POWER-GRID.COM : DECEMBER 2014 THE OFFICIAL PUBLICATION OF
20 How to Prevent Meter Fires
24 Plains & Eastern Clean Line Progress COMED Builds
29 Smart Buildings Neighborhood and Utility Impacts Microgrids
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1412pg_2 2 12/8/14 11:34 AM FROM THE EDITOR EDITOR IN CHIEF TERESA HANSEN Be Part of the Grid EDITOR IN CHIEF Teresa Hansen Evolution Discussion 918.831.9504 [email protected] “If Alexander Graham Bell were on earth today, he would not recognize SENIOR EDITOR the telephone; however, if Thomas Edison were here today, he would have Kristen Wright 918.831.9177 [email protected] no trouble recognizing the electricity grid.” How many times have you heard that or something similar? I’ve heard it many times, but I don’t think I’ll hear ONLINE/ASSOCIATE EDITOR Jeff Postelwait it much in the future. The grid is evolving and beginning to look less like the 918.831.9114 [email protected] grid that has been around for decades. This evolution creates challenges and GRAPHIC DESIGNER opportunities for utilities, as well as sleepless nights for utility executives. Deanna Taylor 918.832.9378 [email protected] The days when all electricity traveled from large central station power
CONTRIBUTING EDITOR plants through the grid to captive customers are over. Large power plants and TransmissionHub Senior Analyst Corina Rivera-Linares long-distance, one-way transmission will be around for years, but that will
BUSINESS ADMINISTRATOR cease to be the only model for electricity generation and delivery. The amount Angie O’Dea 918.831.9431 [email protected] of small-scale distributed generation being added to the grid is increasing and will continue to do so. As distributed energy resources such as rooftop solar VICE PRESIDENT-AUDIENCE DEVELOPMENT & MARKETING photovoltaic technology become cheaper and markets incentivize electricity June Griffin consumers to become electricity generators, the grid will evolve, along with AUDIENCE DEVELOPMENT MANAGER customers and the entities that serve them. Who knows? One day you Linda Thomas 918.832.9254 [email protected] might generate your own electricity or buy it from your neighbor or your homeowners association. SUBSCRIBER SERVICE P.O. Box 3264, Northbrook, IL 60065 If these possibilities intrigue you, or more important, affect you and phone 847.763.9540 [email protected] your company, you should attend the Electric Light & Power Executive
SENIOR VICE PRESIDENT, NORTH AMERICAN Conference, a DistribuTECH co-located event. Senior Editor Kristen Wright POWER GENERATION GROUP and I have worked with a small group of industry experts to create this event Richard Baker 918.831.9187 [email protected] that is now in its sixth year. It is designed to cover a few select topics that are
PENNWELL CORP. IN EUROPE covered at DistribuTECH, but in a less technical and more business-centric PennWell International Limited way. The upcoming conference will occur Monday, Feb. 2—the day before The Water Tower, Gunpowder Mill Waltham Abbey, Essex EN9 1BN, United Kingdom DistribuTECH begins. Its focus will be the electricity industry’s changing phone +44.1992.656600 fax +44.1992.656700 business models and technologies and how they are affecting the grid. [email protected] Industry executives will participate in a full day of panel discussions that CHAIRMAN will include audience participation. They are: Policy and Strategy Evolution; Frank Lauinger Whose Customer is it Anyway?; (Distributed Energy Resources) Impact on PRESIDENT/CEO Utility Planning and Operations; and The View From the Top. The entire Robert F. Biolchini program should be great, but I’m especially excited about The View From the SENIOR VICE PRESIDENT, FINANCE & ADMINISTRATION (CFO) Top, which will be led by five investor-owned utility CEOs. Mark C. Wilmoth If you’re a utility manager or executive, please join us Feb. 2 at the Omni
1421 S. Sheridan Road, Tulsa, OK 74112 San Diego Hotel. If you already plan to attend DistribuTECH, it’s simple to PO Box 1260, Tulsa OK 74101 Phone 918.835.3161 Fax 918.831.9834 upgrade your registration to include the EL&P Executive Conference. You can [email protected] www.pennwell.com find details about the event, including how to register, at www.elpconference. com. I think you’ll be impressed with the experts we’ve recruited to discuss POWERGRID International is the these important topics. I hope to see you soon in sunny San Diego at the offcial publication of Electric Light & Power Executive Conference, DistribuTECH or both.
December 2014 | 3 www.power-grid.com
1412pg_3 3 12/8/14 11:34 AM DECEMBER 2014 VOLUME 19.12
16 Advanced Meters Give Oncor Customers More Control Over Energy Costs, Management Oncor’s Anna Kurian explains how advanced metering is improving how the company does business one year after the installation.
20 Preventing Electric Meter Fires: Two Perspectives Sangeet Dutta of Apex CoVantage and Scott Mann of Brooks Utility Products answer the most common meter installation safety questions.
24 Plains & Eastern Clean Line Keeps Transmission Construction Local Wayne Galli of Clean Line Energy Partners and Phil Albert of Pelco Structural LLC write about Clean Line’s construction deals with businesses in states through which the Plains & Eastern Clean Line will be built.
12 29 Converging Building Efficiency COMED Builds Trends and the Potential Impact on Traditional Electric Utilities Community Microgrids Robert Wilkins of Danfoss lists five trends that are posed One Neighborhood to converge. Are electric utilities ready for a big change? at a Time Shay Bahramirad and Joseph Svachula of 31 Nebraska Utility ComEd, Amin Khodaei of University of Manages Seasonal Loads Denver and Julio Romero Aguero of Quanta With Communication System Scott Wilke of Siemens RuggedCom tells tales of rural Technology share how ComEd is developing irrigation on the Great Plains and a new communication microgrids that are much more than system at Cuming County Public Power District. Customer engagement solutions allow homeowners to residential backup generation. take energy use into their own hands.
From the Editor 3 35 Products Notes 6 36 Calendar/Ad Index
PowerGrid International™: ISSN 1547-6723, the appropriate fee is paid directly to Copyright (international air mail). Back issues of PowerGrid addresses to P.O. Box 122, Niagara Falls, ON L2E BPA International. is published 12 times per year (January, Clearance Center, 222 Rosewood Dr., Danvers, International™ may be purchased at a cost of 6S4 “PowerGrid International™” is a registered Printed in the February, March, April, May, June, July, August, MA 01923 USA, 978.750.8400. Prior to pho- $13 each in the U.S. and $21 elsewhere. Copies trademark of PennWell Corp. We make portions of U.S.A. GST No. September, October, November and December) tocopying items for educational classroom use, of back issues are also available on microfilm our subscriber list available to carefully screened 126813153 by PennWell Corp., 1421 S. Sheridan Rd., Tulsa please contact Copyright Clearance Center, and microfiche from University Microfilm, a Xerox companies that offer products and services that OK 74112; phone 918.835.3161. ©Copyright 222 Rosewood Dr., Danvers, MA 01923 USA, Co., 300 N. Zeeb Rd., Ann Arbor, MI 48103. may be important for your work. If you do not want Publications Mail 2014 by PennWell Corp. (Registered in U.S. 508.750.8400. Distributed to executives and Available on the NEXIS™ Service, Mead Data to receive those offers and/or information, please Agreement No. Patent Trademark Office). All rights reserved. engineers in electric, water/wastewater and Central Inc., Box 933, Dayton, OH 45402; (937) let us know by contacting us at List Services, 40052420 Authorization to photocopy items for internal gas utilities and pipeline companies around the 865-6800. Postmaster: Send address changes PowerGrid International™, P.O. Box 2280, Tulsa or personal use, or the internal or personal world. Periodicals Postage Paid at Tulsa, OK and other circulation information to PowerGrid OK 74101. use of specific clients, is granted by PowerGrid and additional mailing offices. Subscription: $85 International™, P.O. Box 3264, Northbrook, IL Member American Business Press. International™: ISSN 1085-2328, provided that per year (U.S.), $94 (Canada/Mexico), $225 60065-3240. Return undeliverable Canadian
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1412pg_5 5 12/8/14 11:34 AM NOTES
wind capacity that ERCOT expects to be available during peak demand periods. A new methodology approved on Oct. 14 by the ERCOT board of directors enables ERCOT to project wind gen- ERCOT: eration availability based on location © CAN STOCK PHOTO INC. / KONART (coastal or noncoastal) and historical WE HAVE ENOUGH performance during seasonal peaks. ELECTRICITY FOR WINTER, The winter SARA includes coastal wind generation at 36 percent of installed SPRING capacity and noncoastal at 19 percent, bringing the expected peak average wind capacity contribution to nearly 2,500 MW. ERCOT continues to caution resi- dents in the Lower Rio Grande Valley of TEXAS potential reliability challenges as trans- mission providers work to improve the system that serves that rapidly grow- The Electric Reliability Council of than 16,000 MW to less than 1,200 ing region. The SARA is a systemwide Texas (ERCOT), grid operator for most MW, the latter representing a worst-case assessment and does not reflect this of the state, expects the region will have scenario of very high demand, exten- localized issue. sufficient electric supplies this winter, sive generation outages and fuel supply Based on input from generation own- based on broad planning scenarios in limitations that would reduce generation ers, ERCOT does not expect drought the Seasonal Assessment of Resource capacity further. In that scenario, peak conditions or coal transportation issues Adequacy (SARA). demand could exceed to affect generation avail- “We have more generation resources 59,640 MW, more than ability during periods of available than we did this time last 2,000 MW higher than The forecast, peak demand this win- year,” said Warren Lasher, director of the 57,265-MW winter based on 12- ter. To date, ERCOT also year average system planning for ERCOT. “Although record in February 2011. has not received reports winter some areas could experience colder Ken McIntyre, ERCOT from generation own- temperatures, than normal temperatures this winter, vice president of grid ers of expected capac- projects peak we are not expecting peak demand to planning and operations, demand at ity changes associated be as high as we saw this past winter.” said generation providers about 53,000 with the Environmental Generation resources for winter in recently have improved MW. Protection Agency’s the ERCOT region total more than their preparation proce- (EPA’s) potential imple- 77,350 MW. The forecast, based on dures for extreme winter mentation of the Cross- 12-year average winter temperatures, conditions. State Air Pollution Rule, which could be projects peak demand at about 53,000 “We continue to monitor these efforts in place in January 2015. Although gen- MW. One MW is enough electricity to to help assess the preparedness of the eration owners likely will wait for addi- serve some 200-500 homes, depending system overall,” he said. tional guidance from the EPA, ERCOT on weather conditions. In addition to new resources that expects some coal-fired units to reduce Under the full range of planning sce- began operations in 2014, the increase operations to comply with the new narios, available ERCOT reserves during in generation capacity also reflects a rule and will continue to monitor these this winter’s peak could range from more change in the percentage of installed developments.
6 | December 2014 www.power-grid.com
1412pg_6 6 12/8/14 11:35 AM PEPCOPEPCO DEPLOYSDEPLOYS IITRON,TRON, CCLIPPERCREEK ELECTRICELECTRIC VEHICLEVEHICLE SMARTSMART CHARGING electricelectric vehiclesveh to take advantage of off- to evaluating this cutting-edge solution, peakpeak charging.chargi which will empower our customers to PepcoPepco wwill use the smart charging to reduce peak usage and save money when testtest demanddeman response events and calculate charging their electric vehicles, while also thethe lload impact of each event. The decreasing the demand on our electric © CAN STOCK PHOTO INC. / KONART Pepco,Pepco, electricelectric serviceservice providerprovider toto pilot program is to validate electric distribution system while increasing our more thanh 801,000801 000 customers throughouth h vehicle smart charging stations to system reliability.” Maryland and the District of Columbia, is support consumer engagement, demand With Itron Embedded Sensing, Itron deploying Itron and ClipperCreek’s electric response, time-of-use rates and embedded equips each ClipperCreek 240-V charging vehicle smart charging pilot solution, the revenue-grade metering. Pepco will be station with revenue-grade metrology and companies announced. able to study the impact of electric vehicle command and control communication The technology, which combines charging to the utility distribution system. over various mediums. The solution ClipperCreek’s charging station with “Itron and ClipperCreek’s smart allows for flexible and automatic control Itron Embedded Sensing technology, charging system is an innovating of charging, receiving inputs such as provides the foundation for Pepco’s technology that satisfies our requirements charging schedules and control signals Demand Management Pilot Program for for our Plug-In Vehicle Charging Pilot for demand response. In addition, the plug-in vehicle charging. The voluntary Program,” said Barbara M. Gonzalez, solution allows Pepco to remotely measure program encourages Pepco customers in PHI manager of special projects who is the energy delivered to the vehicle as its Maryland service territory who own leading the program. “We look forward interval metering data.
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1412pg_7 7 12/8/14 11:35 AM NOTES
MOODY’S: WARNINGS OF UTILITY ‘DEATH SPIRAL’ FROM DISTRIBUTED GENERATION PREMATURE Distributed generation, when utility “The electric grid is a critical piece In addition, lawmakers also have other customers produce their own electricity of infrastructure, and its value could be policy tools, such as renewable portfolio such as with solar panels, is a long-term even greater in the future,” Manabe said. standards, to manage the growth of dis- competitive threat to U.S. electric utilities “Consequently, we believe utilities will tributed generation. that operate under a traditional ratemak- continue to receive reasonable regulatory Distributed generation poses a com- ing structure. treatment.” petitive threat to utilities under traditional, But utilities will receive reasonable regu- According to Moody’s, proactive regula- vertically integrated regulation that own latory treatment to deal with any potential tory response to distributed generation generation assets. industry transformation that a widespread is credit positive because it gives utilities Moody’s found that utilities in those adoption of distributed generation would improved rate designs and helps in the states were least likely to have policies bring, according to Moody’s Investors long-term planning for their infrastructure. or rate designs that promote distributed Service. In some states, such as California, New generation. “Distributed generation poses a threat York and Hawaii, regulators are going even Moody’s also found that transmission under traditional ratemaking but it’s pre- further by pursuing new utility business and distribution utilities that don’t own mature to call a ‘death spiral’ for the sector,” models that embrace distributed genera- generation assets and have decoupled rates said Mihoko Manabe, senior vice president tion, but most are tackling rate design and are more likely to promote distributed of Moody’s, in the report “US (sic) Utilities: policy issues first. generation in their service territories. Regulatory Response Looks to Stay Ahead The near-term regulatory agenda is Increased investments expected in the of the Distributed Generation Curve.” focused on reforming net metering, a tariff electric grid will make transmission and Moody’s discounts the “death spiral” that most rooftop solar customers have to distribution more valuable while vertical- caused by many customers’ disconnecting reduce their electric bills. ly integrated utilities seek from the utility grid as a remote worst-case The fast growth in customers’ generat- ways to make distributed scenario; a steady decline in volumes, ing some of their own power with solar generation a business however, is more likely in a do-nothing panels have raised a policy concern that opportunity. scenario. the costs of maintaining the utilities’ facili- “Lessons learned Technological developments are uncer- ties are shifting to other customers. from these early ini- tain and could be disruptive, but Moody’s Across the country, regulators are reas- tiatives will set prec- does not see the utility structure’s being sessing net metering tariffs to reduce the edents for others in the sector,”
upset on the horizon. risk to utilities’ revenues. Manabe said. © CAN STOCK PHOTO INC. / MILO827 EYE ON THE WORLD
Simple Energy expands into Europe Software-as-a-Service (SaaS) company Simple Energy began pioneering international markets during summer recently expanded into the European market, the company 2014, establishing its first partnership in Canada announced. withwith MMiltonilton HHydro.ydro. The partnership delivered a social The announcement marks Simpleple EEnergy’snergy’s benchmarkingbenchmarkin program, rewarding consumers for first international office and followslows thethe reducingreducing their household energy use while EU’s announcement that it planslans toto helpinghelping local schools win cash awards by reduce Europe’s annual primary energyenergy joiningjoining a school challenge team. A second consumption as much as 20 ppercentercent programprogra in Canada will reward residential by 2020. utilityutility customers for energy savings with Founded in 2010, Simple EEnergynergy AirAir MMiles.i
8 | December 2014 www.power-grid.com © CAN STOCK PHOTO INC. / MAXXYUSTAS
1412pg_8 8 12/8/14 11:35 AM PJM, NYISO IMPLEMENT COORDINATED TRANSACTION SCHEDULING PJM Interconnection and the New York by incorporating projected price differenc- allows more efficient use of transmission Independent System Operator (NYISO) es between the two markets into interre- resources across our borders,” he said. are streamlining electricity flow across gional scheduling decisions. By coordinat- The Federal Energy Regulatory their mutual borders and reducing ener- ing energy flow schedules, CTS will pro- Commission approved the tariff revisions gy production costs. The grid operators vide benefits to consumers in New York necessary for implementation of CTS in on Nov. 4 implemented a coordinated and the 13 states served by PJM. Estimates, March 2014. CTS is among the Broader transaction scheduling (CTS) system that including one from the market monitor for Regional Markets initiatives that the NYISO, improves the scheduling of wholesale elec- NYISO, found that CTS potentially could PJM and other grid operators have under- tricity sales between New York state and reduce production costs between $9 mil- taken to improve interregional scheduling the PJM region where they border in lion and $26 million annually. practices and power flows. Initiatives the Pennsylvania and New Jersey. This enables “Implementation of CTS is the latest NYISO and PJM already have completed market participants to access the least-cost example of interregional collaboration to improve market efficiency at their com- power within the two regions and helps efforts that are enhancing the availability of mon border include intra-hour transaction lower the combined energy production resources and enabling more efficient use scheduling and coordinating their opera- cost of the two systems. of power assets,” said Stephen G. Whitley, tions to cost-effectively solve transmission CTS will enable PJM and the NYISO to NYISO president and CEO. system constraints. The implementation of use the transmission lines that connect the PJM President and CEO Terry Boston CTS marks the completion of the planned regions more efficiently. The system also agreed. Broader Regional Markets initiatives iden- minimizes counterintuitive power flows “Coordinated transaction scheduling tified in January 2010.
