46
LNG
INDUSTRY
OCTOBER
2016
Nothing new
In other industries, it is standard practise to use simulators
as training aids, or to give timely future insights. Simulation
can be used for business planning to help design, shape
ideas and resolve issues that cannot be seen on paper.
Crucial to their performance is finding out what works – and
what does not – before investing money and time into
actions based upon flawed thinking.
Simulation is also well established in the LNG industry
to stress test and validate technical assumptions. However,
it can now be used for wider business planning and market
scenario testing. Modern, dynamic simulation-based
models can be applied to help LNG players across the
globe respond to the challenges of a marketplace that is
only getting harder to predict.
Where to begin?
So, how can the spreadsheet-based approach be improved
upon?
Firstly, organising for success should not be taken
lightly. To leverage the maximum value from a predictive
simulation model, a business must choose how best to
invest in a capability that understands its use, that can
design ‘what-if’ scenarios and then analyse and explain
simulated outcomes to those that require the insight and
foresight for planning or policy decisions.
This is the first challenge for many as they weigh up the
pros and cons of using the technology and techniques.
Should internal resources be recruited or trained, or should
experienced specialists be contracted? A blend of both is
often a good place to start, benefitting from immediate
access to expert technical skills, whilst simultaneously
up-skilling internal resources, thus future-proofing as part of
the process.
Secondly, with many options for software and model
scope, predictive simulation projects can seem a complex
choice. However, there are some simple steps that can be
applied to get started.
Think big
Timing is everything – the model building phase is crucially
important. By being involved in this phase, stakeholders
are forced to understand their operations, question
assumptions and interact in a way that deepens knowledge
on the way to clearer insight. Doing this earlier rather
than later will help develop human thinking and provide
access to the best information in enough time to influence
decisions.
Think bigger
By leaving it too late to understand what is in the balance
for strategic choices, most are likely to fall back on
judgement calls and simplifying assumptions (rather than
testing them) in order to suit the timeframe available
rather than the gravity of the decision. All projects have
multi-disciplined teams of industry experts, but successfully
aligning their agendas and interests for the common goal
of a holistic project requires unbiased, non-political and
objective guidance.
Put simply, it is about helping to develop the thought
process by getting the best information in enough time to
influence the big decisions. Consider the LNG carrier transits
of the Panama Canal that are now underway, and the
reservations for over 170 more this year, which has unlocked
the Asian market potential for US Gulf Coast producers.
Although pivotal now, a number of advanced US producers
have, for some time, been simulating (or virtual planning)
how to use the 11-day round voyage reduction and one-third
cost saving to their advantage. Crucially, however, they
have also been doing this by quantifying the effects of new
disruptive factors that Panama introduces, such as Gulf
weather delays and Panama convoying rules.
Start small
There are always experts in the technology, but people
who know both the analysis techniques and the way the
future business needs to work are also of vital importance.
They will be able to hit the ground running quicker, and be
able to help generate, understand and explain the evidence
needed for stakeholders, project partners, backers and the
target market.
Move fast and maintain
momentum
Off the shelf models and simulations are a perfect place
to start. Simulations are created in software and can
always be tuned to better fit as understanding, needs and
perspective change. Understanding what is required will
become clearer with a phased, iterative approach. Just as
LNG projects are phased to build up to full momentum,
Lanner has worked with Cameron LNG, first on its initial
three trains, and then re-using the simulation assets to
analyse the expansion case proposals. Through modelling
factors such as shipping, Calcasieu channel traffic and
weather, Cameron LNG was able to properly validate its
decision making and assess its choices for the proposed
expansions.
Skills and knowledge fade quickly, so the new thinking
learned should be documented to save time later on.
Recent clients in Texas and Louisiana, US, have now
nurtured their analysis capabilities and can point to
improved project success as a consequence. As a result of
using simulation, these clients were able to quantify the
potential risks and make key decisions quicker, in turn
optimising their whole project lifecycles.
Experts from all different parts of the business should
be brought onto the same page, in order to ensure that the
simulation represents everyone’s reality. This is a great way
to test ideas and bring a team together in collaborative,
proactive, innovative sessions.
Whether or not the decision is made to do more or less
of the technical work in-house, an expert should be fully
integrated with the business philosophy and goals.
Conclusion
Around the world, many LNG owners and operators are
already using predictive simulation solutions for reliable
and efficient planning and decision making. Project
development budgets will always be under intense
pressure, choices diverse and priorities split, but the biggest
question for most is at what price does the wrong decision
come?
