Major Challenges Facing Oil & Gas Companies In The North Sea and KPIs That Can Be Used To Monitor and Manage Them

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KPI or Key Performance Indicator as Concept

The Oil and Gas industry in the UK contributes billions of pounds to the UK economy and provides the UK with 73% of its primary energy [1]. (UK Oil and Gas Economic Outlook 2013). However, there are a number of challenges facing the industry at this time. Despite an all-time high of £13.5 billion worth of investment in 2013 there continues to be a sharp decline in production efficiency across the UK Continental Shelf (UKCS) [2]. Analysts have equated this to the equivalent of the 22% decrease in production [3]. This most probably will have a knock-on effect on the UK economy in terms of increased reliance on imported fuel and less revenue for the treasury, potentially increasing government borrowing or forcing cutbacks in spending on services.

This decline in production efficiency has been attributed to deteriorating reliability and extended maintenance shutdowns [4]

The decrease in production efficiency comes with a background of an aging asset base and a legacy of installations designed and built with lower levels of design and process redundancy during the period of sustained low oil prices between the late 80s through to the early 2000s [5]. Many offshore sites are also operating long past their design life adding to difficulties, particularly in terms of structural integrity and integrity of the process [6].

In addition to this, there is often a constraint on the number of personnel on board (POB) that can actually carry out maintenance work. Those that do often have very low tool time and struggle to work efficiently in the reactive environment that low reliability often brings with it.

In summary, the main challenges facing the oil and gas industry in the North Sea could be distilled to:
• Decreasing trend in reliability of equipment
• Detrition in the condition of aging structures and process containment infrastructure
• Constraints on work execution capacity

KPIs To Help Meet This Challenge

Creating and executing an effective Maintenance Strategy, through a well-organised maintenance system, is one of the keys to increasing reliability and work execution capacity. The main Key Performance Indicators should, therefore, focus on these areas. The KPIs that I feel will be best placed to measure and drive improvements are discussed below. In selecting the KPIs I’ve included some leading indicators. These are an indicator that we can manage to drive improvement rather than lagging indicators that are a result of events that have already happened and therefore cannot be managed or avoided.

I’ve also selected these KPI to allow for an assessment to be drawn as to where the site sits on the effectiveness vs. efficient continuum. Allowing a path to be followed to Good Maintenance, Executed Well.

efficent-vs-effective

Figure 1: Effectiveness & Effectiveness [7]

KPI 1: Safety Critical Maintenance Overdue

This is measured in Man Hours and Number of Work Orders. It is a leading indicator of major damage to our people and assets.

We need to focus on keeping our workforce and assess 100% safe during operations and protecting our assets from major damage. Part of this is carry out all safety critical maintenance as outlined in the maintenance strategy. Without this we risk harming individuals and could jeopardise our license to operate. No license means we have no business.

KPI 2: PM Maintenance Compliance

This is a lagging indicator of the effectiveness of the Work Execution Process. It is a leading indicator of reliability levels of equipment.

To be able to measure the effectiveness of our maintenance strategy we need to make sure we are actually executing it as per the design. If we are not completing our maintenance, then we will never know if the strategy is effective we can therefore also expect to experience lower levels of equipment reliability.

KPI 3: Ratio of Preventive to Breakdown Work

This is a lagging indicator, however, it is important to understand if the maintenance routines that are being executed are effective and be able to feed this back through modifications to the maintenance strategy if required.

Analysing this ratio would be a starting point and if PM compliance is being met but the ratio of Breakdowns to Preventive Maintenance is still increasing then further investigation may need to be carried out to understand the effectiveness of the routines.

KPI 4: Schedule Compliance

This is a lagging indicator of maintenance execution and a leading indicator of PM Compliance. Schedule Compliance is a good measure of the Work Execution Process and how efficiently a site is working. Creating a schedule and then successfully executing that schedule needs a number of elements to be in place and working within the Work Execution Process so is a good compound KPI.

KPI 5: Tool time

With a constraint on the number of people we can fit on offshore installations we need to constantly strive to increase our tool time to allow us to get the most efficient use of the labour at each site. Increased tool time means we can get more work done with the same number of people and is key to allowing us to execute our maintenance routines.