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1412pg_9 9 12/8/14 11:35 AM NOTES
EYE ON THE WORLD
CG partners with ANDE to expand Paraguay grid Avantha Group Co. CG has signed a contract with CG has been involved in the generation, transmission and the state utility of Paraguay, Administracion Nacional de distribution sector in Latin America and the Caribbean with Electricidad (ANDE), for eight single- and three-phase an installed base of more than 55,000 MVA and up to 500 kV. transformers that total 420 MVA for the expansion of the The company is in more than 28 countries in the country’s 220-kV and 66-kV electricity network. region with active representation in most countries. CG Paraguay is one of the world’s largest electricity will manufacture the transformers in Mumbai, India, and exporters, especially to Brazil and Argentina. CG has been supply them in three lots. Spare parts, supervision of the in South America for two decades and installation and commissioning and on-site training are part of CG’s scope. Latin America forms an important part of CG’s India export strategy, and the company has been exporting equipment to the region more than 23 years, primarily from its manufacturing bases in Bhopal, Mumbai and Nashik, India. CG also has a manufacturing base in Brazil that is involved in the manufacture of extrahigh-voltage (EHV) switchgear, mobile substations and automation solutions for utilities in the region. previously partnered with ANDE for the supply of single- The Paraguayan grid has 1.3 million customers and and three-phase transformers and 30,000 smart meters to some 32,000 kilometers of distribution lines. It has been the Paraguayan grid. growing at an annual rate of 4 percent since 2009. This This contract was won through a competitive contract represents the strengthening of some 15 percent international public bidding process. CG was selected of ANDE’s current transformer capacity. ANDE’s grid also for this project because of its record in Paraguay, backed faces difficulty because of distribution losses among the by a global recognition of its technical expertise in highest in the region. CG’s smart meters assist in reducing manufacturing and supplying high-voltage transformers. these losses and improving the grid’s energy efficiency. © CAN STOCK PHOTO INC. / NATANAELGINTING
GE helps UK utilities meet smart metering legislation requirements U.K. utilities will meet new government requirements of consumption. smart meters in every residential and commercial location Available in single-phase and by the end of 2020, and GE’s Digital Energy business is dual-element meter options, ready to help. the SGM1300 features an LCD © CAN STOCK PHOTO INC. / GRUML GE’s SGM1300 IEC smart electricity meter will provide display with intuitive icons utilities with the advanced metering infrastructure to meet that let installers know when the U.K. legislation and to better provide on-time, reliable the meter is connected to the and accurate billing information to their customers. network and running on the system. GE’s meters will help enable two-way communication This removes ambiguity and between U.K. utilities and their customers. For example, provides confidence that smart meters will provide customers with half-hourly data the installer can leave the on their energy usage. installation fully operable. For electricity customers, the smart meters support The SGM1300 electricity home-area network communications between local devices smart meter also provides utilities with such as a GE gas meter and, using the in-home display, additional security through anti-tampering will give them a consolidated view of their electricity and features and secure communications gas usage, allowing them to better manage their energy solutions.
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1412pg_10 10 12/8/14 11:35 AM FEBRUARY 3-5, 2015 SAN DIEGO CONVENTION CENTER SAN DIEGO, CA USA DISTRIBUTECH.CCOM
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1412pg_11 11 12/8/14 11:35 AM BY SHAY BAHRAMIRAD AND JOSEPH SVACHULA, COMED; AMIN KHODAEI, UNIVERSITY OF DENVER; AND JULIO ROMERO AGUERO, QUANTA TECHNOLOGY
reater Chicago electric util- substations, distributed generation sites or ity Commonwealth Edison (ComEd) consulting firms and software developers consumer premises. Microgrids may be recently won a Department of Energy in this effort. ComEd will gain invaluable operated in two modes: (DOE) grant to develop an advanced experience in transforming traditional elec- 1. Interconnected to the grid. Under microgrid controller with applications to tricity supply and delivery plus firsthand this mode, a microgrid can import, export community microgrids. knowledge on future integrated grids. The or have zero power exchange with the These microgrids are much more than experience also will pave the way for other grid. This type of operation generally is backup generation for residential custom- utilities to adopt new business models designed for normal conditions (no system ers. A microgrid is “a group of inter- and embrace anticipated changes in utility contingencies). Its objective is to improve connected loads and Distributed Energy operations. grid performance and efficiency by using Resources (DERs) with clearly defined DERs consist of distributed genera- local DERs, e.g., to defer capacity invest- electrical boundaries that acts as a single tion and distributed energy storage (DES) ments, reduce system losses, improve local controllable entity with respect to the installed at utility facilities, e.g., distribution reliability, etc. grid,” according to the DOE. 2. Disconnected from the grid. ComEd will lead a select group of power Under this mode, a microgrid is allowed and energy industry authorities from uni- versities, national labs, manufacturers,
12 | December 2014 www.power-grid.com © CAN STOCK PHOTO INC. / 5XINC
1412pg_12 12 12/8/14 11:35 AM 1412pg_13 13 gency hasbeenaddressed. interconnected operationafterthecontin- case, themicrogrid to isexpectedtoreturn islandedoperation. Inthelatter temporary continuous supplyduringcontingencies— nent islandedoperation—ortoprovide toremotevide service locations—perma- of operationgenerallyisintendedtopro- achieve generation-loadbalance.Thistype e.g., demandresponse orcurtailment,to tation ofenergy demandmanagement, operation alsomayentailtheimplemen- frequency regulation. Successfulislanded dinated fashiontoprovide voltageand the microgrid tobedispatchedinacoor- requiresof operation theDERswithin known as intentional islanding.Thistype to operateislandedfrom thegrid,also APPLICATION TO COMMUNITIES Community microgrids recently have microgrids and extensive discussions of microgrids andextensivediscussionsof design anddevelopmentofcommunity bases. tary the mission-critical energy needsof mili- power gridsthatare required toaddress bility inproviding self-sustainingsmall and via- Department ofDefensesupport facilities; and or buildingtransmissionanddistribution provide thanupgrading electricservice a more efficient andviablesolutionto nal expertiseinengineeringandscience; availability ofresearchand inter- funding and developmentefforts are devotedto: sively inliterature. Mostmicrogrid studies microgrids havebeeninvestigatedexten- microgrids, however, are limitedalthough mentally friendly. Studiesoncommunity Lacking are detailedstudieson microgrids 3. Military because of 2. Remotemicrogrids becausetheyoffer 1. Campusmicrogrids becauseofthe smart gridandtechnologysmart at C in Dallas. technical chairofthe2016 IEEE PES T&D Expo of Denver.Engineering atUniversity He is ofElectricalandComputer in theDepartment 2016 IEEEPES T&D Expo. Technology andtechnical chairofthe2014and She isanadjunctprofessor atIllinoisInstitute of she leadsthemicrogrid cityeffort. andsmart Shay Bahramirad, Ph.D. Joseph Svachula Amin Khodaei, Ph.D being economic and environ- and economic being and powerqualitylevelswhile can provide premium reliability for electricinfrastructures that address therisingsocietaldemands emerged to asanalternative is vice president of isvicepresident of ., isanassistant professor , ismanagerof OM E D where where engineering and smart gridat C engineering andsmart with which the authors maybeaffiliated.with whichtheauthors positions oropinionsofany entityororganization and donotnecessarilyreflect authors the Transactions GridandPower onSmart Delivery. distribution subcommittee and editor ofIEEE Quanta Technology. HeisvicechairoftheIEEE director ofdistributionandexecutive advisorat Chicago. co-chair ofthe2014IEEEPES T&D Expoin vehicles, and the well-documented grid vehicles, andthewell-documentedgrid emergence the e.g., electric plug-in of for vitalactivitiessuchastransportation, growing dependenceonelectricservice infrastructurespower delivery becauseof may possesssensitiveloads;and quality powerare growing becausethey ers’ needsforhighreliability andpremium concerns; address socioeconomicandenvironmental incentives andregulations designedto uted generationmotivatedbyattractive edented intermittentrenewable distrib- quality; demanding betterreliability andpower duced intheU.S.,according toEPRI,are than one-third oftheelectricenergy pro- ing trends: a potentialsolutiontoaddress thefollow- value propositions oftheviabletechnology. CHALLENGES SIGNIFICANCE, BENEFITS, The opinions expressed are solely of the The opinionsexpressed are solelyofthe Julio Romero Aguero, Ph.D. 4. Society is demanding more resilient demanding more4. Societyis resilient 3. Commercial andindustrialconsum- 2. Utilitygridsare experiencingunprec- 1. Residentialconsumers,whousemore Community microgrids are emerging as December www.power-grid.com OM , issenior E
D 2014 |13 . Hewas 12/8/14 11:35 AM
© CAN STOCK PHOTO INC. / 5XINC vulnerability issues exposed by recent nat- 7. The potential to reduce energy costs anticipated benefits. The financial incen- ural disasters such as Superstorm Sandy. by using distributed generation technolo- tives offered to consumers, who would Community microgrids introduce gies with dropping prices. consider load scheduling strategies, is the opportunities for consumers and the oper- most powerful driver for performing load ation and planning of the power system, The transition from the conventional scheduling. including: utility grid to smart com- Smart metering, advanced devices and 1. Improved reliability by Community munity microgrids and the building management systems are reduc- introducing self-healing at microgrids enhanced use of DER and ing this barrier. the local distribution net- would not be controllable loads are antic- Ownership and regulatory frame- work; successful ipated to change extensive- work. Several regulatory aspects remain 2. Improved resiliency unless fully ly how communities use unresolved, including microgrid owner- by offering capability to implemented electricity. ship, third-party generation participation, withstand low-probability, and adopted Several major obstacles, investment recovery and inclusion in util- high-impact events and by utilities. however, exist to achieving ity rate cases. Changes in the regulatory quickly returning to nor- rapid, widespread deploy- framework are required to drive this resil- mal operating state; ment of community microgrids: iency effort. 3. Emission reduction by the diversifica- High capital cost. Yes, microgrids As these challenges are addressed, tion of energy sources; require significant upfront investments, more widespread deployment of com- 4. Reduced costs of recurring system but they are essential and bring value munity microgrids will occur to the point upgrades by deferring investments on new beyond what is measured by the economic that smart communities might act as a transmission and distribution facilities; metrics used today. Microgrid developers core component of future power systems. 5. Enhanced energy efficiency by reduc- must convince consumers that microgrid Community microgrids could be viable ing transmission and distribution losses benefits exceed the capital costs. Microgrid solutions to challenges of economy, reli- and allowing the implementation of opti- benefits must be scrutinized and com- ability and environment while providing mal load control and resource dispatch; pared with the microgrid capital cost for unprecedented benefits for local consum- 6. Higher power quality by enabling ensuring a complete return on invest- ers and the whole power system. local control of frequency, voltage, load ment and justifying microgrid deploy- Community microgrids leverage the and the rapid response from DES; and ment. Accurately assessing microgrid eco- existing utility distribution infrastructure, nomic benefits is challenging because of thus the utility must play an active role to significant data uncertainty. Some of the ensure microgrids realize their maximum assessment results, such as reliability or value and deliver all proposed benefits. resiliency improvements, are difficult for Community microgrids would be consumers to understand when repre- built upon the existing utility distribu- sented in supply availability terms. tion network and would not be suc- Lack of consumer knowledge. The cessful unless fully implemented and second obstacle is the lack of consumer adopted by utilities. knowledge on potential impacts of dis- As this technology becomes more tributed generation and load scheduling viable and advantageous, more utility strategies, which will persist as long as involvement would be needed to ensure consumers lack keen knowledge of load sustainable deployment to the point that scheduling strategies or are unwilling to utilities could ensure benefits and pro- contribute in energy management efforts mote community microgrids. in microgrids. ComEd is pushing power innova- This obstacle could be eliminated by tion by leading efforts to implement and educating microgrid consumers about design community microgrids.
14 | December 2014 www.power-grid.com
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1412pg_15 15 12/8/14 11:35 AM BY ANNA KURIAN, ONCOR Advanced Meters Give Oncor Customers More Control Over Energy Costs, Management
hen Oncor installed 3.2 million By having an intelligent, automated The meters provide situational aware- Wadvanced meters across its ser- system, the company can shrink the ness, said Mark Carpenter, Oncor senior vice territory in late 2012, the company duration of an outage and complete vice president of transmission grid man- expected the technology would improve several service orders remotely, decreas- agement and system operations. how the company does business. Fast ing response time and the utility’s car- “Obviously, we can’t control the forward one year and the technology bon footprint by eliminating the need weather, but having these meters gives is surpassing expectations and provid- to deploy as many service trucks for us a much better, faster situational ing unforeseen benefits to customers troubleshooting. awareness,” Carpenter said. “The bot- and the market through a tremendous When customers do call about an tom line is it enables us to provide increase in data and information. outage, Oncor’s customer service rep- quicker and more thorough responses “We are now tapping into the true resentatives can check a meter elec- to our customers.” operational value of advanced meters,” tronically to see if it detects power at said Jim Greer, chief operating officer at a home. This is important because in EMPOWERING TEXAS Oncor. “And our customers and com- many cases, a single customer power ELECTRIC CUSTOMERS pany are benefiting.” outage is the result of a customer’s main Advanced meters and the data they circuit breaker’s tripping provide benefit the mar- QUICKER RESTORATION and interrupting power One year ket and customers. Oncor In 2012, Oncor integrated its to the home. This remote after Oncor operates in a competitive advanced metering system with its out- diagnostic checkup takes installed electric market. age management system that uses lead- only seconds and is pos- advanced The company delivers ing-edge equipment and software to sible because of the data meters, the electricity to customers, identify service issues and pinpoint the an advanced meter can technology who purchase electricity source. The system detects outages and provide. is surpassing from a retail electric pro- notes power quality issues. When out- The integrated system expecations. vider. ages occurred before installing this tech- helps during storms and Advanced meters allow nology, Oncor relied on customer calls is beneficial during a Oncor to collect and vali- to find out about issues and dispatched blue-sky day. On these normal weather date data for daily settlement with the employees to troubleshoot problems days, 25 percent of Oncor’s outages are market. and find the sources. The process could resolved without a customer report. Obtaining this data used to entail a take hours. Since implementing the system, Oncor monthly meter reader visit. Now infor- “Dispatchers and other restoration has resolved more than 7,300 outage mation is available remotely and can be personnel are using advanced meter events on blue-sky days, affecting near- accessed in real time. information all the time,” Greer said. ly 75,000 customers without customer “They are now an integral part of our interaction. This means a customer’s Anna Kurian is communications support operations, increasing our productiv- home might have experienced an outage coordinator at Oncor Electric Delivery. She ity, cutting back on wasted time and during work hours, and Oncor resolved is bilingual, has a degree from Southern Methodist University and enjoys writing helping us restore power more quickly the issue without the customer’s calling feature stories. than ever.” it in or even knowing it occurred.
16 | December 2014 www.power-grid.com
1412pg_16 16 12/8/14 11:35 AM This modern home is a triumph of technology and innovation. And that’s just the electric meter.
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1412pg_17 17 12/8/14 11:35 AM cost $18; today it costs $3.20, and on CHANGES IN MOVE-IN/MOVE OUT April 4 it will drop to $2.26. A priority CHARGES 2007-2014 move-in (a move-in request prioritized by a quick timeline) charge cost $97 in Standard Priority Holiday 2007. Today, that amount has plummet- ed to $10.35 and will fall to $2.47—a 97 percent drop. If you needed a meter connected on a holiday, it cost $123 in $18 $97 $123 2007 and was subject to scheduling by $2.26 Oncor based on technician availability. Today if a homeowner has an advanced
$2.47 meter, it costs just $20.75 to remotely $4.07 connect service, and it happens within 87.4% 97.5% 96.7% hours. That rate also will fall in April to Decrease Decrease Decrease $4.07, representing a 97 percent savings from seven years ago. 2007 2014 2007 2014 2007 2014 Overall, from a meter-related discre- tionary service perspective, full instal- For customers, real time is key. In enabled significant market changes and lation of advanced meters has reduced today’s data-driven and communica- product offerings, such as time-of-use the cost to customers by $35 million tion-rich environment, customers want pricing and peak demand reduction. annually. actionable information. They want to Retail electric providers can offer plans know things such as how much energy such as free nights and weekends or OUR ADVANCED FUTURE they’re using and how to save money. prepaid options. Advanced meters and their data are Now this data is available. Customers Advanced meters also make it easy to creating changes outside of the electric can examine this advanced meter data switch retail electric providers. These market, and because the technology is at www.smartmetertexas.com. service requests can be performed still new, the amount of product offer- Many retail electric providers host remotely and quickly—a stark contrast ings is set to increase in the foreseeable the data on their own proprietary sites; to the previous processes available with future. others send usage alerts to customers analog meters. Before advanced meters, Advanced meters are the foundation to encourage them to make changes Oncor needed 48 hours to schedule and for future innovations. The benefits that and avoid high bills. They also send perform a move-in or move-out work are seen now, such as streamlined opera- customers a forecast of what their bills order, which required an on-site techni- tions, reduced outage time and addition- will be if their usage patterns con- cian. Today, if a home has an advanced al information about usage, will be even tinue. Customers can review their usage meter, Oncor can perform a connect more valuable as innovation continues. information, as well as their carbon or disconnect service remotely; usually These advances were impossible a footprints and prices per kilowatt-hour, within minutes of receiving an order. decade ago, said Bob Shapard, Oncor in near real time via energy manage- The costs Oncor charges to perform chairman and CEO. ment devices such as in-home monitors, these services have been dropping “That’s all changed now,” Shapard home-area network devices and smart- steadily as Oncor has installed advanced said. “We’re moving quickly to develop phone apps. meters. And these costs are set to drop and integrate more cutting-edge tech- These notifications, new devices and again April 4. nology that gives our customers more apps would be impossible without Seven years ago (before advanced information about their electric ser- advanced meter data. meters were installed in Oncor’s service vice and consumption than they’ve had In addition, advanced meter data territory), the standard move-in charge before.”
