Asset Integrity & Reliability Management A Strategic Perspective Andreas de Vries Doha, 15 – 18 May 2016

The views expressed in this presentation are not intended as a representation of the practices at either the current or past employers of the author. 1 Disclaimer

3 The Relationship Between Strategy and AIRM How to Make AIRM Strategic

4 The Relationship Between Strategy and AIRM How to Make AIRM Strategic

What is Strategy? 2 A “CEO appointment” is an assignment of authority, of control over decision-making, regarding certain resources:  Fixed assets such as PP&E, Human Capital resources, Financial resources, Intangibles such as intellectual property rights, etc. In the business world, a CEO is handed authority together with a task:  “Maximize profit”, “Maximize shareholder value”, etc. A CEO has to identify the use of the resources that will “maximize profit” or “maximize shareholder value”  Use the plant for local demand or the international market?  Use the human Capital resources to produce bicycles or tricycles?  Invest the financial resources in America or China?  Defining the most valuable use of available resources is the essence of Strategy

The Strategy Management Process Strategy Management Strategy Formulation Strategy Execution Strategic Planning AspirationsAchievements

What is AIRM? Asset Integrity is the state in which an operating plant performs the function it is designed to perform in a safe, reliable and efficient manner AIRM is designed to get a plant to this state and keep it there AIRM covers everything that affects the plant’s ability to performs its function in a safe, reliable and efficient manner  Ensure Design is aligned with business need and Construction is as per design  Ensure Operations are kept within operating window  Ensure Monitoring through inspections and testing  Ensure Maintenance to optimize runtime 4

The AIRM – Strategy Relationship Benefits of AIRM  Maximize Reliability, Availability, Maintainability (RAM) of equipment  Improve Occupational & Process Safety, and reduce risks  Reduce cost of operations, monitoring and maintenance  AIRM maximizes the value of an operating plant Objective of Strategy  Maximizing the value of the assets of an organization  Including the value of fixed assets such as operating plants  Asset Integrity Management should be an integral part of any Strategy 5

9 The Relationship Between Strategy and AIRM How to Make AIRM Strategic

10 The Relationship Between Strategy and AIRM How to Make AIRM Strategic

Ensuring a Strategic Focus on AIRM Why AIRM is sometimes understood as not Strategic: 1.Corporate Leadership is not aware of the Strategic importance of AIRM  Build the Strategic Case for AIRM 2.Corporate Leadership believes AIRM should be managed at lower levels of the organization  Ensure Leadership Engagement for AIRM 3.Corporate Leadership believes AIRM is too complex to manage at the Strategic Level  Make AIRM Manageable & Value Adding for Leadership 6

Making AIRM Strategic Build the Strategic Case for AIRM Communicate the impact of doing AIRM “What if we do it?”  Better safety  Lower costs  Higher revenues Communicate the impact of not doing AIRM “What if we don’t do it?”  BP Deepwater Horizon Gulf of Mexico  Piper Alpha North Sea  Texas City Refinery Communicate the cost of doing AIRM AIRM is a “quick win” opportunity  Utilize existing resources on the existing assets  Redesign working procedures to deliver better results  No big upfront investments required

Making AIRM Strategic Ensure Leadership Engagement for AIRM Communicate the necessity of cross-functional collaboration AIRM is by its nature a cross-functional activity  Involvement of Engineering, Operations, Maintenance, Finance, etc Cross-functional initiatives require “higher level” leadership to make all the difference parts work together Communicate the need for cross-functional focus Organizations focus on the real priorities of Leadership Leadership engagement drives sincere focus on AIRM  AIRM benefits can not be achieved without Leadership engagement

Making AIRM Strategic Make AIRM Manageable & Value Adding Separate “Outputs” and “Inputs” Outputs: What are we trying to achieve? Inputs: What do we need to manage to achieve this? Leadership interest is in Outputs first, Inputs second Production Mechanical AvailabilityYield*¹Feed QualityQuantity Maintenance Demand Maintenance Execution Labour Resource availability Resource quality Material Own Contractor Labour (competency) Material Own Contractor Maintenance Planning Maintenance Optimization Criticality Assessment Maintenance Strategy PM schedulingData quality MaintenanceAsset Integrity Export facilities Mechanical Availability Capacity Inspections Condition Monitoring PM tasks Reliability Design Integrity Technical Integrity Operating Integrity

Making AIRM Strategic Make AIRM Manageable & Value Adding Separate “Events” and “Root Causes” Event: What happened? Root Cause: Why did it happen? Leadership interest is in Root Causes, not Events Analyze for the future, rather than for the past Backward looking analyses: “Who is to blame for this?”  Builds a culture of fear  Focuses the organization on hiding issues and challenges  Prevents continuous improvement Forward looking analysis: “What can we do to prevent this from happening again in the future?”  Focuses the organization on identifying solutions  Enables continuous improvement

Making AIRM Strategic Example Availability  Overall availability below target due to the following bearing failures:  Equipment X on the such-and-such date  Equipment Y on the such-and-such date  Equipment Z on the such-and-such date

Making AIRM Strategic Example Availability  Overall availability below target due to issues resulting from design / operations incompatibility  Possible solutions include: 1.Redesign  Cost …; Speed of implementation…; Complexity of implementation … 2.Throughput reduction  Cost … (revenue reduction); Speed of implementation…; Complexity of implementation … 3.Feed & Yield optimization  Cost … (margin reduction); Speed of implementation…; Complexity of implementation …