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Flow Measurement Challenges - 1997 E. Loy Upp |
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SUMMARY The challenges of Flow Measurement today are significant. The Energy business, of which we are a part, is in upheaval. We have moved from a regulated business to a competitive business. Our flow measurement knowledge requirements are greater than ever with demands of new governmental regulations, new standards, wider use of automation and higher efficiencies. The answer to these challenges is knowledge. INTRODUCTION The Flow Measurement challenges today are more significant than at any time I can remember in my 46 years in the business. In the past, we have been a relatively conservative, traditional business with steady growth and real changes happening at an evolutionary pace. Today that pace is changing for many reasons and these changes affect each and everyone of you in your daily work. Those of us that are unable to change will be left in the backwash wondering what has happened. It is my purpose to look at these changes and the related challenges with you today so that each of you can interpret them and plan on what they mean to your future in the business. OUR CHANGING ENERGY INDUSTRY In the mid-197O's we witnessed an energy shortage in which natural gas was unable to meet the demands and prices increased at an uncontrolled rate. This was followed in the mid 1980's by a reduction in usage, an improvement in efficiency of utilization, a conversion to other sources, and price rollbacks that sent shock waves through the entire industry. Them was an initial feeling that this was only a temporary adjustment and with a little time the industry would turn around. However, usage continued to drop and prognosticatons began lengthening the time before recovery would begin. We have seen in the last three years a realization that the industry market projection is at best rather flat with little or no growth projected into the 1990's. The very nature of the business is changing with fierce competition among producers, pipeliners, and distribution groups for the little growth seen, plus competition for their old markets. Incidentally, we have already seen a manifestation of this competition with companies becoming less open at association meetings regarding their immediate plans and operations. What was once an industry that completely shared their knowledge, problems, and solutions, is becoming one of protecting any perceived edge at getting a job done. This has occurred because pipelines have become common carriers with complete changes in the economics of operation. Producers are in a market of oversupply and have had to redo the marketing of their present products and revise their future drilling programs. This has led to producers competing in each other's market with little overall increase in the total market. Distribution companies have found considerable reduced growth and reduced usage by their customers and have had to review their operations and planning, including competing with other's sources of supply for some of their present markets.. In each of these cases we have seen buy-outs, early retirements, reductions in staff, more complete economic studies of all projects, delays if not cancellations of projects and total changes in a company's operating philosophy. We could belabor these points further, but all we have to do is pick up any newspaper and find the details almost daily. The results of these changes am affecting each of us and will continue to do so. Analysts have stated that we are 'working in a "mature industry"; that growth is completed and now the business will enter its declining years. Some credence is given to this happening by one congressional study which suggests that natural gas production in the United States will decline between 36% and 56% of the 1980 levels by the year 2000. This same study suggests that the gross national energy demand by 2020 will be reduced by 28% based on a per capita consumption of one half of today's rates. In 1980, 45% of our national energy demand was met with oil and 27% with gas. These percentages are probably still about correct except the total energy delivered is less. The other 28% is made up of coal, nuclear power, wind generators, solar power, hydro-power and blo-mass fuel, all of which the report stated were to be high growth areas that will fight to increase their share of the energy market. The industry, then, is facing reduced usage by customers, increased competition among ourselves, and new competitors. GOVERNMENT INFLUENCES Our governmental policies of today have relaxed controls on interstate transportation of all types. While regulated industries want to be free, the resuns of such freedom can be traumatic, if not disastrous, to some of the companies involved. Witness the airline and trucking industries are two groups whose deregulation has totally changed the industry with some companies going out of business and others being totally reorganized. In our industry, one of the major governmental bodies is The Federal Energy Regulatory Commission (FERC). Their approach to deregulation of our industry is being carefully followed. FERC has made some proposals that dramatically reformed the interstate gas pipeline regulations. The dramatic changes that have followed FERC ruling 636 include expanded marketing activities as a separate entity while the producers and pipelines have retumed to their original business of drilling for oil and gas and pumping oil and gas, respectively. This has brought new terms of fear into our business -downsizing and re-engineering, which is not over yet, with new announcements coming every week. Gas Pipelines The latest major change has been the combining of Natural Gas Pipeline and Electrical Companies. These form a total energy supply store for customers needls. A pipeline that provides transportation services to one shipper is required to supply it to any shipper. A shipper has the right to displace the pipeline as a supplier to one of the pipelines own customers using The pipelines capacity. It is in the pipelines interest to reduce its transportation costs, since it will be the pipeline that shippers will want to use. The other ramification of this is that the pipelines have become competitive shippers on a continual basis with the less efficient losing contracts and becoming even less efficient. Pipelines are basically trucking companies 'with rapid changes in contracts causing variations in pipeline operations which effect flow measurement. CHANGES IN STANDARDS Our Flow Measurement business traces its rules to standards such as the API Manual of Petroleum Measurement Standards 14.3 Parts 1, 2, 3, and 4 (AGA -3), as well as our OonOacts. The industry his been very active in the area of upgrading and rewriting these standards, many of which had remained unchanged for years. The basic purpose of these changes has been to upgrade the flow measurement requirements based on new knowledge, expansion of the ranges of application, coverage of new methods and equipment as they are developed, and reduction of accuracy tolerances on the measurements obtained. Gas Measurement In the gas measurement area, two new standard editions, 1985 and 1992 have been issued. The formats are changed and the usage of them require more than a minor review of changes. They give differences in the volumes obtained; change some field testing practices, and add "clarification" that may be at odds with some of your present practices. It is a change that has caused confusion and will continue until it is digested and put into practice. Depending on your contracts and agreements with your customers, these changes