Atkins – Realising major savings through spares optimisation

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1.Problem statement

Ever increasingly, operators are facing the challenge of managing their existing assets during volatile market conditions such that unnecessary financial ‘wastage’ is minimised and opportunities for increased efficiencies, and ultimately operating revenues, are maximised without compromising safety. Related to this, a further key challenge demands proactively positioning the business such that future operations are optimised to sustain improved efficiencies and financial return at minimal OPEX / investment, again, without compromising safety.

2. Aims 

Particular focus is demanded on minimising unnecessary and wasteful expenditures.  Such unnecessary spend can arise from many sources, but especially from inefficient inventory management. This includes excessive/unnecessary spares purchase, storage, etc.,  which can lead to extreme storage costs and avoidable, large scale capital expenditures, often of the order of £M’s. To combat this Atkins has developed a successful managed service that can help clients improve their inventory management, and overcome challenges including:

  • Excessive data handling issues – inadequate infrastructure/resource to deal with ‘Big Data’.
  • Inadequate corporate systems/processes to interrogate inventory stock types and levels.
  • Lack of coordination/communication between relevant internal groups and divisions.

Poor awareness of internal standards/practices (if they exist) leading to inconsistent implementation of maintenance strategies, R&M guidelines, etc. and quality related issues.

3. Method

Atkins service has three key elements:

  • Reducing waste by cleansing inventory data of unsuitable spares (obsolete, mothballed, degraded, perished, wrongly classified, etc.).
  • Increasing safety and availability by stocking the correct spares in the required condition, to mitigate critical failure, with focus on local operating context.
  • Reducing capital and operational costs by minimising excess stock, while managing stock-out risk to an acceptable level.

4. Impact

Following implementation of Atkins process on an operator’s range of assets, comprising offshore facilities, onshore terminals, and pipelines, the analysis revealed numerous inventory management inefficiencies, offering potential for significant waste reduction and reliability improvements.

For example:

  • An initial 29% of operational spares book value not linked to equipment – directing an investigation by the operator.
  • Errors in migration of inventory data when upgrading between CMMS versions.
  • Duplicate purchase orders.
  • Accounting data inconsistencies.
  • Inventory data fields not fit for purpose.
  • Surplus project spares from vendor spare parts interchangeability lists (SPIL) offloaded to operation regardless of suitability.
  • Scope for common spares pooling, promoting further excess stock savings.
  • Recording issues in free-text material descriptions – operator without physical metrics to get competitive quotes and reliant on overpriced spares from vendor SPILs.
  • Generic ‘repair versus replace’ response guidance not fit for purpose eg decision support logic not sufficiently nuanced for combinations of store and materials ownership and leasing.

Total savings anticipated

The analysis ultimately revealed $179 million of recommended savings constituting $79 million of unsuitable spares and $100 million of excess stock  – of this $49 million has been confirmed to date by client’s ongoing review.

“We achieved all three waves of disposals that needed to be accomplished, thanks to Atkins’ work, with savings of $49 million against the target $45 million for 2017, plus an extra $40 million already released to Material Management for producing Disposal Forms.”

Client’s project sponsor, Aug 2017

Click on the image above to download the case study.

Aker Solutions – Kaizen: PPE

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1. Problem Statement

Needless over-issue of PPE Kits (316 duplicated kits issued to technicians in 2016)

2. Aims

  • To reduce the spend on initial issue PPE whilst ensuring individuals still receive PPE needed for their work prior to deployment offshore.

3. Method

  • Kaizen event that included the PPE supplier
  • Map current process and draw out issues causing overspend on PPE
  • Analyse the root causes to all the issues and identify their solutions
  • Build a detailed to-be process
  • Carry out the actions needed to run the new way of working
  • Track the benefits

4. Impact

  • Over-issue of kits reduced
  • 93% in 2017
  • 100% in the last 6 months
  • Despite a spike in recruitment with the up-man for a major hook-up contract.
  • Quantity of returned kits reduced
  • Measures implemented at minimal cost that makes the suppliers work easier (i.e. less expensive).
  • Benefits tracked for a year after and spend per person is still below target
  • Regular meetings with supplier set-up to ensure standard kit continues to contain best for purpose PPE.
  • 43% Cost avoidance during a major hook-up contract up-man

% cost avoided

43%

(Jun – Nov17)

Click on the image above to download the case study.

