SHELL GROUP’S ASSET MANAGEMENT AND IMPLEMENTATION

ASSEM AL-HAJJ AND KHAMIS AL-SAADI

Al-Hajj is a lecturer with Robert Gordon University, Aberdeen, Scotland, theU.K. He holds a BSc degree in civil engineering from Beirut Arab University in Lebanon, an MSc in construction management from Heriot-Watt University in Edinburgh, Scotland, and a PhD in construction management from the University of Dundee, Scotland. Al-Hajj is a training consultant for project management and economics for Shell SPDC, Nigeria. He has closely worked with the oil and gas industry for seven years. Al-Saadi heads staff development and training for Well Engineering Petroleum Development Oman (PDO) Oil Company. He holds a BSc degree in petroleum engineering from Pennsylvania State University, Harrisburg, Pennsylvania. He obtained his MSc in asset management from Robert Gordon University in Aberdeen, Scotland. During 12 years with PDO, he has worked in well engineering areas, including operations, commercial and human resources in Oman and the U.K. covering onshore and offshore industries.

ABSTRACT
Asset management’s goal is to optimize overall asset performance throughout a life cycle. Single-point accountability is one of the main strengths of asset management. Different methods to deploy asset management principles have been adopted in the oil and gas industry. However, there is a need for common understanding of the concept and a generic method for implementing asset

32 SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002

and sub-modules within the surface infrastructure (drilling) were managed by a drilling manager. Ministry of Industry initiated terotechnology back in 1968. INTRODUCTION Managing an asset through single-point accountability was not a common occurrence until recently. skills and behaviors: structure. It also highlights the importance of people and knowledge management in the change process to an asset management-based organization. and to establish the right data and knowledge management systems. BACKGROUND ON ASSET MANAGEMENT To optimize asset-operating expenditures via an improved feedback loop between maintainers and designers. leading to the reduction of maintenance costs and increased plant availability. resulting in tightening up of the HSE regulations and dramatically reduced profit margins. The possible savings were perceived as small compared to the cost of mindset. Such change requires an organization that has provided the infrastructure for information and knowledge management. Asset management is based on getting the right balance between the main constituents of any organization. A successful asset management-based organization requires a management style that promotes the above and manages by principles of trust. For a typical oil and gas industry installation. These techniques and philosophies alone are not enough to make asset performance economical and provide sufficient asset growth. These include: • Cost reduction in the new era (CRINE) to standardize work procedures. techniques and methodologies together. the need for single-point accountability for an asset became essential in allocating expenditures (CAPEX and/or OPEX) so the value of an asset is maximized over its lifecycle. the U. Terotechnology philosophy did not attract SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 33 . The most important requirement for implementing such a combination of techniques is to create an organizational structure that promotes the use of these tools.management. Within these separate disciplines. Terotechnology failed to provide industries with clear guidelines of business management and thus made little impact. This paper focuses on Shell’s approach to the implementation of asset management as an example from the oil and gas industry. there is the need for a management principle that uses these techniques and establishes the best way to optimize asset life cycle to maximize the rate of return. The second was the 1988 Piper Alpha disaster in the North Sea causing 167 fatalities. Asset management is the concept perceived to provide the missing link that maximizes the use of these tools. Successful implementation of any new management principle requires promotion of a supportive change in culture that directs people’s energies to support the change. Therefore. risk-based maintenance (RBM) and risk-based inspection (RBI). DEFINITIONS Terotechnology forms the basis for asset management (AM). It blends philosophies. They concluded that significant savings could be made provided that maintenance activities. reliability-centered maintenance (RCM). organizational and cultural changes required to benefit from such change. Two major events occurred in the late 1980s that changed the way of thinking within the oil industry. respect and support. Although individual techniques focus on specific aspects of the organization. experiences and costs were fed back to the designers. with the aim of each manager to optimize his own budget without any due considerations toward the total picture. instead of opposing and rejecting it. Thus. contributing to optimum asset life value within an organization by achieving the right balance between risk and cost. the oil industry because it was introduced at a time when oil prices were increasing and operating company profit margins were at their maximum.K. its people and their attitude. These two events led to major improvements in HSE awareness and business management. a working culture to allow lateral learning and cross-fertilization of knowledge and experience sharing. the surface infrastructure (platform) was managed by a platform manager. subsurface assets used to be managed by a subsurface development manager. whole life cycle cost (WLCC). processes and systems. roles. Other initiatives aiming to standardize procedures within the industry have existed. This invited the implementation of techniques to reduce asset life cycle costs such as availability modeling. • Joint industry projects (JIP) to standardize the approach to the implementation and optimization of asset life cycle cost in the oil and gas industry. the combined use of these techniques is the desired overall achievement. both capital expenditure (CAPEX) and operating expenditure (OPEX) were managed separately. maintainability modeling. It gives an overview of the advantages and disadvantages of asset management in a typical oil and gas company. The first was the dramatic drop in oil prices to below $10/barrel from $35/barrel during 1986.

