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Natural gas production has remained stagnant even as the nation creeps toward cooler weather. Instead, processing plants have begun to increase the variety of products in their portfolios, investing in asset infrastructure for purifying natural gas liquids.
But what does diversification like this mean, especially to an industry focused on cutting Opex costs and optimizing production? What concerns should stay at the forefront of midstream investors’ minds when installing, expanding, or reconfiguring NGL fractionation and distillation equipment?
Plan for market agility through asset utilization
Although the low cost of natural gas may be of benefit to gas-fired energy generators across the country – especially as air conditioning demand trends upward, according to Reuters – companies entrenched in the oil and gas industry must find new methods for capitalizing on goods without saturating the market. Extracting pentanes and other worthy hydrocarbons from NGLs prevents natural gas organizations from tapping extra wells and using the most of the production already available to them.
However, as midstream operations spin ethane, butane, etc. from NGLs, asset expansion necessary to control these varied resources only stands to complicate processing and open up room for mechanical failures, product mishandling, and perhaps even regulatory noncompliance. Additionally, a diversified stock so reliant on domestic and export market performance requires responsiveness to remain a boon to business. When one outperforms others, decision-makers must be at the ready to tilt production accordingly without compromising quality or service.
Maintain cost-effective energy consumption
Industry leaders know distillation columns used in NGL fractionation burn a lot of thermal energy, with as much as 40 percent used on site for “refining and continuous chemical processes,” according to the U.S. Department of Energy.
Labor reductions to extraction upstream trim production to avoid market saturation, but these austerity measures also aim to deflate costs throughout all oil and gas operations while prices remain low. Adding energy-intensive assets without taking energy expenses into consideration may undermine cost-cutting initiatives elsewhere. Apart from balancing the books and ensuring the difference in operational growth doesn’t derail Opex cost reduction, what else can NGL producers and processors do to mitigate how much distillation may grow their energy footprint?
One method, according to the American Institute of Chemical Engineers, involves targeting energy variability through the establishment of pressure controls, particularly for light-hydrocarbon columns. Researchers found even a 7 percent reduction in pressure could yield the typical distillation process a savings of $240,000 in annual energy costs. Moreover, advanced condenser mediums capable of balancing distilled resources at the perfect temperature could more than double those gains.
Oil and gas companies ought to concentrate more on how they run their distillation towers.
Avoid distillation column misuse
How fractionation towers function in a more general sense also matters, especially if on-site NGL distillation has undergone maturation because of process mapping and other physical changes to the layout of a facility.
For instance, Chemical Processing reported how many refiners focus too heavily on condensers and reboilers when they should give equal consideration to column feeds and how they perform around entrant trays. A misplaced feed could force fractionation towers to work overtime and increase their energy demand unnecessarily. This mistake may also cause asset failure due to imbalance, compromising safety and the quality of the product therein, as well as every other NGL that would have been harvested down the chain.
When altering process organization for greater operational efficiency gains, don’t alter feed locations unless data confirms the move won’t jeopardize asset availability and uptime. Remember: Distillation towers are almost the perfect embodiment of the domino effect. If one column becomes compromised, you will almost assuredly lose all others until the problem is remedied.
Fractionation presents natural gas with horizons to conquer and opportunities to turn market troughs into progressive growth as companies expand the scope of their operations. Before integrating new distillation assets or changing how you use the ones already on site, discuss your plans with a knowledgeable consultancy, preferably one with a specialization in continuous processes and utilization, as well as one with a proven track record in the field of oil and gas.
What challenges do glass manufacturers face as they attempt to reduce their energy consumption? Where might they turn to achieve significant results?
Troubles with energy efficiency in glass manufacturing as a sector, true to its product, are as transparent as they’ve ever been in this age of sustainability and eco-conscious private sector leadership. For the sake of the environment and operational costs, the glass industry has sought ways to rectify the matter.
Glass production: Portrait of an energy-intensive industry
According to data from the U.S. Energy Information Administration, glass manufacturing – the production of glass containers, flat glass, fiberglass, etc. – accounts for 1 percent of the U.S. manufacturing sector’s total energy consumption, placing it on par with other energy-intensive industries like steel and cement. However, as the EIA stipulates, glass manufacturing throughput volumes are much lower than others of its consumptive caliber, thus making it all the more inefficient in terms of energy use per unit.
“Melting processes consume 65% to 75% of energy required by glassmakers.”
Furnace operations represent the majority of energy expenses for glass manufacture across all subcategories, according to a study from the International Energy Agency. Depending on region of product, end product, and utilization of processes like sintering or cullet agglomeration, melting limestone, silica sand, or soda ash consumes anywhere from 65 to 75 percent of energy required by a given glassmaker. With so much riding on energy expended for direct production, any optimization efforts glass manufacturers undertake run the risk of compromising the integrity of the product and further complicate matters.
