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The Fundamentals of Asset Integrity Management

Online Training Series Course Summary

COURSE B: THE FUNDAMENTALS OF ASSET INTEGRITY RISK


MANAGEMENT

Module 6: Course clinic: Answering the most commonly-asked


questions on asset integrity risk management

When Setting up an Asset Integrity Management System, it must be the case that we know,
understand and communicate the following
What our risks are - how bad they are and how often they can occur
What controls are required - what risk control systems do we have in place
Whether these are suitable and sufficient - are the controls strong enough, fast
enough to deal with the situations we need for them to deal with fast enough and
suitable enough
Have implemented practicable improvements -
Do we have mechanisms to assure asset integrity - such as inspections, testing and
ensuring the right training and competencies/knowledge of personnel who are
maintaining and managing our assets
Proactively measure these mechanisms - have we established leading and lagging
indicators to tell us whether or not the systems are doing as well as we would want
it to do and where the weaknesses in our systems are
Monitor and review - to check whether or not we are doing what we say we were
doing and we are doing it good enough

1. What are the biggest challenges in getting asset integrity risk management right?

Leadership - leadership is critical and establishes the culture and the budget for
Maintenance Management (MM).
Impact on process safety of long-term strategy and decision-making by senior and
executive mangers depends on their understanding and awareness of major hazard
risks posed by their operations. It is critical that leadership needs to understand and
are aware of what the risks posed by their operations actually are. If they dont
understand this, how would they be able to provide support for the improvement
measure.
There is a need to set better leading indicators for integrity, e.g. backlog (ensure all
maintenance is completed before due date or report total hours outstanding),
Verifier anomalies. If we dont get the information across, were not going to be
able to get the message across, and if we dont get the message across, we cant
get the commitment required from this system.
Complexity of many maintenance systems and quality of maintenance data is
hindering ability of management to gain a clear understanding of state of plant and
equipment. Maintenance systems tend to absorb information and it can give us
information on how we are managing our assets. We need to just ask the right
questions. From and Asset integrity point of view, we do we need to know to set up
a system and make sure that the MM system gives the information we need to

Course summary developed by Michelle McIntyre on behalf of Oil and Gas Fundamentals Oil and Gas Fundamentals 2012

THIS IS A CONFIDENTIAL SUMMARY OF THE CONTENTS OF AN ONLINE TRAINING COURSE FOUND AT WWW.OILANDGASFUNDAMENTALS.COM.
IT IS FOR THE REVIEW OF COURSE PARTICIPANTS ONLY AND IS NOT FOR DISSEMINATION COPYRIGHT RESTRICTIONS APPLY
The Fundamentals of Asset Integrity Management
Online Training Series Course Summary

know. Such information as the maintenance records not giving us proper


information about the equipment condition that may have caused failures and so
on.
Leading indicators - condition of equipment
Lagging indicators - possible causes of failure
It is important to understand these.
*Issues are well known and are capable of being addressed by improved leadership at
senior level
Understanding the major hazard control loop
You must make sure that people throughout the organization understands the
relationship between the Safety Critical Elements (SCE) and performance standards and
the management of the integrity of the assets. Management needs to understand these
risks and how these risks are to be managed, but also down at the individual personnel
level, they understand their role in assuring the asset integrity and why what they do it
critical to managing risk.
SCEs are the barriers to prevent major accident events
SCEs are developed by analyzing major hazard scenarios, identifying important
controls and developing performance standards
Performance is assured via maintenance, inspection and testing, and formally
verified (often independently)
*Needs to be understood at all levels of organization

Ageing assets and life extension


Everybody is trying to get more out of less - extend the lifetime of the original design
lifetime. The initial design assumptions that have been made - do they still function in the
way its supposed to? Obsolete systems are no longer required - and how many of these
obsolete systems do we have still within our MM systems? Asking yourself what is critical
may actually be a saving to the business - that we actually concentrate on the important
stuff rather than continuing what we've always done.
Regulators are recognizing that facilities are getting older and the risk profiles are
changing and that things/equipment need to change.
Many platforms in UK North Sea are approaching or have exceeded their
design life
High oil and gas price has seen economic life expectancy of many installations
extended by between 10 and 25 years
Integrity management of ageing installations depends crucially on knowing
equipment condition and associated degradation processes, as well as
identifying obsolescent systems or components
Expect much greater attention from regulators
*Arguably the single biggest challenge facing operators across the globe

Skills shortage
In the drilling and fixed equipment industry, many questions are asked - such as where are
we going to get the people to work? How are we going to make sure that the new people
we hire have the competencies we really require? How do we keep the essential skills of

Course summary developed by Michelle McIntyre on behalf of Oil and Gas Fundamentals Oil and Gas Fundamentals 2012

THIS IS A CONFIDENTIAL SUMMARY OF THE CONTENTS OF AN ONLINE TRAINING COURSE FOUND AT WWW.OILANDGASFUNDAMENTALS.COM.
IT IS FOR THE REVIEW OF COURSE PARTICIPANTS ONLY AND IS NOT FOR DISSEMINATION COPYRIGHT RESTRICTIONS APPLY
The Fundamentals of Asset Integrity Management
Online Training Series Course Summary

the people who are retiring and leaving the industry whilst allowing the new people to
learn the lessons of these older heads?
Worldwide problem across all industries
Perception that oil industry is hire and fire?
Competency assurance of personnel becomes critical
Need to improve learning and communication between assets and between
companies
*Essential that industry works cooperatively to assure the skills, training and competencies
required.

