Article published on the Control Engineering Magazine. The online version can be accessed at goo.gl/mQGVTP

1. Simulation: A game-like approach to innovation
The low price of oil has caused hydrocarbon companies to look at innovative ways of
reducing their costs. Simulation modeling has recently emerged as a way of
minimizing operating overhead or removing unnecessary scope from capital
projects.
Alvaro Gil
11/20/2015
Companies constantly face tough challenges that are solved by a combination
of leadership, strategy, and innovation. The current low price of oil is reducing
the industry's profits and increasing risk aversion for investors. This is an
example of the type of adversity that requires an agile response. Apple
Computer founder Steve Jobs used to say that innovation is what
distinguishes between a leader and a follower. The market is avid to
innovative approaches. However, not many companies dare to try new ways
of doing things, which could be due the risk involved and the unknowns
associated with new methods.
Risk is the paradox that drives and stalls society simultaneously. The search
for a risk-free environment is the reason why we use standard methodologies.
When one plays video games, the player is released from the natural
boundaries that inhibit the real world. Through gaming, new methods of doing
things can be uncovered, which in consequence, improves achievement.
"Gamification" uses game thinking and game mechanics in a non-game
context to engage users and solve complex problems. This analogy illustrates
how much game thinking is necessary for companies to find winning
strategies.
Oil and gas applications for simulation
Simulation technology in the oil and gas industry has been largely restricted to
a few isolated areas, such as reservoir analysis or control instrumentation. A
general lack of experience with simulations and some technical limitations

2. have restricted the adoption of the technology in the oil and gas industry,
though the technology is widely used in other industries, such as
telecommunications, logistics, health care, and financial services.
Many aspects make simulations a fundamental tool to innovate and potentially
uncover unused capacity or capability. Reasons to use simulation in oil and
gas include: ·
 Users can experiment with different physical configurations or operating
schedules before making changes in their facilities.
 There is a possibility of creating and modifying individual and collective
behaviors through the use of simple logic or business rules, such as
blending, crude management, or batch sequencing.
 Users can find practical ways of exploring existing assets, discovering
unseen relationships, and improving opportunities.
 There is a potential for interaction with users that increases the
engagement at different levels (i.e., schedulers, managers, executives,
etc.).
 Communicating with other systems, such as reservoir simulators,
instrument sensors, and control centers; and incorporating the
information (past or real time) as input into the simulation.
Simulation is the science and art of replicating the essential elements of a
problem or opportunity. It is not digital twinning, where one attempts to copy
reality. Rather, is designed to mimic reality in a controlled environment.
After there is a reasonable representation of the actual facility, the simulator
can play with any number of variable inputs or outputs in a risk-free virtual
environment.

3. How games tie into simulation
Contrary to what the traditional paradigm says, games (and more specifically
video games) are very popular activities for all ages and social positions.
According to the Entertainment Software Association Foundation, 155 million
Americans play video games, where some 74% are more than 18 years old.
Additionally, 70% of senior executives play games during work hours
according to Gamification Nation, a company that helps other integrate
gamification into business. The popularity of games is explained by many
factors, including social acceptance, the possibility to compete, and
collaborative play. Another reason for its popularity is the ease of access.
Currently, it is possible to play games on computers, tablets, and
smartphones. It requires no preparation, and with some dedication level, it is
possible to learn and master the game in a short time. There are games for all
tastes: social games, action, strategy, and puzzles are just a few examples of
the variety of subjects.
Gamifacation can be considered, in part, a philosophical approach to running
models through simulations with many tweaked variables, until the best
approach for solving a problem is found. In other words, the player wins the
game. However, before playing the game, the company that wants to run the
simulation must invest in research and spend great amounts of time and effort
to gather and parse the data needed. This can be thought of as the player
working to earn money to spend on playing the game. Once the game is
started, it is easy to run the simulations, which can foster a free-thinking,
intuitive approach to solving the problem.
Compared to other industries, the oil and gas industry is late to partake in the
simulation "game". Telecommunications, logistics, healthcare and financial
services have been using simulation as a fundamental tool to innovate and
uncover unused capability for many years, incorporating some of these
elements in basic business processes. For example, U.S. industrial
manufacturer 3M uses simulation to support decisions in their supply chain
management. The French aircraft company Airbus uses simulation to control
the manufacturing process of airplanes. In addition, some hospitals have
implemented simulation to train staff and allocate resources based on
workflow and forecasted patient inflow.
Simulation is the future of innovation
A major advantage of using simulation games in a business context is that
users become active decision makers in an artificial environment without

4. limitations. This is not to say that modeling is not a serious business that
requires great efforts to acquire and parse data needed to run the simulation.
By removing the boundaries, the user is free to explore new possibilities and
experiment with varied scenarios with no risk or fear of injury or loss.
Another benefit is the extreme flexibility provided by a virtual world. Dealing
with complexity becomes easy when a systematic approach is applied to a
problem using machine algorithms and high-speed processors.
Recent examples of applying simulations in crude-oil pipelines and terminals
have resulted in capital savings of $85 million and additional revenues of $24
million per year. In this case, a large trans-national crude oil pipeline company
was growing quickly and unable to resolve a chronic shortfall in its throughput
and revenue performance. The traditional static analysis tools (spreadsheets
and manual analysis) were used to understand the commodity flows and track
the various physical and operating constraints at each terminal and across
main pipelines. The analysts were not able to definitively identify the system
bottlenecks because the conflicts moved around the network as the inputs
and boundary conditions varied. In addition, the causative events leading to
inventory build-up were not readily apparent and the interactions between the
events in the terminals were not well understood. Clearly, a dynamic analysis
was required to understand the cause-and-effect dynamic at play.
Other examples include assessing designs for new rail and marine loading
facilities that realized more than $200 million in capital savings. In this case, a
client went thought initial study and design with engineering company that
estimated the total costs of the project around $500 million. The proposed
project consisted of a low-speed rail circuit railway system, petroleum storage
tanks and several miles of pipeline to be installed between the facility and the
marine terminals at the port. This project was used to transfer petroleum to
marine vessels. After performing an operations and infrastructure optimization
study, through simulation, the client was able to cut around 40% of
infrastructure costs by optimizing its business model, operations, risks
aversion.
Typically, Game-simulation models are constructed in a way that can be
modified as needed for additional projects or tuned for operating diagnostics.
Because any number of variables can be added, the simulations can be
extended to include maintenance and reliably, or any associated business
functions, such as risk management.

5. - Alvaro Gil is a project manager and senior developer at Stream Systems. He
has more than 10 years of experience in modeling, simulation and
optimization in industries such as pharmaceutical, manufacturing, logistics,
healthcare, finances and more recently oil and gas. He holds a Bachelor's
degree in Industrial Engineering as well as Master's degrees in Industrial
Engineering and Economics. He's been involved with Stream Systems since
the beginning of 2015.