Michael M. Barash, Ph.D., Invensys Process Systems, Foxboro, Massachusetts;

and Darrell Rangnow, Resources2Energy, LLC, Houston, Texas

Increasing supplies of stranded natural gas reserves and favorable liquefied natural gas (LNG) economics have been driving forces for building many new LNG liquefaction plants and receiving terminals.

The global LNG trade has increased steadily by at least 5% per year since the industry began. According to leading experts, last year LNG comprised 2 to 3% of the natural gas supply in United States, and projections are that it will make up to 20% of the global supply within 20 years. Globally, the LNG market has grown by 33% over the last five years, and more than $4 billion has been invested in that effort, according to the International Energy Agency in Paris.

Responding to the increased LNG supply, a significant number of companies are in the process of constructing LNG terminals that will provide terminal services to LNG importers, including LNG ship offloading, LNG storage, re-gasification, and natural gas sendout. To support their business processes and operating procedures, LNG terminals require both terminal information management systems (TIMS) and process control systems (PCS). The main role of the TIMS is to ensure terminal’s operational safety and efficiency, and provide integration between the corporate management systems and terminal Process Control Systems. Some of the requirements for LNG terminal’s process control and operations management systems have been addressed in other studies, where the emphasis was on the operations on-line monitoring and reporting. Here, the focus is on the LNG supply chain’s unique features and its interactions with operations.

The goal here is to discuss the uniqueness of business processes stemming from the LNG Terminal’s commercial model and the resulting TIMS requirements. The discussion will also describe a phased approach to the TIMS design and implementation that has been employed by Invensys to ensure TIMS integrity and effectiveness. Invensys has applied the phased approach at various phases of the terminal information management system design and implementation for several grass-roots LNG terminals, including Cheniere’s Sabine Pass terminal (Texas, USA), Freeport LNG Development’s LNG receiving terminal in Freeport (Texas, USA), and Sempra LNG’s Energía Costa Azul LNG receipt terminal (Baja California, Mexico).

TIMS design considerations

In the past, LNG terminals typically only served one commercial customer. The few terminals that occasionally allowed access to additional (third-party) customers only did so in situations where the terminal operator substantially controlled the downstream markets, and the third-party users did not represent a competitive threat. As the LNG industry matures and LNG becomes a globally traded commodity, LNG terminals will be required to become more flexible and serve more customers. With greater flexibility, the LNG industry will be able to increase profits through strategic plays, such as intercontinental arbitrage, seasonal storage, and peaking services. The move towards third-party-use terminals requires some rethinking of the business practices, as well as information system requirements.

The degree of third-party utilization has broad ramifications on the business processes, design approach and, ultimately, information system requirements. Business models vary from a pure third-party use to a mixed third-party and owner-use. For the third-party-use terminals, the customers are actively involved in developing the business practices for grassroots terminals and throughout the information system design and implementation. The mixed third-party and owner-use model tends to result in less interaction upfront with the customers until the requirements are better defined.

There are other commercial agreements that affect information systems design, such as:

  • Sales and purchase agreements (SPA) that extend beyond the terminal to a price basis hub, such as Henry Hub. These netback deals from the commodity price basis increases auditing requirements on the terminal.
  • Operating balance agreements (OBA) with downstream pipelines affects contract administration requirements.
  • Operating and cooperation agreements (OCA) among the terminal customers affects terminal scheduling and contract administration requirements.
  • Complex commercial relationships among the companies, in terms of customers, owners, operators, and bankers which affect contract administration and terminal scheduling requirements.
  • Various lease and royalty agreements may also affect contract administration requirements.

Business process requirements become more attenuated to accommodate third-party use versus single-owner operator business models. Some of the business processes impacted by third-party-use agreements are:

  • Ship nominations become more important due to customer’s competition for berth and storage space.
  • Natural gas redelivery nominations are performed in accordance with downstream pipeline nominations procedures.
  • Marine scheduling becomes more challenging, particularly during weather disturbances, tidal effects, or heavy channel traffic.
  • Terminal scheduling becomes much more important due to the requirements to comply with the terminal use agreements and ensure equitable treatment among shippers.
  • Energy balance and reconciliation becomes more important in order to quickly identify losses, audit balances, and monitor ship discharge.
  • Customer LNG composition tracking becomes more important to ensure that downstream natural gas pipeline specifications can be met for various LNG cargo qualities.
  • Multiple shippers sharing the same terminal require a more thorough ship monitoring and demurrage analysis.