British Standards (1997) define life cycle costing (LCC) as “the process of economic analysis to assess the total cost of acquisition and ownership of a product. fast developing information management and technologies and operating at the best cost throughout the asset life further complicate the task. It is critical. E VA L U AT I O N O F A S S E T M A N A G E M E N T Advantages The “Guide to Terotechnology” (1992) highlighted the following benefits to any organization. and physical assets required to achieve these targets and planned asset lifetime. they have common agreement in realizing that it is the terminology that aims towards achieving optimum overall asset economics. maintenance strategies are optimized and performance-monitoring criteria are put in place. 1992). health and environmental management system that minimizes the risk of getting into disastrous circumstances. I M P L E M E N TAT I O N C O S T A N D D I S A D VA N TA G E S Implementation of a new business strategy will always be accompanied by reluctance to change and cultural barriers. Otherwise. Although an asset management approach does not provide the magic of putting up-front costs to these potential disasters.. Huge financial losses can occur through mismanaged health. the basic organizational requirements that should be met are (Guide to Terotechnology. however. ­ Enhanced cross-fertilization of good ideas and data sharing improve data flow between designers and maintenance managers. life cycle costing is simply “the economic management of physical assets” over time. safety and environment-related issues. the process will fall apart and it would not make business sense to go through the change process.” LCC applies managerial. ­ Improve management control over the decision-making process. building and other practices to physical assets in the pursuit of economic life cycle costs. Although the above definitions differ in describing asset management. These two elements must be captured in asset economic models. there is an increased profitability through a reduction in total cost of ownership. especially in an extremely demanding and fluctuating business environment. Brent Spar is an ideal example of how environmental issues can damage a company’s reputation and cause it to incur huge financial penalties. The wealth of experiences and knowledge from maintenance are then fed back to the 34 SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 . Whole life cycle costing analysis is based on obtaining the design that optimizes maintenance strategy to achieving maximum asset availability. safety and environmental requirements and regulations. Two main criteria that are more specific to the oil industry are: 1. The cost of the Piper Alpha incident was not only limited to compensation and clean up costs. 2. financial.Optimizing every single process within an asset is not necessarily achieving the overall optimum economical performance. Also. Decisions based on life cycle costing analysis are of more value to management for longterm business competitiveness and survival. Asset management is all about finding this balance to optimize the asset’s life cycle value. Spending of any sort (CAPEX and/or OPEX) authorized by one person provides a winning edge over the traditional approach of a number of managers optimizing their budgets with little-to-no due care for the other sub-modules. Defining asset management is not an easy task. but also put Occidental out of business in the North Sea. As a result.e. Cost of production deferment (loss of production at any time) and cost of asset demobilization (abandonment). It is the balance of all the processes within an asset that gives optimum performance. maximum value. 1996). and with challenging health. it supports a self-correcting safety. ­ Improved control over expenditures through single-point accountability (asset manager). to demonstrate that the benefits of implementing an asset management business approach outweigh all the associated implementation costs and shortcomings that come with it. In order to achieve adequate implementation of asset management. engineering. This is a critical element of design optimization toward minimizing life cycle cost of an asset. These two main obstacles take the longest time to dissolve and transformation processes are very slow. enhanced asset HSE performance and enhanced companies’ reputation. designers at early stages of any new project. ­ Up-front determination of production and cost targets. ­ Asset performance is specified. At its most basic. i. Asset management is the application of engineering and management tools to optimize the entire life cycle value of some form of engineering asset to enable the alignment of engineering decisions with corporate and business objectives (Hodge.

