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Running a successful midstream oil and gas company can feel a lot like caring for a two-headed dog, one head for upstream operations and the other downstream. Midstream can’t address one head’s needs over the other, balancing the needs of both can prove complex and even redundant, leading to more work with less payoff. However, midstream can make peace by utilizing the right process optimization strategies that focus on increased transparency for both data and resource management.
Technological transparency for ethane recovery/rejection
Midstream oil and gas companies seeking to optimize their processes won’t succeed with a one-size-fits-all fix. Companies must develop multifaceted plans that cover different paths upstream operations might take according to market demand.
The choice between ethane rejection and recovery represents one such decision. Should upstream oil and gas companies divert its ethane into dry natural gas pipelines, or should they simply move it down the chain as is and send it to fractioners for midstream processing? In either case, how can either event receive an optimization boost so midstream businesses turn a good profit without adding complexity to an already complicated system?
“Data visibility allows midstream companies to discern which way upstream operations are leaning.”
Coordination with upstream and downstream partners through data transparency offers a window for midstream companies to interpret more about their partners’ schedules to effectively plan their own. Market and demand fluctuations scrutinized by either party should be shared via an easily accessible data management portal. Instead of waiting for commands from producers as to the course of action to be taken, data visibility allows midstream companies to discern which way upstream operations are leaning, so midstream can plan accordingly.
It isn’t just about market fluctuations either, as Level 2 Energy reported – the recovery-versus-rejection decision could also be contingent on the amount of ethane producers have recently sold as natural gas. Again, as the three segments in the oil and gas chain utilize an open network of freely moving, up-to-the-minute information in a centralized location with a consolidated data stream, midstream can better anticipate what’s coming down the pipe.
Hydrocarbon transfer asset management and maintenance
Hydrocarbon transfer systems present midstream companies with another valuable opportunity to hone processes, not exclusively in their day-to-day operation and use, but also their upkeep over time. Lease automatic custody transfer units move resources from buyers to sellers and give all parties involved visibility into previously transported volumes.
So, why has such important equipment appear to have fallen by the wayside as the rest of the oil and gas industry at large appears so open to other forms of modernization? A study by Rockwell Automation found a predominant number of LACT units rely on “snail mail” to report supply information between seller and buyer, leading to an epidemic of accounting errors. Additionally, maintenance plans for these hydrocarbon transfer assets are usually just as outdated. Manually managing these sites with little to no technological integration and data reporting means midstream businesses charged with their oversight waste valuable resources visiting remote LACT units with no problems while neglecting those that do.
“Operators can coordinate LACT unit visitation data to create criticality rankings.”
Midstream companies ought to invest in remote monitoring capabilities to prioritize maintenance work orders and bolster resource accounting in one fell swoop. Operators can coordinate LACT unit visitation data to create criticality rankings for each site in terms of which receives immediate attention and why. Digital resource reporting capabilities will also prevent miscommunication between buyers and sellers, decreasing or eliminating altogether the resources expended to amend breakdowns in accounting.
Midstream oil and gas operations can serve of two masters, so long as companies pay particular attention to how innovation can streamline data flow and simplify their responsibilities in intelligent ways.
Companies manufacturing hardwood flooring have struggled to right themselves since the housing market crash in 2008. After all, when real estate underperforms, so too will home goods producers of all kinds. Though the housing market has been slow to recover, wood flooring manufacturers have risen to their challenges and recovered in significant ways in the years following the recession. Floor Covering News research revealed U.S. businesses grew their sales by 6 percent in 2015 to more than $2 billion, or 830 million square feet at wholesale, even at a time when many potential homebuyers still rent.
What challenges await hardwood flooring producers in 2017? Will the momentum the industry generated over the last few years be enough to overcome these hurdles?
Rising raw materials costs and increased supply volatility
According to an industry survey conducted by the National Wood Flooring Association through Hardwood Floors Magazine, 46 percent of all responding NWFA members reported raw material cost increases between 2015 and 2016.
“White oak surpassed red as the most sold species of wood in 2015.”
What could be behind this fluctuation? If the recent popularity of white oak is any indication, the culprit is a confluence of outside-market competition and consumer demands. White oak, a highly durable and rot-resistant material according to The Wood Database, provides customers with an all-natural product that competes well with high-strength composites without much processing. So it’s no surprise white oak surpassed red oak as the most sold species of wood in 2015 according to the aforementioned NWFA survey.
“This is the first time white oak has overtaken red oak in our survey results,” says the study.
However, other industries seek out white oak for its attractive properties. Whiskey producers, for instance, require casks and barrels, and red and white oak are operative base materials. The New York Times reported U.S. whiskey production has increased over 40 percent in the last decade, no doubt affecting barrel use on its own.
Furthermore, extramarket competition also means contending with a rival’s regulations. In this regard, contentious wording in the Federal Alcohol Administration Act requires spirits producers to use their barrels only once, forcing these businesses to churn through these products at a faster rate, buttressing sales for industrial coopers and increasing raw materials costs for all other industries hoping to get their hands on white oak.
In light of this, flooring manufacturers would be wise to examine their product lines, consumer trends, what other industries greatly consume these supplies and recent activity impacting demand in their respective markets. As housing goods producers recover from a downturned global economy, leveraging this pertinent data for guiding intelligence will ensure a steadied rehabilitation.
Manufacturers beware: Laminate flooring may have fallen out of favor thanks to Lumber Liquidators.
Tightening regulations and high consumer scrutiny
In the wake of a recent wood floor manufacturing scandal, regulatory bodies are cracking down hard on the industry and effectively adding to upstream supply chain costs through an increased demand for source visibility.
Earlier this year, CBS News exposed industry giant Lumber Liquidators for selling Chinese-made products containing high levels of formaldehyde, a recognized carcinogen. Who knows what will happen to Lumber Liquidators, but many flooring manufacturers believe this represents a watershed moment in the industry and how it manages imported goods from the forest all the way to the consumer. Data must traverse that entire supply chain as well, as the Lumber Liquidators controversy no doubt spurred consumer awareness in the dangers lurking in noncompliant flooring.
As wood flooring producers incorporate more technology into their supply chain designed to reinforce strong reporting and vendor accountability, they will need to position these changes as value propositions for their customers, especially if these initiatives will eventually affect sale prices. Demonstrating a commitment to safety and consumer protections will not only allow an organization to capitalize where competitors fell short, but manufacturers can rest assured knowing their investments into transparency will pay off in other ways. These are not empty gestures, after all – the right reporting and analytics tools could prevent a less-than-reputable vendor from harming your brand and your customers.