World Class Asset Management

Interviewee Number: #2
Role: Director (former VP Operations at BP)
Interview date: 9/18/15
Interviewer names: SD

Background information:
Type of company Oil & Gas
Geography Europe
Expertise (years) 25 years in the Oil & Gas sector
Experience in the relevant Operations, Analytics, Asset Management, Automation,
field of expertise Maintenance

QUESTIONS

Part 1 – Identifying World-Class Asset Management

1. Which industries and businesses are demonstrating world-class asset management?

Asset Management in Oil & Gas is about having the right data coming off assets and having the right
people in place to monitor and react to the data.

The industry is currently really focused on analytics and big data, and what that can do to transform
the operating paradigm – particularly offshore and for aging assets. However, right now it’s really
only been applied to rotating equipment Imainly GE and Rolls Royce turbines).

The offshore industry in particularly has always been woeful in terms of asset management. It is
around 30% less efficient than an equivalent onshore refinery or manufacturing facility.

Part of the problem is that most oil & gas processing plants do not operate within their design
envelope for very long. It is a highly dynamic system because the fluid composition changes over
time i.e. starts producing 100% oil, then after 20 years it is producing 5% oil, plus gas, water, sand,
scale and other solid particles. This is what causes all of the asset integrity and optimization issues in
oil & gas. There is also no choice over location of plant and facilities. These make asset management
more challenging.

There has been a lot of talk about broadening the analytics approach to asset management from
rotating equipment to other plant, but this hasn’t really happened in any meaningful way.
Schlumberger has been pioneering integrated asset management and automation, as have
Halliburton, Weatherford and other service companies, but this is mainly in relation to drilling and
 well operations.

A number of plant OEMs (Honeywell, Rockwel, AspenTech and the like) are developing smart assets
for greenfield applications, as well as sensors that that can be retrofitted across a plant. Smart Signal
was a OEM-agnostic leader in this field, but has since been bought by GE on the basis of developing a
cross-plant monitoring ad diagnostic capability.

However, the experience to date is that analytics either tells you what you already know, or gives you
answers to questions that aren’t relevant. Often we’re not looking for complex patterns, we’re just
interested in when assets go outside of their operating envelope. This can be done using existing
technology, but what we need to do is apply different approaches to asset integrity and
maintenance.

Condition monitoring is becoming more common, and has value particularly when linked directly to
maintenance management systems. This closes the loop – from data acquisition, decision-making
and action. If this can be automated, then so much the better. This is where data-systems add value

There’s a lot of talk about predictive analytics in relation to asset management in oil & gas, but no
one is really doing anything because the value has not been defined.

No one is really doing this in a meaningful way, and certainly not enterprise wide. It’s happening in
pockets largely driven by certain BU leaders that have budget. It’s also being applied mainly in
greenfield applications where the value proposition is much clearer than brownfield.

2. What attributes define “world class” asset management? And, how can these attributes
be measured? Do these attributes differ significantly by industry?
It is easier to answer this question in terms of outcomes.

The key outcome would be to eliminate unplanned shutdowns – particularly of aging, complex
production facilities.

The second outcome is to maximize operational uptime. Average uptime in the UK North Sea is 65%,
which is not sustainable, particularly given the current oil price.

Also need to think about greenfield vs brownfield:

Greenfield projects should all be about driving down the need for maintenance through good design.
Facilities are often overly complicated due to poor capital project management, particularly in the
design phase. Better project management and multi-disciplinary teams will eliminate unnecessary
assets and simply the facility and process, which will reduce the maintenance burden.

For brownfield projects, it is enabling a move from scheduled to predictive maintenance regimes. A
lot of facilities would benefit from a simplification project to determine what assets can be
eliminated, what maintenance routines can be redesigned, and how can technology help through
automation of high risk or critical assets.

Having relevant data, which can be analyzed, followed by a multi-disciplinary approach to

implementation needs to be the big change. There needs to be closer integration between
operations and maintenance functions, which will maximize the potential for closed-loop automated
response and control. E.g. in the old days a turbine signals a problem, and by the time a meeting has
been called to discus it, the machine has already shaken itself to bits. Integrated asset management
 means that the turbine should be automatically shut down, redundant systems spooled up to take its
place is protected and a maintenance program automatically scheduled in the background.

