How to optimize energy consumption to beat rising costs

Most individuals and organizations rely on natural gas in one form or another, from small-scale residential appliances (e.g., stoves, heaters) to large-scale feedstock for farming fertilizers in food production, fired equipment at a processing facility or transportation purposes. Natural gas is a methane-based fossil fuel that is an energy staple in today’s market and has extensive impacts on the gas-value chain.

Any change in the natural gas market will have direct and trickling effects on individuals and industries. When natural gas prices spike, improving efficiency and optimizing natural gas consumption always adds value. Over the past few decades, the energy paradigm has shifted to focus on cleaner energy. While natural resources such as solar, wind and hydro have helped supplant coal, these renewable energies simply cannot replace natural gas as an alternative means of fuel and power.

The natural gas value chain encompasses the entire process of extracting, processing, transporting and utilizing natural gas as an essential energy source. It begins with exploration and production, where geologists identify potential gas reserves and drilling operations extract the gas from underground reservoirs. Once extracted, the gas is processed to remove impurities such as sulfur and moisture, ensuring its quality and safety. The next step involves transporting the natural gas over long distances through pipelines or liquefying it into liquefied natural gas (LNG) for easier transportation via specialized vessels. At the distribution level, natural gas is delivered to end users, including residential, commercial and industrial sectors, for various applications such as heating, electricity generation and manufacturing processes.

The natural gas value chain is a complex and interconnected system that plays a vital role in meeting global energy demands while contributing to the transition towards cleaner energy sources. Each step in the gas value chain typically involves the consumption of natural gas and presents opportunities for efficiency throughout the chain.

The Henry Hub tracks and graphs natural gas price trends and helps drive decision-making in industry, but the price of natural gas involves a complex network of different factors. In recent years, coal and natural gas prices across Europe and Asia soared 500%–1,000%, and natural gas prices in the U.S. more than doubled. While price fluctuations are primarily driven by the demand for natural gas in the sundry sectors that utilize it, other external factors also play into fluctuations. For example, political actions, LNG trends, weather anomalies, etc., influence the price of natural gas, as well.

In the case of a sustained 500% increase in coal and natural gas prices across Europe and Asia, the cost of manufactured goods could inflate by as much as 50%. In addition, the cost of manufactured goods in North America could rise if the doubling of energy costs in that region is sustained. Although these increases may prove temporary, continued high prices through the coming fall and winter could result in consequences for the population and economy, such as rising consumer prices and reduced profit margins for corporations.

When the cost of natural gas increases, it can impact plant operations and overall company health. In one scenario, an escalation in natural gas price may be passed along in the value chain to the consumer and ultimately affect plant profitability. This pathway to the end consumer is not always the case—it depends on whether an alternative feedstock can be used, a likelihood that can increase during a period of elevated natural gas prices. If natural gas is the only feedstock that works for the production of the end product, however, it tends to profit the plant. Conversely, a facility may be negatively impacted if natural gas is used as a utility (e.g., fired heater fuel supply) rather than feedstock in the process. In the latter scenario, the plant is paying for the cost of natural gas consumption, resulting in increased operating costs. Improving efficiency and optimizing natural gas consumption are part of the solution to optimize operating costs when natural gas prices spike.

The first step to improve operating efficiency and reduce natural gas consumption is to assess the condition of the operating equipment that uses natural gas as a utility, including fired heaters, boilers, incinerators, reformers and turbines. For instance, a heater may lose heat due to a damaged refractory and may not be as well insulated as it once was, or it could lose peak efficiency simply due to age and obsolescence of the original equipment.

Company managers are often faced with deciding which projects and action items should take precedence at their facilities. If no action is taken or there are unknown issues, unknown wastes could occur, or worse, unaware personnel could be at risk. A conceptual-level screening checklist is a cost-effective stepping-stone that evaluates equipment in a systematic fashion to identify the condition of fired equipment, maintenance or repairs history (where each piece of equipment is in its lifecycle), and any potential code requirement deficiencies. A conceptual screening checklist is particularly beneficial for:

• Companies that recently invested in a new facility or purchased an existing facility
• Aging fired equipment that has not undergone recent upgrades
• Fired equipment with an uncertain adherence to codes and standards
• Personnel who are unfamiliar with the operation or condition of the fired equipment or want a better understanding of the unit.

The operation and control scheme should also be analyzed to determine whether the equipment is operating under peak efficiency. Operating philosophies can change with time and deviate from the original design intent. For example, a heater may have originally been designed to operate on dual fuels but was later switched to a single fuel with little planning or forethought; new technology might have been integrated with old technology; or instrumentation or control strategies were changed. In other circumstances, perhaps an older system had not been designed well originally and was never upgraded, resulting in the operators adjusting their procedures in response. Any piece of equipment that is outdated or to which modifications were made that decreased efficiency should be the target of efficiency gains and consumption improvements to return it to its optimal operation.

Historically, a facility’s utility sections are the last sections that asset owners aim to upgrade since they may not directly affect product throughput; however, companies may pay a substantial price if natural gas utilities are overlooked and fired equipment continues to operate under poor efficiency, particularly when gas prices spike higher. Most equipment has a specified life expectancy, and pushing it beyond its useful life can put an operating facility at risk. Maintaining aging equipment can also be a challenge, as parts for the old equipment are often no longer available or can be very expensive to acquire quickly (e.g., the manufacturer may no longer exist, may no longer produce the parts, or available components do not meet the newest revision of a regulatory standard). If a facility is unable to find replacement parts or utilizes replacement parts sourced outside of the normal supply chain from the manufacturer to adapt to the existing system, short-term solutions could potentially perpetuate mechanical and reliability issues.

Depending on the results of the screening checklist, the operating mode or equipment condition may be fine-tuned, selective upgrades may be applied to the deficient areas identified, or equipment may need to be replaced entirely. An efficiency optimization analysis of natural gas consumption also provides an opportunity for other gains that add value to the plant, with input from the personnel who operate and maintain the equipment. Other goals may be recognized and addressed, such as maintenance concerns due to age and obsolescence and issues with codes and standards compliance that affect safety. Plant owners may not know when the next fuel price spike will hit, but operating at increased efficiency will always generate savings. 

When organizations invest in making their systems more reliable so that they do not trip, efficiency is improved so that less energy is needed to get operations back up and running. Additionally, improving reliability reduces spurious trips, which, over the long term, also improves efficiency and uses less energy. The author’s company can help clients optimize energy consumption and maximize the efficiency of their fired equipment combustion controls to save on operating costs while making other valuable improvements to equipment along the way. GP

 

Chris Neff is the Senior Vice President, Project Development, for aeSolutions. He has more than 25 yr of experience developing and executing complex projects to create value for customers in diverse industries, including refining, chemicals, onshore and offshore oil and gas, LNG, syngas/methanol, utilities, infrastructure, power, metals, mining, food and pharmaceuticals. Neff has held many leadership positions, from serving as an instrumentation and controls systems lead engineer for a large refinery to leading an operation team of more than 600 staff for a global corporation. He complements his leadership skills with expertise in engineering, procurement, construction, commissioning and startup, including more than a decade of site-based experience. Neff has prioritized process and construction safety in his projects throughout his career, and leads the Fired Equipment Program for aeSolutions, applying his knowledge and skills to partner with clients to create and maintain safe, efficient fired equipment and associated processes.