Doing More with Less: A Framework for Effective Equipment Integrity Assurance

Operators have been forced to make staffing cuts and postpone any non-urgent work until it can be completed without risking the health of their workforce. Looking ahead however, there is a need for essential drilling activity to continue to maintain current levels of production and meet future demand. With operators in survival mode, now more than ever they require innovative solutions and approaches to achieve desired results within tighter margins.

According to Rystad Energy, global oil and gas capital budgets could be slashed even further by $100 billion during 2020, a number that could rise to $150 billion if low oil prices persist into 2021. Worryingly, recent data suggests this has increased risk. Lloyd’s Register recently surveyed operators responsible for well integrity assurance and found that as many as 35% admitted that their wells delivery process was ineffective at reliably managing risk and preventing failures.

TIME IS MONEY

The increased pressures operators face today may spur them to take a closer look at non-producitve time (NPT) than ever before. According to the Oil and Gas Authority’s (OGA) latest Wells Insight Report, NPT accounts for 23% of overall well development spending; this could be due to anything from a tool failure to a system breakdown, or unforeseen glitches in the original drilling plan. Right now, a significant factor which has the potential to drive that NPT figure even higher is the ongoing price pressure within the global hydrocarbons industry, which poses significant challenges to any operator seeking to maintain reliability and minimise risk.

Across the well lifecycle, effective management of integrity is one area in which operators face great pressure, and a wrong turn can prove catastrophic. Who can forget the explosion which destroyed the Deepwater Horizon drilling rig in the Gul of Mexico, which was caused by numerous equipment failures but according to BP’s September 2010 report, ultimately started with a “well integrity failure”.

The investigation from this accident played out on the global stage and the lessons learnt demonstrated how critical it is to get the 3P’s right—people, processes and products. It is important to learn from past experience and taking a systematic approach to managing these factors is critical. This allows operators to plan and direct investment to where it matters the most, and where it has been deemed to be most effective—without taking any shortcuts.

THE HUMAN FACTOR

An unfortunate reality in the global hydrocarbons industry today is that not all people are as experienced or competent as they should be. This may be because they are new to the role, have recently joined the industry, or are adapting to changing business practices. The downturn of 2014–16 also saw a lot of experience and skills built over many years depart the industry, leaving behind a knowledge gap that cannot be ignored.

Many engineers entering the industry for the first time may bring insights and knowledge from the theory they have learnt, but despite their enthusiasm and work ethic, they lack the hands-on experience to make key decisions or require close monitoring to ensure critical projects are delivered on time, on budget and without any issues arising.

It remains to be seen exactly how the challenges of 2020 will impact the sector long-term, however if we once again lose experienced personnel over the coming months, the level of mentoring and oversight needed in this safety-critical industry will almost certainly be affected.

THE SKILLS CRISIS

OGUK is one industry body that shares these concerns around a global skills crisis. According to the organization, a combination of the Covid-19 pandemic and low oil prices could directly result in as many as 30,000 people employed directly or indirectly by the industry lose their jobs—this equates to around one in five workers. Many industry experts have predicted that the actual figures could be much worse.

The fallout from this loss of experienced talent, and the bleak outlook for the industry, could see increased pressure put on those who remain in their position. With additional responsibilities and growing workloads, quality may suffer as a result.

It goes without saying that human behaviour, experience and effort play a key part in every project and the impact those aspects can have on performance should not be underestimated. In an environment potentially about to become leaner than ever, people management will be paramount.

EFFECTIVE LEADERSHIP

The importance of effective leadership and governance in the application of wells drilling cannot be overlooked. It plays a significant factor in achieving successful project delivery, where short-cutting or ignoring issues often leads to a workforce suffering with low morale. This can in turn result in undesirable outcomes or failures that can have a detrimental impact on the success and safety of the project.

The Coronavirus crisis is transforming the way that teams work across the world, making many types of operations remote for the first time and forcing operators to run projects with skeleton teams – not only under increased pressure, but with an added challenge of social distancing. The leadership role and the need for it to adapt to fit the new “normal” has never been more important than it is today.

Leaders should seek to foster collaboration and transparency across the project team during this challenging time, as well as in the future. This may be through the allocating authority over specific tasks and sharing information out so that the team feels informed and included.

Leaders must also quickly establish an architecture for decision making, ensuring that expectations and accountability are clear from the onset.

