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Operational Excellence in Oil and Gas Loss Prevention

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Mike Marshall, PE (mtmarshall.llc@gmail.com) is an Oil & Gas industry consultant who has recently developed an EAM loss prevention and asset optimization software product derived from various spreadsheet-based tools (consisting of business methods, practices, KPIs, scorecards, reports, data maps/views, etc.) which were central to the actual asset performance optimization/management and process safety improvement metrics and methodologies he implemented while working for both Marathon (23 years) and Chevron (10 years).

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Operational Excellence in Loss Prevention Where are we now? Where do we want to go? How do we get there? 1 Michael Marshall LLC Email: mtmarshall.llc@gmail.com

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Operational Excellence Plan DoCheck Act • Manage risk • Reduce costs • Improve productivity Operational Excellence Focus Areas • Risk management • Process safety • Operational reliability • Equipment reliability • Lost profit opportunity • Management system design (people, processes, tools/technology) • Operability, sustainability, accountability • Soft skills & involvement Processes • Project planning • Workshops • Gap analysis • Corrective action planning & tracking • Implementation planning • Training Solutions • Asset integrity & health analysis • Bad actor detection & optimization • Asset criticality analysis • Risk analysis & prioritization • Risk management & mitigation • Performance benchmarking • Production loss analysis Protocols • Industry best practices • Metrics, KPIs, reports • Change management • Auditing processes • Incident investigation • Root cause failure analysis • Hazards assessment • Risk response critieria • Emergency planning & response

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Where are we now? • 2005/10 BP, 2010/14 Tesoro, 2012 Chevron, 2013 Williams, 2014 DuPont, 2015 DCRC and 2015/16 ExxonMobil incidents…driving PSM reexamination – Not a failure of equipment, procedures or training – Management system failure • US Oil & Gas industry losses highest of any sector – US Refining industry accident rate is 3 to 4 times that of Europe • PSM rule quickly falling out of favor with regulators – Safety Case and ALARP used throughout Europe now advocated by the CSB – California and CSB proposal for Inherently Safer Design (ISD)…reduce risk to greatest extent possible - Major Events Have Increased Industry Scrutiny -

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4 API RP 754 “Process Safety Performance Indicators for the Refining and Petrochemical Industries” • Tier 3 and 4 data hold the key to avoiding Tier 1 and 2 events • Safety and profitability go hand in hand

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5 API RP 754 “Process Safety Performance Indicators for the Refining and Petrochemical Industries” Major Minor Near Misses KPIs • Tier 3 and 4 data hold the key to avoiding Tier 1 and 2 events • Safety and profitability go hand in hand

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Where do we want to go? • Where is the risk? • How should it be managed? Risk • What are the compliance needs? • Where is the most vulnerability?Regulatory • How can operational health be measured? • How can safety systems be optimized?Operations • What are the economic impacts of LOPC? • How is lost profit opportunity measured?Profits • How can sustainability be ensured? • Define who, what, when, where, and how Continuous Improvement

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PSM: OSHA 1910.119 elements

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PSM: OSHA 1910.119 elements PSM Plus TM – Leverage process safety programs to improve performance and add value • Safety and Environmental  Reduce fires and explosions  Reduce spills and releases  Reduce near misses • Utilization  Increase mechanical availability  Reduce unplanned outages  Reduce production losses • Reduce maintenance costs  Achieve best in class performance

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Time Value of Data “If you can’t measure it, you can’t manage it” • Automated data retrieval, consolidation and analysis • Near real-time data availability • Access to equipment data for ad hoc queries • Better analytics and KPI dashboards, reports and benchmarking • Rapid problem-solving for systemic root cause determination

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Case Study: Multi-refinery International Oil Co. • Collect incident data across units/areas/refineries and benchmark performance by: – Incident type and classification – Equipment category and type – Unit and process type – Operating mode – Process anomaly – Equipment failure mode and causal factor – Damage mechanism – Basic cause category – Safety system and failure mode – Department – Contributing factor – Risk (C/L/R) ranking and response criteria • Form deep-dive teams and perform root cause failure analytics

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Common Tier 3 and 4 Failure Trends • Pumps: Determined to be least reliable equipment type – Upgraded lubrication design – Instituted vibration technology and diagnostics programs and training – Trained operators on proper startup techniques • Compressors: Root causes of failure not due to machine mechanics – More often due to equipment peripherals, ESD design and mis-operation • Heat Exchangers: Throughput limitations – Due to excessive fouling tendencies of 45° tube pitch design and water side high temperature • Heaters: High excess air operation, overfiring and flame impingement – Created refinery optimization teams with technologist oversight – Improved firebox diagnostics with skinpoint TCs and thermal imagery tools • Block Valves: High incidence of leakage when closed for isolation – Resulted in leak testing new/reconditioned valves prior to installation • Personnel: Human factors and management system failures, not error

