Asset and Facility

Risk Management
for Oil and Gas

Mark Perrin
Senior Upstream Oil and Gas Consultant

Global Association of Risk Professionals

November 2015
 The views expressed in the following material are the

author’s and do not necessarily represent the views of

the Global Association of Risk Professionals (GARP),

its Membership or its Management.

2
 Mark Perrin
Biography
 35 years of Engineering, Information Technology
and Finance experience in upstream oil and gas
 Increases value clients receive
from their investments in analytics
 Assists oil and gas companies
to implement EPAP
 Manages projects that arise from
opportunities to leverage
technology
Corvelle Drives Concepts to Completion 3 3
 Objectives

 High-level overview of asset and facility

lifecycle analysis
 Benefits of adopting lifecycle analysis into
– reliability engineering
– maintenance management

Corvelle Drives Concepts to Completion 4

 Presentation Outline

 Why pay attention

 Impact on risk management
 Where is lifecycle analysis used
 Lifecycle analysis techniques
 Benefits for upstream
 Implementation challenges
 A reasonable approach
 Conclusions
 Next steps
 Questions

Corvelle Drives Concepts to Completion 5

 Why Pay Attention To Lifecycle Analysis

Corvelle Drives Concepts to Completion 6

 Why Pay Attention

 Value for Risk Management

– Unplanned outages impact cash flow
– Missed targets undermine investor confidence

Corvelle Drives Concepts to Completion 7

 Why Pay Attention

 Assets and facilities are complex

 Components have a lifecycle

Corvelle Drives Concepts to Completion 8

 Lifecycle Analysis – The Bathtub Curve

Corvelle Drives Concepts to Completion 9

 Where is Lifecycle Analysis Used

 Downstream
 Aviation
 Military
 Automotive

Corvelle Drives Concepts to Completion 10

 Lifecycle Analysis Techniques

 Weibull distribution is a leading method

– Works for small samples
– Accounts for components that have not failed
 Other commonly used life distributions
– Exponential
– Lognormal
– Normal

Corvelle Drives Concepts to Completion 11

 Lifecycle Analysis Answers

 Where is this component in its lifecycle?

 When can I expect it to fail?
 How many failures can I expect?
 Which component should I choose?

Corvelle Drives Concepts to Completion 12

 Benefits for Upstream
Facility Maintenance
 Trigger:
– Unplanned outage to replace a component
 Answer the questions:
– Should I replace other major components?
– What spare parts should I have?

Corvelle Drives Concepts to Completion 13

 Benefits for Upstream
Well Maintenance
 Trigger:
– Service rig mobilized to repair a well in a field
 Answer the questions:
– Should I service adjacent wells?
– What spare parts should I have?

Corvelle Drives Concepts to Completion 14

 Benefits for Upstream
Downhole Pump Design
 Trigger:
– Problematic run life
 Answer the question:
– What is the impact on run life of speed, pump
size?

Corvelle Drives Concepts to Completion 15

 Benefits for Upstream
Planning And Budgeting
 Trigger:
– Prepare maintenance budget
 Answer the question:
– How much should I budget this year for well and
facility maintenance?

Corvelle Drives Concepts to Completion 16

 Benefits for Upstream
Planning And Budgeting
 Trigger:
– Prepare production forecast
 Answer the question:
– What is the predicted availability?

Corvelle Drives Concepts to Completion 17

 Implementation Challenges

 Inconsistent method of reporting failures by

Field Staff
 Inconsistent historic data
Failure description Average of Run
Down Hole Pump Failure 689
PC pump 210
Pump Change 1014
Pump Failure 552
Pump will not start 160
Seized pump 35

Corvelle Drives Concepts to Completion 18

 Implementation Challenges
Enrolling Staff
 Discover the value of consistent reporting
– Meet or exceed production targets
– Improve run life
– Reduce operating and maintenance costs
 Agree on consistent reporting
– Level of detail
– Set of descriptions

Corvelle Drives Concepts to Completion 19

 A Reasonable Approach
Identify Opportunities
 Operations staff know where the problem
areas are
 Prioritize based on impact on cash flow

Corvelle Drives Concepts to Completion 20

 A Reasonable Approach
Data Availability
 What systems are collecting data
 How consistent is the reporting
 Who owns component lifecycle data

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 A Reasonable Approach
Data Cleanup
 A great position for a summer student
 Who is responsible
– A cross division and cross functional effort.
– Who pays

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 A Reasonable Approach
Pilot
 Pick an area where the field staff are
enthusiastic
 Pick a sub-set of problematic components

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 A Reasonable Approach
Pilot
 Start with Excel-based analysis

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 A Reasonable Approach
Pilot
 Consider more sophisticated systems
– Microsoft Azure ML
– Tableau or Spotfire with R
– MatLab

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 A Reasonable Approach
Implement
 Prioritize areas
 Roll-out area by area
 Include learnings from previous areas

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 Conclusions

 Attention to asset and facility lifecycle

analysis can:
– Reduce the risk of unplanned outages
– Increase cash flow certainty
– Improve certainty of well and facility availability
– Increase the accuracy of forecasts

Corvelle Drives Concepts to Completion 27

 Next Steps

 Ask:
– Is your company already performing lifecycle
analysis?
– If not, are there problematic components?
– Is there an appetite?
– Do you have expertise?
 Get help:
– Canvass your peers for experience
– Engage a suitable consultant

Corvelle Drives Concepts to Completion 28

 Questions

Corvelle Drives Concepts to Completion 29

 Asset and Facility Risk Management
for Oil and Gas
Yogi Schulz Clay Long
403 860-5348 403 710-6980
YogiSchulz@Corvelle.com ClayLong@Corvelle.com

Mark Perrin Mel Miners

403 613-6987 403 200-5544
MarkPerrin@Corvelle.com MelMiners@Corvelle.com

Corvelle Consulting
300, 400 - 5 Ave. S.W.
Calgary, Alberta T2P 0L6
www.corvelle.com
Corvelle Drives Concepts to Completion 30
 Bibliography

 Gas and Oil Reliability Engineering, Modeling

and Analysis, Eduardo Calixto.
 Life Data Analysis Reference, ReliaSoft
Corporation.
http://reliawiki.org/index.php/Life_Data_Analysis_Refere
nce_Book

Corvelle Drives Concepts to Completion 31

C r e a t i n g a c u l t u r e o f
r i s k a w a r e n e s s ®

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Risk Professionals

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www.garp.org

About GARP | The Global Association of Risk Professionals (GARP) is a not-for-profit global membership organization dedicated to preparing professionals and organizations to make
better informed risk decisions. Membership represents over 150,000 risk management practitioners and researchers from banks, investment management firms, government agencies,
academic institutions, and corporations from more than 195 countries and territories. GARP administers the Financial Risk Manager (FRM®) and the Energy Risk Professional (ERP®)
Exams; certifications recognized by risk professionals worldwide. GARP also helps advance the role of risk management via comprehensive professional education and training for
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