IBP1976_12 IMPROVING OFFSITES OPERATIONS BY DEPLOYING INVENTORY AND MOVEMENT MANAGEMENT SYSTEMS Erika Francischinelli Fernandez1, Eric van

Dijk2, Paulo Garcia de Souza3

Copyright 2012, Brazilian Petroleum, Gas and Biofuels Institute - IBP

This Technical Paper was prepared for presentation at the Rio Oil & Gas Expo and Conference 2012, held between September, 1720, 2012, in Rio de Janeiro. This Technical Paper was selected for presentation by the Technical Committee of the event according to the information contained in the final paper submitted by the author(s). The organizers are not supposed to translate or correct the submitted papers. The material as it is presented, does not necessarily represent Brazilian Petroleum, Gas and Biofuels Institute opinion, or that of its Members or Representatives. Authors consent to the publication of this Technical Paper in the Rio Oil & Gas Expo and Conference 2012 Proceedings.

Abstract
Inventory and Movement Solutions are utilized in Refineries and Petrochemical Offsites, but also in Terminals Management Systems and Pipeline Management Systems. The level of automation in refinery offsites is generally low compared to other refinery areas. When evaluating the different offsites areas, it can be noticed that blending systems usually present a fair level of automation by the use of blend ratio control, blend optimizers and blend plan optimizers, while the inventory and movement operations are typically poorly automated. Most of the existing inventory and movement automation consist of isolated systems used by a limited group of plant personnel and the integration of the available automation components is usually done manually by the operator. New challenges of todays refining industry, such as high oil prices, complex product qualities and increased trading of components and products, have enhanced the need for more accurate accounting and an efficiency oriented operation of inventory assets. The purpose of this paper is to show how operational safety and yield accounting can be improved by increasing the level of automation in the offsite area through the implementation of inventory and movement management systems. Connecting the offsite automation to the real-time SCADA environment (e.g. tank gauging, flow meters, pumps and valves) allows for drawing conclusions concerning the operational safety, that goes beyond measurement limit checking since the equipment is evaluated inside the operational context. In this work, it is presented that by increasing the availability and quality of the data from offsites, all the operational disciplines, from planning and scheduling and all the way up to accounting and trading, will benefit. Furthermore a number of guidelines, derived from many years of experience in this area, are provided for installing Inventory and Movement Management solutions.

1. Introduction
Refinery offsites is traditionally seen as a cost center in the overall operations. For blending finished products such as gasoline or gasoil this scenario has changed over the years. Technology advance, particularly analyzer technology and high performance computers, allowed real time blend optimization and blend plan optimization to become reality. Benefit calculations for staying closer to the product specification and thus reducing the quality giveaway have justified a large number of blend optimization projects. In addition, a lot of research has been done in this area, such as the studies present by Singh et al (2000) and Chen and Wang (2010). With an average investment return between one and two years, blending automation has proven to be a very attractive investment. Nowadays, blend optimization is a common ground technology which is successfully deployed by all major oil companies. The story is a little bit different for inventory and movement management. The level of automation in the control room is typically low. The daily work flow relies primarily on paper, like scheduling instructions paper and operations and movement log sheets. When there is automation available, the panel operator quite often manually links the different systems by typing data retrieved from one system (e.g. the tank gauging system) into another system (e.g. Excel spreadsheets or the movement accounting system). In this scenario, no automation benefits are archived, since the quality of data is negatively impacted, the tank gauging system does not have movement information and the accounting

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Msc., Chemical Engineer INVENSYS OPERATIONS MANAGEMENT, BRAZIL BE (Ing), Electronics Engineer INVENSYS OPERATIONS MANAGEMENT, NETHERLANDS 3 Msc., Solid State Physics INVENSYS OPERATIONS MANAGEMENT, BRAZIL