2. How can companies justify the time and expense required?


The cost of minor accidents
Costs include:
Financial Costs - additional costs actually incurred to achieve desired output
Opportunity Costs - costs of labor paid for no work or production
The categories of costs fall into:
Direct costs such as clean-up costs, sick pay/cost of compensation to injured
individual, replacement of damaged equipment and legal fees
Indirect costs such as lost production, loss of corporate reputation, loss of
market share, fall in share price, labor costs of downtime
The cost of major accidents
Major accidents e.g. Piper Alpha:
Physical damage $680m (50%)
Business interruption $275m (20%)
Fatalities / injuries $160m (12%)
Wreck removal $100m (7%)
Re-drilling $87m (6%)
Well control $34m (2%)
Pipeline removal / re-routing $30m
Seepage / pollution $4m (0.3%)
The accident iceberg - pertains to the costs we can get back and what costs we can't get
back
INSURED COSTS
Injury, ill health, property damage & business interruption
Employers, 3rd party & corporate liability
UNINSURED COSTS
Product and material damage, Plant and building damage
Tool and equipment damage, Legal costs
Expenditure on emergency supplies, Clearing site
Production delays, Overtime working and temporary labor
Investigation time, Supervisors time diverted
Clerical effort, Fines, Loss of expertise / experience
*Some can be insured against but at significant extra cost
Observation: its better to work safely and not have incidents/accidents rather than to
operate without due caution just because a company is insured. It can cost more money

Course summary developed by Michelle McIntyre on behalf of Oil and Gas Fundamentals Oil and Gas Fundamentals 2012

THIS IS A CONFIDENTIAL SUMMARY OF THE CONTENTS OF AN ONLINE TRAINING COURSE FOUND AT WWW.OILANDGASFUNDAMENTALS.COM.
IT IS FOR THE REVIEW OF COURSE PARTICIPANTS ONLY AND IS NOT FOR DISSEMINATION COPYRIGHT RESTRICTIONS APPLY
The Fundamentals of Asset Integrity Management
Online Training Series Course Summary

and time with insurance to recuperate from the incident than anticipated. The reputation
of the company will also go down the drain and this cannot be recovered with insurance.

If one does not understand or have a full appreciation of direct and indirect costs, one will
not fully appreciate the magnitude of the risks one is actually responsible for managing.
The more time we spend in production, the less lime we spend cleaning up after incidents
and more profits will be made - and due to this, the more employees will be returning
home safely.

3. Can asset integrity risk ever be reduced to zero?

Zero risk is often set as a goal, but is it realistic to achieve?


Basic idea behind the ALARP principle is that:
whilst the reduction of risk may always be desirable, the achievement of the
reduction may be unwarranted
Design process seeks to remove risks as far as possible, e.g. inherent safety
The earlier risks are identified, the easier they are to manage
Whilst potentially hazardous materials or processes remain, there will always be
some level of residual risk
The challenge is to strike a balance between the cost of risk controls and the
remaining residual risk

Applying Asset Integrity Risk Management


Concept Design - Select technology, process, location, manning levels
Residual Risk - Inherently Safer Design using Intensification, Substitution, Attenuation, Simplification
Detailed Design - Risk Reduction Measures such as Prevention, Control, Mitigation
Residual Risk - Reliability & Availability - Passive, Active, Administrative
Operation - Manage Asset Integrity and Change

4. As Low As Reasonably Practicable (ALARP)


ALARP Misconceptions
If risks are Tolerable, they are ALARP - this is not true - we can live with a risk that we can tolerate, but it only
tolerable if we have sought to improve and we've evaluated improvement measures and we have
implemented those measures.
Ensuring that risks are reduced to ALARP means raising standards continually - society expects that we raise
safety performance within the company
If some companies have adopted a high standard of risk control, that standard is ALARP. Now because a
company may have a certain level of ALARP, doesnt mean that we can stop at that level - but you can reach
for a higher level once it can be achieved.
Ensuring risks are reduced to ALARP means we can insist on all possible risk controls
Ensuring that risks are reduced to ALARP means there will be no accidents or ill-health. This doesnt mean that
there will be no accidents or ill-health, but it means that we do what is reasonable to ensure that there are no
holes in our control systems to try and make sure we don't have any more surprises in the future.

Course summary developed by Michelle McIntyre on behalf of Oil and Gas Fundamentals Oil and Gas Fundamentals 2012

THIS IS A CONFIDENTIAL SUMMARY OF THE CONTENTS OF AN ONLINE TRAINING COURSE FOUND AT WWW.OILANDGASFUNDAMENTALS.COM.
IT IS FOR THE REVIEW OF COURSE PARTICIPANTS ONLY AND IS NOT FOR DISSEMINATION COPYRIGHT RESTRICTIONS APPLY