The need for data collection and its conversion into useful information on which to base decision-making cannot be over emphasized. Time and life expectancy forecasting for an asset. • The cost of supplying feedback information or of processing feedback received. ­ In large international companies. Currently. and time and effort in dissolving cultural changes. SHELL MODEL FOR ASSET MANAGEMENT Introduction Shell reacted faster than other oil companies in implementing worldwide asset management principles. Asia and Africa are slowly but surely following in these footsteps. This change. • The cost of making existing data compatible with the need of AM. the change becomes a total failure. both CAPEX and OPEX are managed separately with the aim of each manager to optimize his own budget without any due consideration toward influencing the other part of the total picture. there is the cost for setting up appropriate information management systems to collect. Within these separate sub-assets. short-term thinking prevails and thus AM principles are no longer applicable. Nevertheless. ­ Mind set changes are required to enhance continuous improvement via lateral learning and knowledge sharing principles. and sub-modules within the surface infrastructure (drilling) are managed by drilling management. from minimizing the CAPEX way of thinking of optimizing asset WLCC. Benefits of the outcome after the change must outweigh the associated difficulties. Indeed. senior management’s active participation and understanding is vital to promote and reward all activities involving efforts to minimize the cost of ownership and to optimize physical asset value. asset and production performance. This single point forms the biggest challenge for its use and thus weakens its principles for the oil industry. Shell companies in the United States and Europe have pioneered asset management for the entire Shell Group. Otherwise. a subsurface development manager manages the subsurface assets. It is clear that such organizational changes start from top to middle management and finally move to the workforce level. such a structure worked effectively during the exploration phases with smaller team compositions. SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 35 . The costs to achieve such organizational features include training senior management and the workforce. experiences and knowledge.­ Experiences throughout asset lifetime are captured in a form of feedback loop information system that improves and optimizes total life cycle costs. in which management turnover is frequent. the above is essential to obtain benefits from implementing asset management principles and might be why the oil industry was late in adopting it. is extremely difficult due to market demand and oil prices dictating production strategies and investment attractiveness. Functional-based organizational structure has long existed in Shell. and enhance and stimulate a lateral learning culture internally and externally. analyze and feed back data. Changing to new organizational structures does not happen overnight. • The cost of any additional analysis. particularly for the oil industry. it maximizes the success by applying the learning from previous change processes and thus minimizes the risk of failures. The main difficulties/challenges of asset management implementation can be summarized as follows: ­ Overcoming hurdles of getting to an asset management-based structure and dissolving the cultural resistance to change barriers. Organizations need to assess the need for change so that companies do not change for the sake of change. A Typical Functional-Based Structure Companies operating under such a structure do not manage through single-point management. These costs include: • Cost of collecting additional data not already collected for management purpose. In addition. and the fear of not realizing the benefits may quickly cause dramatic failures. whereas companies in South America. Therefore. companies use only 7 percent of their data to make decisions with 93 percent of the data going unused (IBM research). The organization will struggle through the transformation process. Such information includes historical trends on market fluctuation. ­ Main principles of the AM approach depend highly on forecasting and accurate knowledge of life expectancy of an asset. Although this causes delays in capturing all the benefits of asset management implementation to Shell. HSE performance and other indicators critical for the decision-making processes. requires accurate forecasting and a good understanding of asset finite life expectancy and operations. store. In an oil industry installation. the surface infrastructure (platform) is managed by a platform manager.