Rio Oil & Gas Expo and Conference 2012 system has no monitoring functions available. From the perspective of operations, the automation is perceived as a burden as it requires continuous feeding information while there is little direct benefit. Operations work for the automation system instead of the other way around. In addition to the problem of the data quality and inefficient use of human resources mentioned above, refineries, petrochemical plants, integrated pipelines and even isolated terminals are facing new challenges which increase the requirement for inventory and movement management systems. For instance, high oil prices demand accurate oil accounting and increase the need for just in time production. The increased diversification of products handled and the decreased tolerance on the product qualities, such as bio-fuels and sulfur, requires multiple quality constraints for products and tighter product segregation. Information must be traceable, accountable and auditable, making it necessary to have accurate metering systems and an automated product delivery process. Another aspect that has changed within the years is the complexity of the refinery value chain. Nowadays there is more trading of component and products (independent refiners, more traders and terminal owners). This introduces the requirement for multi site component inventory planning, decision support for trading (buy/sell components), planning delivery and receipts and inventory visualization. Having a real-time view of the inventory and movements of the refinery and integrated processes prevents inefficient operations and lost opportunities and keeps the whole supply chain competitive. In todays organizations, operational excellence requires an emphasis on efficiency and obtaining maximum yield. With that in mind, integrated solutions for inventory and movement management have been developed. Those systems are not limited to storing data of delivered raw materials and the movement of those materials into operational process. They also seek to control economics aspects associated in this operation, such as inventory costs. This enables the optimization of offsites. In this paper essential characteristics of an inventory and movement management system are provided and the advantages of implementing these systems are highlighted. Based on the authors project experience, critical aspects of integrating the systems in an existing environment are discussed. Project justification and the main project success factors will also be touched upon.

2. Functions of an Inventory and Movement Management System

Inventory and movement solutions stand between the traditional automation SCADA Systems which focus on the instrumentation and operation aspects, and the corporate ERP Systems focused on the legal and accounting aspects of the business. The typical architecture of this system is shown in Figure 1. In order to have a complete overview of all product displacements and supply chain, the Inventory and Movement Management System must govern them all. This includes all import/export movements and all internal movements such as unit feed and rundown, blending, etc.

Figure 1. Inventory and Movement System Architecture

Rio Oil & Gas Expo and Conference 2012 There are a number of solutions available in the market for the Inventory and Movement Management Systems. Although they are all different implementations, one common characteristic is that they all are built in functional layers. The following layers are distinguished: Inventory Management Obtains raw tank measurement data such as level and temperature and combines these with data from other sources such as the Laboratory to perform quantity calculations and draw conclusions regarding the operational condition of the tank. Movement Management Is responsible for planning, executing and administrating movements. Inventory data are obtained from the Inventory Management module and from the control layer (flow meters). The Inventory Management is informed about the active movements so it is capable of monitoring tanks taking active movements into account. Movement Lineup Management Is responsible for finding a path (a.k.a. lineup) from the source of the movement to its destination while obeying movement criteria such as equipment (pump, manifold) to use, physical separation from other movements and contamination. At the starting/stopping procedures, the Movement Lineup Management opens/closes valves and starts/stops pumps. The movement equipment is monitored in relation to the usage in the movement. For instance, when an isolation valve opens the operator is warned and/or the movement is stopped to prevent contamination. In the reverse operation, Movement Lineup Management recognizes that there are movements being executed by examining the equipment status of valves and pumps in relation to the plant topology. The identified movements are compared to the registered ones in the Movement Management system and the operator is informed where these two data do not match. Material Balance For a given period, this module compares the delta in inventory with the quantity moved of the movements and provides an overview of the material balance from different perspectives such as: tank, tank group, product, product group, area, etc. All data relating to a movement is monitored and historized on an inventory and movement solution, which includes all interaction with the user and the warnings and alarms that have been issued. This fulfills an important recommendation (#9) of the Buncefield Major Investigation Board. Each of the functions mentioned above, is accessible through a graphical human interface. Through logging in the user credentials, it is established the level of access and the permissions of the logged user. This allows that multiple groups of users have access to the system: planning and scheduling for preparing the long and short term planning, operations for the daily operations, and accounting for the material balance. The functions of the Inventory and Movement Management systems are implemented in one or more software modules. The key aspect in this implementation is the integration between the modules themselves and the integration with the installed refinery automation both on the control layer and the business layer. The main purpose of the integration is the data integrity and availability.