18 | December 2014 www.power-grid.com
1412pg_18 18 12/8/14 11:35 AM 2015 CONFERENCE PROGRAM DISRUPTING EVERY RULE: THE EVOLVING UTILITY A DistribuTECH EVENT FEBRUARY 2, 2015 Omni San Diego Hotel • San Diego, California www.elpconference.com NEW SPEAKERS ADDED!
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1412pg_19 19 12/8/14 11:35 AM BY SANGEET DUTTA, APEX COVANTAGE, AND SCOTT MANN, BROOKS UTILITY PRODUCTS Preventing Electric Meter Fires: Two Perspectives lectric meter fires, when they occur, WHY DO METER FIRES Ecan put utility customers, workers CONTINUE TO BE AN and company reputation in jeopardy. ISSUE FOR UTILITIES? News coverage of these events at times Mann: Hot sockets are a struggles to determine what caused the very serious and very promi- problems. Yet much is known on safe nent concern for the metering installations. A body of knowledge has industry. Meter socket safety emerged around socket safety: what to issues, including fires, are noth- do before, during and after installing ing new. Due to the rise in AMI A socket jaw tester, like the one pictured above, helps detect any loss of jaw tension, a common contributing factor to hot advanced meters. deployments throughout the socket conditions. Scott Mann of Brooks Utility Products world and more readily acces- and Sangeet Dutta of Apex CoVantage sible information, the number Varieties of block replacement kits, like the one pictured COURTESY BROOKS UTILITY PRODUCTS COURTESY have extensive knowledge and experience of reported hot socket incidents above at right, offer ways to restore safe conditions to deteriorated sockets or socket components. in hot sockets and meter socket safety. is on the rise. There has been Mann addresses the issue with equip- significant debate both inside ment and training: thermal imaging and outside the industry about the root practices and equipment standards that equipment, socket testers and thorough cause of these events. Are they caused by can be applied any time crews are work- inspection techniques, for example. the new meters’ being installed? Perhaps a ing at a meter site, inside the socket or Dutta approaches the issue through defective meter socket is to blame? Could it inside the meter that will reduce risk work flow management: forced march be that the meter was improperly installed? considerably. There are steps that can be work flows, fault-resistant work flows, Some have suggested environmental fac- taken to fix issues once they are detected business process and enterprise resource tors such as vibration are to blame. to improve safety for work crews, as well planning (ERP) principles specifically for Despite the industry’s collective experi- as for homeowners and businesses where advanced metering infrastructure (AMI) ence in planning and executing meter meters are sited. and other smart grid infrastructure. deployments, we seem unable to anticipate Dutta: Meter fires are an important Both see socket safety training as vital. the impacts of product life cycle and other and sensitive issue that has particularly Brooks Utility Products instructs install- variables on the safe operation of metering come under public scrutiny during the ers at metering school seminars across equipment. widespread infrastructure upgrades of the the country. Apex CoVantage trains, tests Factors outside the scope of planning— last decade as utilities increasingly move to and certifies work forces before putting age and condition of existing equipment advanced meters. Any time a utility invests them in the field to work for utilities. and who might conduct the inspection in advanced meters, they are conducting a Each has worked with utilities, both cited here—can undermine the success vital equipment upgrade to one of the most ameliorating damage after fires and cre- of a meter deployment with potentially visible, customer-facing elements of their ating practical solutions that reduce util- disastrous results. Brooks Utility Products power infrastructure. Consumers often ity risk before metering deployments. has its ears to the ground and is commit- have questions about what this technology With roughly two-thirds of U.S. elec- ted to delivering solutions and providing is and whether it is safe or even necessary. tric meters yet to be converted to smart leadership toward root cause consensus Public concern is understandable, since meters, these perspectives might help that will help the industry overcome this fires—though statistically rare—can have those remaining utilities install advanced socket safety issue. tragic results. To reduce risk and liability meters safely. However, there are sound principles, and to protect consumers, workers and
20 | December 2014 www.power-grid.com
1412pg_20 20 12/8/14 11:35 AM utility resources, meter installations must paramount for manufacturers and utilities. for another few decades. Best practices for be completed in the safest, most transpar- Not only is it critical from a PR perspective, avoiding meter fires should include taking ent and efficient way. but also from a financial viewpoint. Costs advantage of the opportunity to make vital It is not merely a matter of looking associated with socket safety issues increase repairs to enhance future safety. at ways to avoid trouble, either. When the longer they go undetected. Replacing utilities remove old meters, they create an damaged equipment and components if WHAT IS YOUR APPROACH TO opportunity to inspect equipment that may caught early is much more cost-effective DETECTION OF SOCKET ISSUES? have been covered up for years, perhaps than having to reconstruct the entire service Mann: Visual inspections—covering even decades. By detecting signs of dete- or pay damages to a consumer. Developing factors such as deterioration of insula- rioration or damage at the meter site and a process that proactively identifies and tion to melted conductors—and mechani- acting to make repairs, utilities can proac- mitigates problem sites is crucial in getting cal inspections—covering variables from tively ensure the safety of their networks in front of hot socket issues. proper torque of wire lugs to the socket’s for years. Too often, the industry has not Dutta: We recommend that utilities take connection to the facility—can help in recognized this moment as a once-in-a- advantage of all of the resources available these areas. In addition, utilities can and generation chance to act. to them. One of the contributions Apex should make use of temperature analytics While the causes of meter fires can be has made is developing the utility indus- capabilities provided by the meters to more many and complex, a body of knowledge try’s only ERP solution built specifically for precisely identify sites that are a concern. COURTESY BROOKS UTILITY PRODUCTS COURTESY has emerged to reduce risk and enhance AMI installations. This software, ProField, To assist utilities in identifying these both the customer experience and the util- applies the widely recognized principles problems, Brooks is renewing the aware- ity business case. Yet many utilities are not of business process management (BPM) ness of a long-standing, but little-known aware of the range of solutions available. to drive the training, project management product. More than 10 years ago, Brooks and back-office quality assurance processes introduced the socket jaw tester, a specially HOW DO YOU RECOMMEND in support of utility infrastructure instal- designed force gauge for measuring the UTILITIES REDUCE THE RISK OF lations. insertion and extraction forces associated METER FIRES? We really encourage utilities to investi- with installing a socket-type meter into Mann: To prevent hot socket issues, one gate the health of their meter sites when a meter socket. The socket jaw tester first has to understand what causes these those old meters come off to investigate the provides immediate feedback on whether incidents. Several features or sources can state of their infrastructure and to invest in the socket jaw tension is adequate and cause hot sockets, but among the most its safety. No one wants to see a new meter less likely to result in micro-arcing. In prevalent are: go in and cover up deteriorated conditions • Mechanical breakdown of compo- nents; • Excessive moisture; • Environmental contaminants; • Frequent meter change outs (resulting COURTESY APEX COURTESY COVANTAGE in loss of jaw tension); • Excessive electrical load (overload or short circuit); • Loose or melted conductors; • Vandalism; • Ground settling; and • Storm damage.
A culture of safety means full personal This worker is guided by fault-resistant Becoming informed and establishing protective equipment is worn “seal to work flows through areas of common methods to address hot socket issues is seal” on meter sites. error or high risk.
December 2014 | 21 www.power-grid.com
1412pg_21 21 12/8/14 11:35 AM addition to jaw tension inspection, Brooks b. Line tension recommends utility personnel and installa- c. Corrosion levels tion contractors visually inspect all socket d. Jaw conditions parts and wiring to ensure they are in e. Evidence of theft safe, working condition. The inspection of f. Foreign objects socket installations also should include a 3. Photo of meter socket sent to off-site mechanical review of all hardware. Are the experienced meter technician for sec- lugs, mounting screws and other connec- ondary analysis tions tightened to an acceptable and safe 4. Mechanical inspection torque level? a. Jaw tension Dutta: We combine the best of human b. Voltage Safeguards begin at the job site and continue initiative and automated approaches to c. Heat sensors through all processes: approaching, opening, advance safety in all areas of an AMI 5. Closing external visual inspection removing and installing meters. installation. We begin with the software, replacement of existing A-base terminal which contains work flows’ incorporating Following these protocols allows blocks, allows the socket enclosure to be knowledge of best practices and areas of advanced meter installations to proceed salvaged and costs to remain relatively low. potential problems. When a worker arrives on time, within budget and safely. The universal block replacement assem- on-site to install meters, he or she comes bly was developed in the mid-1980s for equipped with a mobile handheld device WHEN SOCKET OR METER SAFETY situations where the utility could not press preloaded with a series of forced march ISSUES ARE IDENTIFIED, WHAT CAN the consumer to address an unsafe socket work flows. These work flows then guide UTILITIES DO TO PREVENT OR situation, and utilities needed low-cost installers through each assigned activity MITIGATE RISK AND DAMAGE? solutions to address problem installations. with step-by-step instructions, increasing Mann: Once a problem has been detect- Should a utility find sockets in disre- the likelihood of a successful installation ed with the socket, there are several means pair and require wholesale upgrade of the while greatly reducing human error. For to address the situation, largely dependent installation, we provide protective noncon- example, a strict “work safe or not at all” on socket ownership. In situations where ductive socket covers, rings and seals to philosophy is embedded into the work the consumer owns the socket enclosure, ensure customer safety. flows, requiring full crews to put on per- the utility may notify the consumer of the Dutta: The protocols above provide a sonal protective equipment and wear it issue and require the consumer to replace glimpse into the larger process for acting “from seal to seal” in meter work. the entire service entrance. This can be on issues as they are detected. At each step, We have developed socket safety pro- extremely expensive because it might installers can escalate the process. If jaw tocols to anticipate and address safety require other equipment to be brought tension is poor, if there are scorch marks issues for every element related to meter, current with local and national electric from a past arc flash, if a part appears to site and socket. The protocols cannot be codes. Passing on significant cost to the have been stolen, the worker has a clear skipped, thus ensuring every meter is consumer in light of an inspection related sense of what to do or not do and who to fully assessed and problems acted on. The to a change in meters might result in bad contact for resolution. Forced march work essential inspection protocols we recom- PR for the utility. An alternative might be flows lead installers to take the appropriate mend include: lower cost mitigation performed by the action in each case. 1. Initial external visual inspection utility. In addition, we do something unique to a. Site, power source Brooks offers several mitigation solutions provide additional checks and balances. b. Worker equipment and safety to help replace socket components. Tools Each worker’s handheld device includes a gear such as the universal block replacement camera function to record any conditions c. Meter and socket for signs of past assembly, which allows field replacement of concern and send visual images to an arc flash of most 200 Amp single-phase S-base off-site experienced lineman. Each time a 2. Internal visual inspection meter socket interiors, and the universal meter is removed, the trained installer and a. Socket interior around meter replacement terminal block, which allows the off-site experienced meter technician
22 | December 2014 www.power-grid.com
1412pg_22 22 12/8/14 11:35 AM COURTESY APEX COURTESY COVANTAGE
Enterprise resource planning software specifically for AMI guides workers through installations using handheld devices. New workers must be thoroughly trained, certified and monitored. Even installations performed by perform empty socket analysis to reveal experienced workers should be quality checked regularly. unsafe conditions and allow utilities to restore safe conditions across all their and use their own work forces. Whatever shared much of its work with the industry meter sites. the model, we recommend that training at conferences, and its insights are valuable Because real-time communications are includes both basic and advanced safety for others to draw upon. The findings of built into the technology, field-workers, techniques and that installers become the AEP temperature analytics program supervisors and utility management can adept at recognizing the signs of hazards. support the need for vigorous visual and communicate readily to address issues Apex has developed a rigorous training mechanical inspection of the socket each promptly as they arise. This also increases and certification program consisting of time a meter is installed or removed, project efficiency. more than 60 hours of classroom instruc- regardless of socket and meter age. tion and field training. Installers learn to Dutta: Sometimes you don’t know WHAT TRAINING APPROACHES DO recognize and address the symptoms and what you’ll find until meters have been YOU RECOMMEND FOR UTILITY factors that can affect socket health. They disconnected and the socket and wiring WORK FORCES WORKING WITH come to grasp the significance and con- are exposed. One utility did not get far SOCKETS? sequences if no action were to be taken, into a meter upgrade project before they Mann: Meter schools are a great including possible meter blade overheat- discovered an abundance of deterioration resource. We do a lot of instruction at ing, meter damage, socket damage, loss in old meter sites. They reached out to us these, usually weeklong courses for con- of phase and even socket or house fire. early in that deployment and we trained tinuing education credits. We have seen Once certified, a worker receives 100 their installers to recognize symptoms of an increase in the percentage of schools percent monitoring in the form of shad- trouble. We created new work flows to that offer socket safety topics during the owing by an experienced supervisor. Even ensure proper inspection of their existing past year, especially. We spend significant experienced workers are subject to quality network to proactively safeguard equip- portions of the classroom sessions teach- control through random field inspections. ment, lives and the utility’s investment. ing workers not only how to stay safe, but When we are not hiring or training the Their swift attention to underlying also what techniques and tools they can work force, we simply share knowledge to issues was a smart investment in reduc- use to identify risky situations and lessen support the utility’s success. ing risk and ensuring safety during risk and prevent problems. We put tools installation and for years to come. It was into the hands of students and familiarize WHAT WORKS WELL FOR UTILITIES a prime example of a utility’s taking pre- them with the ways that a jaw socket ten- THAT HAVE ENCOUNTERED ACTIVE ventative steps to maintain the integrity sion tester can reveal signs of trouble or a SIGNS OF SOCKET DANGER? of its existing network. Utilities that are heat-detection gun can help them avoid Mann: One of the utilities we have col- proactive in addressing their AMI infra- potentially harmful scenarios. laborated with is American Electric Power structures are setting good examples for Dutta: Some utilities use our turnkey (AEP). They have developed an aggres- the industry. They protect their workers solution that includes installation services, sive internal program for identifying and and customers from harm, and they as well as full use of our ERP software. In addressing socket safety issues through a safeguard their reputations and that of
other cases, utilities license our technology temperature analytic program. AEP has the AMI industry.
December 2014 | 23 www.power-grid.com
1412pg_23 23 12/8/14 11:35 AM 24 | December 2014 www.power-grid.com
1412pg_24 24 12/8/14 11:35 AM BY WAYNE GALLI, CLEAN LINE ENERGY PARTNERS, AND PHIL ALBERT, PELCO STRUCTURAL LLC
he 700-mile Plains & Eastern Clean Line that will trans- commodity prices and the number of T mit up to 3,500 MW of wind power from the Oklahoma structures purchased. Panhandle to communities in the Mid-South and Southeast has Pelco’s proximity to the Tulsa Port of inked construction deals with businesses in states through which Catoosa and the availability of galvaniz- the transmission line will be built. ing services in northeastern Oklahoma Clean Line Energy Partners LLC selected Power Engineers as made it a logical choice as one of the the owner’s engineer for the Plains & Eastern Clean Line proj- Plains & Eastern Clean Line’s preferred ect. To date, Power has completed the preliminary design suppliers. Clean Line also recognized criteria for the overhead HVDC line, including a prelim- the value in manufacturing custom inary family of transmission structures that would products to match the construction traverse Oklahoma, Arkansas and timeline of the Plains & Tennessee. The western portion Eastern Clean Line—spe- Clean Line’s of the project would intercon- cific structures must be potential nect to the transmission system manufactured in a par- supply order operated by the Southwest Power ticular order to maximize for steel Pool in Oklahoma; the eastern por- poles from efficiency and meet tar- tion would interconnect to the transmis- Oklahoma- geted deadlines. sion system operated by the Tennessee based Pelco Pelco, which employs Valley Authority in Tennessee. could top some 200 people, uses For the line’s tubular steel $300 million. a custom manufacturing pole structures, Power is footprint and offers engi- working closely with neering design, manufac- Claremore, Oklahoma,-based Pelco turing and logistics solutions from its Structural LLC. Founded in 2005 293,000-square-foot facility. by Phil Albert and Phil Parduhn, The company’s business model is the custom steel pole design project-based and specific to customers’ and manufacturing compa- needs with a focus on design-sensitive, ny has shipped more than delivery-critical projects. $175 million of products Clean Line has formed strategic alli- in 44 states and Canada. ances with other companies for the At this stage, Pelco and Plains & Eastern Clean Line, as well, Power are working to including Fluor Corp. and General refine initial designs Cable. of the tubular steel A memorandum of understanding poles to be used in (MOU) designates Fluor Corp. to pro- the construction of vide development support and engi- the Plains & Eastern neering, procurement and construction Clean Line. Clean services (EPC) for the Plains & Eastern Line’s potential Wayne Galli is executive vice president of supply order for transmission and technical services at Clean Pelco poles could Line Energy Partners. top $300 mil- Phil Albert, pictured, is president of Pelco lion, depending on Structural LLC.