Big savings can be made by smart design and operations decisions, enabled by multi-disciplinary
working. A lot of the maintenance and operating costs is as a result of silo’ed engineering decision-
making.

.
3. How have these attributes been achieved by these businesses? And, what lessons have
been learned that other asset intense businesses can adopt?
Very few and isolated examples of good implementation. This is a very immature area for oil & gas
companies, but one that is desperately needed.

4. How is the asset landscape or profile optimized to enhance utilization within world-class
asset management?
Maintaining operating integrity is key, particularly in remote operating environment (e.g. offshore).
Once that is assured then the next priority is utilization. On older facilities, where the field is in its
mature life cycle stage there is often a lot of asset infrastructure that becomes redundant.
Generally, over the life of a facility there is often quite a bit of tweaking of the process as operating
conditions change, which leads to a lot of asset inefficiency.

One of the first things that should be done in brownfield projects is to remove redundant or
underutilized assets, and replace them with fit-for-purpose assets (where budget will allow). This
should be done in parallel to a general debottlenecking program. This will require coordination
with the reservoir engineers, in order to understand how the produced fluids will continue to
change over the agreed time horizon and incorporate that into the planning. If you can get that
right, it will go a long way to saving a lot of money through better asset utilization.

For greenfield projects, there should be a significant investment in creating a ‘smart’ facility straight
out of the box. Ensuring sensors on critical equipment, telemetry systems, data management,
analytics and automation are all key, but difficult to justify installing in aging facilities due to the
high upfront capex. This will ensure efficient operations and optimum asset utilization.

5. What attempts are being made to align asset utilization with improving profitability and
customer growth?
For a greenfield project you don’t want any topsides asset choking back the well production, as that
will directly impact profitability by deferring production.

For brownfield (i.e. aging assets) it’s more about streamlining and rationalizing the assets that are
under-utilized due to changing operating conditions and taking them out.

6. What has been the impact of adopting improved asset management from financial,
operational, environmental and people perspectives?
Where improvements have been implemented the impact is huge. Unplanned shutdowns can cost
offshore facilities $millions every day. It also improves environmental performance by improving
 containment and integrity.

Implementing this will have a knock on effect in a reduction in facilities manning levels, which will be
a major cost saving as well as the intangible benefits of reducing risk, safety, logistics and so on.

7. What else are leading asset managers doing beyond ISO55000?

ISO55000 has not been applied to the oil & gas sector to the best of the expert’s knowledge.
However, his company only recently received an RFP for a project that included an ISO5500
readiness assessment. He had to research it to find out what it meant.

Part 2 – Role of ISO55000 Asset Management

8. Generally, how is ISO55000 used by leading asset managers (to drive activity or as a
compliance tool)?
No experience of ISO55000 being considered or applied in the oil & gas sector. This could save a lot
of work and duplication of effort, and ultimately save a lot of money. However, there may need to
be an oil & gas version in order to be adopted wholesale.

9. ISO 55000 states “Asset management translates the organization’s objectives into asset-
related decisions, plans and activities, using a risk based approach.” Does this definition
and the aligned Asset Management Systems detailed in ISO 55001/2 cover all of the key
requirements to achieve World Class Asset Management? If not, what is missing?
N/A

10. Which asset intensive industries are demonstrating greatest commitment to / interest in
ISO 55000/1/2 accreditation? Why?
N/A

11. Which industries and businesses are demonstrating significant Asset Management /
bottom line improvements through the adoption of ISO 55000/1/2?
N/A

12. How have these industries and businesses approached adoption of ISO 55000? And,
what ISO 55000/1/2 adoption lessons have been learned that other asset intense
businesses can adopt?
 N/A

13. Are industries and businesses identified as demonstrating world-class asset management
ISO 55000 accredited or seeking to be? If not, why not?
N/A