3. Key Impacts of Using an Inventory and Movement Management Solution

The use of an Integrated Inventory and Movement Management solution has impact on different aspects of the operations. Below are listed the more significant impacts: Data quality improvement Reducing the amount of manual data entry into the system and the storing manually entered data besides the data captured from the field instrumentation makes the system auditable and increases data accuracy. This positively impacts from of planning and scheduling to yield accounting, which are very depended of quality of the data used. Increase of data availability Enabling real-time and historical data of refinery offsites to be accessed by all refinery users offers a wide range of opportunities. Planning and scheduling can act instantly after a change in process conditions or a change in supply and/or demand. Trading becomes better capable of acting on actual market conditions and can more easily work with different strategies. Increase of operational safety Inventory and Movement Management System reduces the number of contaminations and spills, directly affecting operational safety and providing significant cost reductions. Audit ability Storing all events and user activities makes the system auditable. This is essential information for analyzing the operational efficiency and investigating incidents. The data collected allows setting up a learning environment aimed for continuous improvements in the offsite area. Reduction of inventory Due to real-time availability of inventory and movement data, it is possible to reduce the amount of the inventory as this can be forecasted more accurately. Besides the examples listed above, there are others like: improved schedule accuracy, less off-spec lifting and quicker loss identification. 3

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4. Areas Benefited by Inventory and Movement Management System Implementation

Inventory and Movement Management System helps to improve different areas inside the refinery, petrochemical and pipelines operations and it is beneficial to a variety of people inside the organization. Planning and Scheduling personnel uses it for planning blends and movements. Operations use it for executing and monitoring instructions. Yield and stock Accounting uses it to evaluate operational data. In the following sections it is described how the use of Inventory and Movement Management systems impacts the different users in their daily operations: 4.1. Planning and Scheduling While ERP systems can plan nominations and transfer orders, they lack real time production data to adjust the long term plans with real time scheduling in response to real time events. On the other hand, SCADA Systems are designed to operate and monitor field equipments such as pumps, valves and tank levels, but they dont have the necessary features to manage daily movements. Inventory and Movement Management Solutions cover this gap, by providing graphical and tabular displays that enable the operator to prioritize, organize and follow the movements in real time. Typical movement management displays are shown in the following figures: Figure 2 shows a typical movement overview and Figure 3 shows a typical movement scheduling display where the colors are used to highlight the schedule status of the movements. Unlike other non-integrated solutions, Inventory and Movement Management Systems provide accurate and reliable data required by ERPs accounting and reporting functions.

Figure 2 - Typical movement management display Tabular View

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Figure 3. Typical movement management scheduling display

4.2. Tank Farm Asset Management Besides presenting the observed tank level (as the traditional SCADA Systems) a Tank Inventory Management System also calculates and presents the (ASTM) corrected volume, the integrated real time quality and composition of each tank. Figure 4 presents a typical Inventory Management tank display with those characteristics. The trends show the historical data and allow exporting data to Excel or other applications. Note that the additional tabs at the top of the display provide additional functionalities to the plant operator. The calculated properties described above provide the basis for blending and movement optimization, on line certification and consequently effective asset utilization, by means of reducing storage or maximizing pipeline occupation and up-time.