­ Single-point accountability at a lower level in the organization. In 1997. The three reasons for Shell to apply as many synergies in asset management principles implementation across all operating companies are: ­ Demonstrable HSE and cost benefits of applying asset management in the U. The concept of asset management within Shell began in 1993. led to the development of the asset/process management structure. but then left individual operating companies to develop the required structure and management system to best realize their aspirations in implementing asset management principles. ­ Teamwork is extremely weakened. single organizational structure for asset management lines to suit all Shell operating companies. Guideline Model for Asset Management Deployment Since Shell Expro led Shell Group. 2 shows the overriding expectation of any structure applied (Shell International Miri Conference. and (iii) processes and systems to ensure that technical integrity and proper management systems are in place to manage the company’s businesses. when Shell International Petroleum Maatshappij (SIPM) issued its first guide to operations reference planning as a user training guide. ­ Challenges to status quo and development personal skills. in evaluating how well Expro was performing compared to in 1995/96. (ii) structure and roles to deploy the people and establish reporting relationships. 1. The overriding principles of implementing asset management are the same across the board. ­ Faster decision processes. Shell’s main office did not prescribe one. Expro took the opportunity of the Northern Business Unit organizational restructuring to apply the asset/process management structure as a pilot for Expro and Shell companies (Miri Asset Management Conference. Typical functional-based structure. 36 SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 . and European Shell operating companies. An overall model enhances: ­ Focus on bottom line. All Shell operating companies recognized that an asset/process model is the way forward. ­ Cost transparency. However. and ­ There is a lack of information and knowledge sharing. 1998). skills and behavior with the goal of creating a culture that will promote asset management principles. The Shell model establishes asset management implementation by concentrating on getting the right balance between (i) attitude. ­ Competitive market and fluctuating oil prices justify changes in all Shell operating companies in order to survive and stay competitive. Guideline model for asset management deployment. Shell has expanded throughout the years to the point that the above structure is no longer effective to appropriately manage its business. 1998).Operations Reference Plan for Assets (ORP). ­ Shell staff movement among operating companies bridged the gap between the cultures and maximized lateral cross-fertilization. The main drawbacks in operating under this structure are: ­ This structure creates silos between different departments and therefore restricts communication.Production Drilling Fig. ­ Ease of operational processes and asset focus. An internal assessment within Shell Expro. ­ Growth and value creation through life cycle view of the asset. Shell’s main office provided guidelines. Asset Management Benefits to Shell The following main benefits were quoted from asset teams in Shell operating companies (Miri Asset Management Conference.S. Shell Expro led the group in implementing an asset reference plan (ARP) in 1994 in its Brent Field Unit. fig. Therefore. change to an asset management-based structure was a natural progression caused by business expansion and the management of mature assets during the later asset life cycles. Decision Support Improve Teamwork Volumes for Value Major Project Realization Asset Focus Enhance Communications Common Interest Network Life Cycle Planning Asset Management Model Responsiveness Quality Work Personal Skills Development Bottom Line Focus Fig. EP93-2015 . ­ Diversity is discouraged. ­ Responsiveness. 2. its model was generally accepted. and ­ Communications and teamwork. 1998).