Most importantly, there is a need for a tight linkage between supply chain activities, ship unloading operations, and vaporization processes. Significant agility is needed to handle the difficult marine scheduling requirements at the terminals with multiple customers sharing the docks. These additional requirements for third-party-use terminals may significantly affect TIMS design.

Design and implementation

Each TIMS project is unique due to differences in the business model, approach to business, and commercial agreements. There are, however, notable similarities among the LNG terminals that cover the fundamental aspects of owning and operating a terminal, such as business, asset and compliance management requirements. In order to reflect terminal business processes uniqueness and ensure system integrity, Invensys utilizes a top-down, four-phase approach to TIMS design and implementation:

  • Business process design
  • Functional design
  • Detailed requirements
  • Configuration design and implementation.

Each phase of work is consistent with the previous phase and builds on the results of previous work. This approach preserves the terminal business processes integrity and ensures appropriate levels of automation. A brief description of each phase of work follows.

Business process design

Since each terminal tends to have unique requirements, it is important to begin the design with high-level workshops to identify these terminal-specific requirements. The business process design defines, at a high level, all the business processes required to operate and manage an LNG terminal business. This process begins by interviewing all major stakeholder groups including management, operations, maintenance, regulatory compliance and commercial groups.

Following the interviews, a business process map is developed based on the results of the interviews and previous design experience. Figure 1 illustrates a high level business process map that is required to manage the LNG supply chain. The boxes in the diagram are the business process and activities. The arrows between the boxes illustrate information flow between activities. The ovals outside the boxes represent information sources, sinks and stakeholders.

Functional design

Based on the results of the high-level business process design, functional design requirements for the TIMS are then developed. During functional design, we define a specific functionality required to meet the business needs and specify automation requirements for the business processes. This activity is reviewed by the business process stakeholders to ensure that the business process requirements are met, and that the right level of automation is used for subsequent design. At this phase, potential software vendors are identified that can meet some or all of the automation requirements, and the vendors are short-listed. A budgetary estimate is developed for the remainder of the project that covers the costs associated with system implementation, including software license fees, implementation and integration services, training, and ongoing software maintenance support.

Detailed requirements

Detailed requirements drill down further into specific activities required to execute the business processes. These details specify the information technology requirements that are needed to automate the business process in terms of software applications and their integration, message handling, archiving, viewing and reporting results. Detailed requirements form the basis for final software selection. Figure 2 illustrates the detailed design process mapping. Detailed requirements are tabulated in a compliance matrix such that software vendors can specify compliance with the requirements. The completed compliance matrix forms the foundation of their commercial proposal.

Design and implementation

Based on the detailed requirements design, the software vendors develop a configuration document which provides all the specificity that an application engineer needs to design and configure the software to meet the business requirements. The application vendor conducts design workshops with the end users in order to ensure the system meets the user needs prior to developing the configuration design.

The configuration design document also details the integration requirements and defines how the application will implement the integration requirements. For the case of custom-application development, the design includes use cases, and screen and report design mock-ups. During configuration design, the testing procedures are developed and approved by the stakeholders, and hardware requirements detailed.

Implementation consists of loading the selected software in the development environment and configuring it as defined in the configuration design document. After the software is configured, a full factory acceptance test is conducted to identify and correct problems prior to moving the software into the production environment. This is followed by site acceptance testing and integration testing to validate automation requirements across the major business processes. User training is conducted prior to placing the system into production. Once the system is fully operational, a performance audit is conducted to certify that the system meets its business process and system performance requirements.

Typical implementation schedule

The overall TIMS schedule is illustrated in Figure 3. From start to finish, the TIMS project requires 18 to 24 months to complete. The system should be fully operational prior to receiving the first cool down LNG cargo. Phase I, high level design, typically takes about one quarter to complete. Phase II, functional design, builds on the high-level requirements work performed at Phase I and takes about one quarter to complete. The Phase III deliverable is a “detailed requirements document,” which is specific enough to obtain fixed price quotes from systems integrators or software vendors, and requires one to two quarters to complete. Phase IV, configuration design and implementation, typically requires five to six quarters to complete, and should be done in waves that are aligned with the construction schedule.