December 2014 | 25 www.power-grid.com
1412pg_25 25 12/8/14 11:35 AM PLAINS & EASTERN CLEAN LINE 1
KEY Collector system (AC) MISO Plains & Eastern Clean Line SPP (HVDC) TVA & neighbors Existing utilities’ system (AC) AC/DC Converter
This map is intended for illustration purposes only and does not represent a proposed route.
Clean Line. Fluor and its subcontrac- tor Pike Electric Corp. will provide initial permitting and EPC develop- ment support services for the transmis- sion line. According to the MOU, after the project has received all permits and regulatory and financial approvals, Fluor and Pike will provide the full EPC services for the line. Another MOU with General Cable contracts an estimated $100 million order for high-voltage conductor cable based on current commodity prices. The order would keep the current 152 associates at the Malvern, Arkansas, plant busy nearly two years. General Cable North America President and CEO Gregory J. Lampert announced the news during a press conference. The total development and con- 500 direct jobs to maintain and operate “Our facility and our associates in struction cost of the Plains & Eastern the wind farms and transmission line. Malvern can take pride in knowing that Clean Line is an estimated $2 billion. The project will make possible more the product they make will, in part, Renewable energy generators and utili- than $7 billion of new renewable energy stay right in their state of Arkansas ties that purchase transmission capacity investments that will increase demand for this Clean Line project—improving on the line will pay for usage of the for wind turbines and components and the infrastructure of their state and Plains and Eastern Clean Line. The likely create business opportunities strengthening its economy,” Lampert line is expected to generate more than throughout the wind energy supply said. 5,000 construction jobs and more than chain. The Plains & Eastern Clean Line
26 | December 2014 www.power-grid.com
1412pg_26 26 12/8/14 11:36 AM also will result in a significant increase in fourth quarter of 2014, concurrent with property tax revenues, landowner pay- the release of the Draft Environmental ments and direct economic benefit to Impact Statement (DEIS). As of press rural communities. time, that had not occurred. The DOE Electricity delivered by the Plains & will hold public meetings after the DEIS Eastern Clean Line will provide enough release and solicit public comments. The energy to power more than 1 million DOE is expected to identify a preferred homes per year in the Mid-South and route for the project in 2015 with the southeastern United States. release of the Final Environmental Impact As it stands, the Plains & Eastern Statement. Clean Line is undergoing a federal envi- The Plains & Eastern Lean Line is ronmental review under the National expected to achieve commercial opera- Environmental Policy Act led by the tion as early as 2018. Department of Energy (DOE) in coor- Clean Line has five projects under dination with the Southwestern Power development in 11 states: Oklahoma, Administration. Clean Line anticipates Arkansas, Tennessee, Iowa, Illinois, that an applicant proposed route and Kansas, Missouri, Indiana, New Mexico, alternative routes will be published in the Arizona and California.
CLEAN LINE PROJECTS 2
December 2014 | 27 www.power-grid.com
1412pg_27 27 12/8/14 11:36 AM BY GARRETT STEINBROOK, TERRACON CONSULTANTS INC. Want to Save Time, Money and Headaches? Try Transmission Line Pre-construction Planning Recently American Electric Power-Public BMPs for the project. The site visit took each team • Providing more accurate project cost esti- Service Co. of Oklahoma (AEP-PSO) began to several days to complete. mation and potential time savings; and rebuild its 9-mile Prattville to Bluebell transmission Pre-construction evaluations became • Creating a less stressed project manager- line some 5 miles west of Sapulpa, Oklahoma. increasingly beneficial as the crews compiled field crew relationship. The contribution to the project by engineering vast amounts of valuable information. The “The work was beneficial from both a com- firm Terracon was straightforward: Conduct wet- benefits of pre-construction planning include: pliance standpoint with the Corps of Engineers, land and best management practice (BMP) eval- • Identifying wetlands, which can be avoided as well as from a storm water pollution preven- uations of the transmission line in August 2014 during construction; tion plan maintenance standpoint,” said Tommy before construction activities. The job included • Providing adequate time to obtain neces- Vannoy, project manager at AEP-PSO. walking the right of way where the proposed sary permits for unavoidable wetlands Construction on the project will begin in construction activity would occur and taking notes before construction; January 2015. Additional benefits of effective along the way. • Preventing construction delays that result planning will unveil themselves as the con- Terracon sent two groups to the line—two from Army Corps of Engineers’ halts struction portion of the project develops. The people to perform BMP evaluations and three because of lack of permitting; rebuilt line is expected to be complete by the people to perform wetlands evaluation—and end of 2015. transected the proposed construction area with • Allowing for seamless construction from Garrett Steinbrook is an environmental sci- field notebooks, maps, GPS and other pertinent start to finish; entist for Terracon Consultants Inc. in Tulsa, gear. The crews noted stream crossings, low areas, • Identifying issues that could slow construc- Oklahoma. His background includes environ- roads, wetlands, areas to avoid and ideal paths for tion or cause headaches; mental compliance, environmental assess- the right of way construction roads. • Assisting with compliance of storm water ments, and oil and gas due diligence. Reach Next, the crews developed areas where BMPs permitting during construction; him at [email protected]. would be required and estimated quantities of
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1412pg_28 28 12/8/14 11:36 AM BY ROBERT WILKINS, DANFOSS Convergingg Building Efficiency Trends and the Potential Impact on Traditional Electric Utilities he Environmental Protection Agency Emerging and maturing technologies Testimates that buildings use 65 per- could further transform energy. Building cent of the electricity in the U.S. Some equipment is improving energy use and buildings are improving in individual areas preparing buildings to respond better through better technologies and integrated to and offset peak utility loads. High- design strategies, but total building energy efficiency, variable-speed air conditioning use is on the rise, driven by growing plug and chiller systems improve energy effi- loads and data systems. This is a grow- ciency over a full-year cycle by continu- ing issue for building owners, equipment ously and more precisely matching heat- manufacturers and electric grid operators. ing and cooling output to the load, and Electric utilities play an increasingly sig- they provide enhanced demand response nificant role in the operation of commercial performance by providing greater kilowatt buildings from power availability and reli- reduction per British thermal unit of cool- ability to the total cost of operation. But ing reduction. Small combined heat and as the way in which buildings consume power (CHP) systems provide a clean heat- and even produce energy changes, so, too, ing source and are becoming more eco- could the role of electric utilities. nomic. On-site photovoltaic generation is decreasing in cost and can produce energy © CAN STOCK PHOTO INC. / ALPHASPIRIT / INC. PHOTO © CAN STOCK CONVERGING TRENDS AND connected, data-driven and technol- largely coincident with peak air condi- EMERGING TECHNOLOGIES ogy-abundant culture increasingly tioning loads. And storage systems—from Five trends are poised to converge: strains homes and buildings. thermal and battery storage systems to 1. There is ever-growing, wide-reaching 4. Renewable energy sources are begin- smart water heaters and electric vehicles— interest in energy efficiency to reduce ning to offset electricity demands, but also are maturing in the market. costs, carbon and surface pollution. these technologies are variable. Communication protocols such as 2. Recent global and domestic actions 5. Attention is called to another trend: OpenADR 2.0 can facilitate more robust such as the Obama administration’s the natural gas supplies that have communication between buildings and Climate Action Plan have helped reig- been unearthed and made abun- Robert Wilkins nite public consciousness of and a dant by fracking. As a cleaner fossil is vice president of public affairs at Danfoss, a global manufacturer of nationwide conversation about the fuel, natural gas provides benefits to components and controls for high-efficiency climate change and energy nexus. improve efficiency and can be stored air conditioning, commercial refrigeration and 3. There is a growing focus on electric- to manage peak loads or periods of motion systems. He previously worked as ity demand and utility peak loads interrupted generation from solar and vice president of marketing at Florida Power caused partly by population growth wind. Gas also does not require the and Light Co. and serves as chairman of the Smart/Connected Equipment Committee and deepening penetration of elec- massive generating stations needed to of the Air-Conditioning, Heating, and tronic systems that are taxing the receive, store, handle and burn coal Refrigeration Institute. aging U.S. infrastructure. A more and clean up the effluent.
December 2014 | 29 www.power-grid.com
1412pg_29 29 12/8/14 11:36 AM utilities. The Department of Energy (DOE) cost to the building or meter, allowing it to further reducing utility load factors, but is evaluating and encouraging a broad- be transferred across owners or shared by also require utility investment to provide based communications network among tenants. It also would provide investment the backup services. This could result in utilities and buildings that would have opportunities for utilities if mechanisms higher utility rates, which would further transactional capabilities among buildings were put in place to provide a comparable encourage building owners to consider to assist in the trading of demand response or enhanced return on investment com- alternatives. commitments. This multiway communica- pared to traditional utility investments. The utility-building relationship would tion is enhanced by smart grid technology Manufacturer and utility organizations be affected further by the EPA’s proposed and meters. are considering the implications of these regulations under Section 111(d) of the These trends and technologies are creat- convergences. The Air-Conditioning, Clean Air Act. As states set and comply ing possibilities for commercial building Heating, and Refrigeration Institute with guidelines for emissions reductions efficiency and utilities. As it becomes easier (AHRI) has established a Smart/Connected as soon as 2020, utilities and buildings and more cost-effective to reduce energy Equipment Committee to assess opportu- would play a central role. use and produce and store energy on-site, nities for connected HVAC equipment and The confluence of technologies, market distributed generation becomes attractive develop recommendations for AHRI mem- trends and regulatory requirements likely for commercial buildings and campuses. bers. AHRI also formed a working group foreshadows two decades of change for This could lessen grid stress and energy focused on a building system approach electric utilities. Such change often creates waste by recovering heat rather than emit- to energy efficiency, which promises to opportunities for those poised to exploit ting it. The combined effect is a direct be a source of significant energy savings. them. Investment opportunities would impact on energy efficiency and produc- The Consortium for Energy Efficiency is not be in traditional generation and trans- tivity and the U.S. economy. Plus, they developing a connected equipment com- mission assets, but rather in energy effi- enhance the control of peak loads, which mittee and is collaborating with its AHRI ciency, CHP systems, solar PV and distrib- defers building power plants. counterpart to assess the efficiency oppor- uted energy storage and high-performance tunity and explore emerging technologies HVAC equipment with enhanced energy ACCELERATING ACTION, CHANGE and smart grid connectivity. Gas utilities efficiency and demand response benefits. Public and private sectors have been and organizations also have begun explor- Such a transformation requires a pursuing actions that would accelerate the ing gas marketing and efficiency programs regulatory open mind to innovate rate improvement of commercial building per- to meet and anticipate changing market structures that help shape demand, formance and affect traditional utilities. As demand. as well as tools such as rate-basing or a first step, building labeling programs to The DOE has been monitoring these on-bill financing of distributed ener- benchmark a building’s operational energy developments and is holding public meet- gy investments. Energy efficiency and use would enable the communication of ings to consider broadening the concept of demand response programs must move building efficiency metrics for owners, interconnected buildings and equipment from isolated customer programs to managers and tenants to improve rental to provide for building-to-building trans- being considered together as integrated and resale values of high-performance actional communications. demand-side management strategies buildings. These programs have garnered For electric utilities, the changing land- that are further unified with strate- interest and support of organizations such scape of building energy use and energy gies for rate structures and investment as the U.S. Green Building Council. efficiency technologies could present chal- recovery mechanisms and tactics for Support also is growing for on-bill lenges and opportunities. As buildings investing in distributed generation. financing programs that would allow prop- become more energy-efficient and use The confluence of market trends and erty owners to finance the upfront costs parallel energy sources such as on-site technologies and a new utility strategy of efficiency improvements via electric or solar PV and CHP generation and utility- could bring the U.S. to a model that natural gas utilities. This financing would supplied energy, traditional utility loads could pay big dividends and change encourage investment in energy efficiency could decline. Building owners could how buildings, end users and utilities improvements by tying the investment investigate backup or emergency services, think, operate and interact.
30 | December 2014 www.power-grid.com
1412pg_30 30 12/8/14 11:36 AM BY SCOTT WILKE, SIEMENS RUGGEDCOM Nebraska Utility Manages Seasonal Loads With Communication System rom 30,000 feet above rural north- crops—mostly thirsty corn and soy- Like many utilities, NNPD uses a pro- Feastern Nebraska, the plains below beans—a lot. Added to their seasonal gressive rate schedule to encourage con- appear as an endless array of green load on the CCPPD grid are summertime servation. crop circles. These are farmers’ fields air conditioning demands by residents “When heavier loads force us into that use center-pivot irrigation systems. and local businesses, despite the county’s higher-cost rates, it raises our power bill Each system has a radial sprinkler arm, a relatively sparse rural population. and those of our irrigation customers,” pipe usually a quarter-mile long Moore said. “It can increase and raised above the crops on their bills by as much as $2,500 wheeled towers. The arm slowly a year.” rotates around a central hub that Technology Supervisor contains a well and electric motor Monte Draper said CCPPD’s that drives both the arm and well wireless, low-bandwidth pump, taking up to three days SCADA system suffered a lot of to irrigate an entire field. Water latency in transmitting data— is drawn from the huge Ogallala up to 45 minutes. Aquifer hundreds of feet below “We couldn’t see real-time ground. Power comes from the loads,” Draper said. “We’d have local utility. In Cuming County, to poll all of our substations that’s the Cuming County Public to see what the loads are, then Power District (CCPPD). shut off enough irrigation wells Farmers with irrigation opera- to reach our predetermined tions like these make up most levels. Some guesswork was of CCPPD’s 300 commercial custom- Moore said the CCPPD offers discount- always involved, and we’d overcorrect to ers. That’s out of 4,000 total accounts ed rates to irrigation customers who take play it safe. But this meant shutting down across its 620-square-mile service area. part in its load-control program. Using some wells unnecessarily and for longer The farmers’ irrigation demands on the supervisory control and data acquisition than needed.” CCPPD grid peak in the summer grow- (SCADA) telemetry through 12 remote Draper said the load-balancing process ing season and are subject to a load- substations, the program monitors the required a CCPPD employee to take balancing program, said Elwood Moore, power drawn by irrigation customers’ hours each day to oversee the SCADA general manager at CCPPD. systems and turns the systems off when system’s pre- and post-polling of the “Of course, it depends on rainfall,” he their loads exceed preset limits. irrigation systems and substation load, said. “The less there is, the more they “A typical load in the summer is about plus do manual calculations. With just must water, and the more we have to 25 megawatts,” Moore said, “and with manage the load on our grid.” our load-control program, we try to dial Scott Wilke is senior regional sales Given that Cuming County gets just it back to about 70 percent of that.” manager of power utilities at Siemens RuggedCom. Reach him at scott.wilke@ 75 percent of the U.S. average annual CCPPD buys its electricity from the siemens.com. rainfall, its farmers must water their Nebraska Public Power District (NPPD).
December 2014 | 31 www.power-grid.com
1412pg_31 31 12/8/14 11:36 AM 18 employees—eight of them linemen in RuggedCom RX1500 series integrated low-lying substations, CCPPD installed the field—this chore was a considerable Layer 2 and Layer 3 switch and router. repeater systems using WIN 5237 sub- staff burden. Connected to the RX1500 are WIN scriber units on the receiving end (inter- Draper said CCPPD’s aging SCADA 7237 outdoor wireless base stations that connected with a WIN 7237 base station system faced a forced shutdown for two comply with the IEEE via an RS900, a nine-port, reasons: 1), the Federal Communications 802.16e WiMAX stan- Cuming Layer 2, fully managed Commission (FCC) narrow-banded the dard. County Public Ethernet switch). 450-megahertz radio frequency system, CCPPD obtained an Power District’s Each substation also which would have meant replacing hun- FCC license to use the SCADA system has one of these sub- dreds of radios; and 2) the system’s soft- 3.65-gigahertz radio fre- qualifed for scriber units, along with an SGIG grant ware vendor announced it would end quency, which is one of an RSG2100 19-port, to cover half support for what CCPPD was using. nine spectrum options the fully managed fast/gigabit the cost of an “Clearly it was time for us to move on,” WIN family offers. Ethernet switch to inter- upgrade. Draper said. The WIN 7237 uses connect all the substation’s About this time, the U.S. government MIMO technology to provide increased intelligent electronic devices (IED)s. For made its existing Smart Grid Investment coverage capability and up to 40 Mbit/s those devices that need copper connec- Grant (SGIG) program part of the throughput to CCPPD sub- tions, CCPPD installed an RMC40, a American Recovery and Reinvestment stations—some as far away as 13 miles. four-port, Layer 2, unmanaged Ethernet Act of 2009. To deal with the line-of-sight issues of switch with up to 100 Mbit/s speeds. It provided funds to cover half the costs of projects that would help mod- ernize the nation’s electric grid. CCPPD’s need to upgrade its SCADA system quali- fied. It applied with a neighboring util- ity that had similar requirements, and together they won the funds needed. CCPPD’s new network architectur- al design came from the work of the Siemens RuggedCom professional ser- vices team. Before specifying any compo- nents, they conducted a comprehensive site survey and radio frequency (RF) propagation study. The investigations helped their RF-channel planning and system design, which helped facilitate the implementation of the physical net- work and network management system (NMS). The project also included one year of priority support. The backbone of the CCPPD system architecture is a redundant, microwave backhaul ring on five 90-foot towers with throughputs of up to 200 Mbit/s. It’s linked to each CCPPD substation and the main office data center with a Siemens
32 | December 2014 www.power-grid.com
1412pg_32 32 12/8/14 11:36 AM Unlike most commercial broadband wireless gear, the standalone WIN 7237 base station doesn’t require an Access Service Network (ASN) gateway that can cost up to $100,000. It also complies with North American Electric Reliability Corp. Critical Infrastructure Protection (NERC- CIP) two-factor mutual authentication, 128-bit AES encryption and message integrity protection using cipher-based message authentication code (CMAC). To reduce cabling costs, all the RuggedCom devices are powered via the RP100 single-port 802.3xx Power-over- Ethernet (PoE) injector.
