American Oil and Gas Reporter - January 2022 - 57

Cloud Suite Eases Complex Logistics
By Jeff O'Block
From the Permian Basin to the Bakken,
the upward tick in crude oil prices is
getting the lion's share of the headlines.
Yet with infrastructure bottlenecks being
alleviated, record LNG exports, and the
long run of low pricing for natural gas
and natural gas liquids retreating in the
industry's rearview mirror, natural gas is
again an industry darling.
During the early stages of the pandemic,
when crude oil demand collapsed,
NGL pricing showed resilience. Demand
remained strong for propane, one of the
main NGLs, because of its many residential
and commercial applications,
which are as diverse as crop heating. The
rest of the NGL mix-ethane, butane,
isobutene, and natural gasoline-are major
feedstocks for a variety of petrochemical
products and fuels that remained in demand
even during pandemic shutdowns.
It's all looking better today. Crude oil
demand is rebounding at a steady pace,
and natural gas prices are strengthening
as well. NGLs' unique position in providing
critical energy needs means renewed
emphasis on efficiency and margins
as the liquids are condensed from gas
streams and moved to market.
Transportation's Importance
Record NGL demand in the U.S. market
and an exploding export market for
propane and ethane underscore the need
to rapidly transport NGL from the wellhead
through the value chain. Price differentials
also create an incentive for
marketers to move NGL long distances
to capitalize on higher prices.
While crude oil production continues
to dwarf NGLs, condensates account for
about a third of total liquids production
in the United States, or more than five
million barrels a day according to the
U.S. Energy Information Administration.
Pipelines provide a partial solution to
the NGL transportation problem, with
takeaway capacity from the Permian getting
a recent boost from the EPIC Crude
Oil Pipeline, Gray Oak Pipeline and
Cactus 2 Pipeline.
When it comes to moving NGL,
crude oil, water or any other commodity,
however, there is no monolithic transportation
solution. Given the dynamics
of the oil field, shifting economics and
emerging midstream takeaway bottlenecks,
oil field marketing and service
providers increasingly will rely on multiple
transportation methods to increase
optionality and respond to customer demand,
including rail, barge and ship. If
the United States is a swing producer
for the global energy mix, trucks are
the swing carrier for the transportation
mix, always crucial for their ability to
quickly fill takeaway gaps.
Despite the unblocking of many takeaway
bottlenecks in the Permian and
other basins, trucking remains strong
yet presents the industry with challenges.
There is the logistical challenge of orchestrating
large fleets and large numbers
of monthly hauls. There is an environmental,
social and governance (ESG)
challenge from engine emissions and
the risk of spills. And there is the challenge
of getting drivers. In a recent
report, the American Trucking Association
repeated its warning that a nationwide
shortage of 80,000 drivers continues
to threaten supply chains, making it
business critical for carriers to attract
and retain workers.
From field tickets and bills of lading
to dispatch and regulatory bookkeeping,
today's trucking industry remains heavily
dependent on paper-based and manual
processes. To overcome logistical, environmental
and driver challenges, midstream
providers are turning to digital
transportation management systems
(TMS), which comprise specialized enterprise
resource planning (ERP) technologies
and management processes. For
example, one of the largest independent
midstream infrastructure companies in
North America is leveraging a TMS solution
that pairs a mobile app for drivers
with a cloud-based ERP purpose-built
for oil field carriers.
Midstream service providers who master
TMS will unlock substantial benefits,
including increased transparency and accuracy
into supply chain costs, improved
cash flow through accelerated accounting
processes and lower fuel usage that improves
ESG performance.
Pipelines remain the safest and most efficient way to transport crude oil, natural gas
and natural gas liquids, but to take advantage of price differentials and meet shifting
customer demands, producers and marketers are drawing on all forms of transportation,
from truck and train to barge and ship. This agility is enabled in part by cloud-based logistics
management systems that provide real-time information on pricing and product
location, simplify transactions and accelerate cash flow.
JANUARY 2022 57

American Oil and Gas Reporter - January 2022

Table of Contents for the Digital Edition of American Oil and Gas Reporter - January 2022