will have to be managed so that you are on the same wave length. The 1985 AGA-3 was published with no great changes. In 1992 the new AGA-3 was presented broken down into 4 parts that has made significant changes to the mechanical requirements, the calculation procedures, and the equation data base, that gives a different answer than the 1985 standard. The implementation of these new standards has been entering the measurement field in varying degrees from no change yet, to complete adoptbnon of the standards. This has caused confusion and consternation. The new standards represent the best knowledge to date. The only concems are to get them implemented to minimize the cost effects on our operations and procedures. AUTOMATION Another influence that has baen around for a number of years is receiving serious study, and implementation at many companies is an enhanced degree of automation. Its purpose is to improve operating efficiencies. In the past it was rnore or less thought to be something of value for the future, but no real commitment was made to use it as extensively as is now being studied. It is becoming more of a requirement because of a much less stabilized operation in the pipelines when the previously mentioned effects of deregulation are feft. The automation of flow measurement is only a part of the overall automation programs being planned by producers, transporters and distributors. Generally the industry is looking across department lines with data handling, communication, pipeline, compressor or pump station, accounting1 and management personnel involved. And1 the measurement people are usually contributors to a "committee decision". FERC ruling 636 has made real time measurement information almost a necessity, so many more companies have added computerization of their operation for control purposes. It has encouraged the development of storage capabilities, both in the production and distribution areas of the country to stabilize the supply and delivery ends of the pipelines. The Measurement need is part of a system for data handling for the whole company. The overall system must properly meet the requirements of measurement We have seen the disappearance of the Measurement Department of twenty years ago being replaced with Operating groups who have responsibilities beyond measurement. There has also been a trend to move the measurement function to the field areas with a large reduction in headquarters staff. This has followed some experiences of increasing "loss and unaccounted for" in the pipeline companies. It is interesting to see this turning around right now with the reformation of Measurement Departments of sorts to establish a responsblity-authority relationship. EFFICIENCY The emphasis now is on efficient operation of our present facilities, so that our products can be delivered more cost effectively. The measurement man is directly involved in this, since a major portion of the input data for efficiency studies will be from flow measurement. We are requested to improve our analysis of compressors and pumps, and pipeline efficiencies. The operation of our facilities change often and the requirements of delivery to individual customers are highly variable. Short term contracts require continual monitoring so that proper scheduling can be planned, resulting in the lowest cost of delivery of the products. This requires the addition of new equipment and new design concerns for new flow measurement stations along with upgrading of present installations. Remote operations have become common-place. Obviously, one of the impacts is the extensive use of data-communications equipment now available. There is no question that the equipment is available in all shapes, forms and cost ranges - just visit the exhibit hall and you will see a number of options. The deciding question, however, is cost justification. There are many questions of initial cost, operation costs, maintenance costs1 mean-time between failures. problems associated with increasing level of dependence on the new technology, staffing requirements1 redundance, failure modes contract requirements and the like. All of these considerations most be balanced against the savings anticipated by the equipment use. If there are minimal or no savings - the investments will not be made in the present restrictive economic dimate of the energy business. Economics has put pressure on the supplier to have less costly computers available for low dollar volume metering sites. The major oil companies that have sold off their marginal properties to a number of independents. These companies are much more cost control practitioners. One detriment of the past to the use of computer equipment that has been removed, is the retirement of a large number of pipeline personnel hired in the early fifties. They were trained prior to the electronic explosion. Their retirement has allowed the degree of technical sophistification of the field and office work force to be upgraded with less of the reluctance to change because of the training required of the existing work force of the recent past. The retirement of experience has speeded up the acceptance of the computers1 but to a degree has put more emphasis on the read out equipment with less concern about the primary meters. This has led to reduced maintenance which has ended up as increased measurement controversy. Over a million computers a year have been sold since 1980. So there is no scarcity of available personnel with backgrounds in the computer's use and usefulness at all levels of the work force. At the same time, more training in the basics of the energy business is required since less personnel is available to do the work and we will become more than measurement people or computer people. On the other hand, over-sophistication of a work force that feels that all problems are solvable on a computer can have its problems also. The picture of a meter technician today is one of an employee with an electronic test unit rather than one with a wrench in their hand. We see an increase in demand for more real time data. Pipelines that once operated in a stable market place have converted to common carriers - each competing for the business of transporting gas at the cheapest price. Base loads without base contracts demands that full knowledge of costs and cost reduction method are important. This data has to be available on a continuous basis to be useful in this type of operation. This has happened with the requirements of the 636 bulletin boards. The 836 rules do not allow for the 'loss and unaccounted for' differences of gas volumes to be considered in the rate base. Therefore, any loss is a direct deduction from profits. Management will push for zero loss and unaccounted for that will add pressure to a measurement man's work. CONCLUSION What is the answer, then, that we individually can look to? The answer is knowledge: knowledge that the industry is changing, knowledge the industry is upgrading, knowledge that must change or we will be left out. Where do I get that knowledge: From my company, my fellow workers, and from schools such as the one you are attending here. When should I start immediately, if not yesterday. How do I do it - attend the classes, attend the exhibits. Don't be bashful. Ask all of the questions you have. Discuss your problems with the others at this school and recognize that what you are doing at this school could well affect your future in this changing industry. I give this to you as your challenge. I believe it is real. I wish you luck in the pursuit of the knowledge that I feel will be the source of your best answer to this challenge of our changing industry.
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