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While the major price swings of energy production in the last decade may seem like they’re firmly in the past, the future of the energy sector is anything but certain. Many companies have learned lessons from the industry’s unexpected turns and implemented processes that are designed to avoid past mistakes and oversights. But one area that’s too frequently overlooked by oil and gas companies are their maintenance systems, processes and strategies.
In today’s highly competitive landscape, it’s no longer enough to simply track and fix equipment assets. A more aggressive asset strategy is needed — one that ensures equipment efficiency that maximises the return on investment (ROI), especially that of physical assets. Today’s maintenance strategies need to go deeper. Asset data needs to be collected and analysed so that companies cannot only better understand what the maturity of their assets means, but also assess equipment condition and predict why and when assets are likely to fail.
Using operational data to track and fix assets
Asset downtime is costly in any industry, and no less in the upstream, midstream and downstream oil and gas sectors, where it can equate to millions of dollars in lost production, extra materials and additional labour costs. The same also applies to the Renewable Energy sector. Across the industry, equipment problems can go well beyond just the loss of output and production; faulty equipment can even result in serious safety and environmental complications.
Many energy companies have maintenance programs in place that help prevent equipment failures. However, many of these programs still focus on tactical procedures that track and fix assets — they don’t provide much in the way of analysis into why assets fail or even try and predict when failure might occur. With today’s focus on reducing operational expenditure across the enterprise, energy companies need to gauge their current procedures; determine what kind of asset management system they have in place; and, depending on what they find, move to a more strategic solution that incorporates predictive failure analysis practices.
Understand the maturity of assets
We believe there are five stages in any energy company’s asset management maturity process, starting from the very basic asset tracking and progressing to a comprehensive, enterprise-wide maintenance strategy.
These five stages are:
In stage 1, the company is reactive to all of its maintenance issues; it fixes something when it’s broken. The company takes few or no preventive measures. This approach increases downtime costs and often results in lost opportunity or production output. You will often find excessive safety stocks that reduces inventory turnover and increases pressure on cash flow.
Here, the company recognises their approach to maintenance could be improved, but can’t properly fund a major overhaul in systems and practices. It continues to focus on reactive procedures, but adds some element of planning such as ensuring critical spares are in inventory and, when practical, overhaul instead of replacing equipment.
Stage 3 is when the company begins to emphasise financial aspects of maintenance. In this stage, the company should communicate its expected ROI to senior management, stressing the importance of investment for additional preventive maintenance measures such as routine inspections, lubrications, adjustments, and scheduled service plans. Planning ahead helps improve equipment ‘Mean Time Between Failures’ (MTBFs).
As time goes on, enterprise participation grows. This means having the support of management that is critical and mandatory. With a growing shift towards predictive maintenance, more data will be collected and analysed. This is needed for organisations to understand when failure is likely to occur and the potential impact on the business. The MTBF will significantly improve during this stage because the company is proactively attempting to manage risk.
The final stage includes maintenance as part of a total company-wide system. Its where the company combines prior techniques with operator involvement that frees maintenance technicians to concentrate on repair data analysis and major maintenance activities (MRO).
These stages have followed the evolution of enterprise asset management (EAM) systems, from computerised maintenance management systems (CMMS) to today’s advanced asset performance management systems. CMMS is usually tactical in nature and provides an understanding of when to repair assets. It also sets the flow for issuing and tracking work orders and other activities. Such a system is well suited to small single-plant operations with limited resource. However, it doesn’t consider the hierarchical nature of complex multi-site assets and locations.
Achieving the highest ROI from your equipment
According to a strategy report from PWC, one of the top issues impacting global energy production is deferred maintenance. This report states, “some operators have put off non-critical spending in recent years to help reduce operating costs.” This is especially troubling for an industry that often relies on ageing assets — some that are used long past their expected lifespan. When a company invests in a mature asset management strategy, it is much better positioned to ensure that it maximises MTBF and achieves the highest potential ROI on equipment— aging or otherwise.
In our next edition we will discuss the importance of maintaining an Asset Ecosystem, how to build a system around industry best practices, assessing and identifying strategic assets and how to develop a comprehensive asset maintenance strategy.