3.” Fig. with emphasis on asset management implementation and maturity. SHELL EXPRO ASSET/PROCESS STRUCTURE Roles and Responsibilities Every job has associated with it one or more of the following roles. managing director of Shell Brunei. Management System Framework Shell Expro classifies an asset as anything that has potential value for the company. Rowlands. each of which has a corresponding set of responsibilities. The first conference was held in 1997 in Oman with the objective of having a common understanding of the key principles of asset management. Functional silos are becoming a feature of the past” said P. Corporate Direction “Why we are in business and the core values and controls that give direction to our actions. ­ Healthy competition between asset teams. asset management tools. 1998. Proce Push Bottom Line Aspirational “Pull” (Goals) Fig. 0100-001). productivity. reserves replenishment and ultimate recovery (growth) of a company and therefore profit. “There can be little doubt that since the adoption of the asset management principles in Shell Gabon there has been a notable improvement in cost transparency and awareness. Asset Management Organizational Structure Assets Organization “How we deploy and work with our staff to achieve our objectives. Shell Expro asset/process structure SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 37 . service agreements. implementation tools and the best knowledge sharing practices. 0100-001. 4.e. and ­ Lateral learning between assets and operating companies. skills management and performance measurement. onshore plants.” Processes “The way in which our work is carried out. managing director of Shell Gabon. structure and guidelines to manage its assets. cash and information to reputation. staff. i. Management system framework Asset Management Forum Manage Assets Process Owner Corporate Process Owner Corporate Process Owner BBU Asset CBU Asset Manager Local Process Owner Local Process Owner NBU Asset Manager Local Process Owner Local Process Owner GSG Asset Manager Local Process Owner Local Process Owner GSP Asset Manager NBD Asset Manager Local Process Owner Execution Executi Process on Proce Push ss h Process Forum Support & Suppo Service rt / Process Local Process Owner Local Process Owner Corporate Process Owner Local Process Owner Local Process Owner Local Process Owner Local Process Owner Local Process Owner Support & Service Processes Shell Expro’s management system provides the overall framework. It will certainly enhance efficiency. ARP. The results of this conference proved very valuable to Shell to ensure that all companies are on the right track toward being fully integrated into the asset management style. money and technology.­ Asset optimization by scenario planning. 3 below Corporate Management Manual. Fig. 1997. Issues discussed included asset management. Malaysia. periodic asset management conferences are held to evaluate the progress of the implementation process.” said H.” A S S E T M A N A G E M E N T I M P L E M E N TAT I O N MONITORING To ensure a common understanding of asset management and to allow cross-fertilization among Shell operating companies. A second conference was held in November 1998 in Miri. wells and equipment to skilled people. integrity. 1997. over the life cycle of the asset.” “The management of our assets and the opportunities for generating wealth for the company. people and processes as shown in fig. a greater focus and wider involvement in optimizing the use of assets and a sharpened sense of accountability. “The asset management process enables one to maximize the value of an asset by making use of resources. Hombroek. ­ Identification of technology and resources needs for the asset. pipelines. 1998. from the natural fields and reservoirs and functional offshore installations. ­ Common key performance indicator (KPI) between assets. ­ Cross-discipline understanding and ownership of the asset. 3 indicates the Shell Expro interaction process between different owners (Corporate Management Manual.

