Quality

The Case for Process Safety Management

Source: Health & Safety Middle East | 30 August 2013

Against a background of well documented tragedies, Katherine McCarthy argues the case for establishing meticulous process safety management systems.

Major, memorable accidents and the severity of their effect on not only the stakeholders within the oil and gas industry, but the people and communities directly involved, have prompted much attention towards process safety management (PSM) systems, not only oil and gas activities, but in other process industries as well.

Labor Department Monitoring Shale Gas Work Issues

Source: Fuel Fix | 5 August 2013

It’s amazing how many times Rodney Bean has heard the phrase “but everyone’s doing it” from oil and gas companies, big and small.

“Everyone” hires independent contractors instead of employees. “Everyone” pays a flat day rate instead of a salary or hourly wage.

When these companies get a notice from the US Department of Labor, they call Bean, an attorney with Steptoe & Johnson, and he tells them, in the most respectful way: Yes, you’re right. Everyone is doing it. And they’re doing it wrong.

Bean is getting more and more calls these days, as the Labor Department’s Marcellus Shale Initiative enters its second year.

The agency began targeting oil and gas firms because the industry has shown a pattern of labor law violations, according to John DuMont, district director for the department’s Pittsburgh office. The firms tend to improperly label their workers as independent contractors, which allows the companies to avoid paying overtime. They also pay employees a day rate without calculating how many hours are worked in a week and without keeping proper records.

Column: Change Is Impossible Without Addressing Resistance

Source: Phil La Duke | 5 August 2013

When it comes to organizational change, for my money, you can’t beat the work of Edgar Schein. Schein is considered by many to be the father of organizational development; he coined the term “corporate culture” and, if for that fact alone, should be revered in the same hushed tones in which people talk about Edison, Deming, or Jobs.

Schein postulated that organizational change can only come when the resistance to change is less than a combination of dissatisfaction, vision, and next steps.

I have devoted much digital ink to fomenting discontent, casting the vision, and crafting logical next steps, in fact, I make my living doing all three; but what about resistance? How do we recognize and attack it. Week after tedious week I work with organizations that seek rapid change—a means of accelerating culture change without merely masking symptoms by obfuscating them with a climate change. Some say it can’t be done—that culture change is a long and laborious process, but since time is money, most notably money that ends up in the pockets of safety culture (mostly through greed or stupidity) I distrust the argument—I say it can be done. I’ve done it.

Report Blames Manufacturing Defects for Mayflower Pipeline Spill

Source: Rigzone | 16 July 2013

An independent report conducted by Hurst Metallurgical Research Laboratory faults manufacturing defects on the Pegasus Pipeline that ruptured and spewed 150,000 gallons of crude oil in Mayflower, Arkansas, Exxon Mobil reported.

Cracks were found near a seam that opened on the ruptured pipeline, the report stated. The report was provided to ExxonMobil and the Pipeline and Hazardous Materials Safety Administration, which both declined to release the report publicly.

The defects identified in the report reflect the “root cause of the failure,” the company stated. Ongoing tests are being conducted to evaluate other factors in the spill that evacuated 20 families from their homes. ExxonMobil said the cleanup is continuing and the pipeline is shut-in.

Study Looks at Current State of Corporate Sustainability

Source: KPMG via Mondaq | 9 July 2013

Climate change and Sustainability issues are becoming increasingly important in today’s corporate agenda. Major businesses are becoming more engaged in adopting essential initiatives to improve their business performance, reduce and manage costs, innovate, respond to stakeholder demands, and gear up for regulatory changes. Specifically, businesses are concerned with mitigating climate change and sustainability risks, and in turn convert these risks into strategic opportunities. But, what does it mean to be sustainable?

A preliminary study conducted in 2011 by KPMG International in cooperation with the Economist Intelligence Unit entitled “Corporate Sustainability: A progress report,” defined corporate sustainability as “adopting business strategies that meet the needs of the organisation and its stakeholders today, without compromising the ability of the organisation to sustain the resources both human and natural that will be required in the future.”

 

Optimization of Reliability and Maintenance Unlocks Hidden Value

Source: Oil and Gas Facilities | 1 July 2013

Unplanned capacity downtime because of equipment problems in onshore and offshore oil and gas production facilities translates not only into decreased volumes of sales product but also into the potential for interrelated equipment or process slowdowns or shutdowns. Compared with the US industrial average downtime ranging from 3 to 5%, the oil and gas industry’s estimated downtime ranges from 5 to 10%, indicating that improvement is needed in reliability and maintenance (R&M) of facilities, equipment, and processes.

