March 2013, Vol. 240, No. 3

Q&A

Energy Managers Share Ways To Control Costs

There is no free energy, even for energy companies. In recent years, energy costs for pipeline companies have become an issue of increasing importance to managers and executives alike.

A group of oil products pipeline energy managers eventually realized they needed their own forum to deal with an agenda specific to their needs. So, in 1995 the Pipeline Energy Group, known as PEG, was created. It has now evolved into an annual three-day conference that brings together energy managers from around the country.

Dan Merritt is an active member of PEG who explained the group’s goals in a recent interview. He has worked at Tulsa-based Explorer Pipeline since 2005 where he is Principal Power Optimization Engineer. A 1979 graduate of Iowa State University with a degree in civil engineering, he has more than 33 years of pipeline engineering experience, working in many engineering disciplines including onshore and offshore pipeline design and construction, facility automation, SCADA system configuration, testing and implementation, field operations and maintenance, pipeline system transient analysis and more recently, energy management.

P&GJ: Why was the Pipeline Energy Group created?

Merritt: For many pipeline companies, power costs are among their largest operating expenses, so several of their energy managers thought periodic meetings could provide valuable insight. Those who started PEG saw an excellent opportunity to meet yearly by extending their participation at the annual API liquids pipeline conference by a half day. That additional time provided the energy managers an opportunity to discuss and share best practices.

The annual PEG conference is now a three-day meeting that provides all of the original content plus technical presentations from members, vendors and industry experts as well as social functions that offer networking opportunities for all of the participants.

P&GJ: Why was it felt necessary to hold this conference separately?

Merritt: The PEG participants soon recognized they had much more to discuss than would fit in the time available following the API conference. They also found it difficult to simply add more time at the end of the API conference, as being out of the office for that much time caused a hardship for most of them. The best solution was to hold another conference focused specifically on issues that matter most to pipeline energy managers and to schedule it completely independent from the API conference.

P&GJ: Who is the membership composed of, what are the requirements to join – are you specifically targeting energy managers of LDCs, gas transmission and oil products pipelines?

Merritt: We target energy managers for participation in the conference, but it isn’t limited to just energy managers. The conference has a history of expanding to fill its needs. Participants originally included only energy managers from liquid pipeline operating companies, and primarily only those who operate systems in North America.

Participation subsequently was expanded to include representatives from electric utility companies, electric industry consultants, drag-reducing agent (DRA) chemical and equipment suppliers, and more recently, energy management/power optimization software providers. Many of the issues relevant to liquid pipeline company energy managers also pertain to gas pipeline, but there is not much representation from the gas transmission industry.

PEG is not a formal organization so there are no membership requirements. The only requirements to attend a conference are to register with the event organizer and to cover your own travel-related expenses. There are no membership dues or fees associated with attending the conference.

P&GJ: How can members benefit from joining PEG?

Merritt: Participants gain knowledge and insight into the factors affecting the electric energy industry, the technologies available to help them achieve the results that are expected of them, and an understanding of how their colleagues overcome their challenges. Building relationships with each other can grow into a technical resource that can help resolve many of the problems they face at their office.

P&GJ: What role do vendors play?

Merritt: Vendors are vital and integral participants as PEG offers them an opportunity to meet in one place with many of the pipeline energy managers they support, some of whom are their largest customers. They also provide a valuable resource that enables the energy managers to gain a better understanding of the products and services available for them.

Vendors have historically generously offered to sponsor events at the conference. Some arrange for meeting rooms to provide in-depth interaction with their client base without conflicting with other scheduled activities. Their financial involvement and sponsorship has made PEG a valuable conference for pipeline energy managers. Vendors often choose to fund activities for which they receive formal recognition.

Each year’s host organizer, a volunteer from among the energy managers that participate in the conference, is responsible for selecting the venue, setting the agenda, coordinating event sponsors and identifying presentation topics and presenters. All presenters, whether they come from the pool of industry experts, vendors or energy managers, are encouraged to keep their presentations focused on the technical aspects of their subject in order to provide maximum value to the broadest scope of participants.

Since the energy managers attending PEG work for companies often competing with each other, each participant should be very familiar with and adhere to the requirements of their respective companies’ anti-trust policy concerning their interactions at PEG.

P&GJ: What are the chief priorities on PEG’s agenda for the near-term?

Merritt: While the PEG’s conference agenda changes from year to year, its basic priority is to provide a forum for sharing best practices, gaining a better understanding of the electric energy industry, discussing the changes affecting the supply of electric energy and keeping current on technological advances that support pipeline energy managers. Since PEG is not a formal organization, it does not seek to develop standards or recommended practices as does the API.

P&GJ: What are some of the market trends that most seem to concern members?

Merritt: There is a great degree of geographical and operational diversity so there is a wide variety of market conditions and trends that affect them. Common ones include political influences on electric power generation, transmission and distribution, including the transition away from traditional sources due to concerns like carbon and greenhouse gas emissions; ability of the electrical infrastructure to meet current and projected energy needs; and challenges and opportunities presented by regulated and deregulated energy markets and technical developments such as the Smart Grid.

P&GJ: What do they feel are their biggest challenges and needs?

Merritt: Generally, it is the role of all energy managers to provide their company with recommendations that are safe and improve operational efficiency in order to power costs as low as possible. Often, it is difficult to achieve those objectives, particularly when costs are rising.

Energy managers need tools and techniques that allow them to capture available opportunities as well as methods to document and report the effect their efforts are having. Those reports identify the value they provide their organizations, but they can also be instrumental in identifying and quantifying the magnitude of potential opportunities yet to be addressed.

One big technical challenge that has surfaced at past PEG conferences is identifying a meaningful metric, or set of metrics, that allows for a direct comparison of the performance of pipeline systems. There are so many variables that influence a pipeline system’s cost effectiveness which makes it difficult to develop meaningful metrics.

Parameters such as the characteristics of the fluids being pumped, size of the pipeline (diameter and length), rate schedules of the utility servicing the pipeline facilities, operational flow rates and elevation differences can make it appear that one system is being operated more effectively than another when in reality the exact opposite may be true.

P&GJ: What are some topics covered in past conferences?

Merritt: Topics at past conferences include: market trends in the energy sector; life-cycle cost of pumping equipment; theory and operation of pumps, motors and variable frequency drives (VFD); drag-reducing agent (DRA) performance, applications, and product quality limits; utility-sponsored energy efficiency and demand-response programs; and participant pipeline company operating overviews. Roundtables address sharing of best practices, individual successes and lessons learned from different energy management initiatives.

(PEG 2013 is being hosted by Enbridge Pipeline Co. April 30–May 2 in Nashville, TN. Those interested in attending can contact Shane Henriksen at 715-398-4590 or shane.henriksen@enbridge.com.)