Best Practices in Managing Oil Patch Assets

Nov. 19, 2008
Aligning Performance Expectations with Corporate Goals

“Asset performance management is about achieving business goals,” began Mehul Shah, Aberdeen Group research analyst. Shah presented the results of the company’s recent Oil and Gas Industry Asset Performance Management study to the Oil and Gas Industry Forum this week at Automation Fair.

“In order to do asset performance management (APM) successfully, you need to expand the scope of what you consider to be assets,” he said. “Most managers think about assets as equipment, but you should be adding facilities, automation, data, IT and employees to what you consider assets.”

Aberdeen divides respondents to their surveys into Best in Class, Average Companies, and Laggards based on survey information from the respondents. Shah presented data from the survey broken down that way.

“There are six major roadblocks to Best-in-Class Asset Performance Management,” Shah said. “First, there is the need for culture change from break-fix to proactive maintenance. The second roadblock is that most managers think of asset management as a cost center. Third, many enterprises are stuck with complex and different data sets. Fourth, there is often lack of communication between departments even in a single plant. Fifth, managers often do not count the effect of Best-in-Class asset management on environmental impact. Finally, the sixth roadblock is the lack of effective knowledge transfer.”

“It’s important to align your performance expectations with corporate goals.” Aberdeen Group’s Cindy Jutras and co-presenter Mehul Shah shared best practices in asset performance management for oil and gas companies.

Shah showed data that indicated the oil and gas industry lags in several important categories. In the metric of OEE (overall equipment effectiveness), for example, Best-in- Class companies reported 89%, while oil and gas companies reported 75%. Best-in-Class companies reported their unscheduled downtime as less than 2% while oil and gas industry companies reported theirs as 7%.

“So how can the oil and gas industry improve from 7% to 2% unscheduled downtime?” Shah asked.

Shah reported some best practices based on the survey. “You should be standardizing asset monitoring across the entire enterprise,” he said. “You should be moving from break-then-fix to asset performance management systems employing condition and reliability monitoring. You should be taking a risk-based approach to APM, and you should have standardized APM Key Performance Indicators (KPIs) across the enterprise. You should have dynamically updated asset management processes across the entire enterprise as soon as new best practices are developed. This is a continuous improvement process,” Shah said.

Best practices as Aberdeen sees them include executive ownership and sponsorship of APM, as well as development of centers of excellence for APM across the corporation. “This is just like the centers of excellence you all set up for Six Sigma or Lean,” Shah pointed out. “You also need to establish cross-functional teams for strategic performance management issues, so that you can establish enterprise-wide ROI and profitability goals for your Asset Performance Management initiative.”

Best-in-Class companies collect asset data in real time, and use central knowledge warehouses instead of siloed databases. They use historical data and real-time data as actionable intelligence for decision making. “And they make on-demand data accessible by maintenance and production employees,” Shah said.

“Failure data is used for root-cause analysis by Best-in-Class companies,” Shah said, “and asset performance metrics are directly linked to financial metrics. Best-in-Class companies use analytics for predictive insights, too, and all the standard operating procedures (SOPs) are documented and automated. Asset performance can be compared across plants, too,” Shah said. Enablers include alarm management, master data management, operator training and risk management.

“A real focus area for asset management is mobility,” Shah said. “Best-in-Class companies use mobility tools for rounds, track and test and inspection, to manage work orders, to track assets and even for signature capture for closing out work orders.”

Green companies are beginning to establish KPIs, carbon footprint metrics, executive accountability, and to use asset management data to improve their sustainability.”

Added Cindy Jutras, Aberdeen Group vice president and group director, “We recommend that if you want to become a Best-in-Class company you should implement executive ownership of asset management, align the goals across all the departments in the enterprise and invest in APM tools with real-time interoperability. And finally, align your performance expectations with corporate goals and manage your energy consumption.”