Robert MacArthur, head of ABS Group’s asset and maintenance optimization practice, said, “I have been on offshore platforms that were in a crisis mode of operation, running at 30% unplanned downtime.”

He estimated that the oil and gas sector may also fall short in another key performance indicator (KPI)—assets meeting their engineered life expectancy. The industrial sector’s assets last approximately 65% of their expected life on average. “Midstream and downstream asset life expectancy is about 65%, but offshore is estimated to be somewhat lower,” MacArthur said. Although there is no specific KPI for offshore asset life expectancy, the marine corrosive environment likely affects the asset longevity.

Effective management of R&M in production facilities can be challenging for many reasons: the complexity of global operations; remote, isolated facilities; limited or poor-quality legacy data from which to build a meaningful database; and inability to amalgamate existing databases.

Attaining the Highest Production Capacity at the Lowest Cost

To appreciate just how far R&M initiatives have come, consider that, 20 to 30 years ago, Six Sigma initiatives, business process reengineering processes, and lean operations were the state-of-the-art in efforts to improve R&M. In the 1990s and early 2000s, supply chain optimization gained favor. These previous efforts improved R&M and added value to the organization.

Major oil and gas companies, for whom 2% capacity downtime because of maintenance represents a significant cost to operations, are now asking, “How can the next 1% capacity improvement be achieved with R&M?”

Citing industrial findings, MacArthur highlighted areas where improvement in R&M is needed. He said that in many operations, 10% of the asset base drives 90% of the cost and operational effects. And while studies have shown that 90% of asset/component failures are random and not based on time parameters, 90% of companies still run a predominantly time-based intrusive preventive maintenance program. The required opening and inspecting of equipment can contribute to its operational failure. He added that predictive/condition-based maintenance is nonintrusive (the equipment is not opened) and better aligned to identify pending failure. Maintenance workers in many facilities and operations average 25% wrench time during their work shifts, equivalent to 2 hours per 8-hour shift; the majority of the remaining shift-hours are spent looking for parts and seeking supervisors’ technical approval or feedback. The average maintenance, repair, and operations supply chains and storerooms are short of critical spares and overstocked by 20%.

These inefficiencies increase downtime and maintenance costs. The capability to identify shortfalls in an organization’s R&M establishes a benchmark of current performance and establishes a baseline from which needed adjustments can be made.

Enterprise Asset Management

In the late 1990s and early 2000s, asset-intensive organizations placed increased value on enterprise asset management (EAM) because of increasing global competition. The ARC Advisory Group recently identified the following business drivers for EAM: reduction of cost for maintenance labor and parts, extension of asset longevity, improvement in uptime, and management of safety and risk factors.

EAM comprises the following components:

  • Strategy—includes measurement and tracking of KPIs integrated with resource and planning optimization strategies, such as total productive maintenance. Strategy determines the company’s direction toward achieving its R&M goals.
  • Maintenance, repair, and operations (MRO) processes—include work management, inventory, planning, purchasing, and scheduling.
  • Technologies—serve as enablers within EAM and include computerized maintenance management systems (CMMS), calibration management software, pressure vessel and valve tracking applications, predictive maintenance software, and handheld devices. These applications use engineering data to provide an automated tool set to support MRO processes while producing empirical data for analysis and KPI tracking.
  • Engineering data—electronic data from equipment/assets, inventory stock, operations, resources, and maintenance procedures. Serve as the foundation for the overlaying technologies, which in turn are used to support the MRO processes. EAM strategy implementation is impossible without the engineering data, technologies, or MRO processes.

EAM Implementation

Who are the decision makers for EAM implementation? “Ten years ago, a plant or asset manager made the decision in 70% of the cases. A maintenance manager would often be a champion working to convince a plant or asset manager to implement EAM. In 25% of the cases, it was decided as a corporate initiative. Today, those numbers have flipped. About 90% of the time, we are dealing with an enterprise approach to EAM, usually driven out of the corporate function of operations and production. We are seeing what may be a bellwether. Increasingly at the corporate levels of large industrial companies, there are designated vice presidents of asset management, which was never heard of 10 years ago,” MacArthur said.