and ­ Provides a detailed analysis of the cost of operations (activity-based cost modeling). well engineering. ­ Anticipate future technology developments. • Authorize. 1998. 5. • Manage expenditures against the activity's budget. ­ Define the boundaries of the asset (asset mandate). • Initiate and plan for the provision of services to the asset. threats and opportunities that can affect the asset during its operational life. • Monitor. release and control the capital and operating budgets as approved by management. It is clear that before ARP. maintenance and engineering). • Develop and maintain an asset Reference Plan from which annual capital and operating costs are derived. According to the asset Reference Plan Guidelines. Fig. ­ Encourage regular review of the health of an asset.Conceptual Operation Reference Plan in 1995. being the base case over the life of an asset. resources. ARP is an integral part of the Shell asset management model. servicing and support (Corporate Management Manual. Relationship between roles and responsibilities R E L AT I O N S H I P B E T W E E N R O L E S A N D RESPONSIBILITIES Asset Reference Plan (ARP) ARP Objectives ARP emerged from EP95 . Generally required to: • Acquire the resources necessary to execute the activity. Process Ownership Manage Processes Activity Executor or Services Provider Manage Activities or Services Executes activities within an operational or service related business process. • Establish performance indicators. or recommend implementation of. They are required to: • Ensure asset performance and provide assurance of asset integrity. policies. ­ Contains a record of the key assumptions and uncertainties. • Measure and improve the efficiency and effectiveness of the process. • Monitor and analyze activity performance. and ­ Provide a baseline for testing the impact of future opportunities.Asset Ownership Manage Asset Accountable for all aspects of management of an asset in line with corporate objectives. deferment. They are required to: • Develop and document their process. • Implement. • Obtain support and advice from the appropriate technical disciplines on all matters affecting the safety. ­ Manage interfaces and handover throughout the asset life cycle. through quantifying and categorizing those activities with reference to technical integrity. • Ensure that all activities achieve optimum performance. design and operational integrity of the asset. “everybody had their own idea of their base case and the impact of their work on 38 SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 . • Make improvements through elimination of non value-added activities. • Approve and authorize implementation of business improvement proposals. It aims to develop a single information source that: ­ Defines the management strategy for the asset (production. sub-surface studies. Its primary uses are to: ­ Determine predicted cash flow. • Apply continuous improvement to maximise benefit to the customer. ­ Provides a key events plan. 0100-00. the optimum process to line management. Relationship between Roles and Responsibilities Accountable for the design and improvement of specific processes. It is the principal management tool by which assets are effectively and efficiently managed throughout their life. • Execute activity optimally while managing inherent business risks. ­ Provide the basis for economic modeling. staff competency profiles for the operation of the process and risks associated with their process and ensure that appropriate controls and standards are developed and communicated to those responsible for operating the process. standards. facilities design and equipment selection (e. the key objectives of an ARP are to: ­ Optimize asset planning. better cost visualization for planning control and “what if” scenarios). operations. • Identify critical activities. ­ Integrate the various process strategies.g. ­ Assess future manpower requirements. analyze and communicate process performance. ARPs reflect the impact on cash flow and profitability of the activities. and ­ Assess decommissioning dates and critical decision points in the operation of an asset throughout its life cycle. • Monitor and report business performance and health of the process against company and process objectives. 1997). remaining net present value (NPV) and end of field life (EOFL) from various scenarios.

1998). The ARP maturity cycle indicates how the ARP develops in line with the asset life cycle (Asset Reference Plan Guidelines. from acquisition to decommissioning. production forecast). Asset Reference Plan Guidelines.their budget (compartmentalization)” and ARP “forces people to smooth activity timing and people on board (POB) requirements and hence reduce costs (integration)” (Auk/Fulmar ARP document. updated and issued annually throughout an asset’s life to take into account changes to the above listed information. ­ Documents assumptions and uncertainties. ­ Base case. better cost visualization for planning/control and optimization opportunities). using activity-based cost forecasting to determine the impact on cash flow of all activities planned throughout the asset life cycle. ­ Means to influence project planning. 6. activitybased cost model. and ­ Summarizes the growth and development plans for an asset.e. and ­ Critical decision points in the operation of the asset installation/plant/field ARPs. EBP/ARP planning process ARP Team Workshop(s) Reviews SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 39 . EBP/ARP Planning Process The ARP is a working document that does not include a large amount of very detailed information. 6) shows where the ARP Process sits within the process (Asset Reference Plan Guidelines. The asset reference plan provides: ­ Record of the strategic management of an asset over its life cycle. ­ EOFL prediction. ­ Detailed analysis of the cost of operating the asset during its life cycle. gives a typical information system referenced in the AR document. ARP provides only a snapshot of the asset status at the time of preparation. Only key information is summarized and the relevant information sources are referenced. The above are part of the overall planning cycle and are updated annually to aggregate into Business Unit Plans that subsequently form the basis of the Expro Business Plan (EBP). The ARP contains key information on: ­ Asset strategy. 1998). 1998. Expro Vision Technology Plan ARP PROCESSES AP7 Process Strategies BU Strategies AP1 AP5 AP8 Activity Plans AP9 AP11 AP13 AP14 Asset Strategy AP2 Asset Base Case Draft ARP ABCM Follow-Up Actions Final ARP Stretch Targets Development Plan AP4 AP3 AP10 Business Plan Interface with EBP Commercial Agreements & Markets Activity Portfolio Preparatory Work Production & Sales Forecast AP6 AP12 AP15 Kick-Off Meeting Fig. ­ References supporting information sources (e. The ARP is reviewed. Typical Information Systems referred to by ARP O V E RV I E W O F A R P P R O C E S S The asset reference planning process is a generic methodology. The asset life cycle reflects different stages of an asset’s development. 1998). facilities design and equipment selection (i. ­ Assessment on abandonment dates. ­ Record of the key assumptions and uncertainties.g. ­ Accurate assessment of the manpower and resource requirements during the operating phase of the asset. The Expro Business Plan model below (fig.