Halliburton – Vendor Managed Inventory

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Submitted by Halliburton

Impact

The average consumable spend per workshop hour Dec-14 to Jan-15 was £2.04 per hour.

The average consumable spend per workshop hour in Jan to Mar-16  spend was 81p per hour (i.e a 60% reduction in consumable cost per workshop hour)

Not included in the above figures are the saving and reductions that Vendor Managed Inventory (VMI) machine provides in the following:

  • inventory stock holding (releases working capital);
  • saves admin/processing time on: raising purchase requisitions/purchase orders, goods receipt, storage/counting, goods issuing; and most importantly,
  • saves the workshop technicians time in them walking to the stores to ask for basic consumables.

Description of Best Practice

A VMI machine was installed and became operational within one of Halliburton’s workshops in Aberdeen in March 2015. These machines hold fast moving consumable workshop items such as PPE, abrasives, glues, tape, aerosols, etc, and allow technicians controlled access to withdraw these goods straight from the machines instead of the traditional trips to stores or raising requisitions. Not only do these machines save the technicians time but they avoid the entire requisition/purchasing/invoice processing effort/costs involved with traditional sourcing as the contents remain the property of the supplier until used. The machines are connected directly to the internet and send stock usage info to the vendor’s office 3 times daily so that replenishment (against min/max levels) can be planned multiple days weekly as required. Monthly billing and online interface simplify administration while allowing detailed reviews of usage patterns. Swipe card security, touch screen and photo catalogue interface makes average “picking time” circa 15 seconds.

The VMI machines are supplied free of charge by the vendor and set-up costs are very minimal (electrical power and a native internet connection) and the machines are reconfigurable and can be relocated.

The usage of the machines is monitored and weekly and monthly usage reports are automatically e-mailed to facility supervisors and materials for review – supervisors were easily able to identify unusual or excessive use and challenge individuals.

Contact: John Suggett
john.suggett@halliburton.com

BP – Mastering effective daily management at terminal delivers performance improvements

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Submitted by BP

Impact

  • BP has delivered efficiency improvements on Sullom Voe Terminal’s Renewals and Turnaround projects by adopting a visual management process to expose, and then eliminate, waste.
  • Plan attainment of Renewal and Turnaround resources can now exceed 80% and safety improvements have also been recorded.
  • The system has evolved over the last year to incorporate comprehensive metrics to identify continuous improvements in everything from how the working day is structured to equipment hire, schedule variance, vendor invoicing and HSE audits.
  • An improved and collaborative work environment means less frustration among individuals.

Description of Best Practice

BP has delivered performance improvements on our Sullom Voe Terminal Renewals and Turnarounds projects by applying a visual management approach and implementing what the project team call the ‘war room’.

The Sullom Voe Terminal was built in the 1980s and most of the major plant items are now operating beyond their original design life. A number of different projects are currently underway to help support the current east of Shetland fields and expanding fields in West of Shetland.

As a result of this large and rapid growth of work fronts at site and the limited resources of Operations, coupled with the resulting lack of clarity associated with accountability, delays were being encountered in a number of the Renewals and Turnarounds team projects.

In 2014, the project leadership team could see that there were inefficiencies: plan attainment was only 50%, against a target of at least 80%. However, with numerous contract companies and BP functions involved, resolving technical and operational issues was a challenging and time consuming process. Daily morning meetings would uncover an issue or that some of the workforce were not at their scheduled activity due to being held up on the previous job. But with workers starting at 8am, it was usually already too late to do anything about it and several hours could be lost by moving them to the required job.

So, the project team established a daily forum open to all functions and contract companies that would bring work through and assign visible accountability for resolving any obstacles.

Known as the ‘war room’, key stakeholders meet at the end of each day to identify, and act on any issues for the following day. Heads of each of the service companies, as well as representatives from the relevant Operations departments and the person accountable for each job all attend. With everyone in the room at the same time it is a way to quickly resolve issues in preparation for the next day.