Nearly three-quarters of fuel usage for glass production in the U.S. relies on natural gas, with the final quarter primarily coming from electricity by way of “boosting.” In a pinch, electric boosting technology can increase production dramatically – but it comes at a cost to efficiency as manufacturers trade additional operating costs for immediate results to keep up with demand.
Although these challenges may be great, in what ways have some glassmakers already begun turning energy-intensive operations around?
Furnace upgrades and process changes retain heat and long-term value
Innovation will ultimately resolve the glass industry’s high energy consumption, especially as it pertains to the technology charged with controlling combustive fuels and heat transfer in glass-producing furnaces.
Glass manufacturing requires a light touch, both in forming products and controlling fuel.
First, any industry utilizing natural gas as a fuel source is bound to run into trouble with inconsistent diluent and hydrocarbon makeup. The result is an inability to predict or react to intensity increases or decreases within the burner, sometimes leading to resource overuse. Should glassmakers invest in technology capable of balancing the flow of natural gas into their furnaces regardless of composition or steading their air-to-fuel ratios, they will effectively reduce energy consumption at a traditionally wasteful process point.
Furthermore, while it may offer glass manufacturers greater market agility, electrical boosting technology can defeat its own purpose of meeting demand increases by adding considerably to energy costs, thus mitigating or negating revenue. Instead, the U.S. Department of Energy recommends outfitting outdated furnaces with waste heat capture retrofits for process heating. This technology captures lost heat and returns it to the furnace before electrical boosting occurs, priming the materials inside and reducing the amount of boosted energy required to raise the temperature to an actionable degree.
In fact, minimizing heat loss at any opportunity throughout the entire glass manufacturing process would also help immensely. Efficiency gains may only require operators to close furnace doors as often as possible or initiate a preventative maintenance program to ensure all energy-reliant assets stay in good working order. Never underestimate these little optimizers – they can really make a difference.
How can a business in the chemical processing sector maintain a commitment to continuous improvement as its industry undergoes a period of financial stagnation or decline?
Optimization isn’t an abstract idea – it’s a discipline rooted in real process changes and data-driven exploration into on-site and remote operations. After all, when companies expend the effort to improve, they’re not competing against competitors per se. They’re competing against the best version of themselves.
Unfortunately, that level of dedication does not come free. According to the American Chemical Society, many key players in the chemical processing sphere experienced turbulence coming into 2016 and throughout the first half of the year. Some stressors were milder than others, but all contribute in some way to a decrease in revenue and could impact how they optimize and innovate:
- Petrochemicals: Although evening out after the crash in 2014, oil and gas prices are still low and production hasn’t fallen enough to affect demand.
- Agrochemicals: Bumper crops abound after two years of abundant harvests, driving crop prices down and forcing farmers to spend less on products.
- Electronics materials: Growing demand for consumer products has already persuaded manufacturers to seek more affordable supplies for semiconductors and displays.
- Pharmaceuticals: Thanks to the 2016 election cycle, consumers have a renewed interest in lowering U.S. drug prices.
The question is, are there methods for sustaining optimization initiatives even when budgets are tight and if so, where should chemical processors focus their attention to derive the best results?
Be wary of diversification
Reaching out into new markets may open new frontiers for companies when business is up, but when sales plateau product diversification needs serious consideration. Deloitte research revealed that as industrial production contracted in 2015 across all industries, chemical demand also waned. In response, many chemical processors took the opportunity to focus on retooling their core business rather than take risks with experimental projects. Essentially, they chose to optimize over maximize.
However, PwC chronicled the turmoil of a subsection of chemical processing that didn’t fall in line with this mentality: engineering polymers. According to PwC, one company tried to expand into new areas of business both geographically and through product diversification during this risky market environment. The end result placed significant strain on logistics resources, internal conflict, and supply chain disruption.
So, when it comes to product diversification, how can businesses tell the difference between a sure thing and a dud? By first investing in thorough, unbiased analysis, perhaps from a third party. However, if funds are tight, that money might be better spent on next-generation productivity through an overhaul of the core processes underpinning company culture. Doing so has shown to reduce operational expenditures, thus freeing up more spend for opportunities at more stable junctures.
Understand customers – and yourself – through data
The age of big data is both a blessing and a curse for optimization in chemical processing. On the plus side, it presents an opportunity to forecast fluctuations in demand, materials performance, and internal operations charged with capitalizing on these elements. By leveraging the most actionable data management strategies, chemical companies have the power to amp up their services and dive deeper into the nuances of their industry like never before.
The problem is, so can everybody else. So, while big data can help an individual business accomplish their goals, it simultaneously raises the bar for all industry players in regards to what clients expect as the status quo.
With that in mind, chemical processors should tailor all optimization initiatives toward retaining the customers they already have, instead of playing to the clients in their competitors’ pools. Focus on what separates your company from others, then strive to optimize those services as much as possible. Also, don’t settle on what services you do best, but rather what services you do differently that resonate with your customer base.