Apache Corporation Makes Better Decisions for Kitimat LNG with Lanner

APPLICATION: LNG Logistics Simulation

VERTICAL: Oil and Gas

SECTOR: LNG

BENEFIT: Apache relies on WITNESS to validate crucial project decisions, validating and optimizing their landmark Kitimat LNG project.

Kitimat LNG is an LNG export facility in British Columbia, Canada operated by Apache Corporation, an independent energy company that explores, develops and produces natural gas, crude oil and natural gas liquids. 

Co-owned by Apache Corporation, EOG Resources and Encana Corporation, Kitimat LNG is located on Bish Cove, approximately 650 kilometers (400 miles) north of Vancouver, and represents Canada’s first LNG export terminal. 

Sourcing its natural gas from the Western Sedimentary Basin which spans Alberta and British Columbia, the facility will be responsible for natural gas liquefaction, LNG storage and marine ship-loading facilities. The site has a planned capacity of approximately five million metric tons per annum, the equivalent of nearly 700 million cubic feet per day. 

Created to supply markets in the Asia-Pacific region, the project also comprises construction of a 463-kilometer (287-mile), 914-mm (36-inch) diameter pipeline from Summit Lake, B.C. to Kitimat and is scheduled to begin export in 2015.

Validating Decisions, Reducing Risk 

In managing a project of this magnitude, Apache Corporation required proven business process simulation capabilities to test, evaluate and validate key decisions pertaining to all aspects of the facility and justify the feasibility of the project. The level of investment associated with LNG projects, combined with the fact the facility was unprecedented in Canada, meant that Apache required a simulation partner to ensure that investment was channeled appropriately, processes optimized, and any risks quantified. 

Following a thorough evaluation of the market, Lanner and its LNG Supply Chain Simulation tool (built using Lanner’s WITNESS simulation software) was selected based on extensive experience delivering proven benefits to LNG projects around the world.

Model Behavior 

At the outset of the project, Apache worked with Lanner’s consultants to configure Lanner’s LNG simulation application (built upon the WITNESS simulation platform) to Kitimat’s detailed requirements to validate their investment case, optimize processes and procedures, and establish the appropriate resourcing levels necessary to maximize operational performance and efficiency. 

Once established, the resultant Kitimat LNG model simulates the future operation and predicts the performance of the facility. The simulation mimics reality by applying the effects of a number of key variables and constraints, including stochastic events. These included planned and unplanned downtime, a range of potential weather events and the cause and effect of delays and congestion. Furthermore, the underlying WITNESS software allowed detailed testing of the system under conditions that reflected future terminal and shipping changes and expansion options. Through projecting future performance and risks many years into the future before finalizing design and evaluating prospective modifications, planners were able to effectively ‘de-risk’ the project, validating decisions and verifying investment for each stage of the project’s lifecycle. 

Specifically, the Kitimat LNG simulation application gives comprehensive analysis of the often subtly complex, interdependent processes involved in optimizing LNG production; tank capacity; jetty and berth utilization; shipping fleet; voyage times; knock-on effects of weather variability; and receiving terminal operations. 

In turn, this detailed analysis identified a number of parameters and KPIs for the project to include:

• The maximum volume of LNG that can be exported utilizing various tank and berth configurations. 
• The critical factors that limit volume and key indicators of this, such as loss of production and berth occupancy.
• Scheduling and frequency of shipping required; the profit trade-offs of volume against queuing times and cost. 
• The identification of optimal configurations of storage under various production train scenarios. 
• Verification of the design and operational plans for the new terminal through Pre-FEED and FEED stages.

Flexibility for the Future 

Crucially, Lanner delivered their modular, configurable simulation tool designed specifically so that it could be re-used by Apache’s planners in the future to support the evolving demands of the project. This flexible WITNESS based tool now enables the Apache analysis team to continuously run “what-if” scenarios and identify the very best answers to questions, highlight potential risks and secure buy-in from stakeholders. 

Steve Hemsley, LNG Industry Lead at Lanner concludes: 

“Our LNG Supply Chain simulation tool has been integral in supporting Apache’s planning team in assessing various investment and risk scenarios and enabled them to proceed with design plans for the facility with increased confidence. The model helped inform decisions on optimizing outputs from the project design, establishing accurate resource thresholds; a tool that can be continuously re-used to fi ne tune and validate changes as Kitimat LNG evolves.” 

“Apache’s experience demonstrates the rapid solution design capabilities of WITNESS and our LNG simulation team; supporting them in understanding investment options, testing operational solutions and making the right decisions.”