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Figure 4. Typical movement management tank display Tank Details

4.3. Mass Balance Reconciliation and Inventory Accounting Each and every plant today must report end of period or daily inventory for meeting accounting and legal requirements. Neither SCADA nor ERP systems are prepared to provide such data, but Inventory and Movement Management Solutions cover this gap. Most Inventory and Movement Management Solutions are capable to generate real time (and midnight) reconciled quantity and quality data per tank, per product, per terminal, etc. 4.4. Spot & Hedge Market Decision Support Inventory and Movement Management Solutions provide simulation capabilities which tied to accurate inventory accounting and ERP forecasts represent a useful tool for what if analysis and support to spot market decision support. 4.5. Safety & Environmental Compliance Most Inventory and Movement Management Solutions provide preconfigured and certified compliance reports. Additionally, reliable reconciled data is demanded for simulation and leak detection applications.

5. Inventory and Movement Management System Implementation

5.1. System Integration in the Existing Environment In order to maximize the benefits of an Inventory and Movement Management solution, it needs to be integrated in the existing automation landscape. The purpose is to reduce manual data entry as much as possible and to enable access of the offsite data to the business. Connections need to be made to the Automatic Tank Gauging system and to the available control system(s), so field measurement data can be retrieved and equipments can be remotely 6

Rio Oil & Gas Expo and Conference 2012 controlled. A connection to the business systems is necessary in order to establish an information flow from Planning and Scheduling to the Inventory and Movement Management system and back to the accounting system. Other connections made for improving the workflow are to the laboratory system, plant historian, EH&S reporting system, etc. 5.2 Project Justification The implementation of an Inventory and Movement Management Solution impacts the whole site operations. It streamlines the movement operations, reduces operational errors, provides real-time access to all users and it improves data quality. Qualitatively speaking, this means reduction in product loss, reduction in contamination, better inventory visualization and consequently better planning. Once the system is available, it can be used to improve other areas such as managing the electricity demand, and integration with asset management systems. Nevertheless it is difficult to quantify benefits for Inventory and Movement Management solutions. Unlike in the blending area, the hard data is scarce which implies that determining the benefits of an inventory and movement management system requires many assumptions. A good example is the reduction in contaminations. The real benefit should be calculated from the operational history which is difficult to obtain. Although the cost of a product contamination is easily calculated, the number of contaminations is a closely guarded secret. 5.3. Project Success Factors The success of implementing an Inventory and Movement Management system depends on many factors of which most are manageable. A number of the factors that have been obtained from 25+ years of successful project implementations are listed below: Clear project objectives; Involvement of all stakeholders in all stages of the project from senior management to operations; Thorough design phase where the current work flow needs to be well evaluated; Prototyping of the solution to help the users understand how operations will work in the future; Out of the box thinking mentality from both the plant operations and the vendor; Factory Acceptance test with representatives from plant operations; Rigorous training for all users; Clearly defined change over plan with consensus of all users.

6. Conclusion
Inventory and Movement Management solutions have a significant positive impact on the offsites operations of refineries, petrochemical plants and isolated terminals. Using Inventory and Movement Management solutions unlocks the information captured and managed by the offsite operations to the business which enables the transition from passive/reactive model to a proactive decision support model. Inventory and Movement Management solutions improve the operational safety by advising the user, monitoring the operations and providing a continuous learning environment. Inventory and Movement Management solutions are required to remain competitive now and in the future. The industry has obtained a lot of experience in the implementation of Inventory and Movement Management Systems. Following the guidelines that have been derived from these projects ensures a successful, on time and on budget implementation.

7. References
BUNCEFIELD MAJOR INCIDENT INVESTIGATION BOARD, Recommendations on the design and operation of fuel storage sites, First published 03/07. (www.buncefieldinvestigation.gov.uk) CHEN, X., WANG, N., Optimization of short-time gasoline blending scheduling problem with a DNA based hybrid genetic algorithm. Chemical Engineering and Processing, v. 49, p. 1076-1083, 2010. SINGH, A., FORBES, J. F., VERMEER, P. J., WOOD, S. S., Model-based real-time optimization of automotive gasoline blending operations, Journal of Process Control, v. 10, p. 43-58, 2000.