Implementation of EAM takes time. In the case of large offshore operators with thousands of assets and people, from 12 to 18 months are required to move from one category to the next in Fig. 1. Moving from the planned to enterprise category is a 3- to 5-year process.

The three steps to advance an R&M program include:

  • Benchmarking of the operator’s current status and identifying areas of opportunity for improvement with assessments of R&M strategy, work management, planning and scheduling, organizational readiness, EAM/CMMS functionality and utilization, inventory management, and metrics and performance improvement.
  • Plotting the plan/strategy. Each organization has different constraints and conditions. For example, if a CMMS needs to be upgraded, but the company has a large-scale enterprise resource planning (ERP) implementation slated to occur in a year, it may not make sense to replace the CMMS before the ERP. If the work management processes, which are the lifeblood for the data that reliability engineers analyze, are not sound, it makes no sense to hire, train, and put in place reliability engineers. “It’s like building a house. It does not make sense to spend a lot of time on the architectural roof shingles if we haven’t poured the foundation,” he said. The plan fills the identified gaps in R&M to create and sustain the asset reliability, maintenance planning and scheduling, and MRO supply chain programs.
  • Implementing EAM. The components of EAM (strategy, MRO processes, technologies, and engineering data) are integrated into the company’s infrastructure.

Case Studies

ABS Group worked with a major oil and gas producer to identify its major safety-related equipment and systems, loading the data to the CMMS, and reviewing/updating maintenance plans to assure the integrity of these assets. Because of the unavailability of the company’s maintenance and engineering resources, ABS Group provided project management, safety, discipline engineers with experience on offshore assets, and process engineers with documentation experience.

The project illustrated the complexity in the components of large-scale R&M programs. It included reviewing 220,000 offshore assets; identifying and categorizing 85,000 safety-related assets; loading information to the CMMS and linking to the producer’s desktop facility status reporting tool; developing 180 safety performance standards for equipment; and comparing and analyzing existing maintenance routines in terms of the new performance standards. All of the above information was linked to the producer’s CMMS.

The producer realized the benefits of all safety-related assets identified and maintained in the CMMS and developed and published performance standards for use in the company. Facility status reporting was functional and rolled out globally.

Another offshore operator sought assistance in the planning and scheduling of several rotating campaign teams working on the backlog and mini-projects that were outside the routine work of the core maintenance team.

The operator requested help in coordinating work packs for offshore teams, which included grouped preventive maintenance work orders for critical systems along with corrective and modification work for the same systems; daily management of team scheduling and reporting of progress against plan and backlog reduction; review and improvement of maintenance routines, scheduling, planned labor/material and maintenance effectiveness for critical systems; development of corporate maintenance strategy related to offshore asset reliability; development of new process flows for maintenance activities; and cleanup of CMMS data in preparation for upgrade of the system.

To date, the operator has achieved a 40% reduction in backlog hours and review/improvement of 20% of the critical system maintenance plans. Preparation and coordination of work packs has been completed for campaign teams through five tours.

Looking Ahead

Over the next 10 to 20 years, new technology capabilities are expected to further expand the potential of EAM, MacArthur said. Today, Web-enabled technology is commonly used, and the use of cloud network technology is growing.

Smart equipment capabilities will also expand, such as GE Measurement and Control’s recently introduced condition monitoring and sensing technologies for the subsea sector. The acoustic leak detection system detects and locates subsea oil and gas leaks by discriminating the noise of a leak from other sources of sound in a 500-m area of coverage by using passive, acoustic hydrophone technology. The company’s subsea multi-domain condition monitoring system combines electric emission monitoring and acoustic hydrophones designed for monitoring the operating condition of subsea machinery and processes. The system performs multi-domain analysis based on pattern recognition and machine learning algorithms to identify and display subsea structure, machine, and pipeline activities and anomalies.

SPE Holds First HSE Conference in Latin America

Source: 18 June 2013

SPE is holding the first Latin American conference on HSE 26–27 June in Lima, Peru. The SPE Latin American and Caribbean Health, Safety, Social Responsibility, and Environmental Conference will bring together experts from two geographic locations to share best practices, technological advances, and new ideas for HSE.

Experts from Latin America and the Caribbean will conduct more than 50 technical and poster presentations that showcase the latest technological advances and innovative applications in HSE. The opening plenary session, “How to Address and Obtain a License To Operate in Sensitive Areas,” features an in‐depth discussion on social and safety risks, control and transportation of hazardous materials, wastewater treatment, and more.

