July 2016, Vol. 243, No. 7


Tracking Pipeline Production and Inventories

By Nicholas Newman, Contributing Editor

Since the collapse of oil and gas prices after August 2014, North American pipeline companies have been under pressure to cut costs. For example, Cushing marketplace pipeline earlier this year dropped its already discounted rate for shipping light crude, by another 10% to $2.50 a barrel.

The Alerian Energy Infrastructure Index, a composite of 50 North American energy infrastructure companies engaged in pipeline transportation, processing and storage of energy commodities, has declined steadily since summer 2015, reflecting pressure on pipeline company margins and, currently pipeline companies are either reducing distributions or threatening to do so. For example, Kinder Morgan, the largest, has slashed dividends by 75% and last month announced the layoff of 120 workers.

But with the industry’s acceptance of low energy prices lasting for some years, and the pressure from discounts on shipments of crude, pipeline companies are searching for new ways to cut costs and have zeroed in on making radical improvements to customary data collection methods employed to track all the components used to build, operate and maintain pipelines. Inaccurate data arising from transposed data points, lost spreadsheets and smudged stencils, which have long hampered efficiency and safety, no longer are seen as acceptable in the new economic climate and increasingly tough regulatory environment.

Pipeline operators are actively exploring new, innovative methods to collect real-time, accurate and traceable data from the whole supply chain: from the mill to production, installation, daily operations and last but not least, maintenance. Adoption of  Internet of Things (IoT) technology underpins  the new approach, providing a flood of real-time information collected by digital tags and sensors on the performance of the pipeline, its maintenance requirements as well as flow rates, all vital information needed to improve management decision-making.

One area that has seen marked improvements is that of inventory management with the development of new software such as Canada’s Vintri Technologies’s VintriPlant and UAE’s Asset Integrity Engineering’s Veracity Pipeline software, that keeps track of multiple items, throughout their individual lifecycles. Norwegian oil and gas operator DNO Block 8 offshore operations in Oman has benefited from such software.

Pipeline Integrity Management Software

Specialized software that can manage both inventory and production data is able to provide pipeline owners and operators with ready and timely access to the manufacturing history of every component and section of coating in their pipes. For instance, a steel manufacturer can record origin details in an identification tag, which will include process data and mill test reports, while the pipe manufacturer will add information on the mill run and inspection date.

Following this, the pipe is then transported to a coating plant where it receives internal and external coatings. The coating plant will add production process data at this stage and tally data will be included. At the next stage, the pipes are distributed to storage yards, which will require an accurate inventory of the production life history of the pipe section. Finally, the pipeline builder will need to add to the data, including details of pipe cuts, joints and ultimate GPS location. Thereafter, the system will generate maintenance reports and user data. At the end of the pipe’s useful life, the accumulated data will provide useful information for its decommissioning .

A case in point is that of pipeline coating company Bredero Shaw which uses VintriPlant software to enable it to keep track of its pipes by multiple use of indicators including, pipe number, length, heat number (that provides references about the steel used to make the pipe), date of receipt, manufacturer and shipment details, quality-control tests and raw material batch numbers for coating materials.

Paul Kleinen, a director of Bredero Shaw, said, “Data from the steel and pipe manufacturers are transmitted to the inventory cloud environment [and] once it has completed our manufacturing process, we add additional data that can be accessed by scanning the barcode on the pipe”.

Accessible in the field, via smartphones and tablets, cloud-based data platforms generated by pipeline integrity management software represents a huge step forward for the logistics industry. “Previously, data was stored on spreadsheets, email attachments and (for immediate communication) phone calls, which often resulted in errors which needed a significant amount of manual effort to resolve to reconcile inventory,” said Kleinen.

In addition, IoT-enabled  inventory management software allows users to manage their on-site inventory and meet customers’ requirements seamlessly through live updates on individual orders. The new technology facilitates coordination and information-sharing across multiple organizations and different locations as every component has its own individual identification tag able to withstand conditions in the Arctic north or the warmth of Mexico.

Problem Solving

Centralization of vital inventory information, work order and management data in a common cloud platform with open access for all identified  stakeholders provides, for the first time, rolling access to to up-to-date information, enabling managers to visualize data and make decisions on maintenance needs, pipeline condition and flow rates. In particular, IoT-enabled specialized inventory and production software helps a range of stakeholders along the supply chain to solve a number of problems including:

  1. Enabling an immediate response to information requests from end users and regulators.
  2. Providing traceability of each component from manufacture to the end of its lifespan.
  3. Allowing a reduction in paper-based recording systems.
  4. Facilitating in-the-field access to crucial information, thus saving time and costs.
  5. Enabling of real-time updating to meet customers’ needs.

Such is the power of the system that pipeline coating company Bredero Shaw, can accurately record the coating solutions used for each of its customers across its 20 permanent and seven mobile-coating facilities around the world. They are not alone, for “at present there are nine field joint coating systems available on the market,” said Nathan Muncaster, a director at Polyguard products.

Pipeline Yard Inventory Management

IoT technology-enabled software is also available to automate pipeline yard inventory and management processes. A case in point is that of the TallyWizard, a multi-purpose tubular inventory tracking software product, which in addition to keeping track of all pipe, pipe racks  and oil field equipment movements inside storage yards, stores third-party vendor  and dispatch information. Another benefit is that this data can be exported in the form of spreadsheets, PDFs and internet-based reports to suppliers and customers for real-time reporting on smart and affordable devices.

In practice this means that any service company can now receive a batch of bare pipe and quickly determine how it has been coated and processed through its manufacturing life cycle before ultimate delivery. Essentially, this software improves productivity through its accuracy in recording delivery, storage and dispatch of every item held in the yard in real time. The IoT-enabled software system’s efficiency eliminates the chance for mistakes and saves time when compared with the  old-fashioned paper or old computer-based inventory control.

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