December 2014 | 33 www.power-grid.com
1412pg_33 33 12/8/14 11:36 AM “We chose Siemens RuggedCom factor of each circuit and totals in each customers’ savings.” components because we knew all of substation. Since the installation of the network, its gear is utility-grade and up to the “In addition, we monitor voltage and Draper said, it has survived three major harsh outdoor conditions we have here tap position of each regulator,” Moore said. hail storms and a pair of tornados. in rural Nebraska,” Moore said. “A lot “We can also see the electronic breaker One of the twisters was an EF4—one of manufacturers will ruggedize their panel faceplate, which gives us breaker step down from the most violent rat- standard products, but we know the status and fault current of any breaker trip ing—that destroyed a small town in reliability and durability of RuggedCom and the number of operations.” the next county. Although the winds products is designed and built-in, not This real-time data feed has freed the knocked the microwave transmitters added on.” person who used to manually monitor out of alignment, the equipment was Installation and commissioning of and manage the irrigation load control unaffected. the gear was fast and easy, Draper said. program, Moore said. “A lineman brought in one of the Siemens trained CCPPD line- RuggedCom base stations men on the particulars of micro- because hail had shredded wave base station and sub- the cable and conduit going scriber installation, who then into it,” Draper said. “But I installed the equipment on the plugged it in, and it worked microwave towers and existing just fine.” utility poles without problems. Lineman safety is para- “It was supereasy, pretty mount. Reducing truck rolls much plug-and-play,” he said. gives linemen fewer reasons “Establishing line-of-sight to work on CCPPD’s ener- for the subscriber units was gized lines, Draper said. simply a matter of position- “That’s where a lot of the ing them for maximum signal RuggedCom gear is located, so reception.” if we can do resets, reconfigu- To monitor, configure and rations and troubleshooting maintain all the RuggedCom from here in the office, they’re components across the microwave tow- “It was very time-intensive and often not put in harm’s way,” Draper said. “But ers, 12 substations and repeater sta- tedious, so now we have that person if they do need to replace a unit, we can tions, Draper uses the company’s net- doing other things that are more valu- switch our breakers on that particular work management software, which his able to us,” he said. “Plus, with real- circuit to one-shot status.” team can access from any device with a time data, we don’t have any latency It takes a lineman only a few minutes, standard Web browser. With its auto- issues anymore. By taking out all the he said. discovery capabilities, he has real-time guesswork, we can be much more pre- Moore and Draper envision many visibility and notification of events, cise and don’t have to overcorrect just other services they could operate over thresholds and alarms throughout the to be safe in managing our grid loads. the WiMAX network’s ample band- network. If necessary, he can do remote We can see what’s happening on each width. One example is having a Wi-Fi resets, which save expensive linemen of four circuits that connect to each hotspot at each substation to provide truck rolls. substation. linemen and technicians information With the network, Moore and Draper “This is helping us be 10 to 20 and communication access. Another is can get real-time data about the CCPPD percent more efficient in using our video surveillance. grid through each of its substations. power supply, which translates to tens “Frankly,” Moore said, “we have just This includes peak amps per phase, of thousands of dollars a year in savings scratched the surface of what we can do neutral amps, kW, kVar and power to us. And that’s not to mention our with this system.”
34 | December 2014 www.power-grid.com
1412pg_34 34 12/8/14 11:36 AM PRODUCTS
Fiberglass Equipment Mounts Customer Service, Training Center Geotek’s Pupi Equipment Mounts are designed to Ametek Solidstate Controls has mount cutouts, arrestors and cable terminations on util- launched its new Western Service Center ity poles. Four new fiberglass equipment mount designs and Customer Training Facility in Carlsbad, feature the same, proven fiberglass in Pupi crossarms, California. Similar to an existing service and training center including SunGuard 60-year UV-resistant coating and near Houston, the new facility offers hands-on training for TorqueGuard bushings for maximum durability. Pupi’s customers of Solidstate Controls’ industrial UPS, battery TorqueGuard bushings reinforce holes for added strength chargers, inverters and all of its power products. The cen- during hardware ter is outfitted with 60-inch smart white boards. The facility installation. The also houses a service center and parts depot, providing mounting brack- improved coverage of the company’s installed equipment ets are aluminum base in the western U.S. and western Canada. The center alloy. Pole mounts are aluminum alloy or galvanized also plans to host leading battery expert Marco Migliaro steel, depending on model. Fiberglass resists insects and and his renowned industrial battery training symposiums. woodpeckers and does not rot. Pupi fiberglass is non- A list of scheduled courses for both facilities may be found conductive, never rusts and never needs re-coating. Pupi at the Solidstate Controls website. fiberglass products are maintenance-free with a service life Ametek Solidstate Controls estimated to be twice that of wood in nearly all conditions. GO TO WWW.PGI.HOTIMS.COM FOR MORE INFORMATION Geotek GO TO WWW.PGI.HOTIMS.COM FOR MORE INFORMATION Cloud-based Design Integration Bentley Systems Inc.’s ProjectWise Essentials is a cloud- Cloud-Based OpenADR Products Test System based, instant-on design integration environment that QualityLogic Inc.’s Cloud-Based Test System for provides immediate access to advantages of ProjectWise, OpenADR Virtual End Nodes (VENs) or clients will provide a design collaboration and work sharing solution. users with access to a cloud server implementation of Geographically dispersed teams managing projects small a certified Virtual Top Node (VTN). The system uses an to mega can leverage industry standards and best prac- OpenADR Alliance certified open source VTN released tices required to speed secure information sharing and by EPRI to serve as a reference for testing VENs as a plat- the exchange and delivery of project drawings, models, form for running small-scale pilots or as a learning tool to documentation and complex reference files—in support increase understanding of the OpenADR technology. A of applications commonly used in AEC projects, including beta version of the EPRI VTN is available for download at Revit and AutoCAD Civil 3D. This increases productivity, no charge from Source Forge. QualityLogic has deployed mitigates project risk, lowers costs and improves project the certified open source code in Amazon’s EC2 Cloud sys- performance. Teams can interact with project information tem with added benefits to subscribers. Each subscriber is in views that directly relate to their specific tasks without provided with a unique VTN server implementation and needing the authoring applications. These views include can start using the VTN for interoperability tests without a spatial view for map-based navigation, a Web view for the need to download, install and configure a version in online browser access, a permissions view for access con- a lab. QualityLogic has added an administrative interface trol management, a dependency view for understanding and is making technical support and training available for and managing complex file relationships, and a compo- users of the Cloud-Based Test System for VENs. nent view to search across 2-D and 3-D content. QualityLogic Inc. Bentley GO TO WWW.PGI.HOTIMS.COM FOR MORE INFORMATION GO TO WWW.PGI.HOTIMS.COM FOR MORE INFORMATION
December 2014 | 35 www.power-grid.com
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14 16 REPRINTS DistribuTECH India Rhonda Brown 219.878.6094 fax 219.561.2023 MAY www.indiapowerevents.com Pragati Maidan, New Delhi [email protected]
36 | December 2014 www.power-grid.com
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1412pg_C4 4 12/8/14 11:36 AM For the industry’s career-minded professionals WINTER 2014
A Perfect Storm: Energy Retail’s Winter of Discontent Certification – Do You Get What You Pay For?
TRAINING INSIGHTS: Five Steps to Find the Best Employees Before the Big Shift Change Hiring the Next Generation of Hourly Oil and Gas Talent
A supplement to PennWell publications | www.PennEnergyJOBS.com
1411PEJEW_C1 1 11/5/14 5:03 PM 1411PEJEW_C2 2 11/5/14 5:03 PM WINTER 2014
A PENNWELL PUBLICATION
2 EDITOR’S LETTER The Phoenix Issue Hilton Price, PennWell 3 The Perfect Storm: Energy Retail’s Winter of Discontent By Michael Hinton 6 Certification – Do You Get What You Pay For??? By Michael Powell
9 TRAINING INSIGHTS Five Steps to Find the Best Employees Before the Big Shift Change By Jean Martin 11 Hiring the Next Generation of Hourly Oil and Gas Talent By Jean Martin and Mark Strong
13 INDUSTRY INSIGHTS Georgia Power Solves Long-standing problem Dorothy Davis Ballard, Content Director [email protected] of Hardware Failures By Tasha Hardegree Hilton Price, Editor 15 5 Top Offshore Oil Companies and Their Future Outlook [email protected] Kelli Mylchreest, Art Director 17 A Career in Downstream – What Do People in [email protected] Downstream Businesses Do? By Cheryl McKinney Daniel Greene, Production Manager [email protected] 19 Evidence-Based Management: Tommie Grigg, a Practical Management Approach Audience Development Manager [email protected] By Eric Scheller
23 ORGANIZATIONAL INSIGHTS What the Heck Happened to SEMS? By Dr. Scott Shemwell PennWell Corporation 1421 South Sheridan Road Tulsa, Oklahoma 74112 918 835 3161 PennWell.com www.PennEnergyJOBS.com
Advertisers’ Recruitment Advertising Sales: Index Chevron �������������������������������������������������������������������������������������������������������������� C2 Courtney Noonkester PennEnergy Jobs ������������������������������������������������������������������������������������������������ 10 Sales Manager PennEnergy Jobs ������������������������������������������������������������������������������������������������ 12 918 831 9558 [email protected] PennEnergy Research Services �������������������������������������������������������������������������� 14 PennEnergy Jobs ������������������������������������������������������������������������������������������������C4
1411PEJEW_REV_1 1 11/24/14 5:26 PM Editor’s Letter
Like the Legend of the Phoenix…
HERE was a moment when I thought we weren’t going to do this anymore. The T energy industry is increasingly moving to the digital sphere, and that’s no more exemplary than in the media that covers it. Magazines are being replaced by websites, and for a moment we thought PennEnergy Jobs Energy Workforce would be making that same transition. It’s worked for other brands in the PennWell family, and although we were sad to say goodbye to this tried and true format, we were excited for what would come next. But not so fast! Just as we were ready to leap fully into an on-demand digital format, we realized we had too much good content to deny it a place in physical perpetuity. So, like the Phoenix of legend, the issue you are reading now rose from “We have to be ready for what’s the proverbial ashes and prepared to take flight again. This may be the next, while still throwing our best last magazine formatted edition of effort at what we do today. That’s PEJEW, but it may not. We’re going to let our audience, not the trends, how we can strive to be the best.” dictate what’s best. Speaking of the best, the industry is constantly searching for the best; the best talent, the brightest minds, the hardest workers. We look at how to find the best employees for the big crew change on page 9. The weather of 2014 wasn’t the best, and it played havoc on the energy industry, especially on the retail side. We look at the effects of this perfect storm on page 3. How do you become the best? Is there a single path, and can it really be quantified? We look at the good and bad of certification on page 6. Who’s the best offshore? From the companies ruling the waters today to those who will be floating above the rest tomorrow, we look at some of the biggest names offshore on page 15. How do we do better? Hardware failures can be frustrating, but one company is solving the problem. We look at how they did it on page 13. We have to be ready for what’s next, while still throwing our best effort at what we do today. That’s how we can strive to be the best. Let’s get to work!
—Hilton Price
2 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_2 2 11/5/14 5:02 PM Cover STORY
The Perfect Storm: Energy Retail’s Winter of Discontent By Michael Hinton
N January 31st, Maryland-based a vice-grip of spiking demand, dimin- Out in the cold Clean Currents shut its doors ished supply and a rapidly degrading op- On the surface, surging demand for elec- Ofor good. erational capability. tricity should have meant increased rev- The renewable energy supplier sent PJM Interconnection, the largest US enues and profits for all. But peak power a minor shockwave through the indus- grid operator, hit a record winter peak use isn’t always preferred. For electricity re- try by abruptly announcing it could no of 141,500 megawatts – just as 20 percent tailers with customers on fixed-rate con- longer serve its 8,000 residential and of its generators went offline due to the tracts, demand and price volatility bring business customers. Speaking to jour- freezing temperatures. risks that can obliterate margins. nalists about the closure, the company Coal-fired power plants accounted Overextended electricity systems president said ‘the financials were fine. for roughly half the outages, while die- can spell disaster. At the depths of None of us suspected that we would be sel generators made up the other half. deep freeze, our customer South Car- out of business in a week.’ There were instances of coal stacks be- olina utility SCE&G was forced to im- Clean Currents was a casualty of ing frozen solid and many diesel genera- plement rolling 15-minute blackouts wholesale price volatility during the Po- tors just wouldn’t work in extreme cold. to manage demand. Many others were lar Vortex cold snap, which sent tempera- Pipeline constraints also caused gen- openly calling on customers to turn tures plummeting overnight in early Jan- eration problems by driving up natu- down thermostats or even leave the cur- uary and massively disrupted life on the ral gas prices east of the Rockies. As the tains on South-facing windows open so East Coast and Mid-Western states. most popular American heating fuel, util- sunlight could heat their homes. Most Essential infrastructure simply seized ities relying on gas for generation had to grid operators in the affected states up: flights were cancelled, trains stalled, compete with standard natural gas needs were compelled to draw on expensive schools were closed and white-outs were when the vortex landed. demand response resources from other common on icy, snow covered highways. The wholesale energy market re- suppliers, putting further upward pres- For energy retailers, it was the ultimate sponded accordingly: sure on wholesale pricing. black swan. Already dealing with cold- • PJM’s average on-peak power price Inadequate hedging against such ex- er-than-normal fall and winter tempera- jumped from $50 to $278 treme variability in wholesale pricing left tures, they quickly found themselves in • Henry Hub spot prices spiked from many retailers financially exposed and $3.95 to $8.15 MMBtu scrambling to pay their bills. When it an- • Propane jumped from $2.08 to $4.20 gal. nounced its closure, Clean Currents said MICHAEL HINTON is Chief Customer Officer and Senior Vice President, Products • North Sea Brent Crude spot price aver- spot market prices during the Polar Vor- and Solutions for Allegro Development aged $110 bbl for 8 consecutive months tex went up not by 20 or even 50 percent Corporation. Source: EIA – some jumped by 500 percent. When
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 3
1411PEJEW_3 3 11/5/14 5:02 PM Winters of Discontent Is chaos the new normal? Extreme weather events can JAN 2014 The Polar Vortex 2014 descends on much wreak havoc on energy retailers. Black Swan Events of the US east of the Rockies are unanticipated and impossible to plan for The Ice Storm Cometh In early 2014, the Polar Vortex descended, and recent history shows they are creating the coldest winter in decades 2010 ensnaring many retail energy providers, on the rise. whose margins were hammered by flat rate pricing and inadequate hedging in the face of weather-related black swan events. 2011 A second SPRING 2014 continent-wide heatwave Record gas demand leaves huge storage JANUARY 2004 strikes most of North America deficit compared to historical levels Cold snap hits 2000 Northeast US. Boston's coldest FEBRUARY day in 114 years 2009 Gas & electricity retailer Clean Currents Heatwave hits the shuts its doors Pacific Northwest FEB 10 1990 Spurred by spiking gas prices, FERC 2006 raises the cap on power charges that WINTER 1996 A continent-wide heatwave PJM passes on to third-party suppliers strikes most of North America The great Midwest cold break. JANUARY Temperatures of -60º F in Minnesota. NYMEX natural gas futures reach 5-year high 2001 Heatwave affects JAN 31 most of Eastern Virginia-based Dominion Resources North America abruptly exits retail electricity market SUMMER 1995 750+ people die from JAN 07 2000 heat-related illnesses On peak power prices spike to nearly during the Chicago Heatwave in the $1000 MWh as Polar Vortex takes hold heat wave Southern US South Carolina utility, SCE&G implements rolling blackouts after JUNE 1998 AUGUST 1998 remote transmitters freeze ° Power Company of America is forced 100 F temps drive wholesale PJM, the largest grid operator in the electricity prices in the Midwest into bankruptcy due to unpaid bills & South to record highs US, sets a new winter peak record at 139,069 megawatts.
Polar Vortex descends. temps in JUNE 1998 Boston & New York between 11 & 17º F Peak prices approach $600 per MWh, more than 10 times normal JAN 06 Temps in Boston & New York avg. 37-43º F JAN 01 New Year's Day. Average on-peak power prices at PJM stable at CA $50 MWh Hedged Against the Storm
Extreme weather events are now a fact of life. How can energy retailers predict Black Swans Unprecedented future demand – and react quickly when unforeseen events do happen? & Blackouts Heatwaves By Mid-century Extreme cold can cause serious Data models from 21 climate operational degradation, including issues centers worldwide show Trade and usage information need to be with natural gas pipelines and mechanical cascading heatwaves in the aggregated on a single CTRM system problems with power generators. US starting as early as 2020.