Therefore, quality management is central to helping assure delivery, looking at both the broader picture as well as specific elements such as the technical quality activities. The key wells and drilling component findings for reliable and robust wells project delivery include:

• Application of the right ‘SMART’ business objectives: specific, measurable, achievable, relevant and time-bound;
• An organization and management structure that provides tight control of project governance;
• Consistent application of logical well project delivery processes aligned to internal and external processes, incorporating supply chain and regulatory processes;
• Demonstrably competent people displaying the right behaviours, bringing together an integrated wells project team responsible and accountable for managing project delivery;
• Robust, consistent and effective risk management processes with criticality assessed decision-making driving the wells project and business at large.

Merely having these in place, however, will not assure a failure-free operation—especially as teams grapple with remote working.

Also required is a tight quality management framework of control over the processes in place, the activity and tasks that workers are undertaking and the products (equipment) to be deployed and/or installed.

The process of reliably delivering a well drilling opportunity is highly complex. From initial conception, concept selection, engineering, procurement and logistics, to transport to the rig, operational drilling and close-out to the satisfaction of the regulators, delivering a well is fraught with challenges.

The effective management and integration of the multi-party, multi-discipline and multi-functional aspects that can impact delivery—including subsurface, well operations, logistics, supply chain, regulators, HSSE and quality—will determine the successful delivery of business objectives and commitments made by the project owner and responsible decision makers.

A BREAK IN THE CHAIN

Fig. 1. A lack of operational experience and effective leadership, in addition to supply-chain difficulties, has led to increased NPT, delays and added cost to offshore projects.

Products and processes are equally important, particularly in terms of equipment criticality in long lead-time procurement elements and their associated risks; this applies equally to off-the-shelf elements, unchanged proven equipment, and modified or new designs. And of course, all must work within a design concept and operational envelope that demonstrate safe work practices, reliability and acceptable performance levels.

Evidence from several recent studies has shown a decline in wells supply chain capability and reliability of products, arguably as a direct result of the continued cost-cutting era. Costs within the supply chain have been squeezed to breaking point, with many firms still recovering from the downturn of 2014/15.

Today, the world has almost come to a halt as it races to contain the spread of the virus and this has led to the oil and gas supply chain facing several hurdles. This includes restrictions on global travel, limits on material handling due to enforced social distancing measures and longer than planned lead times for equipment or parts due to trade and transportation obstructions.

Research conducted by the OGA indicates that, since 2011, fewer than 25% of oil and gas projects have been delivered on time, with delays averaging 10 months and spending coming in around 35% over budget, Fig. 1. Action must be taken now to address the industry’s current issues, which could significantly exacerbate these delays and problems.

A FRAMEWORK FOR SUCCESS

A wells package based on equipment integrity assurance (EIA) fundamentals can play a crucial role in helping project owners and delivery teams safely and efficiently secure the optimum results in the face of current market pressures; between 75% and 80% of potential incidents can be avoided if wells project teams prioritise the management of quality and assurance from the outset.

Fig. 2. The three-axis EIA framework of systems and processes identifies methods to maximize integrity and quality, when operators are faced with technical limits and/or market-driven challenges.

The EIA framework of systems and processes were in part developed for several leading Tier 1 companies in the late 1990s and refined over a more than 20-year period of implementation, adaptation and lessons learned. The concepts were initially targeted at high-pressure, high-temperature (HPHT) fields, and retain the core philosophy of maximum integrity and quality in the face of development challenges, be that technical limit and/or market driven, Fig. 2.

Organizational investment and spend provision in the low-cost era should be directed and based on leading technologies and system structures that enable a direct, scalable and transferable solution that helps to satisfy regulatory statutory provisions, assure equipment fitness for purpose and provide demonstrable duty of care. There is of course an associated cost, but that must be compared to the potentially massive expense of ignoring the quality side of the wells equation: when things go wrong in oil and gas, the cost can be astronomical in terms of both direct impacts and NPT.

An EIA framework, which helps ensure satisfactory results from any well, should be put in place at the earliest stages of the project to address four key areas: people, process and product performance reliability; satisfaction of regulatory statutory provisions; fit for purpose for equipment; and demonstrable duty of care.

The framework should be integrated within all elements of the project including design, purchasing, production and service delivery processes (where applicable and possible).

Deployed across the well delivery timeline, the right EIA assurance approach will play a central role in ensuring the right people are doing the right things at the right time, and that suppliers of goods and services are fit for purpose, reliable and ready on time, every time.