KPI 6: Production Efficiency

Our end goal of being “more productive” is really to provide an increased, and sustainable level of production efficiency. This measure is the total actual production / the total potential production.

Company Specific Challenges

The company has grown exclusively through acquisition over the past 12 years. Over that time we have acquired 12 sites from 6 different major operators in the North Sea. These sites vary in age, production profile and end of life forecasts and the challenges outlined above that face the industry as a whole are exactly those that the company faces at the moment. In addition to those, often the asses underwent a period of under-investment prior to being sold, followed by a production, not maintenance and reliability, focus when the company first started to operate them. This focus was in order to achieve the forecast return on investment figures from the site. We may be paying for this now through reduced reliability and the knock-on effect that has on production levels.

As an example in this company we have chosen to focus on 3 of the KPIs listed above as a starting point. These are:

1. Safety Critical Maintenance Backlog
2. Schedule Attainment
3. PM Compliance

Our safety critical backlog is currently some 112,500 hours made up of 1,850 Work Orders over 12 sites. Lack of visibility and control of the risks associated with the backlog are a constant threat to our license to operate.

To aid with this we have developed an interactive Dashboard to allow quick and easy access to these figures, as well as the functionality to see trends and slice and dice data by craft and function. The intention is to drive accountability between the lead crafts and functions i.e. Maintenance, Drilling, Operations, Inspection and Services for the management of their Work Orders.

In addition to this we are currently defining a work execution training and coaching programme. This will focus on getting work done efficiently and right first time. This will help us to get more work out of the current workforce. Schedule attainment will help us measure how efficient we are at carrying out work based on the capacity of man-hours we have at each site. Sub-elements of this KPI we also monitor are the Work Order that were scheduled but not attained. A great deal of learning can be taken from classifying and trending the reason that work wasn’t carried out as planned. But only if this is acted on to drive continuous improvements in the Work Management System.

We have a total Preventive Maintenance backlog of 130,000 hours made up of 6,500 Work Orders. If we don’t carry these PM Work Orders consistently as per the plan then there is very little chance of understanding if these routines are giving us the increase in reliability we desire and no way of knowing if the strategy is effective. This is why into 2014 there will be a greater focus on PM Compliance.

These 3 KPIs are a combination of leading and lagging indicators and will help us understand how efficient and effective we are at carrying out maintenance as per the strategy we have put in place.

Summary

In summary, the North Sea is, on the whole, a mature area. There are a large proportion of older sites that are suffering from reduced reliability and the lower production efficiency this brings with it. This could be said to be an effect of initial design during an era of cost reduction, operating in excess of their design life and long periods of focus on production at the cost of maintenance.

However, I’m starting to recognise a growing realisation at senior levels that effective maintenance is key to increasing these production levels. Large capital investment levels today should reap benefits in the coming years in terms of increased reliability and production efficiency. This should prolong the lifetime of assets and the Oil and Gas Industry in the North Sea as a whole. It is vital to ensure that our Maintenance Strategies are effective and flexible enough to adapt to take advantage of this investment. Monitoring the correct set of KPIs and using them to drive improvement in the strategy is an important step in this process.

References:
[1] Oil & Gas UK Economic Report 2013, p.7 [Online] Available: http://www.oilandgasuk.co.uk/2013-economic-report.cfm
[2] Oil & Gas UK Economic Report 2013, p.5
[3] North Sea Oil And Gas Production To Face Record Fall, [Online] Available:
http://www.oilvoice.com/n/North_Sea_oil_and_gas_production_to_face_record_fall/3e08324afa0b.aspx [21 August 2013]
[4] Oil & Gas UK Economic Report 2013, p.21
[5] McMahon, T. Historical Oil Prices Chart, 16 April 2013, [Online], Available http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp
[6] Stacey, A. Sharp, J. Birkenshaw, M. Life Extension Issues For Ageing Offshore Installations, 15 June 2008, p.1, [Online] Available http://www.hse.gov.uk/offshore/ageing/life-extension-issues.pdf
[7] Wheelhouse, P. M01 Maintenance Strategy Course Book, Figure 4.4, p.63

 

 

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