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Results at Multi-refinery International Oil Co. - Refining-wide benefits over five years - • SAFETY: 27% reduction in PSM and environmental incidents – 24% reduction in fires and explosions – 39% reduction in spills and releases – 48% reduction in near misses • UTILIZATION: Improved equipment reliability and asset utilization – Increased mechanical availability by 1.5% overall (up to 5% at some sites) – Reduced production losses by 47% – Reduced unplanned outages by 25% • COSTS: Reduced maintenance costs by 18% – Achieved maintenance costs of 2% RAV at most sites (< 3% at others)

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Examples of charts used for analysis

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Examples of charts used for analysis Risk Productivity Costs KPIs

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How are we going to get there? • Leverage OSHA process safety management programs to improve performance and add value • Implement a formal process for incident and information sharing, report generation and cost measurement • Establish performance measures and benchmarking KPIs • Gather and disseminate information used for data analysis and performance reporting • Develop and implement improvement plans for resolution of trouble areas and bad actors • Integrate maintenance, operational and process safety data resulting in procedural and behavioral synergies • Optimize information management systems • Improve design reliability and operability • Identify and apply cost effective new technology

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Plan DoCheck Act • Manage risk • Reduce costs • Improve productivity Operational Excellence Loss Prevention Management System Managerial Plan • Develop strategic purpose & vision • Identify stakeholders • Review policies, EHS laws & risk tolerance • Establish rules, goals & targets vs. key drivers • Assess workforce, resources & assets Do • Develop charter • Establish oversight committee • Initiate training • Communications plan • Programs, systems, processes vs. schedule Check • Corrective action • Audit process (Tier 2) Act • Management review…adjust Technical Plan • Form team(s) • Compile data & info • Draw workflows • Perform gap analyses • Establish baseline Do • Design metrics, KPIs, reports & tools (tech) • Write procedures • Rollout new plans & work processes • Install automation tools & software • Initiate training Check • Perform root cause analyses • Review performance targets • Audit process (Tier 1) Act • Assess gaps, costs & tradeoffs…adjust Communication and involvement are key!

