1. Corvelle Drives Concepts to Completion Asset and Facility Risk Management for Oil and Gas GARP Luncheon, 2015-11-19 by Mark Perrin, P.Eng. 1

2. Corvelle Drives Concepts to Completion 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 2 2

3. Corvelle Drives Concepts to Completion Objectives  High-level overview of asset and facility lifecycle analysis  Benefits of adopting lifecycle analysis into – reliability engineering – maintenance management 3

4. Corvelle Drives Concepts to Completion 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 4

5. Corvelle Drives Concepts to Completion Why Pay Attention To Lifecycle Analysis 5

6. Corvelle Drives Concepts to Completion Why Pay Attention  Value for Risk Management – Unplanned outages impact cash flow – Missed targets undermine investor confidence 6

7. Corvelle Drives Concepts to Completion Why Pay Attention  Assets and facilities are complex  Components have a lifecycle 7

8. Corvelle Drives Concepts to Completion Lifecycle Analysis – The Bathtub Curve 8

9. Corvelle Drives Concepts to Completion Where is Lifecycle Analysis Used 9  Downstream  Aviation  Military  Automotive

10. Corvelle Drives Concepts to Completion 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 10

11. Corvelle Drives Concepts to Completion 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? 11

12. Corvelle Drives Concepts to Completion 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? 12

13. Corvelle Drives Concepts to Completion 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? 13

14. Corvelle Drives Concepts to Completion Benefits for Upstream Downhole Pump Design  Trigger: – Problematic run life  Answer the question: – What is the impact on run life of speed, pump size? 14

15. Corvelle Drives Concepts to Completion 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? 15

16. Corvelle Drives Concepts to Completion Benefits for Upstream Planning And Budgeting  Trigger: – Prepare production forecast  Answer the question: – What is the predicted availability? 16

17. Corvelle Drives Concepts to Completion Implementation Challenges  Inconsistent method of reporting failures by Field Staff  Inconsistent historic data 17 Failure descriptionAverage of Run Down Hole Pump Failure689 PC pump210 Pump Change1014 Pump Failure552 Pump will not start160 Seized pump35

18. Corvelle Drives Concepts to Completion 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 18

19. Corvelle Drives Concepts to Completion A Reasonable Approach Identify Opportunities  Operations staff know where the problem areas are  Prioritize based on impact on cash flow 19

20. Corvelle Drives Concepts to Completion A Reasonable Approach Data Availability  What systems are collecting data  How consistent is the reporting  Who owns component lifecycle data 20

21. Corvelle Drives Concepts to Completion A Reasonable Approach Data Cleanup  A great position for a summer student  Who is responsible – A cross division and cross functional effort. – Who pays 21

22. Corvelle Drives Concepts to Completion A Reasonable Approach Pilot  Pick an area where the field staff are enthusiastic  Pick a sub-set of problematic components 22

23. Corvelle Drives Concepts to Completion A Reasonable Approach Pilot  Start with Excel-based analysis 23

24. Corvelle Drives Concepts to Completion A Reasonable Approach Pilot  Consider more sophisticated systems – Microsoft Azure ML – Tableau or Spotfire with R – MatLab 24

25. Corvelle Drives Concepts to Completion A Reasonable Approach Implement  Prioritize areas  Roll-out area by area  Include learnings from previous areas 25

26. Corvelle Drives Concepts to Completion 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 26

27. Corvelle Drives Concepts to Completion 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 27

28. Corvelle Drives Concepts to Completion Questions 28

29. Corvelle Drives Concepts to Completion Asset and Facility Risk Management for Oil and Gas Corvelle Consulting 300, 400 - 5 Ave. S.W. Calgary, Alberta T2P 0L6 www.corvelle.com 29 Clay Long 403 710-6980 ClayLong@Corvelle.com Mel Miners 403 200-5544 MelMiners@Corvelle.com MelMiners@Corvelle.com Yogi Schulz 403 860-5348 YogiSchulz@Corvelle.com Mark Perrin 403 613-6987 MarkPerrin@Corvelle.com

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31. 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 31