Overview of system functionality

A typical TIMS functional architecture is presented in Figure 4. For completeness, the figure also includes terminal PCS. TIMS includes two hierarchical levels: business systems (supply chain management and business management) and production execution systems (operations management and asset management). In order to achieve safety and high efficiency, all these systems must work in concert; i.e., their business processes and corresponding applications must have coordinated business targets, schedules and information interactions. Invensys has defined five overarching, end-to-end business processes that collectively encompass all aspects of the LNG terminal business. These are generally classified as:

Supply chain management. This business process objective is to deliver reliable, transparent and timely information in one easy to use, role-based, secure portal to manage across the LNG supply chain.

Operations management. The primary objective is to empower operations personnel with easy to use production information access, operating instructions, and alerts in order to execute the terminal schedule in the most efficient way.

Asset management. The primary objective is to empower maintenance personnel with easy access to equipment information, maintenance order information, and alerts to ensure equipment’s high availability and align maintenance work with the terminal schedule.

Compliance management. This business process is designed to ensure constituency information needs and reporting requirements are met, with a focus on regulatory requirements.

Business management. This process provides the ability to achieve a balanced approach to meeting stakeholder needs and ensuring alignment of the business processes to those needs.

Functions of the three latter business processes – asset management, compliance management and business management – are fairly typical of any process plant, with the exception of specific requirements to manage LNG terminal’s various contractual agreements and capital structures. The uniqueness of an LNG terminal’s business processes and TIMS functionality stem from unique supply chain’s commercial model and tight interactions between supply chain and operations. These business processes are described in more detail below.

Supply chain management

The business process begins with an annual “customer LNG receipt schedule,” and ends with meeting daily send-out commitments on a physical basis. On a financial basis, the process ends with a paid invoice by the customer to the LNG terminal. The business process objectives are:

  • Ensure the LNG terminal’s full contribution to the customer’s LNG supply chain.
  • Meet receipts and send-out delivery commitments with timely reporting of receipts and send-outs.
  • Manage terminal services while meeting natural gas send-out specifications.
  • Quickly respond to schedule changes due to unplanned events.
  • Manage supply costs, including demurrage and losses.

The primary activities included in this process are:

  • Customer nominations
  • Terminal scheduling
  • Cargo tracking
  • Energy balances.

Other supply chain activities may include contract administration, mooring and piloting, and demurrage claims management.

Customer nominations

Customer nomination is the primary supply chain customer-facing activity. This application coordinates all ship and natural gas redelivery nominations and confirmations with the customer. Customer nominations manage the creation of the annual delivery program, which are customer-specific and defined in the terminal use agreements. The monthly updates, once accepted, take precedence over the annual program. During the annual and monthly nomination cycles, the customer nominations are displayed, and in some cases available ship unloading windows are also displayed.

On a daily basis, records are published to the customers that contain basis information such that the customer can nominate the next day natural gas redeliveries. For an unplanned event, such as a weather disturbance or ship delays, the customer nomination application receives and manages any customer requests to change ship arrival dates. This application is tightly integrated with terminal scheduling. Embedded in the application are checks to ensure that the customer is in compliance within their contractual limits.

Terminal scheduling

Terminal scheduling is a critical activity, since it integrates customer nomination with operations to produce a feasible schedule that meets the customer needs. Terminal scheduling determines schedule feasibility, analyzes various alternatives, and develops the best feasible terminal schedule. Once the schedule is developed, key parameters are passed from the schedule to the operations execution and ship unloading applications for execution. The terminal schedulers collect schedule baseline information from various information sources to establish the current state of the terminal operations. The most current ship and gas redelivery nominations are imported into the application and analyzed to ensure feasibility of ship unloading, storage, and redelivery capability. The scheduling application also is used to evaluate the impact of terminal services unavailability, weather disturbances, or ship delays.

Cargo tracking

Cargo tracking coordinates and tracks LNG cargoes from the time of the annual LNG receipt schedule until the ship’s cargo is discharged and the ship is sailing. The activity ensures compliance with the terminal use agreement terms with respect to ship nominations, scheduling, and discharge. Cargo tracking is used to manage ship departure notices throughout the voyage, capture cargo information, manage channel transits from the sea buoy to the dock, collect cargo unloading information and ship position information throughout channel transit. Cargo tracking collects all information associated with a cargo life cycle, such as nominations, notifications, cargo quality, and ship discharge events and performance.

Acknowledgment

Based on a paper presented at the LNG 15 Conference in Barcelona, Spain, April 24-27, 2007.