Big Freeze = Supply Squeeze Measure usage against past weather parameters like daily minimum and maximum temperatures Propane jumps Heating oil North Sea Henry Hub from $2.08 to inventories in Brent Crude spot prices $4.20 gal. the Northeast spot price spike from drop by 6.9 averages $3.95 to $8.15 Solid analytics will turn historical data million barrels $110 bbl for MMBtu into load forecasts for expected monthly, 8 consecutive long-term, short-term hourly and even months sub-hourly demand
October - February Rise in US average heating days Understand history repeats itself and a higher than last year. long-term view is needed to react in real-time
SOURCES: BP Energy Outlook 2030, January 2013. The Outlook for Energy, A View to 2040, 2013.
1411PEJEW_4 4 11/5/14 5:02 PM PJM issued its collateral call the compa- blacked out more than 250,000 homes With a solid analytics component, his- ny simply couldn’t afford to pay. in the Midwest in early July. A 1998 heat torical data can then be turned quickly And Clean Currents wasn’t the only wave in the mid-west and south drove the into load forecasts for expected month- casualty. Virginia-based Dominion Re- wholesale price of electricity in those states ly, long-term, short-term, hourly and even sources abruptly exited the retail electric- to record highs, from averages of between sub-hourly demand. ity market in January, while Illinois’ re- $25 and $40 per megawatt-hour (mwh) Once your ETRM system in place, tailer FirstEnergy Solutions announced to thousands of dollars per mwh at times measuring usage against past weather pa- a coming June surcharge of $5 to $15 for of peak demand. Commonwealth Edison rameters like daily minimum and maxi- 220,000 of its customers, to pay for spikes Chicago at one point paid nearly $4 mil- mum temperatures becomes much easier. in wholesale power costs during the deep lion for $100,000 worth of power. A 2013 Forecasted demand, actual demand and freeze. It’s worth noting that New Jersey’s study based on models from 21 climate hourly weather can be displayed or chart- Systrum Energy lost 5,000 customers in centers worldwide says more ‘unprecedent- ed in a single view. February when it tried a similar move and ed’ heat waves are expected to hit the US These can then be applied to individ- passed on higher energy costs to its non- as early as 2020, according to Nature. ual trades. By allowing multiple meters to fixed-rate customers. The common feature of these events be assigned to a single retail power con- In the retail energy sector, unexpect- is their unpredictability. We’ve now had tract point, and including counterparty ed weather and a dynamic book of cus- nearly a decade of news coverage describ- information associated with each meter, tomers means that the science behind in- ing cold snaps, heat waves, extreme snow- multiple meter-level demand forecasts can suring supply can meet demand has to be fall and hurricanes as ‘once in a gener- be aggregated to form the contract-level nimble, sophisticated and reliable. While ation’ and ‘unprecedented’. If January demand forecast for a trade. grid operators and large utilities tend to caught you by surprise, you were in good Finally, you can run various scenarios have robust energy trading and risk man- company. The Climate Prediction Center to stress demand versus supply and deter- agement (ETRM) tools in place to mit- (CPC) had actually forecast higher-than- mine if you are within acceptable risk tol- igate the impact of adverse weather, the normal temperatures for much of the low- erances if not layer in hedges to offset un- winter of 2014 caught many on the retail er 48 from November to January 2014. wanted risk. side. With disruptive weather events be- Climatology clearly has its limits. In Energy retailers will continue to face coming more frequent and intense, retail energy markets however, information events that force them to change their providers need to take immediate steps to can literally be power. Better insight into hedging strategy. In a market where price prepare for the next one, and soon. past and future events holds the promise hikes can bankrupt you or send customers of helping energy retailers be more pro- fleeing for their incumbent utilities; and Extreme & unprecedented. active, and build informed strategies to in a regulatory environment where shaky Welcome to the new normal mitigate the impact of Polar Vortex-lev- financial health could mean having your Extreme weather didn’t start with the Po- el price volatility. operating licence pulled by a state moni- lar Vortex. The eastern seaboard has en- Here are recommendations to help en- toring agency, improving the trading and dured a series of harsh winters and extreme ergy retailers prepare for more weather-re- risk management capability for energy re- snowstorms from 2009-2011, including the lated market volatility. tailers has become mission critical. February 2010 “snowmageddon” in Wash- To forecast future demand and re- The retail sector needs to prepare ington that shut down the federal govern- act quickly when the unforeseeable hap- for more ‘once in a generation’ extreme ment for the better part of a week. pens, trade and usage information need to weather conditions. The winter of 2014 At the other end of the thermome- be aggregated on a single energy trading provides a cautionary tale for all of us, de- ter, storms mixed with high temperature and risk management (ETRM) system. spite the lights somehow staying on. ⊗
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 5
1411PEJEW_5 5 11/5/14 5:02 PM Certification – Do You Get What You Pay For??? By Michael Powell
N looking over job descriptions and requirements in online job boards I or in the print media, we all have seen the requirement for certification Six Sigma, Lean Manufacturing, Au- ditor, Quality Engineer, Purchasing, Etc... Companies and their hiring managers have the mindset that certi- fication is the guarantee of the ability that they are looking for. If you are not certified in the area of their need, you are not even considered for the posi- tion that they are trying to fill. Especially in the quest for improv- ing quality and efficiency, reducing manufacturing costs and waste, the quality and manufacturing technics like a college degree, is your learner’s his “black belt”. Although I am not such as six sigma, lean manufacturing, permit that must be tempered and built certified in six sigma, I was put on his and other problem solving methodolo- upon with experience. Without practi- six sigma team. The task of his six sig- gies, certification seems to be manda- cal “hands-on” experience, certification ma project was to cut the cost of quality tory. But what do you really get when in a methodology does not necessarily (scrap & rework). He focused on weld- a piece of paper (certification) is your produce substantial positive results. ing. The six sigma green belt manag- benchmark for evaluating a prospec- At a company that I was employed er would come out from his corporate tive employee. as a quality engineer at, a corporate lev- office to the plant ever couple of weeks Unfortunately, experience and per- el quality manager that had obtained to lead the team in solving the prob- formance in past jobs does not seem his six sigma “green belt” came to my lem of scrap and rework due to weld- to mean much anymore. Certification, plant to do a six sigma project to earn ing. He went over past nonconformity reports (NCRs) by part number, prod- uct line and type of welding trying to MICHAEL POWELL - Graduate of the University of Houston’s School of Technology and derive the cause for the NCRs. He was Stephen F Austin’s School of Business, has been employed by various oil tool manufacturing companies in Houston, Texas as a manufacturing engineer and a quality engineer over the told early on that the welding problems past 30+ years. were systemic. That if the reason for
6 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_6 6 11/5/14 5:02 PM the scrap and rework was found for one part, product line, or type of welding, the reason for the problem with other parts, product lines, and types of weld- ing would be found as well. That he should look at the overall process. This advice meant nothing to him. Meeting after meeting he went through his num- ber crunching of all of the elements of the parts with the highest number of NCRs by the book that he learned in his six sigma class. We were getting nowhere fast. Noth- ing concrete was coming out of the meetings. Some team members started not showing up for his meetings. Some of us communicated our concern about the waste of time and no results to the plant quality director. He was able to get the plug pulled” on the six sigma proj- ect and that was the last we saw of the corporate quality manager. In spite of his six sigma certification, this guy had no practical “hands-on” experience and no knowledge of welding processes. He “could not see the forest for the trees” so to speak. His six sigma training and certification had no posi- tive impact on trying to solve the prob- lems with welding. Sometimes to get to the root cause of a problem, there is no substitute for getting out in the “trench- es” and “putting your ear to the ground”. the change in the seasons by the fluctu- processes that are “dirtier” than others. In my daily walks through the shops ation in NCRs. Welding processes are The process that was being used was checking on this and that, I would talk sensitive to the environment in which not as “clean” as another that could be to people, listen, and observe. I am not they are performed in. You can have a used but it was FASTER. So when the a welder, but in my years of being first perfect welding procedure, but changes weld was ultrasonically inspected after- a manufacturing engineer and then a in humidity will have an adverse effect wards, unacceptable “indications” were quality engineer, I have watched var- on your weld. found that rejected the weld. Although ious welding processes, talked to peo- One day I was talking to the lead the indications were not found in every ple who knew more than me, and had welding inspector and asked what did case, and they came in varying degree, to deal with welding problems. he think was the cause of our problems. this occurred more often than not. In I had been told that you could tell He said that there are some welding which case the weld had to be cut out
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 7
1411PEJEW_7 7 11/5/14 5:03 PM and rewelded. Sometimes the cut out was so extensive that the large compo- nents had to be cut completely apart and the weld preps remachined. The parts were so large and bulky that it would take up to 3 or 4 hours just to sit up and indicate them in on the large vertical turning lathes. Unfortunately, the faster welding process could and in many cas- es did add addition hours for bad weld removal, remachining, and rewelding to an already overloaded shop schedule. The management mindset was by push and shove. Each operation in the manufacturing process was to be done as fast as possible. Although the faster welding procedure saved time for the welding operation of the manufactur- the best candidate. Candidates without results through a standardized process. ing process, it could cost more time certification are not considered. Man- But like the old saying about computers, than it gained in rework time. agers do not have to think and/or evalu- “garbage in – garbage out”, if experi- Both of the real causes for bad welds ate ….. just put the square peg into the ence and a little “common sense” is not (environment and weld process) were square hole and the desired results will applied to the uniform process, results not touched on in the quality manager’s be obtained ….. improved productivity can be somewhat less than desired. Cer- six sigma evaluation. He was looking and profit margins ….. or so they think. tification does not equate to good effec- at every element of the operation as he Over the past 20 years, “quality” has tive solutions to problems. learn in the certification training. He been a growth industry. Careers and for- Please do not misunderstand me. did not have a clue!! He was looking for tunes have been made in training and Certification in a problem solving band aids to fix the resulting problem. consulting …. ISO 9000 for companies methodology or job function can be a If going by the numbers (in this case – and six sigma and other methodology handy tool in a person’s “skills tool box”. the six sigma methodology) could get training for individuals. So many times But it is not a stand-alone qualification. the job done, then anybody could sit a company will get their people trained A person with experience, an inquisitive through the training in the methodolo- and certified in a quality/productivity mind, and a desire to accomplish some- gy and come up with all of the answers. methodology to show that it is an effi- thing positive can often out preform a Unfortunately, this is not the case in the cient quality operation …. at least on person with just the certification. real world. paper. But the mindset of upper man- Oh yea …. there is another impor- In today’s world of dumbed-down agement is often not changed. It has tant element that is necessary for any immediate gratification, it seems that been papered over with certifications. quality/problem solving methodology businesses rely more and more on a The assorted problem solving meth- to work. Top management has to under- “cookie-cutter” fit out of a text book. odologies originated from the Toyo- stand, believe in, and actively support The candidate for a position that has all ta Quality Team in the auto industry. the improvement program for it to work of the right “certifications” is considered They were developed to deliver uniform effectively!!! ⊗
8 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_8 8 11/5/14 5:03 PM TRAINING Insights
Five Steps to Find the Best Employees Before the Big Shift Change By Jean Martin
HE oil and gas industry is fac- ing a bigger workforce chal- T lenge than ever before. The recent boom has resulted in a wide- spread labor shortage, the baby boom- er generation is near retirement, and studies have found that the oil and gas industry is struggling with effec- tive leadership – with just one in 20 professionals fitting the profile of an effective leader today. The so-called “Big Shift Change,” when baby boomers will retire in droves and leave 500,000 openings HiPos are identified by their leader- grams more than tenfold if they offer in the oil and gas industry over the ship characteristics, and they are twice the right kind of training that devel- next five years, presents a major risk as valuable as their non-HiPo peers ops leaders’ ability to motivate others, for companies as they lose decades of because they save their companies effectively communicate and support institutional and industry knowledge. millions through efficiency, leadership others through change. Compounding the issue further is and longer tenures. Here are five actions consistent- the reduced number of students apply- Major U.S. corporations spend ly taken by successful companies that ing for and completing STEM univer- an average of $3 million every year result in strong HiPo programs, low sity courses, the complex nature of the on leadership and development pro- turnover and increased savings that industry, rapid changes in technolo- grams for HiPo employees, often strug- the oil and gas industry should insti- gy and unique safety concerns, which gle with keeping them with the com- tute now: means that we’re at a critical point in pany -- more than half of will leave Recognize that employees need time for companies to have robust tal- within five years. Our research shows more than strong performance in ent programs to identify and train companies can reduce flight risk and their current role to succeed in future “high-potential” (HiPo) employees. improve the success of their HiPo pro- roles. The shortage of leaders in oil and gas could be explained by the JEAN MARTIN is an executive director and Eugene Burke is the chief scientist and lack of support and training provided analytics officer at CEB, the leading member-based research and advisory firm. to those managers who worked their
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 9
1411PEJEW_9 9 11/5/14 5:03 PM way up through the ranks from tech- ment data to identify employees for Create differentiated development nical roles. While identifying employ- HiPo programs, and nearly half lack a experiences. Typical HiPo programs ees with a record of high performance methodical process for identifying and fail to prepare participants for future is an important step in identifying them developing HiPos, according to CEB roles. Giving HiPos stretch assignments as HiPos, it isn’t enough by itself. CEB research. Rather than relying on subjec- goes part of the way -- they not only research shows that assuming high per- tive assessments, nominations or evalu- learn new skills but also apply existing formance equals high potential puts ations, successful organizations ensure skills to different roles – but even more, the odds at six-to-one that the employ- fair and valid identification of HiPo tal- new learning technologies enable the ee will fail in a development program. ent through scientific assessment. most efficient extraction of knowledge Define “potential” clearly. While Ask for commitment in return for from experience. Getting this blend attributes may vary slightly based on career opportunities. HiPo employees exactly right is even more important company culture and practices, there are highly marketable — they are strong as baby boomers retire and oil and gas are three important aspects all com- performers and are often confident companies fill positions from the big- panies should look for when defining they can find work elsewhere. There- gest pool for potential hires today – mil- potential: employees need to have the fore, organizations that see the highest lennials (ages 18-29 years). As many as aspiration to rise to a more senior role, returns on their HiPo investments pro- 23 percent of millennials say they value the ability to manage and lead effective- actively mitigate flight risk among by diverse experiences more than advance- ly, and commitment to the organization. asking for future commitment – even ment and they place particular empha- Measure potential objectively. Only “career contracts” -- in return for devel- sis on development opportunities when one-in-three organizations use assess- opment opportunities. looking for jobs. ⊗
Books, Books… So Many Books PennEnergy.com is your best source for the largest and most comprehensive compilation of books related to the energy industry. • Oil & Gas • Power Systems • Renewable Energy • Business Management • Mechanical & Chemical Engineering
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10 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_10 10 11/5/14 5:03 PM TRAINING Insights
Hiring the Next Generation of Hourly Oil and Gas Talent By Jean Martin and Mark Strong, CEB
EARLY everyone is aware that surging North American pro- N duction coupled with a wave of retirements is causing an unprecedented shortage of talent across oil and gas com- panies. Increased production in North America is expected to create 500,000 to 1 million new energy-related jobs in the next 10 years. Yet, with an improv- ing economy and rebounding 401k ac- counts, hourly employees of retirement- allow companies to identify candidates cian follows procedures, is dependable age are more confident about retiring with these characteristics during the and may have experience with shift than they were a few years ago. These application stage with greater accu- work. Online assessments can test for employees have been operating and re- racy than a resume or interview will the compatible characteristics before pairing equipment and machinery for elicit. As oil and gas companies com- a recruiter reviews a resume or sched- decades, and will take their institutional pete for talent, using assessments can ules an interview. Once those charac- knowledge with them when they go. help them broaden their talent pool, teristics are assured, companies need to CEB has analyzed operations and reduce safety concerns and hire the design compelling employment offers maintenance jobs in the world’s lead- right people. for non-traditional talent pools. With- ing oil and gas companies and finds out that, it will be harder to pull top tal- that to replace experienced, success- Reach into unconventional ent from other industries. ful workers, companies must find can- areas for talent didates with a set of fundamental skills Hiring a refinery operator from a com- Emphasize safety and abilities: petitor or an instrument technician The drive to fill vacancies quickly can Dependability and reliability from a contractor is fairly easy, and put people’s lives and businesses at risk. Safety orientation most of these individuals already have The energy industry has some of the Teamwork orientation the necessary skills. However, when most extensive safety training in the Learning ability bringing in candidates from unconven- world, but the best companies start Troubleshooting and problem tional sources, companies must deter- focusing on safety at the hiring stage. solving mine if they have the fundamental Our research shows that a small group Mechanical aptitude skills and abilities suited for these roles. of high-risk employees account for a Online, pre-employment assessments For instance, a hospital lab techni- large share of accidents and injuries,
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 11
1411PEJEW_11 11 11/5/14 5:03 PM even after undergoing safety training. Selectively hire the right people that use assessments early in the hiring An oil and gas services company we Hiring mistakes happen – such as those process see a 30 percent reduction in work with implemented a safety assess- who do not show up to work after their unqualified candidates in the interview, ment in their hiring process and real- first paycheck, tend to cause conflicts an 89 percent reduction in overall time ized a 28 percent reduction in at-fault with others in the workplace, or sim- in the selection process and a 55 percent accidents and incidents after screening ply cannot learn the procedures and reduction in cost per applicant. out candidates with the lowest safety ori- requirements of the role. These hires Almost all companies will feel pres- entation scores. In addition to improve- greatly affect productivity and usually sure to hire new employees as rapidly ments in employee safety and well- have short tenure. as possible. Although it seems counter- being, the cost savings associated with By using online assessments, indi- intuitive to utilize assessments to screen accident reduction was over five times viduals’ suitability for roles can be mea- out candidates during a talent shortage, the cost of implementing assessments as sured and determined – these types of valid and appropriate selection assess- part of the hiring process. Also, as safe hires can be screened out of the inter- ments can speed the hiring process by individuals tend to be more depend- view process, allowing recruiters and focusing time and effort on only quali- able, the company found that the rate of hiring managers to focus their time fied candidates, rather than wasting time failures in their drug screens and back- and effort on the candidates most like- on those who have little chance to be ground checks was reduced as well. ly to be successful. In fact, organizations successful. ⊗ Got jobs? We’ve got people. PennEnergy JOBS is the key to attracting the energy industry professionals you need to hire to meet your business goals. Our process puts your recruitment message in front of the industry’s best talent whether it’s online, in print, or at an event. This approach offers you the f exibility to create custom recruitment advertising campaigns best suited to meet your budget and objectives.
