubled between 2013 and 2014.

However, Ms. Barnett pointed out that the most common threat actors for manufacturing IT are insiders, although hacktivists and nation states are also persistent bad actors. Internally, Ms. Barnett pointed out the importance of access and identity management, good password management (how many people still use “abc123” or “password” as their pass-word?), and protection from malware through patching, antivirus, and blocking USB ports. Physical security was highlighted as well, and it was pointed out that not too many end users have intrusion detection soft-ware and many that do are not maintaining logs long enough. Sometimes it can be weeks or months before you realize someone is in your system. Ms. Barnett pointed out that no matter how good your processes and technologies are, it comes down to the competence of your people.

Siemens Software Value Proposition for Oil & Gas

Andreas Geiss, Vice President of Siemens Industry Software, gave a presentation on how Siemens can provide better quality decision making across the oil and gas value chain through Siemens Comos, XHQ, and other soft ware offerings. Mr. Geiss did an excellent job pointing out that value that Siemens can bring to the oil and gas industry through its considerable suite of applications, from Comos to Siemens PLM software, XHQ enterprise intelligence software, and more.

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Apr 30

Siemens Oil and Gas Innovations Summit

I attended the SIemens Oil and Gas Innovations Summit last week at Minute Maid Park in Houston.  The event drew a considerable crowd of around 500 people, many of them end users.  The event brought together all of Siemens’ capabilities in the upstream and midstream oil and gas industry, from software to hardware to industry specific solutions such as water treatment systems.  As part of the media cadre, I was also able to get a tour of the new Siemens analytical facility in Houston, a brand new space with 30,000 square feet of production space where analytical shelters are fitted with analytical instruments and necessary infrastructure.  Siemens is the largest supplier of process gas chromatographs through its acquisition of Applied Automation from ABB back in the late ’90s.

The software offerings at the event were of major interest.  Someone at the event told me that Siemens is the number two software supplier in Europe behind only SAP.  I haven’t yet verified that fact but it seems reasonable when you add in the company’s UGS acquisition, Comos, as well as the XHQ enterprise intelligence software (you may remember XHQ as INDx, which was acquired by Siemens several years ago).  XHQ has a strong following in the process industries among major refiners and chemical companies.  Comos is on a path to realize a vision of a single dynamic model of the plant that can provide the foundation for engineering and design as well as simulation, optimization, and other applications.  I got to use an Xbox controller to take a virtual 3-D walkthrough of an oil and gas facility using Comos and it was quite impressive.  Clearly the implications of Comos go way beyond simple P&ID drawings and we look forward to writing more about further developments in Comos for the process industries.

The event itself featured many interesting keynotes starting with Raj Batra, president of the Digital Factory division of Siemens.  Mr. Batra stressed the need for more advanced forms of automation to deal with the cost pressures and increasingly challenging business environment of the oil and gas industry.  Mr. Batra also pointed out the desperate need to modernize existing infrastructure in the oil and gas industry, citing a statistic from Morgan Stanley that the oil and gas infrastructure in North America is the oldest it has been since 1938.

Don Norman, economist and director of international studies at the MAPI Foundation, gave a good presentation about the factors impacting the cost of oil.  Spare capacity, intermittent market volatility, and the value of the dollar were all cited as key factors, as well as speculation, terrorist activity, and geopolitical instability.  Rig counts are dropping considerably in the Gulf of Mexico, but efficiency is increasing.  Continual re drilling of new wells is necessary however when you are dealing with shale oil.  The amount of oil consumed per inflation adjusted GDP has increased by about 2.4 percent per year, but consumption is growing a lot less rapidly.  Long-term EIA projections show that petroleum consumption will remain essentially flat because of increased efficiency.

Here is a selection of tweets from the event last week:

I’ll post more about Comos, XHQ, and other items of interest from the event this week.  ARC clients can look for an ARCview article that will come out next week.

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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 (, 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 (, 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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