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Simulation Modeling In Oil And Gas Industries - Essay Example

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Simulation Modeling In Oil And Gas Industries

Additionally, there are many variables of operations and decision-making processes to ensure that costs are minimized, available resources are optimized, and maximum efficiency is achieved. Certainly, any course of action may be successful or disastrous to the company. Therefore, simulation becomes a very important tool of assessing viability of a given action before the same is put into practice (Saker solutions, 2007). Simulation modeling is the process of creating computer models that represent the actual production and important logistics processes in the oil industry. The process not only considers the viability of the designed project but it is useful in the prediction of uncertainty such as weather in the oil industry. The aspect of uncertainty is incorporated into the models as random variable, these variables represents uncertain events such as equipment breakdown and destructive weather condition. The system depends on statistical distribution to determine frequency and patterns that determine the occurrence of uncertain events. Using simulation enables the players of the oil industry to work with proven methodologies that reduce or eliminate possible risks (Lanner, 2008). Like most models simulation depend heavily on the use of symbols and animation to represent key factors in the production and logistic sector of the industry. The models therefore use these symbols and animation to represent movements of ships between ports and stations. The models also have appropriate symbols that represent the variation of inventory according to demand and production. Most simulation screens have unique icons that represent facilities, equipments, and products. With the current improvements in technology, simulation applies the latest simulation software and graphical technology to enhance accuracy through the projection of 3D images. These images provide a good representation of real equipments and facilities that promote communication the concerned (Gorski, 2006). Simulation is not only important in the design and decision-making but its application results in massive benefits. The first application of simulation model that is of great significance to the industry is the validation of new receiving and shipping terminals. The models are also applied in capacity analysis that involves analysis of oil production and handling capacity of a company. Simulation models are also useful in the validation of asset portfolio (new and existing plants) and tanks configuration. The models are also applied in the evaluation of cell storage and transportation capacity. The application of simulation models points towards reliability and improved decision-making and therefore the simulation is of great benefit to the industry. Application of the new simulation models has enabled oil companies to realize an improvement on their profit margins. This has been achieved through enhancement of efficiency and the reduction of redundancy resulting from its application (Larner, 2008). The models have also contributed to the adoption of accurate operation procedures within the company leading to an increase in the profit margins earned by the companies. The models have been of great benefit in the determination of operation procedures and timelines. In particular, the models enable the companies to make accurate decisions concerning when to retire a ship or close down a plant. The oil companies not only need to know the viability of their new projects but they also need to evaluate possible risks that may arise from the same projects. Simulation has therefore become a useful tool in measuring uncertainty and other risk factors associated with decisions made in the oil industry. Finally, the models have ...Show more

Summary

Oil and gas industry is arguably one of the capital and operational cost dependent sectors. All the processes from processing, refinery, and transportation of different products involve a lot investment…
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Simulation Modeling In Oil And Gas Industries essay example
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