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12 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_12 12 11/5/14 5:03 PM INDUSTRY Insights
Transmission Staff Specialist Invents Bushing
Georgia Power solves the long-standing problem of hardware failures.
By Tasha Hardegree, Georgia Power
ANY transmission lines have other specialized equipment to inspect had hardware failures due the hardware, and to focus in on the M to wind-induced vibrations. attachment points. This task was com- Over extended periods of time, the plex, time consuming, expensive and wind-driven rubbing between line in- labor intensive and diverted crews from sulator hardware and the associated doing other work when the arm attach- cross arm attachment points can cause ments needed to be replaced due to total failure of the cross arm at the these types of failures. point of attachment. These vibrations To solve this problem; Georgia cause wear between the metal compo- Power was challenged to find a solu- nents on the transmission line hard- tion to eliminate the wear due to ware. In some cases, this could result wind-driven sawing action. With this in line failure or multiple arm replace- concept in mind, Buddy Phillips, a ments, which can be very expensive. maintenance and reliability staff spe- In many cases, over time, the clev- cialist took the challenge given, and er was having with their transmission is pin can completely erode through went straight to work. Over his career line hardware failures. the attachment of the arm. If the hole with Georgia Power, Phillips had rec- is not repaired after it becomes worn, it ognized other business solutions and Installing the device may deteriorate to the point that it may within a matter of weeks, and several Linemen use this device by insert- no longer be able to support the weight prototypes later, he built a prototype ing the stainless steel bushing into the of a conductor. In these situations, con- that was stronger than then his other attachment hole in the arm. Because ventional methods may require replac- designs. What Phillips developed was the attachment is made of a corro- ing the entire arm. a cost-effective repair process that was sion-resistant stainless steel, the work- In the past, some transmission crews easy, simple and fast and a solution for ers no longer need to replace the entire used a helicopter with stabilizers and a longstanding problem Georgia Pow- arm. As a result, it improves reliabil- ity and extends hardware life and has BUDDY PHILLIPS is a line specialist for Georgia Power, in the Maintenance & Reliability also saved a significant amount of mon- Department, has been with the company for 42 years, and is responsible for line maintenance ey in transmission and distribution including: inspection of new line construction, steel structure repairs, evaluation of hardware line repairs, and because of its success, failures, helicopter inspections. He is also responsible for Transmission lines in Georgia and live line training. Georgia Power plans on installing the
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 13
1411PEJEW_13 13 11/5/14 5:03 PM bushings to prevent the wear on new safety, overall cost reduction, improved Patent and Trademark Office, and in construction and to eliminate the fail- operational efficiency, enhanced reli- honor of its inventor, Georgia Power ure due to wind induced vibrations. ability, and risk mitigation. employees have informally nicknamed The stainless steel bushing can not Georgia Power’s field workforce has the product “The Buddy Bushing”. The only be used for electric power trans- installed a number of these bushings on trademarked product is also being sold mission and distribution systems, but 230kv lines throughout its service terri- and distributed by Diversified Prod- can also be used anywhere a hole or tory to prevent arm replacements due to ucts, which has worked with linemen to aperture needs to be repaired or rein- failures from wind induced vibrations bring their inventions to market for the forced. The new bushing was tested, on hundreds of worn cross arms. There past 15 years. ⊗ and not only solved the wear problem, is minimal training required and the but also increased the strength of the savings on this one project alone were Companies Mentioned: clevis attachment significantly. calculated and shown to be significant Diversified Products in labor, equipment and materials. www.diversifiedproducts.com Providing key benefits Due to the successful benefits of this Georgia Power The attachment bushing also provides innovative solution, Georgia Power was www.georgiapower.com several key business benefits such as granted a patent from the United States
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14 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_14 14 11/5/14 5:03 PM INDUSTRY Insights
5 Top Offshore Oil Companies and their Future Outlook
LUNGING into the deepest depths infrastructure system with companies ment ratio with 1.47 last year. Pof the sea, energy companies are such as Shell contemplating adding Statoil projects include the Oseberg constantly searching for new oil pipe to account for growth in offshore East field, an offshore oil field in the and gas resources to meet the global oil. Shell produced 3.2 million barrels North Sea, which has 41.5 million bar- population’s growing demand for en- of oil equivalent per day in 2013 with rels of recoverable oil, according to Nor- ergy. New technologies for deep water sales of liquefied natural gas sales reach- wegian Petroleum Directorate. Recent- drilling are allowing companies to push ing 19.6 million tons. However, the ly, ExxonMobil and Statoil announced the limits of oil exploration and give op- company reported a drop in revenue a major offshore discovery in the Piri erators the power to unlock reserves 500 from the previous year with net cash prospect in offshore Tanzania–where feet or more below the surface. Some of flow decreasing to $40 billion from $46 Statoil has been operating since 2007. the biggest discoveries in the world are billion in 2012. The company is banking on the prof- located in offshore fields like the Libra Shell said it aims to work on deliver- itability of emerging technologies, say- oil field off the coast of Brazil–estimated ing new projects, highlighting its proj- ing new innovations will be critical in to contain up to 12 billion barrels of oil. ects off the coast of Mexico and Bra- keeping the company’s costs low. Statoil Here are five companies that could zil. Looking to the future, Shell said its said it is considering producing a subsea continue their dominance in offshore Mars field–discovered by the firm in compressor that could increase its natu- development now and in the future: 1989–in the Gulf of Mexico started pro- ral gas production and reduce the impact duction in February this year and will of its operations on the environment. 1. Shell reach a peak production of 100,000 bar- Shell has been a pioneer in offshore rels of oil equivalent per day in 2050. 3. Chevron oil development with the company The company also signed a production- In Chevron’s 2013 annual report, the announcing it would stay on target to sharing contract for the Libra oil field. company headquartered in Califor- create the deepest offshore oil and gas nia said it earned $21.4 billion in sales, production project in the world last 2. Statoil AS increasing its annual dividend payout to year. The Dutch firm said it would Based in Norway, Statoil is a major ener- stockholders for the 26th-straight year. make an offshore oil platform in the gy producer with 40 years of oil and gas The company said it added an estimat- Gulf of Mexico that would produce production experience on Norwegian ed 800 million barrels of net oil equiv- almost 2 miles down the surface. waters. Statoil said it had more than $26 alent proved reserves with projects last The Gulf of Mexico is becoming billion in adjusted earnings and $25 bil- year. Chevron aims to increase produc- a hotbed of offshore oil and gas devel- lion in net operating income for 2013. tion with a capital and exploratory bud- opment after the Mexican govern- The company previously announced it get of almost $40 billion in 2014, focus- ment opened up its energy sector to for- added 1.25 billion barrels of oil equiva- ing on core areas as well as building new eign investors. The region is already lent from exploration, recently achiev- legacy positions in the upstream market. equipped with an extensive pipeline ing its highest organic reserve replace- This year, the company has several
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 15
1411PEJEW_15 15 11/5/14 5:03 PM big-budget projects. Chevron boasts 15 coPhillips is quickly making a name for entire_shell_ar13.pdf projects that will receive more than $1 itself outside of Texas with operations http://www.reuters.com/article/2013/05/08/ shell-gom-stones-idUSL2N0DP1I420130508 billion each in investment, such as the and activities in 27 countries. The com- http://www.shell.com/global/aboutshell/ deep water projects Jack/St. Malo and Big pany reported $9.2 billion in earnings for major-projects-2/mars-b.html Foot in the Gulf of Mexico. The Jack/St. 2013 and has made breakthroughs in its Statoil Malo project is expected to yield 170,000 exploration program, predicting it will http://www.statoil.com/en/investorcen- barrels per day of oil and 42.5 million grow its exploration operations in 2014. tre/annualreport/annualreport2013/pages/ cubic feet per day of natural gas from 43 Since the company began drilling default.aspx?redirectShortUrl=http%3a%2f% subsea wells once it is fully operational. in the deep waters of the Gulf of Mex- 2fwww.statoil.com%2f2013 ico starting in the 1980s, the company http://www.statoil.com/en/NewsAndMedia/ News/2014/Pages/IORJune2014.aspx 4. ExxonMobil has interest in 454 deep water blocks in http://www.reuters.com/article/2014/07/03/ As a truly international firm, ExxonMobil the region, which span about 2.2 million statoil-oil-idUSWEB00P7E20140703 has oil and natural gas operations in six net acres. The company has tested out http://www.statoil.com/en/InvestorCentre/ continents. The Houston-based company emerging drilling technologies in Mag- AnnualReport/AnnualReport2013/Pages/ earned $32.6 billion for 2013, ending the nolia, formerly the world’s deepest ten- CEOletter2013.aspx year with a peak of $42.5 billion in cap- sion-leg platform in the Gulf of Mex- http://www.statoil.com/en/InvestorCentre/ QuarterlyResults/2013/Downloads/Finan- ital and exploration expenditures. While ico and is expected to make an impact cial%20statements%20and%20review%20 the company said its capital spending will in the region. In an auction for drilling 4Q%202013.pdf decrease to $39.8 billion in 2014, Exx- rights in the western Gulf of Mexico last Chevron onMobil plans on diversifying its portfo- year, the company submitted the highest http://www.chevron.com/annualreport/2013/ lio with 10 new projects this year that are bid. ConocoPhillips had the largest total documents/pdf/Chevron2013AnnualRe- forecasted to add about 300,000 net oil of bids with $50.3 million, topping Chev- port.pdf equivalent barrels per day. ron’s $32.8 million. In addition to win- ExxonMobil http://news.exxonmobil.com/press-release/ In 2013, the company listed proved ning the bid for drilling rights, the com- exxon-mobil-corporation-announces-esti- reserves at 25.2 billion oil equivalent bar- pany also revealed its fourth deep water mated-fourth-quarter-2013-results rels and has more than 120 projects that discovery in the Gulf of Mexico in the http://news.exxonmobil.com/press-release/ are expected to develop 24 billion oil same year. The Gila discovery was made exxonmobil-oil-production-increase-time- equivalent barrels of oil and natural gas. under approximately 4,900 feet of water. startup-clov-project ExxonMobil’s long-term investments Outside of the Gulf of Mexico, the http://www.offshoreenergytoday.com/exxon- mobil-10-new-projects-to-come-in-produc- include the Cravo, Lirio, Orquidea and company said it has exploration activities tion-in-2014/ Violeta (CLOV) offshore fields in Ango- in Australia and Senegal. ConocoPhil- ConocoPhillips la, which are located between 3,600 feet lips said it plans on expanding its asset http://www.reuters.com/article/2013/08/28/ or 4,593 feet below the sea. The project portfolio and deliver 3 to 5 percent com- us-usa-oil-offshore-idUSBRE97R- is projected to have a production capacity pound annual production growth. ⊗ 0ZT20130828 of 160,000 barrels of oil per day after the http://www.conocophillips.com/ investor-relations/Company%20 company confirmed the CLOV project is Sources Reports/2013_Annual_Report_CR.pdf on schedule. ExxonMobil has also started http://online.wsj.com/news/articles/SB10001 http://www.businesswire.com/news/ 424052702303442004579123560225082786 work on a $4 billion project to develop the home/20131218005644/en/ConocoPhillips- Julia oilfield in the Gulf of Mexico. http://www.bloomberg.com/news/2013-10- Announces-Fourth-Oil-Discovery-Deepwa- 11/brazil-sweetens-libra-oil-field-sale-terms- ter-Gulf#.U8mOooBdXXE to-lure-bids.html 5. ConocoPhillips http://www.conocophillips.com/what-we-do/ Shell producing-energy/oil-and-gas/offshore/Pag- As the world’s largest independent explo- http://reports.shell.com/annual- es/going-deep-in-the-gulf-of-mexico.aspx ration and production company, Cono- report/2013/servicepages/downloads/files/
16 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_16 16 11/5/14 5:03 PM INDUSTRY Insights
‘A Career in Downstream – What do People in Downstream Businesses do?’ By Cheryl McKinney, EOR Strategy and Commercial Business Leader, BP
HE downstream oil and gas in- ed to ensure that it can within the field. dustry is leading the way in pro- process growing sup- At Whiting, we have T viding exciting career opportu- plies of North Ameri- recently engineered a nities for talented engineers around the can crude oil, including way to run the refin- globe. Our industry is critical to the oil heavy oil from Canada. ery’s gasoline-making and gas value chain. We refine, manu- At Whiting we will now units even during the facture and market fuels, lubricants process up to 413,000 planned maintenance of and petrochemicals for both industrial barrels per day and pro- other parts of the refin- and retail consumers. This is our fun- duce enough fuel every ery. This first for BP has damental purpose. day to run 430,000 ensured that production cars, 22,000 commer- can be maintained dur- How the industry is developing cial trucks, 2,000 com- ing downtime and is a The downstream industry has cer- mercial aircraft, 10,000 tractors and fill great example of our engineers’ collab- tainly developed since I joined in the 350,000 propane tanks. This upgrade orative working–taking an initial idea mid-1980’s. Nowadays, careers in this work has required industry leading tal- all the way through to its implementa- segment of the industry offer exciting ent and ingenuity of process, to ensure tion. It required rigorous analysis and opportunities to produce leading prod- that the refinery can work with the thinking to ensure that consequenc- ucts via revolutionary technology and more challenging feedstock, while hav- es were fully thought through and all processes. The downstream industry ing a minimal environmental impact. possible outcomes were taken into is investing across the world, pushing consideration. the use of technology to produce fuels Pushing the boundaries At our Hull petrochemicals plant in and lubricants more efficiently, despite Many misconceptions exist about what the UK, we are leading the way in the the ever more difficult feedstocks now a job in downstream actually entails. research of new product streams that being produced from today’s oil and I believe that we offer a wide range of will help to form the fuels of the future. gas fields. roles, in a variety of exciting operating We also manufacture acetic acid and In the US Midwest, we at BP have environments. It is not all oily overalls acetic anhydride, which are used in redeveloped the Whiting Refinery, to and heavy machinery; technical and textile and plastic manufacturing, as supply fuel to the North American mar- business staff in downstream have the well as in the pharmaceutical indus- kets. The multi-billion dollar upgrade opportunity to work with industry-lead- try and to create bleaches. We produce of the facility has just been complet- ing refining technology and experts half a million tonnes of acetic acid per
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 17
1411PEJEW_17 17 11/5/14 5:03 PM year, making the facility the only large scale producer in Europe. Hull is also home to one of BP’s main global research and technology cen- tres at which we have creat- ed a range of technologies for BP’s global businesses. To meet these global chal- lenges, we increasingly rely on a diverse workforce of men and women from around the globe. The varying perspec- tives of the people in our downstream business allow us to examine issues from multiple angles and develop ideas and technologies that ensure products are available to deliver energy to the world in safe and tion specific, with facilities often locat- these offerings and the diversity of roles environmentally sound ways. ed near major consumption areas close on offer, recruits can expect significant to major cities, which in turn provides a career development opportunities. The downstream lifestyle stable work/ life balance. I believe the sector to be extremely I often hear from our downstream engi- flexible and adaptable to personal prior- neers that they enjoy working in the What can recruits expect? ities and needs. At BP I have found that office environment, while still appreci- Downstream facilities are complex man- our employees’ priorities change as they ating the opportunity to work with the ufacturing sites with numerous func- move through their careers. The scale operational teams in the facilities. The tions all operating in unison. Therefore of the industry’s major downstream sites teams are made up of highly skilled roles in downstream are often suited to allow for progression and development engineers and technicians, responsi- inquisitive candidates, who tend to push within a single site or location, while the ble for designing and developing plant the boundaries in their thinking and reach of the sector means that the global in a complex environment. Being locat- approach. Collaborative team players opportunities are there as and when the ed at a refinery or petrochemicals plant suit this environment and can expect to time is right. allows employees to identify issues, find an inclusive culture that encourag- In summary, recruits can expect an implement changes and examine ideas es innovative thinking. industry with numerous career options and outcomes in a real world environ- Downstream engineers are responsi- and the flexibility to meet their short ment. These teams take things from the ble for delivering often large-scale engi- and long term goals. This is an indus- hypothetical to reality and get to see the neering projects and ensuring the safe try sector that challenges you and the tangible outcomes of their efforts. operation of the company’s plants. BP, way you think, that is inclusive and While some roles may offer the in turn, provides compelling packages that delivers vital products to keep the potential for significant internation- and extensive learning opportunities in world’s light on, homes warm, business- al travel, the majority of roles are loca- the classroom and on the job. Through es running and vehicles moving. ⊗
18 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_18 18 11/5/14 5:03 PM INDUSTRY Insights
Evidence-Based Management: a Practical Management Approach for the Energy Industry By Eric Scheller, Director at Sapient Global Markets
HE rapid growth over the last five years of natural gas, gas liquids T and crude oil activity in shale basins has single-handedly changed the global nature of energy produc- tion. The impact on companies in the upstream, midstream and downstream sectors is seen in increased competi- tion for supply and markets as well as human and financial capital. Compli- cating ongoing business management is the large amount of data from sprawl- ing assets that needs to be analyzed and acted upon in a narrow real-time win- dow through a compelling format. In this article, Eric Scheller discusses the Photo by Rachel Seeley, UOGR challenges and options facing business directors as they try to fully disseminate unprecedented shifts in energy mar- North American energy landscape over and leverage data in the management kets that we are experiencing today. the last five years: and growth of their businesses. In fact, there were many experts who • Record production increases in natu- did not see the development of these ral gas and oil Trends Driving Increased Complexity unconventional plays and now believe • Prolific NGL production from liquid- When Mitchell Energy completed its that North American shale develop- rich gas processing first economic shale fracture in 1998, ment is still in its early stages. Consider • Historical build out of midstream no one thought it would lead to the how much shale plays have moved the infrastructure • Revitalized North American petro- chemical industry ERIC SCHELLER is subject matter expert within Sapient Global Markets’ Midstream practice. He has over 25 years of experience in oil, gas, NGLs and chemicals. His practice It’s clear that upstream producers, areas include business and asset operations strategy, development and business in distress midstream and downstream companies and corporate restructurings as well as commodity marketing and trading. He has served in have had their share of growing pains a variety of business development, consulting, commercial, operations and technical roles for in dealing with the increase in inter- several major companies.