The second day’s plenary session, “Measures and Improvements After Industry Accidents,” addresses the lessons learned from previous accidents and the latest measures and improvements in managing the prevention and response of oil spills.

“This conference is important to the Latin American and Caribbean regions,” said Carlos Arturo Rosas Mota, conference program committee chairman and HSE manager for Schlumberger Peru. “It is a great opportunity to share best practices and case histories and to learn from each other’s experience. Doing so will help us in our efforts to improve HSE performance for the betterment of the entire industry and all its stakeholders.”

Technical sessions, which will have simultaneous translation in English and Spanish, fall into five categories.

  • Environment: Topics include “Designing an Optimal Offshore Pipeline Route To Minimize Impacts on Coastal and Marine Biodiversity,” “The New Structure for International Oil Spill and Preparedness & Response,” and “The Challenges for the Treatment of Drilling Fluid Wastes Generated by E&P Industry in Brazil.”
  • HSE Management: Topics include “The Human Chain—A Different Approach to Behavior Safety Program Through the Use of Social Marketing Concepts,” “Assessing Risks and Regulating Safety Standards in the Oil and Gas Industry: The Peruvian Experience,” and “Building Strong Stakeholder Relations and Minimizing Operational Risks in the Oil and Gas Industry Through Market‐Based Certification.”
  • Social Responsibility: Topics include “The Social Side of Unconventional Oil and Gas in Latin America,” “Innovative Ways to Inspire New Employees to Embrace an HSE Culture,” and “Social Responsibility: A Comparative Study of Oil Majors—Who is the Best?”
  • Safety: Topics include “Integrity Management System Based on Risk Analysis: A Tool to Prevent Failures on Pipelines Which Cross Amazonian Jungles and the Andes,” and “A Study of Rollover Occupant Injury Mitigation Using Dynamic Testing To Evaluate Alternative Protection Systems.”
  • Health: Topics include “Improving the Health of the Workforce May Improve Work Performance,” “Cardiovascular Risk Impact in the Oil Industry,” and “Obesity in the Oil and Gas Industry Population.”

The conference includes an exhibition that will showcase some of the latest developments and trends in HSE.

Economist Calls Climate Change a Financial Threat to Oil Companies

Source: Fuel Fix | 18 June 2013

Energy companies are facing the prospect of physical and financial losses because of climate change, and the oil industry needs to take the threat more seriously, the chief economist of the International Energy Agency said on 14 June.

“When there is global warming, this will result in much more frequent cyclones, floods and storms,” Fatih Birol told FuelFix. “And this will affect the infrastructure of energy companies—we think especially for the offshore oil and gas production in the North Sea, Western Australia, the Gulf of Mexico.”

The implications of climate change will extend beyond direct physical damage, Birol said.

“Even if there was no storm or anything happening, companies have to increase the resilience of the infrastructure, which in turn means that the cost of capital will go up,” he said. “So the energy companies, even if they don’t want to solve the problem, they cannot afford to ignore climate change being part of their decision-making for their investment strategies.”

Texas Railroad Commission Updates Rules for Well Construction

Source: Texas Railroad Commission | 6 June 2013

The Texas Railroad Commission has adopted changes to its rules governing the construction of oil and gas wells.

The new rule amendments take effect on 1 January 2014 and apply to any wells drilled on or after then.

The new amendments to the Commission’s Statewide Rule 13 (Casing, Cementing, Drilling, Well Control and Completion Requirements), known as the well integrity rule, include updates and more clearly outlined well construction requirements, including