The team also adopted a combination of simple and effective visual information aids.

Gary Macdonald is Construction Manager for Renewals and Turnarounds. “Red and green dots symbolise each issue’s status. Red means an issue has arisen with no planned solution and we therefore discuss to resolve the issue and identify who will implement it. Green means a solution has been identified, the issue has been resolved and the function or supplier raising the issue is happy. Only the team raising the issue has the authority to change the status from red to green. Once green, the issue is recorded and reviewed so that it can be decided if a more formal continuous improvement event is required.”

The system has evolved over the last year to incorporate comprehensive metrics to identify continuous improvements in everything from how the working day is structured to equipment hire, schedule variance, vendor invoicing and HSE audits.

The process has exposed waste so that it can be eliminated and prevented from recurring, making the workplace and therefore project more efficient. Plan attainment can achieve more than 80%, with cost savings delivered and safety improvements also recorded.

“Now, representatives from each discipline leave knowing exactly how the day went, where their labour is going tomorrow and outstanding issues are being worked through to resolution,” says Gary.

Contact: Stephanie McHardy

stephanie.mchardy@bp.com

Halliburton – Country PSL Manager

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Submitted by Halliburton

Impact

In logistics, we are leaning out our processes and reducing the areas we see as waste.  We are focused on the future state, deploying the optimum balance between effectiveness – providing the service that either an internal or external customer wants when he or she wants or needs it – and efficiency – providing this service with the optimal use of our resources, including safety, expertise, time, space, money, plant and people.

Description of Best Practice

  • Rationalise systems for mob and demob.
  • Centralised/standardised backload and loadout management.
  • Centralised yard resources.
  • Deploying control tower structures for container and transport management.
  • Consolidation of supplier bases – volume discount and rebates.
  • Re-defining roles/responsibilities and matching competencies.
  • Rationalised yard layout.
  • Review of current customs processes and regimes. Meet new customs code requirements.

Contact: John Suggett
john.suggett@halliburton.com

Perenco – Bringing out of use pipelines back into use

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Submitted by Perenco

Impact

The immediate effect of taking the pipeline out of use was the loss of 60,000 barrels of water injection capacity per day on Furzey Island, ultimately leading to a loss of ~2,400 barrels of oil production per day.

The conventional Horizontal directional drilling option would have taken ~ 14 months to complete at a cost of ~ £5M. The deferred production during this period could be estimated to be over 1 million barrels of oil. In addition a new pipeline would require significant consultation and planning permission to drill in an environmentally sensitive area.

The selected ‘Pipe in pipe’ solution was completed in 6 months for a cost of £2.2M and a deferred production of 430 thousand barrels of oil.

Description of Best Practice

The Wytch Farm Oil field is situated in one of the UK’s most environmentally sensitive areas. On 9th March 2015 following a routine in-line inspection, a 1.2km section of 8” produced water pipeline connecting Furzey Island (in Poole Harbour) with F site (on the Goathorn Peninsula) was found to have severe internal corrosion. The pipeline was immediately taken out of service as a precaution to protect the environment and a project was initiated to restore production.

Conventionally the pipeline would have been decommissioned and replaced using a technique called ‘Horizontal directional drilling’. This would involve a significant project drilling a 1.2km borehole between the two remote sites. A new steel pipeline would then be constructed on the mainland and pulled through the new borehole. Finally the new pipeline would then need to be connected by welding into the buried pipelines at each site.

With technical support from Perenco’s head offices the local team looked for innovative solutions that could repair or re-use the existing pipeline. These included:

  • A tight fit internal sleeve (pulling a PDFE liner into the pipe);
  • A ‘cured in place’ pipeline liner; and
  • A composite ‘Pipe in Pipe’ pulled through the existing 8” pipeline.

The selected ‘Pipe in Pipe’ solution involved pulling a 5”, 155 bar rated composite pipe through the existing pipeline using a small wireline unit on the mainland.

To restore the full 60,000 barrels of water to Furzey Island, an additional 5” and a 4” composite line were installed in two previously mothballed pipelines, already installed between Furzey Island and F site.