More Related Content

Operational Excellence in Oil and Gas Loss Prevention

  • 1. Operational Excellence in Loss Prevention Where are we now? Where do we want to go? How do we get there? 1 Michael Marshall LLC Email: mtmarshall.llc@gmail.com
  • 2. Operational Excellence Plan DoCheck Act • Manage risk • Reduce costs • Improve productivity Operational Excellence Focus Areas • Risk management • Process safety • Operational reliability • Equipment reliability • Lost profit opportunity • Management system design (people, processes, tools/technology) • Operability, sustainability, accountability • Soft skills & involvement Processes • Project planning • Workshops • Gap analysis • Corrective action planning & tracking • Implementation planning • Training Solutions • Asset integrity & health analysis • Bad actor detection & optimization • Asset criticality analysis • Risk analysis & prioritization • Risk management & mitigation • Performance benchmarking • Production loss analysis Protocols • Industry best practices • Metrics, KPIs, reports • Change management • Auditing processes • Incident investigation • Root cause failure analysis • Hazards assessment • Risk response critieria • Emergency planning & response
  • 3. Where are we now? • 2005/10 BP, 2010/14 Tesoro, 2012 Chevron, 2013 Williams, 2014 DuPont, 2015 DCRC and 2015/16 ExxonMobil incidents…driving PSM reexamination – Not a failure of equipment, procedures or training – Management system failure • US Oil & Gas industry losses highest of any sector – US Refining industry accident rate is 3 to 4 times that of Europe • PSM rule quickly falling out of favor with regulators – Safety Case and ALARP used throughout Europe now advocated by the CSB – California and CSB proposal for Inherently Safer Design (ISD)…reduce risk to greatest extent possible - Major Events Have Increased Industry Scrutiny -
  • 4. 4 API RP 754 “Process Safety Performance Indicators for the Refining and Petrochemical Industries” • Tier 3 and 4 data hold the key to avoiding Tier 1 and 2 events • Safety and profitability go hand in hand
  • 5. 5 API RP 754 “Process Safety Performance Indicators for the Refining and Petrochemical Industries” Major Minor Near Misses KPIs • Tier 3 and 4 data hold the key to avoiding Tier 1 and 2 events • Safety and profitability go hand in hand
  • 6. Where do we want to go? • Where is the risk? • How should it be managed? Risk • What are the compliance needs? • Where is the most vulnerability?Regulatory • How can operational health be measured? • How can safety systems be optimized?Operations • What are the economic impacts of LOPC? • How is lost profit opportunity measured?Profits • How can sustainability be ensured? • Define who, what, when, where, and how Continuous Improvement
  • 8. PSM: OSHA 1910.119 elements PSM Plus TM – Leverage process safety programs to improve performance and add value • Safety and Environmental  Reduce fires and explosions  Reduce spills and releases  Reduce near misses • Utilization  Increase mechanical availability  Reduce unplanned outages  Reduce production losses • Reduce maintenance costs  Achieve best in class performance
  • 9. Time Value of Data “If you can’t measure it, you can’t manage it” • Automated data retrieval, consolidation and analysis • Near real-time data availability • Access to equipment data for ad hoc queries • Better analytics and KPI dashboards, reports and benchmarking • Rapid problem-solving for systemic root cause determination
  • 10. Case Study: Multi-refinery International Oil Co. • Collect incident data across units/areas/refineries and benchmark performance by: – Incident type and classification – Equipment category and type – Unit and process type – Operating mode – Process anomaly – Equipment failure mode and causal factor – Damage mechanism – Basic cause category – Safety system and failure mode – Department – Contributing factor – Risk (C/L/R) ranking and response criteria • Form deep-dive teams and perform root cause failure analytics
  • 11. Common Tier 3 and 4 Failure Trends • Pumps: Determined to be least reliable equipment type – Upgraded lubrication design – Instituted vibration technology and diagnostics programs and training – Trained operators on proper startup techniques • Compressors: Root causes of failure not due to machine mechanics – More often due to equipment peripherals, ESD design and mis-operation • Heat Exchangers: Throughput limitations – Due to excessive fouling tendencies of 45° tube pitch design and water side high temperature • Heaters: High excess air operation, overfiring and flame impingement – Created refinery optimization teams with technologist oversight – Improved firebox diagnostics with skinpoint TCs and thermal imagery tools • Block Valves: High incidence of leakage when closed for isolation – Resulted in leak testing new/reconditioned valves prior to installation • Personnel: Human factors and management system failures, not error
  • 12. Results at Multi-refinery International Oil Co. - Refining-wide benefits over five years - • SAFETY: 27% reduction in PSM and environmental incidents – 24% reduction in fires and explosions – 39% reduction in spills and releases – 48% reduction in near misses • UTILIZATION: Improved equipment reliability and asset utilization – Increased mechanical availability by 1.5% overall (up to 5% at some sites) – Reduced production losses by 47% – Reduced unplanned outages by 25% • COSTS: Reduced maintenance costs by 18% – Achieved maintenance costs of 2% RAV at most sites (< 3% at others)
  • 13. Examples of charts used for analysis
  • 14. Examples of charts used for analysis Risk Productivity Costs KPIs
  • 15. How are we going to get there? • Leverage OSHA process safety management programs to improve performance and add value • Implement a formal process for incident and information sharing, report generation and cost measurement • Establish performance measures and benchmarking KPIs • Gather and disseminate information used for data analysis and performance reporting • Develop and implement improvement plans for resolution of trouble areas and bad actors • Integrate maintenance, operational and process safety data resulting in procedural and behavioral synergies • Optimize information management systems • Improve design reliability and operability • Identify and apply cost effective new technology
  • 16. Plan DoCheck Act • Manage risk • Reduce costs • Improve productivity Operational Excellence Loss Prevention Management System Managerial Plan • Develop strategic purpose & vision • Identify stakeholders • Review policies, EHS laws & risk tolerance • Establish rules, goals & targets vs. key drivers • Assess workforce, resources & assets Do • Develop charter • Establish oversight committee • Initiate training • Communications plan • Programs, systems, processes vs. schedule Check • Corrective action • Audit process (Tier 2) Act • Management review…adjust Technical Plan • Form team(s) • Compile data & info • Draw workflows • Perform gap analyses • Establish baseline Do • Design metrics, KPIs, reports & tools (tech) • Write procedures • Rollout new plans & work processes • Install automation tools & software • Initiate training Check • Perform root cause analyses • Review performance targets • Audit process (Tier 1) Act • Assess gaps, costs & tradeoffs…adjust Communication and involvement are key!

Editor's Notes

  1. BDO’s role will be as process architect and manager, ensuring that each of the bullet point items is handled as a project and completed successfully. BDO will oversee and manage the work and perform most of the “busy work” of procedure writing, workflow mapping, xls work, ppt development and meeting facilitation, resource planning and scheduling, communications with/between senior management and technical teams, auditing, training, etc. This is what I did at Marathon for the better part of 20 years across the seven refinery system.