May-2019

Digital twins enhance LNG plant performance

Digitalisation technologies offer new and disruptive ways to overcome the challenges of increasing margin, reducing carbon emissions and addressing talent shortages.

TIM SHIRE and ANDREW McINTEE
KBC

Article Summary

Leading LNG operators have been forced to move away from simply maximising LNG production towards a ‘manage for margin’ approach which considers operating cost, liquids yield as well as production rate in the pursuit of profitability.

Historically, LNG facilities have been designed and operated with a strong focus on achieving high production rates due to feed gas that was perceived to be free or cheap and a high LNG sales price. The engineers’ and operators’ focus was on pushing throughput, even at the expense of high operating costs, certain that it would still boost the facility’s economic return.

Industry and shareholder expectations have changed due to the challenges which the hydrocarbon industry is facing. LNG producers have particular challenges on top of broader oil and gas industry issues:
• Oil and gas industry challenges:
 ν Greenhouse gas regulation
 ν Shortage of skilled engineering staff
 ν Lower for longer oil prices
• Specifically For LNG:
 ν Globalisation of markets
 ν Disappointing return on capital employed.

The globalisation of LNG markets – with a growing proportion of output traded on the spot market rather than sold on long term oil linked contracts and the increase in the number of facilities – is leading to a competition driven reduction in LNG sales prices.
This is coupled with an increase in feed gas prices due to increasing capex required to maintain production in declining fields, a wave of LNG construction in more difficult (for instance deep water) fields, or in some cases, such as the US and Australia, feed gas is procured on the open market. In addition, carbon taxation holds the potential to further add to emissions costs as governments and companies look to improve sustainability.

These drivers mean that single- minded focus on production is no longer valid. Throughput cannot necessarily be considered as the sole important item, and only by considering the operating costs and managing the margin of each tonne produced will the facility meet the shareholders’ expectations.

This shift in mindset means that there is a reprioritisation of critical tasks and a critical examination of the production margin. The first step in this mindset shift is benchmarking, to understanding the facility within the enterprise and also against peers and globally. Benchmarking leads to focus areas being correctly assigned, meaning that for gap-closing improvements the capital spent is focused, the projects get effectively implemented, the results are tracked and the return is achieved.

Complex interactions in variable cost reduction
Energy represents the largest controllable operating cost, with a typical LNG plant burning around 10% of its feed. For a single 4 million t/y LNG train with a gas price of $3/MMBTU this equates to around $50 million/y in operating costs. Further, if carbon tax prices were to rise to $20/t this would increase the cost of fuel by a further 40%. However, the direct cost of fuel is potentially only the tip of the iceberg. Where plants are feed limited, all gas burned as fuel is potentially lost product, which would be valued at the LNG selling price, typically 2-3 times the feed gas price.

Value on this scale is highlighted as a priority in a ‘manage for margin’ approach, but any new priority cannot be simply considered as the new solitary operational focus.

In a LNG facility energy consumption is tightly linked to production, for example the refrigeration system performance is interlinked with the production of boil-off gas (BOG) and the main cryogenic heat exchanger pressure. The refrigeration compressors are often direct coupled to gas turbines which impact the fuel balance, which in turn needs to be balanced to the BOG production rate (see Figure 1).

Complexity is increased on multi- train sites, which typically share product storage and utility systems, meaning changes on any one train affect the others. Only a structured methodology and tools that consider the interactions will mean that improvement in the production margin is achieved.

The technical challenges are exacerbated by human challenges where substantial increases in global LNG capacity have led to a worldwide shortage of skilled engineering and operations staff. The remote nature of many LNG production sites makes it difficult and costly to build up human capabilities. This means that the workload of staff on the facility has increased, leading to a reactive or firefighting culture. Issues therefore may not be identified before they become problems, and the problems take longer to fix due to the required input of expertise not being readily available. Capital improvement projects, when installed, solve the problem locally but do not consider the facility wide systems leaving the benefits diminished when considering the holistic view.

Case study
In 2011, at the World Petroleum Congress in Doha, Loo Yong Eng of KBC presented a case study of a completed project titled On-Stream Optimisation of LNG Liquefaction Plant. The case study displayed how KBC employed a structured margin optimisation methodology based on expertise and rigorous Petro-SIM simulation software on one of the world’s largest LNG liquefaction facilities at a single location in Southeast Asia.

The project identified 100 opportunities that were evaluated using the simulation model, with eight non-investment projects selected to be implemented at a total annual profit improvement of $73 million.

One particular opportunity, which alone generated $30 million per year, was to shift loads between compressors at high ambient conditions. As an overview, the facility uses a multiple refrigerant (MR) process, with the main cryogenic heat exchanger (MCHE) being the key element for liquefaction of the LNG. More cooling capacity can be derived by lowering the suction pressure of the MR compressor by controlling its inlet guide vane (IGV). This adjustment provides more driving force for cooling in the MCHE, which can either be used for higher throughput or to lower the LNG temperature so that less flash gas is generated from the storage tanks, minimising the loss. After 10 years of optimisation, the facility believed that it was at its performance limit through the control of the advanced process control system (APC), but based on ambient variability, there was margin available in reducing MCHE pressure by modifying the compressor IGV limits. This opportunity was agreed with the compressor manufacturer and, by rigorous simulation of the entire plant, it was demonstrated that further margin optimisation can be achieved with adjustments against the current ambient air temperature.

The project required a tracking dashboard built into the control room and posted an engineer on-site for six months to support implementation and capability transfer. This improvement project represented best-in-class techniques using the technologies of the day.