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 19
1411PEJEW_19 19 11/5/14 5:03 PM connected assets to handle the techno- management systems, asset management Base Data Requirements To logical advances and growing produc- data warehouses and commercial sys- Capture Opportunities tion volumes. This growth has spurred tems to assess and monitor their invest- The struggle for many companies is business management complexity as ments. In spite of these investments and determining how to fully disseminate well as the amount of data to be ana- efforts, companies found themselves with and leverage data and analytics in sup- lyzed to assess performance, which ulti- portfolios of assets generating marginal port of corporate goals tied to safety, mately reduced available time to exam- returns. Performance reviews by business environment, health, customer, service ine and seize opportunities. Throughout managers found that one of the underly- and profit and expense targets. Energy this growth, companies recognized the ing contributors of poor performance was firms share many of the same goals, for need to collect, validate, compartmental- that market signals went unidentified as a example: ize and digitize data into electronic data result of marginal data analytics. • Be recognized by the public and industry as a safe and responsible oper- ator of assets as demonstrated through •Safety and environment •Ongoing operations a track record supported by audit his- •Regulatory •Turnarounds tory of a reliabilitycentered asset man- •Commercial •Customers Control Operate agement practice that fully complies with industry regulations • Minimize the total cost of asset own- ership through the efficient use of per- sonnel and a shared services support •Business Extend Optimize •Assets model •Operating assets •Capacity •Supply chain •Portfolio • Maximize the utilization of assets under management to increase top- line and bottom-line growth • Maximize optionality and flexibility Control - Activities tied to the control aspect for the base drivers of the business. through asset interconnectivity •Focus: Safety and environment compliance, regulatory standards and compliance, commercial and legal agreement management • Maximize earnings from integration •Goal : All the processes necessary to operate the business assets are in place and of newly acquired assets or flexibility are valid to invoice and report against in operating the asset
Operate - Activities related to the physical operation of assets under management. • Capitalize on low-risk market oppor- tunities by leveraging assets to flow •Focus: Ongoing operations, business-in-distress turnarounds, customer management •Goal : Business assets are operated safely, prudently and effciently hydrocarbon to premium markets • Leverage returns through volatility in Optimize - Portfolios of assets are optimized to realize the highest returns. commodity differentials supporting •Focus: Assets, capacity and portfolio management arbitrage strategy development • Goal : Achieve the highest returns possible at the commensurate level of risk Companies trying to achieve wide- ranging goals as shown above will have Extend - Lever aging strategies and positions to grow business results Into new areas. to create a data and workflow framework •Focus: Organic business growth, business and operating asset acquisition, supply chain extension with the following characteristics: •Goal : Achieve business development and growth goals to achieve a competitive advantage Accurate and Timely—Data sourced FIGURE 1: Parsing the Business into its Core Functional Activities Focuses Attention across the organization is the driver of on Key Business Elements. solid analytics. Without accurate, up-to-
20 Winter 2014 | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | EnergyWorkforce
1411PEJEW_20 20 11/5/14 5:03 PM ing complex systems with Goal: Operate Multi-Mode limited resources and Transport Services and Terminals disparate data systems Requirement: Capacity to achieve a laundry list management tracking and reporting of goals and objectives. Many ambitious over- Actionable Output: arching initiatives to fully •Summarizelogisticssolu- disseminate and leverage tionsandsystemsforcurrent customers data fall short of achieving any meaningful, action- •Forecastrail,truckandbarg- able output because they esavailabilityforopportunistic redeployment fail to make managing the business faster, more effi- FIGURE 3:Rail,TruckandBargeSchedul- cient and more profitable. ingandManagement Any plan that fails to take the-minute data, companies are unable into account these three ing scientific methods to managerial to discern and communicate possible drivers hampers its chances of success decisions and organizational practices market signals to decision makers. Data from the moment it is proposed. informed by the best available business must be error free, undisputed and freely In order to maximize their chanc- environment evidence. EBM practic- available before any meaningful insights es for success, business directors are es are unique and organization specific can be gleaned through analytics. embracing Evidence-based Manage- and include the systematic accumula- Cross Functionally Available—Com- ment (EBM) to employ actual evi- tion and analysis of data and problem- panies that extend quality data and ana- dence in management and decision- based research and discussion by man- lytics to remote locations and employees making. Leveraging well-developed agers and staff. This leads to decisions across functional silos create an open, methods long used in the medical field, informed by both best available research collaborative working environment that directors in the energy sector are apply- and organizational information. encourages data cross-flows. These new A practical approach to EBM begins flow-paths improve the quality of infor- Goal, Control Pipeline with the reality that a business can mation–driven analytics and systems. Integrity Management be parsed into four unique function- Organizationally Actionable—Deci- Requirement: Asset management, al activities, namely Control, Operate, sion makers receive a continuous posi- integrity and compliance reporting Optimize and Extend, as shown in Fig- tion of actions to improve asset perfor- ure 1, and further described as follows: Actionable Output: mance and enhance business expansion Having timely, accurately aligned •Assetleakdetectionoccurrenc- investments from the rollup of organi- data in each parsed function, com- esandnon-destructiveinspection zationally available data and analytics, dataanalysis bined with a focus on faster, more effi- including up-to-date information on cient and more profitable results, is the - customers, products, product availability •Managementofpredictive/pre key to achieving the goals of a business ventativemaintenanceanalysis. and operations status. director at each level. Ultimately, ineffi- planningandassetperformance/ integrityreporting ciency and waste is minimized and lim- An Evidence-based Approach ited resource utilization and productiv- Business directors in the energy space FIGURE 2:PipelineIntegrityManagement ity is maximized. Using this approach, have long faced the challenge of direct- ComplianceandActionableActivities firms can:
EnergyWorkforce | FOR JOB OPPORTUNITIES, VISIT www.PennEnergyJOBS.com | Winter 2014 21
1411PEJEW_21 21 11/5/14 5:03 PM tool that: Goal, Optimize Return On Assets • Provides immediate and clear feedback Requirement: Grow revenue in • Ties performance to goals and objectives multi-mode services supported by • Aligns operational activity with strate- trading activities gic activity Actionable Output: • Summarizes the right set of metrics • Improve forward visibility on decision makers can control asset balances. in-transit inven- • Allows for problem identification with- overall quality of decisions through the tory and s hipper destination in the business deliberative use of relevant and best avail- terminal rundown • Shows how decisions affect business able analytics. Figures 2 and 3 are exam- • Maximize revenue and volumes success ples of energy company scorecards by related to multi-mode trans- • Compels decision making based on functional activity. They are shown with porting (truck, ra il and pipe] and blending under bundled tra analytics, not instinct a corresponding example visualization. nsport agreements One of the most effective tools to achieve these results is the visualized Success Factors • Capture trading and logistics - solutions to enable storage scorecard. Central to the success of To successfully build a culture of evi optimizat ion and grad e/location scorecard use is its design rationale and dence-based management, firms must: differentialbased transact ions an actionable purpose that furthers the • Demand that all data be validated and insights into the business. A user-centered that a process is in place to ensure con- FIGURE 4: Optimization Interactions design for the scorecard will maximize tinuous validation from Asset and Commodity Data Sets the value of the user experience (UX).1 A • Demand that an open, data-sharing • Streamline data management and well-designed scorecard with an appeal- environment exists for all employees workflow processes ing user experience will enhance the • Create and enforce appropriate work- - • Focus line staff on research and analy Requirement, Market flows that underpin the culture sis within their functional area And Customer Insight In • Resist the urge to take an ad hoc • Disseminate data throughout the Business Expansion approach to scorecard design as it organization invariably results in views that are Requirement: Capacity • Generate new insights into previously management tracking and “nice to have” and may have little unidentified signals reporting redeeming value • Trigger decision-making response and Actionable Output: • Scrupulously monitor and manage new actions by business directors the use of visual scorecards to achieve • Asset efficiency actionable, decision-based views Com- Scorecards • Fuel management panies employing visual scorecards The framework described above is • Supply management supported with accurate analytics and designed to move a company toward an • EBITOA performance timely information dissemination are evidence-based mindset within each • KPI tracking already gaining an advantage against - functional activity. Business manag • Asset risk factors their competitors through decision- ers that take the initiative to drive orga- making responses and actions that nizational decisions based on the best FIGURES 5: Overarching Decision Man- achieve faster, more efficient and prof- available information need an intuitive agement Portal itable results.⊗
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1411PEJEW_22 22 11/5/14 5:03 PM ORGANIZATIONAL Insights
What the Heck Happened to SEMS?
HE original Workplace Safety T Rule aka, SEMS was effective on November 15, 2010 and compliance of its provisions required by November 15, 2013. This included the 13 elements of API RP 75.1 In 2013 the Bureau of Safety and Environmental Enforcement (BSEE) issued 30 CFR Part 250, Oil and Gas and Sulphur Operation in the Outer Continental Shelf—Revisions to Safety and Environmental Management Sys- tems; Final Rule, aka SEMS II.2 This final rule revised and added additional requirements to the SEMS regulations. The rule became effective on June 4, ed into field operations management.4 corporating High Reliability Manage- 2013 and most of the provisions required Moreover, the industry reviewed and ment (HRM) processes into opera- compliance not later than June 4, 2014. continues to explore the good opera- tions.6 There is a growing body of work Only the auditing requirements still tions safety practices of other sectors. on HRM and those organizations that have a future compliance (by) date of The major organizations (opera- embody these principles into opera- June 5, 2015.3 tors and energy service providers) have tions. Those sectors where the cost of incorporated the SEMS requirements failure can be very high, i.e., nuclear, SEMS Implementation into their Operations Management Sys- aviation and medicine are candidates In the study, The State of SEMS— tems (OMS). For example, the Chevron for HRM. The Industry Transformation to a Cul- Operational Excellence Management These traits include sensitivity to ture of Safety first released in January System (OEMS) establishes manageri- operations by organizational leadership, 2013 and updated in November of that al guidelines and process management reluctance to accept simplistic explana- year a detailed review and assessment to assure incident reduction, improved tion of issues, preoccupation with the of industry SEMS implementation pro- performance, compliance and prepara- possibility of failures, deference to those cesses revealed that as might be expect- tion for emergency management.5 with expertise and knowledge regarding ed SEMS regulations were incorporat- Increasingly, the industry is also in- an issue and organizational resilience.7
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1411PEJEW_23 23 11/5/14 5:03 PM Moreover, the relationship between orga- nizational culture and High Reliability has been known for some time. Humans are now managing systems that are more complex than they are able to “sense and anticipate problems generated by those systems.” Known as requisite variety, is can be defined as, “the variety that exists in the system to be managed exceeds the variety in the people who must regulate it.” 8 Collective requisite variety is a func- tion of the level of trust and interaction a group has with each other. It is max- imized when, “each person so behaves • Leadership Commitment to Safety BSEE defines a characteristic as as to be in his turn a valid dependable Values and Actions a “pattern of thinking, feeling, and model for the others. Each acts both a • Hazard Identification and Risk behaving that emphasizes safety, par- model and observer.”9 As subsequently Management ticularly in situations that may have developed, this meets the test of organi- • Personal Accountability conflicting goals.”10 Moreover, accord- zational culture. • Work Processes ing to former BSEE Director James A. • Continuous Improvement Watson, these characteristics are root- Culture of Safety • Environment for Raising Concerns ed in the Nuclear Regulatory Com- In May 2013, BSEE issued its Final Safe- • Effective Safety and Environmen- mission (NRC) policy changes follow- ty Culture Policy Statement that con- tal Communication ing the 1979 Three Mile Island partial tained nine characteristics of a “robust • Respectful Work Environment meltdown.11 safety culture.” • Inquiring Attitude The challenge many still face is devel- oping an understanding and implemen- Processes tation plan for a Culture of Safety for Preoccupation MY company. Organizational culture with failure is a critical component of competitive Mindful infrastucture for high reliability advantage and is in fact who the compa- Reluctance to simplify ny is and the way it behaves. interpretations Capability to Therefore, each is different and the Mindfulness discover and manage reliability unexpected industry will not develop a Culture of Sensitivity to events Safety but thousands of Cultures of Safe- operations ty, each unique yet under the umbrella of the tenets set forth by BSEE. Addi- Commitment tional tools are available to assess man- to resilience agement transform their organization as necessary to meet these new realities. Under- specifcation Copyright © 2013 The Rapid Response Institure. All Rights Reserved. One example is a self-assessment guide- Adapted from Weicket al. (2008). Organizing for High Reliability Sage. of structures 12 Source: Holland and Shemwell (2014) provided with permission. line available online.
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1411PEJEW_24 24 11/5/14 5:03 PM Don’t Forget the Supply Chain edge, Skills and Abilities (KSA) for a tory verbiage. According to the Petroleum Equipment number jobs. For example, the Interna- Just like today, no one thinks it is Suppliers Association (PESA), “as part tional Association of Drilling Contrac- appropriate to drive home at the end of of the new Workplace Safety Rule, all tors (IADC) has released new KSA com- the day while drinking a beer, behavior- operators will be required to develop, petencies for drilling, production and al modification driven by SEMS will implement and maintain a SEMS plan. marine personnel.14 truly be part of how we do business. ⊗ Many major operators are implement- Moreover, supervisors must now cer- ing their SEMS systems supply chain- tify that employees have demonstrated Endnotes wide, which means 1 http://www.bsee.gov/Regulations-and- the requirements will Nine values of a culture of safety Guidance/Safety-and-Environmen- tal-Management-Systems—-SEMS/ reach many service Fact-Sheet/ companies and manu- Problem 2 http://www.gpo.gov/fds ys/pkg/FR-2013- 13 Personal Safe work facturers as well.” identifcation 04-05/pdf/2013-07738.pdf and resolution accountability processes One method of 3 Ibid. assuring SEMS com- 4 http://ogjresearch.stores.yahoo.net/the- pliance and auditabil- state-of-sems.html ity is by extending use 5 http://www.chevron.com/ Leadership Continuous Foster an about/operationalexcellence/ of API Bulletin 97, learning environment managementsystem/ Well Construction for raising concerns 6 Holland, Winford “Dutch” E. and Shem- Interface Document well, Scott M. (2014). Implementing a (WCID) guidelines. Culture of Safety: A Roadmap to Perfor- This “bridging” docu- mance-Based Compliance. New York: ment incorporates the Inquiring Trust and Effective Xlibris. attitude respect communication 7 API 75 SEMS require- http://www.beckershospitalreview.com/hos- pital-management-administration/5-traits- ments and aligns the of-high-reliability-organizations-how-to- operator work process- hardwire-each-in-your-organization.html es with those of the contractor. Orig- an acceptable level of competency for a 8 http://www.aml-safety.com.au/AML- inally designed as the relationship given task. Therefore, the level of work- stores/_images/pdf-files/Weick1987.pdf between operators and drilling contrac- force fitness is greater. 9 Ibid. tors it now encompasses other types of 10 http://www.bsee.gov/uploadedFiles/ BSEE/Final%20Safety%20Culture%20 suppliers as well. So Where the Heck is SEMS? Statement.pdf Robbie Katanga stated, “Culture is how 11 http://www.bsee.gov/BSEE- 15 Training organizations ‘do things’.” Logically, Newsroom/Speeches/2013/ As with any set of change processes, industry culture is the way the industry COS-Speech-04_25_13-final-website-(4)/ training is a Critical Success Factor does business. 12 http://www.therrinstitute.com/assets/cos- (CSF). This includes individuals at all While the industry transformation maturity-model—-2d-edition—-adobe- online.pdf levels in the organization from top lead- to a Culture of Safety is relatively new, 13 http://www.pesa.org/index.php/news/c/ ership to entry-level employees. expect this new culture to grow stron- pesa-news/legal-2013/ Firms are adopting simulation and ger and more ingrained into the fabric 14 http://www.iadc.org/ other sophisticated training tools simi- of the sector. Sometime in the not too knowledge-skill-and-ability/ lar to those used in aerospace as well as distant future, industry speak may not 15 http://blogs.hbr.org/2013/05/ completely redefining certain Knowl- use the word SEMS except for regula- what-is-organizational-culture/
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