Senior Consultant, ARC Advisory Group
Many industrial organizations face pressure to increase workplace and process safety, improve asset performance, and gain visibility into operational risks before incidents occur. Asset-intensive industries continue to suffer from unplanned downtime, failure to meet planned production rates, and too many safety and environmental incidents. Until they can manage and mitigate operational risks proactively, companies will continue to struggle to improve profitability and build shareholder value due to continuing production interruptions, lost productivity, and collateral brand damage.
Statoil provides an interesting case study. While the company's origins approximately 40 years ago were as an upstream exploration and production company focused on the Norwegian continental shelf (NCS), it has expanded its operations over the years to become an integrated international energy company with operations in 35 countries. These include more than 40 production assets plus refineries, terminals, and gas processing plants. Statoil is the third largest crude oil seller and the second largest gas exporter to Europe.
Statoil's stated goal is to be the industry leader in health, safety, and environment (HSE). According to president and CEO Helge Lund, "HSE must be the first priority in everything we do. Should a conflict arise, safety must always take precedence over production." To this end, Statoil has worked to further improve its safety culture and better understand and manage risks through various campaigns and training efforts. The company has also developed management systems at all levels to be able to effectively identify, evaluate, manage, and mitigate many business risks. These efforts have yielded significant results and the company continues to make progress managing process safety and risk at the operational asset level.
Like most global upstream companies, Statoil operates in various challenging environments with different regulatory regimes and operating conditions. Exposure to harsh weather conditions, shipping and logistical challenges, and the need to ensure safe execution of work both offshore and onshore, only increase these challenges. Arctic-specific risks such as remoteness, darkness, ice, and low temperatures require that the company to take a stepwise approach in which continuous learning and improvements are derived from experience.
The company has run several programs to help ensure compliance with its management system, improve risk management, simplify and harmonize business processes, govern documentation, and increase focus on technical integrity and its barriers.
Statoil personnel regularly plan and prepare activities to be able to identify operational risks at the lowest level. They use various methodologies, including HAZOP/HAZID-based quantitative measures supported by Excel spread-sheets or other simple solutions. The company has also developed its own Work Permit and Safe Job Analysis systems to provide a standard way to help ensure that the risk-mitigating measures are implemented effectively and communicated to all involved workers. The Work Permit system also helps coordinate simultaneous activities, partly through visualization of physical assets in a 3D model.
Risk analysis for assets largely focuses on process safety to avoid major accidents. On the asset level, the risk management efforts center around: identifying technical, organizational, and operational (human) barriers to process safety; tracking activities executed on the asset, including high-risk activities, activity conflicts, and total activity level; and managing external impacts.
SAP technology has been employed within several areas to both improve safety and increase operations efficiency and performance. Most of the company's operations involve large production assets in remote locations that are often exposed to rough weather conditions and have limited bed and storage capacities. This challenges both safety and performance, and requires precision and risk awareness when planning and executing activities. The company has established several initiatives to address these challenges. They are described below.
The Technical Integrity Management Program developed a common work process and a Technical Integrity Management Portal to help assess, follow up on, and report the technical condition of barriers, systems, and equipment on the company's production assets. The solution consolidates information from a variety of different source systems, and the portal helps users visualize the status of technical barriers and assess and document the overall technical integrity of the plant.
The Work Permit Management System incorporates Safe Job Analysis based on specifications from a joint NCS effort. In addition to using the solution internally, Statoil has licensed it to several other energy companies. The Work Permit Management System is now a standard, SAP-certified oil and gas solution.
Statoil developed a simple visualization solution using Microsoft .NET technology. This displays the appropriate location of all planned and active work permits in a simple 3D model of the plant. The company plans to further develop this capability.
Statoil used SAP technology to develop its Operational Performance Dashboard portal. Using KPIs and proactive process indicators, it measures operational performance on the company's production assets on a daily basis and provides drill-down options to other data.
The company has also initiated a successful pilot project for its Mobile Asset Management solution, based on the SAP Mobile Asset Management platform, at one of its refineries to support operator rounds, data logging, and notifications. It is now running a project to establish mobile solutions for all production assets, with the first priority to support its US onshore operations.
For Enterprise Resource Management (ERP) applications, Statoil uses SAP to procure materials and services through a vendor portal. It also uses SAP technology to manage its spare part inventories. However, the company developed its own Remote Logistics Management application to support its offshore operations.
The Operational Performance Dashboard has helped the company shift from a reactive mindset, focusing on coordination and control, to a more proactive approach that focuses on quality and precision when planning and executing activities. Constant benchmarking across production assets includes a daily overview of the 10 best performers. By making the underlying results easily available through drill-down, the company has generated a spirit of competiveness, resulting in significant improvements on many assets.
Statoil will continue to focus on improvements within process safety and asset risk management by systematic and proactive follow-up of barriers. The goal is to optimize its portfolio of activities within an acceptable risk level.
Engineering and other support organizations require additional knowledge and awareness about risks when executing concurrent activities. This applies to both external contractors and the company's own organization. While the company has recently addressed the need for improvements in this area, and initiated training efforts, more work is needed to standardize risk analysis methods and tools across process areas like operations and maintenance, drilling, and the well area.
The company manages change using various procedures and solutions. In operations, different work order types are used to manage asset modification activities and update documentation. In the future, the company plans to establish a corporate management-of-change framework.
At the moment, there is not a single Statoil risk management program, but several initiatives focusing on different aspects of risk management. Within operations, the company is working to align focus and priorities across process areas around operational risk management and process safety on the asset level. This includes areas like barrier management, planning, and activity management.