Risk-Based Asset Performance and Its Importance to the US Oil Industry

By Guest Blogger: Jim Stuart

Technology Trends

For the first time since 1973, the United States is the world's largest producer of crude oil, according to the USA Department of Energy.  The American oil boom has reshaped global energy markets as US oil output has more than doubled over the past decade, and the industry needs to address risk-based asset performance.

Risk-Based Asset Performance The%20Permian%20Basin.JPGSignificant advances in drilling technology and fracking have unlocked vast reservoirs of oil and natural gas.  The Permian Basin of west Texas and eastern New Mexico has seen a rebirth of production.

The November 22, 2017 issue of the Texas Monthly reported, “But with the advent of hydrofracking and horizontal drilling technology earlier this decade, oil experts quickly realized that there was more oil left to extract—much more.  Although the Permian has already yielded up to 40 billion barrels of oil through conventional drilling, IHS-Markit now estimates that another 70 billion barrels could be recovered with new drilling technology.”

While technology innovations have modernized drilling and exploration, the vast majority of America’s refining infrastructure was built decades ago.  To sustain this growth and maintain profit margins, downstream producers are leveraging new technologies to assure asset integrity and provide a holistic, 360 degree understanding of their operating assets to optimize production and maintenance as well as minimize risk.

A risk-based approach enables:

  • operators to optimize business operations while lowering risk profile
  • prioritize inspection and maintenance on risk
  • eliminate unnecessary inspection and maintenance activities
  • enable more accurate risk mitigation
  • calculate cumulative risks of aging equipment
  • focus limited resources on critical assets
  • extend maintenance and turnaround intervals
  • safely extend equipment life

To realize the benefits of this risk-based approach to asset performance, operators are leveraging new approaches in mining and analyzing their vast inspection and maintenance data to deliver actionable insights that pin point risk and enhance asset/plant performance and reliability.  In fact, Lloyd’s Register has shown that some operators have realized up to 20 percent gains in overall production while reducing failure risk by 80 percent and achieving cost savings of up to 50 percent.

Just as new technology has enabled this huge growth in crude output in North America, oil refineries and chemical plants are working hard to leverage a new era in digital intelligence of their assets resulting in improved maintenance and reliability programs that removes unnecessary pressure on operations and budgets.

Three Pillars of Risk-Based Asset Performance

The three foundational pillars of this risk-based approach to managing asset performance are engineering expertise, actionable data, and a digital platform with the analytical tools to bring these elements together for analysis and resulting updates to asset strategies and maintenance plans.

Capturing engineering expertise in a digital format (often referred to as organizational memory) has been top of mind for the process industries for years with the looming retirement of a significant percentage of the workforce.  At a November 2017 conference in Dallas called the “Meeting of the Minds,” industry leaders explored how the mechanical integrity and reliability fields will have to prepare for the impending loss of knowledge resulting from the retirement of the baby-boomer generation — a national event known as the “Great Crew Change.”  According to some reports, this represents as much as 50 percent of the current experienced workforce.

The article on that November 2017 conference in the March/April 2018 issue of Inspectioneering Journal also reported, “Knowledge transfer is a vital requirement to reduce the risk of increased errors, missed opportunities for safety advancements, or — worst case scenario — catastrophic events.”

While much focus by technology providers has been placed on advancing prescriptive analytics and Industry 4.0 wireless device connectivity to drive advanced maintenance and reliability programs, asset management platforms must also enable knowledge capture before half the experienced engineers, inspectors, maintenance technicians, and reliability pros retire.  The term “digital transformation” has become an overused buzz word, but the consequences of not having a methodology for capturing and digitizing the collective knowledge of the retiring workforce is unacceptable and thus a must-have for any APM platform.

Actionable data starts with the basics, APIs for easy connectivity to EAM or CMMS systems to access maintenance history as well as failure and effect (FMEA) data. But the recent advances in big data, IIoT machine connectivity, and cloud technology have created new opportunities to get at actionable data from all types industrial/plant assets. Condition monitoring technology delivers real-time asset health information from sensors and vast new array of IIoT devices that feed this data stream through secure wireless networks back to APM systems for analysis.

A comprehensive Asset Performance Management platform brings together all the advanced analytical tools, relevant data (historical and real-time), as well as maintenance and reliability methodologies for all equipment types to deliver on the predictive maintenance vision.  With the right APM platform, operators can optimize maintenance and clearly identify the risk of failure from a single component to global manufacturing/production enterprise systems. With greater asset reliability comes extended time between turnarounds, longer asset life and results in greater lifetime ROI.

With these pillars in place, operators are equipped with the technology and knowledge base to safely and reliably increase production beyond previous expectations.  Additionally, maintenance and reliability teams can use this prescriptive insight to schedule required maintenance at a time that has the least amount of impact on production schedules.

If downstream operators are going to be able to process all this new supply of US crude oil, safe and reliable operations are business and moral imperatives.  Unplanned downtime or, in the worst-case scenario, a containment incident that harms people and/or the environment can set back the production gains made in an instant.

About the Author:

Jim Stuart is Senior Vice President for Digital Products and Software for Lloyd’s Register.  Jim has been leading technology companies for more than 20 years.  His experience covers software product innovation, digital strategy development and implementation, business transformation, and operational excellence.

For more information on the Lloyd’s Register AllAssets APM platform, visit https://www.lr.org/en/allassets/ and read the ARCview “Lloyd’s Register AllAssets APM Platform Puts Assurance Into APM” by ARC analyst Paula Hollywood available here: https://www.arcweb.com/blog/lloyds-register-allassets-apm-platform-puts-assurance-apm


Engage with ARC Advisory Group