Fig. 3. Avoiding short-cuts by using a disciplined and structured approach to equipment integrity assurance can significantly reduce NPT and overall well costs.

A five-step approach to equipment integrity assurance can significantly improve well NPT, Fig. 3.

1. Conceptual design

‘Issues experience transfer’ and ‘lessons learned’ should be deployed from initial concept and feasibility studies. Information, records and documentation management must be established so that if something does go wrong at any stage, those responsible for the success of the project have the paperwork necessary to prove compliance with best practice—a visible and transparent justification for actions taken.

2. Option screening and selection

Initial specifications must be fully developed, risks assessed, and the basis of design clearly outlined. Identify equipment criticality of long lead-time procurement elements, and any associated risks. Any review should apply equally to off the shelf elements, unchanged proven equipment, and modified or new designs.

3. Detailed engineering

This is a critical period that includes well design, tendering and procurement. The delivery team must have the ability to develop and review quality assurance and quality control specifications, oversee selection of equipment and suppliers, and provide independent review of overall design. A proper assurance package will ensure that all elements are not only capable but can clearly demonstrate safe work practices, equipment reliability and acceptable performance records.

4. Operations and execution

During the operational phase, QA/QC must be verified across all equipment while documentation including equipment and materials, as well as packaging and shipping, must be managed. The project success must demonstrably take into consideration the health and safety of personnel, protection of the environment, RSP legislation and wells requirements.

At this stage, health and safety considerations should be considered, especially as the pandemic raises new questions around safety. The Health and Safety Executive (HSE), combined with the Trades Union Congress (TUC) and Confederation of British Industry (CBI), recently stressed that the “health and safety of workers remains paramount” during this time, and that “offshore oil and gas companies must take the risks seriously”.

The HSEQ representative should be engaged at this stage to assess the risks to the health and safety of any personnel being deployed on the project. Any further guidance should be sought at this point, both the Oil and Gas UK (OGUK) and Step Change in Safety have created informative guides to support oil and gas companies ensure the safety of their personnel during the pandemic, and Public Health Scotland has published specific guidance for the prevention and management of Covid-19 cases on offshore installations.

5. Evaluation and improvement

Lessons learned should be reinforced via a systematic supplier performance review and evaluation. To determine true effectiveness and efficiency, the project lead should collect and collate various data and experience for use on subsequent projects.

A tailored EIA should include workflow diagrams and decision trees as well as summaries of the necessary details of what, why, who and how, alongside the key disciplines involved and role descriptions. This will help provide the foresight necessary for what is required at each stage of the process, as well as personnel interfaces from start to finish.

Overall, there should be a measurable reduction in unwanted costs attributed to people, products and processes through the following:

• Criticality-based decision processes for materials selection, procurement and proportional assurance and control interventions;
• Flexibility where criticality drives the level and content of your overall package of quality-control measures;
• Focused application of what matters most, not least, and effective transfer of lessons learned from project to project.

The EIA framework has allowed many organizations to make improvements. In one case on the UK Continental Shelf for example, the model provided an integrated package of wells engineering equipment integrity assurance services on a sector-wide basis. Positive impacts included setting up a managed and planned transition process working closely with the wells and drilling team, supply chain, rig operation, and wells project engineers—with relatively immediate improved NPT reduction results.

This led to a very positive performance review, high HSEQ standards and systems with suppliers, successful cut-over wells quality and supply chain functions and systems, and significant extended and follow-on contracts. Other benefits were implementation of proportional QA and QC, with cost reductions through application of necessary skills and competences based on risk and criticality, client trust and customer integration in-house.

THE PATH TO RECOVERY

The cost of drilling wells has reduced significantly in recent years, but this has primarily been driven by rig and service rate reductions, rather than improved performance.

While most well operator companies will have a wells project delivery process, the current market environment dictates a much-heightened need to reliably and consistently manage quality. This is a critical step to achieving improvements in cost efficiency and value with the aim of hitting maximum economic recovery (MER) within wells drilling.

NPT is still greater than is deemed tolerable and is adding to the pressure operators face in managing risk with recovery. Despite operating under tough market conditions, with limited workforce capabilities and availability, there are real opportunities for sustainable cost reduction through these improved performance measures. If wells delivery teams and leaders follow this guidance, they will be able to more confidently navigate the current crisis and emerge with stronger, leaner well performance results.