API 18LCM (Life Cycle Management) Report back to SC17 August 27, 2015 Review Team: Dave Wilkinson, John Strut, Smarty John, David Saul, Peter Moles

What is API 18LCM? Newly drafted API standard – likely to be balloted prior to YE’15 Goal : “provide a means of maintaining and demonstrating continued conformance of product to original and/or current product definition” from cradle to grave. Scope: “to address the management life cycle for products in the petroleum and natural gas industry”

How does it work? (1/2) Applied to products in the petroleum and natural gas industry It is not clear which equipment it is to be applied to or who will make this determination – user, owner, regulator, API? Unclear if use is intended to be restricted to only products manufactured in accordance with API standards & specifications; could apply to any product regardless of pedigree. Interpreted as requiring data tracking to lowest component level Requires development of LCM plans for management of data pertaining to each product – Implemented by LCM Service Provider (LCMSP) of whom these entities are is intentionally left to be defined Five levels of requirement are currently defined in the draft document – but next draft may only include three levels

How does it work? (2/2) Determination of ongoing LCM status will be by LCMSP based on: Product identification Product definition Technical specifications, verification & validation tests, acceptance criteria, assembly & testing requirements, preventative maintenance requirements Manufacturing records Traceability Usage history Repair and maintenance history

Where does it fit in? Because it defines and manages hardware compliance, it must be a higher level document: Q1 > Q2 > 18LCM > 17D > 17N > 17Q….? 18LCM > Q1 > Q2 > > 17A? If hardware is modified, the need for qualification is not identified in 18LCM; perhaps add verbage for qualification per RP 17N?

What’s missing? What are the criteria for determining what equipment should be managed per 18LCM? Related to well control/integrity? Hydrocarbon pressure containing? All API equipment? All equipment? How is the appropriate LCM level determined? HES risk based? Production loss / downtime risk based? Transition plan Deployment to be defined outside of API 18LCM Can existing equipment be “grandfathered”? Lead in time for application?

How will it impact the market? Changes to hardware offshore become very difficult – Spotlight on MOC requirements – Potentially send some modifications underground and unreported – Tend to encourage continued conformance to OEM specified parts. Implementation – Initially difficult due to incomplete documentation of systems – huge demand on manufacturers (costs) – Grandfathering would be required for existing hardware – Rolling deployment on critical new hardware to start – Monogrammable? Management – Once enacted, becomes an unstoppable train - probably put into law – Success dependant on strong documentation collection (discipline) and ongoing management (software) Silver lining – Massively improved access to data for integrity and risk assessments

Subsea Equipment Examples Tree SCMManifoldSubsea TreeTree USV (1)C/WO Riser API DocumentStd 17FRP 17PSpec 17D RP 17G (2) Monogrammable?No YesNo Hydrocarbon containing? NoYes Part of well containment envelope? No Yes Routinely retrieved to be maintained or modified? YesNo Yes Typically owned byOperator Contractor Effort required to track LCM status High (Often repaired) Low Medium (Usage history) High (Often repaired) Recommend application of 18LCM? No. Not a critical part of well containment envelope. Yes. Critical part of well containment envelope, therefore consequence of life cycle failure potentially high. (1)Including valve actuator (2)Being upgraded to Standard?

Next Steps CSOEMR – Need co-ordinated approach Across all relevant SCs Evaluate benefits versus costs Define grandfathering process and limits on initial application - to HSE critical equipment? Defer publishing until co-ordinated implementation plan in place SC17 – Define applicable hardware – Define appropriate LCM levels – Prepare detailed application examples

Take aways Potentially huge cost and operational impact on the industry – once deployed, never removed How widely deployed in industry? What really matters – qualitative cost versus benefit analysis required Need a co-ordinated and predefined application plan prior to publishing document