SAP) Contracts and Agreements Contracts and Agreements Sales Contracts Sales Contracts Market Trend Analyses Market Trend Analyses Supply Agreements Supply Agreements Benchmarking Studies (e.g.g.g. service providers and individuals.g. EDOs. This approach allows the ARP structure to be established from the start. EPPROMS) EPPROMS) Hydrocarbon Accounting Systems (e. In its transformation process toward enhanced Expro culture. To promote its application. Controller.g. but primarily relied on its internal monitoring and performance control mechanisms to ensure progress toward its aspirations. Lateral learning must be a standard agenda item at all process forum meetings and given specific attention in the annual process assessments and reviews. MAROS) MAROS) HSE Documents (e. while avoiding duplication of data.g. and thus ARP is a common tool used by all Shell operating companies. Economic Tools (e.g. structures and processes. SPOTS) SPOTS) Economic Tools (e.g. IPSE) Production Forecast Systems (e. Typical information systems referred to by ARP 40 SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 . ARP Tool. Production Reporting Systems (e. Although Shell’s main office did not prescribe any organi- Production & Planning •• Financial & Commercial •• •• •• •• •• •• Cost Planning Systems (e. The concept of asset and process was introduced and first piloted by Shell Expro. Shell companies agreed that the single most important tool for implementing asset management is the ARP. During the early phases of development. MAPS) POB Records (e. 7. ARP Tool. 8.g. Availability Modelling Tools (e. ARP forms the basis of business unit plans and may interface directly with the EBP. Expro set an inspirational working culture to strive for. SAP) Availability Modelling Tools (e. Shell Expro’s implementation of asset management has been the model for the rest of the Shell operating companies. Primavera) Primavera) Production Reporting Systems (e. GFP Tool) Production Forecast Systems (e.g. process owners and process forums have specific responsibilities to ensure that lateral learning is applied consistently across their process and required actions are implemented in all local applications of the process.g. Screener) KwikLook. It left each operating company to develop its structure to suit its unique circumstances. McKinsey) Benchmarking Studies (e. Controller. ETSAR) EDOs.g. Safety Case. Explore Development Manager Project Manager Asset Manager Project Manager Identify Define Execute Produce Decommission DSN Project Initiation Note Option Selection Report Basis for Design SWOT ABCM Asset Strategy Key Events Plan Field Development Plan Development Economics Project Specification Process Strategies Asset Mandate Operations Studies SWOT EOFL Prediction ABCM Decommissioning Growth Opportunities Production Forecast Fig.g.g.g. Effective transfer of experience is considered to be an integral part of business management and fundamental to achieving quick and risk-minimized improvement. SAP) POB Records (e.g.A R P M AT U R I T Y C Y C L E ARP can be generated from the point of acquisition of a license block.g. HSE Documents (e.g. Screener) PSV Premises PSV Premises General Ledger (e. Hydrocarbon Accounting Systems (e.g.g. it provided the overriding principles such a structure must deliver. Activity Portfolio. SAP) General Ledger (e.g. GFP Tool) Reservoir Modelling Tools (e. Convergence Plans) Drilling Sequence Drilling Sequence Fig. SAP) Work Management Systems (e. Activity Portfolio.g. ETSAR) Integrity Monitoring Systems (e.g. Safety Case. SAP) Maintenance Management Systems Maintenance Management