Natural Gas Producer Eliminates Supply Chain Bottlenecks thanks to an Arena Simulation Model by SimWell
This supply chain’s context
A Middle-eastern gas production organization is planning an expansion of its facilities. New extraction sites of natural gas are being constructed and the production was increasing in some existing sites.
Each site has a processing plant to prepare the final gas product. At the same time, a co-product is generated, which needs to be shipped out of the region, to foreign customers, through the existing port facilities of the company. The supply chain of that product needs to be upgraded wisely, to avoid becoming a bottleneck in production.
The challenge faced by this gas producer
It was crucial to choose the right means for transporting the co-product from plant to port. It can either flow through a pipeline, when liquefied, or be granulated and carried by rail. These two options can be combined in the overall design of the supply chain. A main railway section already exists. Therefore, for some sites, it seems obvious to build an additional track section to connect to the network. As for some other sites, the distance allows for a potential pipeline. Within the same analysis, the number of trains required on the rail is to be decided. Finally, each site also requires a storage to use as a buffer for the co-product, while it is produced. The required maximum size of that stockpile needs to be determined.
- Choose between rail and pipeline to connect the new plants
- Determine the number of trains required for a good flow of product
- Determine the size of the stockpiles at the production sites
Simulation model of the logistics network
An Arena simulation model of the supply chain is built by SimWell for this project. It included several options, for production rates at the different sites, as well as the number of trains to activate on the rail network. Since some of the sites would only be enabled after a few years into the expansion project, each site can easily be disabled or its production rate modulated. Several potential equipment failures also occur randomly in the model, both for the production and loading at the plant, and in the ship loading activities at the port. Within minutes, a scenario of 20 years can be executed.
The customer used the results of the Arena simulation model to compare some options and choose the best design. They ensured the stockpile sizes and number of trains purchased would be sufficient, but without oversizing any resource. Therefore, the capital expenditures and operational expenditures were kept to a minimum.