Turnaround Excellence in Unconventional Oil and Gas
Over the life of an asset the focus and value in unconventional operations will shift from acquiring access to new fields and executing development projects to delivering world class operational performance and deriving the best returns for ever more demanding shareholders.
Turnarounds are particularly challenging on the economics of an asset since the facility usually goes down for a period of time to allow for crews to set-up, inspect and change equipment, adjust and repair critical elements and test asset integrity. During this downtime, not only is the operation not producing any revenue, it is also incurring a sizeable increase in expenses due to an augmented labor force, and the equipment and logistics necessary to carry out essential tasks related to the scope of the turnaround. Add to this the rising expectations of stakeholders and increasing regulatory demands, and the benefits of developing a world class capability in turnaround excellence become abundantly clear.
Strategy and execution tactics for how and when to perform optimized turnarounds is a significant driver of value. It is essential that turnarounds are performed safely; leveraging cross-functional teams to reduce duration and costs while at the same time executing the work to result in increased plant up time.
Achieving excellence in turnaround operations requires long term planning taking account of the numerous elements, stakeholders and contributors to the process. Examples of these include a safe work environment, turnaround management systems, a rigorous scope, risk management, materials and contractor procurement, a robust planning and detailed scheduling process, change order processes, effective project controls, contractor management disciplines, and clearly understood ramp-down and start-up procedures.
Some examples of the challenges inherent to planning and executing world class turnarounds are listed below:
Involving all stakeholders and contributors to the success of the turnaround early enough in the planning process. Involvement in the creation of plans creates ownership and furthers understanding of expectations. The Turnaround Manager assumes overall control of the planning, scheduling and execution of the turnaround however many other functions, groups, contractors and vendors are integral partners. Coordination is paramount in the success of a turnaround, not unlike a pit-crew in a motor-race, when the driver approaches the pits for a quick fuel stop and change of tires.
Cost overruns as a result of scope creep. As turnarounds are planned so far in advance there is often a sizeable change in scope after the original budget has been set. The ability to accurately identify, freeze and manage scope is crucial to turnaround cost management.
Attracting, maintaining and managing an appropriately skilled and diverse workforce in often remote locations can be challenging. Depending on size and complexity, turnarounds often require the addition of hundreds, even thousands of workers. Effective performance management and provision of housing and transportation substantially impact safety, cost and productivity.
Planning of logistics, equipment and material flow can also be challenging due to remote locations, spacing and SIMOPS (Simultaneous Operations) considerations.
Designing and implementing a Management System to capture real time information of expenditure, plant condition and schedule attainment. The relentless elimination of waste, execution variation and complexity is key to the success of a turnaround, and without explicit and timely knowledge of performance indicators that gauge these, turnarounds often get hit with cost and schedule overruns – the key here is time, as this delays the influx of revenue to the operation.
Turnaround management roles and responsibilities must be clearly defined from start to finish. Poor communication and coordination causes delays, overruns and lost production. For example it must be made clear that responsibility of the turnaround team does not end at start up but at full production.
The next blog post in this series will examine current thoughts in turnaround strategy.
Julie Gray
Julie is a senior management consulting professional with over 15 years of operational excellence experience working with the Fortune 1000, across a wide range of industry sectors in North America, Africa, the Caribbean, South America and Europe. Julie has worked with multiple clients to achieve sustainable and transformational improvements in their businesses.