  • For wells undergoing hydraulic-fracturing treatments, operators are required to pressure test well casings (steel pipes that make up a well) to the maximum pressure expected during the fracture treatment and to notify the commission of a failed test. Also, during hydraulic fracturing, operators are required to monitor the annular space between the well’s casings for pressure changes (which could indicate a leak in casing) and suspend hydraulic fracturing operations if the annuli monitoring indicates a potential down hole casing leak.
  • Operators are required to verify the mechanical integrity of surface casing and intermediate casing for wells in which the drilling time for the next casing string (either the intermediate casing string or the production casing string) exceed 360 hours. This will ensure that the drilling (the rotation motion of the drill string) inside the surface casing did not damage surface casing integrity or other intermediate casing strings.
  • Operators are required to isolate (place cement behind casing) across and above all formations that have a permit for an injection or disposal well within one-quarter mile of a proposed well.
  • Commission approval is required before setting surface casing to a depth greater than 3,500 feet.
  • Additional testing and monitoring requirements are established for “minimum separation wells,” where the vertical distance between the base of usable quality water and the top of a formation to undergo hydraulic fracturing treatment is less than 1,000 vertical feet.
  • Operators are required to use air, fresh water, or fresh water-based drilling mud until surface casing is set and cemented in a well to protect usable quality groundwater.
  • Operators are required to pump sufficient cement to isolate and control annular gas migration and isolate potential flow zones and zones with corrosive formation fluids.
  • References to cement quality, cementing, well equipment, well casing centralizers, and well control are updated and minimum cement sheath thicknesses are set of at least 0.75 inches around the surface casing (steel pipe) and 0.50 inches around subsequent casing strings.
  • Requirements for well control and blowout preventers are consolidated and updated, and a distinction is made between the use of well control equipment on inland, bay, and offshore wells. Main rule amendments involve the makeup of blowout prevention systems.

 

Column: Maximizing the Benefits of Compliance Audits

Source: EHS Journal | 4 June 2013

The prospect of your facility undergoing a compliance audit is unlikely to evoke excited anticipation. There are certain things we do—such as going to the dentist or conducting compliance audits—because they benefit us in the long term. Despite often being viewed with dread, an audit is a valuable tool in a compliance management toolbox. An impartial evaluation of compliance programs is critical for a company to ensure it is meeting regulatory requirements. Perhaps more importantly, an effective audit will determine potential underlying, or root causes, for deficiencies, which is a necessary step to prevent reoccurrence of issues.

Therefore, once the decision has been made to conduct an audit, proper planning, preparation, and execution are essential to maximizing its benefits. While this article focuses on environmental compliance audits, the concepts discussed also apply to health and safety, management system, or other audits. In addition, the suggestions outlined are in the context of voluntary, internal audits and may not apply to audits conducted by regulatory agencies. The different goals and potential consequences of a regulatory agency audit may alter the approach and response of the entity being audited.

Marcellus Trade Group Issues Pipeline Boring Recommendations

Source: The State Journal | 24 May 2013

Pipeline boring is the subject of the seventh guidance document issued by the Marcellus Shale Coalition.

Recommended Practices for Pipeline Boring, released 22 May, offers best practices for the process used by pipeline companies to install pipelines under highways, railroads, and bodies of water in instances where traditional trenching is not feasible.

“Building the required pipeline infrastructure to safely transport natural gas from the wellhead to the marketplace is a huge undertaking and one that requires much due diligence,” stated MSC CEO Kathryn Klaber.

 

Company Earns First API Accreditation for Derrick Inspectors Course

Source: DSL | 21 May 2013
DSL representatives receive the API accreditation from Don Whittaker of API. From left, Paul Brightman, Whittaker, Mark Chandler, and Yaw Addae-Mintah.

Mark Chandler and Paul Brightman of DSL receive the API accreditation from Don Whittaker and Yaw Addae-Mintah of API at the 2013 Offshore Technology Conference. From left are Brightman, Whittaker, Chandler, and Addae-Mintah.

The American Petroleum Institute (API) has presented its first accreditation for a derrick inspectors training course to DSL, a training provider certified by API and the International Association of Drilling Contractors.

The accreditation means that drilling derricks, some of which are rated to lift up to 1,000 t, now can be inspected and certified by qualified inspectors. While other rig-critical equipment, such as cranes and blowout preventers, has been subject for decades to inspection and certification by inspectors qualified through regulatory body approved courses, drilling structures had not had the benefit of inspectors armed with product specific inspection qualifications.

The achievement of this qualification for DSL has been a long-term ambition of owner Mike Smith. “Derrick-related incidents still represent a very large percentage of overall incidents on rigs today,” Smith said. “The introduction of qualified and competent inspectors working under the umbrella of an API 4F licensed company provides the industry with both a qualified standard to adopt, as well as arming the industry with the ability to further eradicate the amount of incidents on both offshore derricks and land rigs.

“Operators and drilling contractors can now rely upon this industry-approved qualification and standard for the inspection of drilling structures where before there was none, thus ensuring that the quality, competency and consistency of these inspections are maintained, whilst at the same time eliminating inadequate inspections by unqualified personnel. We are proud to be able to use our experience, expertise, and competency of drilling structures and channel it into qualifications such as this that enables DSL to make a positive contribution to industry safety and standardization.”