The material for each line came on one continuous reel, 1.3km long from the Supplier in Houston. These represented the longest continuous pulled through line of this diameter ever installed using this material. Importantly for the project team this meant that each line could be installed without the need for joints, and therefore potential leak paths in the carrier pipes under Poole harbour.

The actual pull through of each 1.2km line took less than 3 hours!

In addition, the project replaced significant sections of buried steel pipelines on both F & L sites. This involved several complex excavations up to 6m deep. The areas excavated are some of the most congested areas on site with many live pipelines, high voltage cables and other buried services. This required careful civil engineering design to maintain the excavations, to prevent interruptions to operations and to allow the pipeline team to install and weld the new pipeline in the excavations. In total 137 new welds were installed.

The work was successfully completed and the pipeline returned to service on 9th September delivering over 60,000 barrels of water per day to Furzey Island, exactly 6 months from the date the pipeline was taken out of use.

Contact: Rob Smith / Perenco UK

BP – Reducing costs of hired equipment offshore

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Submitted by BP
Impact

Through implementing these changes, BP expects to generate a significant reduction against hired equipment no longer required.

Having been successfully implemented on one platform, this solution will be rolled out across BP’s North Sea assets.

Description of Best Practice

BP identified a Region-wide trend of hired equipment remaining offshore long after use, generating charges to BP for every day spent offshore. On one platform for example, just one piece of equipment generated £48K in overdue charges.

A project team set about quantifying the extent and root causes of the problem, with a view to significantly reducing overspend.

Following the review, they put in place a number of changes to ensure improved management of hired equipment:

  • Simpler process for registering all hired equipment – improving the visibility of costs.
  • New tagging system to clearly identify status of hired equipment – providing a coherent method for managing and tracking hired equipment from the initial order right through to return to vendors.
  • Increased collaboration with on and offshore SPAs – ensuring only that equipment which is required is sent offshore.

Contact: Sarah Hodgkinson, BP

BG Group – launches efficiency drive by reducing ‘dead’ time and empowering workforce

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Submitted by BG Group

Impact

Expected to significantly reduce ‘dead time’ on installations.

Description of Best Practice

BG Group intends to make its offshore platforms more efficient by significantly reducing ‘dead time’ on installations and empowering the offshore workforce to carry out scheduling and planning.

By enabling employees offshore, rather than logistics coordinators based onshore, to manage materials, plan projects and schedule jobs, the right parts, people and processes should be in place when a job is due to begin. So-called ‘dead time’, common when tasks are delayed, should reduce and efficiency increase.

The company has embarked on the second phase of a £300 million investment in its London and Everest platforms, 140 miles east of Aberdeen.

The North Everest platform has produced since the early 1990s and investment is required to enable it to safely produce to 2025 and beyond. Operating costs must also come down to ensure that it remains economic for as long as possible.

Read the full BBC story here.

BP reduces costs by improving inventory management

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BP has worked hard over the last three years to improve its management of inventory to reduce lead times in getting critical spare parts offshore and reduce waste from the purchase and storage of excess materials.

Over the last five decades of operations in the North Sea, the company has built up a large amount of inventory, stored in many locations. This complexity and excess often resulted in long lead times to transport materials offshore and besides being costly, could have a negative impact on production when these materials were critical to the operation of the platform.

BP launched a project to improve its inventory management – identifying a number of improvements, including better materials cataloguing, disposal of surplus spare parts and a reduction in the number of storage locations being used. As a result, the company has created a more effective materials management process and reduced the costs of inventory management. The number of storage locations has more than halved from 120 to 48, greatly reducing storage costs. The number of inventory items has also halved from 158,000 to 75,000 and around $32 million has been generated by disposing of scrap and materials identified as surplus to the company’s needs.

BP is also participating in Oil & Gas UK’s workgroup focusing on the use of inventory. Through collaboration with other operators, materials are being shared, inventories are being slimmed down and required materials are being made available more quickly.

Arnie Mouat, BP Materials Management Delivery Manager, commented: “The need to address high costs and production efficiency issues in the UK Continental Shelf is clear. Our work to eliminate waste and excess is a good example not only of our relentless focus on making our processes more efficient and reducing operating costs but also of the benefits of collaboration across the industry.”

Please view BP logistics video here.