Systems (e.g. KwikLook. •• Asset Reference Plan Operations & Maintenance •• •• Logistics •• •• •• •• •• Work Management Systems (e. Cost Planning Systems (e.g. IPSE) Technology Plan Technology Plan Development Plan (e. ARP maturity cycle S U M M A RY Shell International’s implementation of asset management has been based on the three areas of which any organization structure consists: people. the evolving ARP will reference key development documents containing data relating to field development plans (FDP). New developments can either tie in to existing assets or have ARPs in their own right and consequently input directly to the business unit plan. Shell Expro did not just participate in Shell companies’ periodic implementation health checks.g. Its Expro model is based on setting mandates for the process owners.g.g. Shell companies perform periodic implementation health checks to ensure that all companies are progressing towards a common understanding of asset management principles.g. SAP) Integrity Monitoring Systems (e. McKinsey) •• •• •• zational structure for its operating companies. SAP) (e. MAPS) Service Level Agreements Service Level Agreements Tanker Schedules Tanker Schedules Flying Schedules Flying Schedules Shipping Schedules Shipping Schedules •• •• •• Development & Engineering •• •• •• •• •• Reservoir Modelling Tools (e.g. Furthermore. Convergence Plans) Development Plan (e.

1998. Prepared by BS technical committee and identical to: IEC. the U.K. Shell U. IEC 300-3-3: 1996. Asset Management Conference (held in Oman) Presentation Materials. Lifecycle Costing. Shell International EP95-0600.. Andrew Ritchie and Mark Eadie for reviewing the paper and granting permission to publish it. British Standard 3843. Shell International. 1996. 1997. “Exploration and Production” Enhanced Expro Asset Management Guide.” British Standards Institution. Asset Management the Model Operating Unit. “Exploration and Production” Corporate Management Manual 0100-001. Part 3. Shell International SIEP 97-5504. Shell U. “The Economic Management of Physical Assets. advice and encouragement throughout the course of this work. Shell Expro. in providing information. Guide to Terotechnology (The Economic Management of Assets. Operating Reference Planning Guidelines.” London. AM = asset management ARP = asset reference plan CAPEX = capital expenditure CM = change management CRINE = cost reduction in the new era EOFL = end of field life FDP = field development plans JIP = joint industry project LCC = life cycle costing NPV = net present value OPEX = operating expenditure RBI = risk-based inspection RBM = risk-based maintenance RCM = reliability-centered maintenance WLCC = whole life cycle costing ACKNOWLEDGMENTS The authors acknowledge the help and support provided by Steve Spreckley. Operations Reference Plan for Assets. MEP. 1996-1997. Shell International EP93-2015. 1998. “Guide to Lifecycle Costing. Shell U. Hodges. Section 3. BS 5760: Part 23: 1997. “Exploration and Production” Auk/Fulmar Asset Reference Plan Document. N. “Dependability Management.K.K. 1992. Shell International. part I). 1997. 1993. 1998. Scotland. Aberdeen.K. Asset Management an Overview. “Exploration and Production” Process Owners Guide. Thanks are also extended to Paul Garnham. 1997. SAUDI ARAMCO JOURNAL OF TECHNOLOGY SUMMER 2002 41 . Application Guide. 1997.Key words and acronyms REFERENCES British Standard. Shell International.” International Electrotechnical Commission (IEC). 1995. Shell U. Asset Management Conference (held in Miri) Presentation Materials.K. 1996.

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