CONOCOPHILLIPS CANADA

A New Spin on Shutdowns

Mark Banham Shutdown Manager

Thinking Outside the Box

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A Different approach to ShutdownsMark Banham

Shutdown Manager, ConocoPhillips Canada (CPC)

In this session I will share a new approach to plan shutdowns with a plan to significantly reduce labour requirements and hours worked.

• How is the planning stage different from the past approach to shutdowns?

• How is the shutdown coordinated and executed over a longer period of time?

• What are the anticipated skilled/craft labour requirements?

• What is the impact of taking the plant down in smaller chunks?

• What are the challenges and what are the expected outcomes of this approach?

Safety Moment: Piper Alpha

November 29, 20163

• 167 men died as a result of the explosions and fire on board the Piper Alpha, including two operators of a Fast Rescue Craft.

• 62 men survived, mostly by jumping into the sea from the high decks of the platform.

• Between 1988 and 1990, the two-part Cullen Inquiry established the causes of the tragedy and made recommendations for future safety regimes offshore.

• 106 recommendations were made which were subsequently accepted and implemented by the offshore operators.

The resultant inquiry changed the Oil and Gas Industry in the United Kingdom and influenced changes in safety process globally.

Timeline Overview

On 06 July 1988, work began on one of two condensate-injection pumps, designated A and B, which were used to compress gas on the platform. A pressure safety valve was removed from compressor A for recalibration and re-certification and two blind flanges were fitted onto the open pipework. The dayshift crew then finished for the day.

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Verification

• Permits don’t mean the work is being completed safely.

• Verification and a chronic sense of unease around any work within a live plant is a must.

• How does this impact your next major shutdown?

• What will you do differently?

My Bio: Early Career - The 80”s

1980 Left School. Trained as a Electrician

1982 Start of England soccer team revival

1985 Roger Moore hands over 007 to Timothy Dalton

1987 My First Oil & Gas Job. (below)

July 1988 Piper Alpha accident resulting in 167 people losing their lives.

Lord Cullen Report fourth Edition 1989, OIM by 28 years old

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The 90’s

England beaten by Germany in World Cup semi-final’s !

1994 Move Overseas to the Egyptian desert

1994 Pierce Brosnan becomes 007

1996 Point Noire, Congo,

Christmas Day on the Rig.

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90’s Continued

Off to Singapore to build a new rig. 1996 England out on Penalties to Germany again!

West Menang semi submersible tender.

November 29, 20168

Back to the North Sea

Formation of AJS- One Gas contract, Shell, AMEC, Jacobs , Stork.

Responsible for 50 SNS Assets and 1 onshore Gas Plant.

Greenfield and Brownfield projects. Major Shutdowns EPC ( Direct Construction ).

1998 Beckham Sent Off Against Argentina!

November 29, 20169

2005 Kuwait

Saddam is Captured

Kuwait want to expand their production.

PMC Contract setup to expand production

From 2.2 million barrels / day to 5 million

2006 Wayne Rooney sent off

and England go home Early Again!

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Kuwait

• In three years we executed 60mmh with a TRIR of 0.4 a Gulf record.

• Developed a culture which included the Kuwait nationals as part of the team.

• Completed Greenfield and Brownfield expansions across 20 facilities.

• 14 Major shutdowns in six months,

• Peaking at 11,000 directs

2005 Daniel Craig the New James Bond!

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2008 Canada

Early Works at Kearl

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2011 Canada

• BHP Billton

• Pot- Ash

• Jansen Site

• Saskatchewan

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2012 Canada

• Kearl Expansion

• England Draw Against USA!

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2013 - Present

• ConocoPhillips Canada.

• Surmont Brownfield Manager.

• Surmont Shutdown Manager.

• Not talking about Iceland beating England!

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Shutdown Management: Planning

To be successful in a shutdown you need to plan to the minutest detail, from resources to equipment to materials you must perform to the highest level.

Asset Integrity Regulatory Scope

O&M &

CapEx

“Subjective” Scope Integrated with Maintenance Planning Processes

Driven by SAP Notifications into the Shutdown Planning group.

Variable scope depending upon Budget/need.

Follows the Scope Freeze/collection/validation process (subjective / debate / challenge).

Ops & Maintenance & CapEx Characteristics

Integrated with Regulatory Compliance Requirements (ABSA).

Objective in nature. Must be done to maintain Regulatory Compliance.

Need not follow the Scope Freeze/Collection/validation process (objective & not up for debate).

Opportunities to challenge Regulatory compliance Inspection Intervals based upon a solid go forward plan & historical data.

Asset Integrity / Regulatory Scope Characteristics

“Objective” Scope

30% of Shutdown Scope

70% of Shutdown Scope

“Regulatory Scope” - The Basis of the Plan

Shutdown Management: Execution

So we looked at how we could turn the tables on this type of work by reviewing the plant design and looking for options to take down the equipment in smaller pieces.

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Then is it not possible to plan ~70% of Shutdown scope into your compliance program plans?

If the Regulatory compliance rules/guidelines for equipment are known years out..

…and ~70% of OpEx Shutdown Scope is Regulatory driven, and ‘must be done’ to maintain compliance..

Validation

The Consultants Agree !!!

Shutdown Management: Execution

Fortunately a SAGD plant does lend itself to this philosophy, however I would say this approach could be utilized across all types of plants if you also look at opportunities for completing scope online. A example would be completing regulatory work on Pressure Relief Valves or opportunities to do online cleaning with the latest technology and equipment we have at our disposal.

• Why do this? Well if you plan your work across a longer duration you can level load your resources required to execute this work. The indirect costs savings result in a number between 33-50 percent. ( depending on original manpower requirements)

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Driving Down Cost Through Scope Mgmt. & Shutdown Planning

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For Alberta to compete on the Global scale we have to drive our costs down.

Oil maybe down at $35 for longer than we would like to think.

Why would we not look at better ways to improve our HSE and Cost performance.

Shutdown Management: Driving down Costs

Reviewing the design of the plant and opportunities to take on inspection work online is still to

be realized. But industry commonly lands on between 30-50% as a indirect cost savings.

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70%

20%

Further Cost Saving

Opportunity

Equipment Outage Program

Implementation of a Equipment Outage Strategy.

Shutdown Optimization ProgramTargeted Management Team: SMS (Shutdown Management

System) Organizational Structure Scope Management Risk Management Contractor Performance

Management

10%

Cost Saving Opportunity

Projectize your shutdown work to achieve these cost savings

Indirect and Direct Labor

33% - 50%

Barrels Saved

?

Shutdown Management: The Value Proposition

Value Levers What & Why Benefits:

HSEApply a strategy that reduces plant shutdown requirements and durations.

• HSE becomes manageable with a reduction in contractor resources across short durations/high volumes of work.

Shutdown Resourcing & Productivity

Load Level resources throughout the year.

• Reduce or eliminate contractor onboarding time (permitting etc.).

• Drive productivity and performance through familiarity of the site.

• Reduce risk of tracking/managing performance – easier to manage small scopes of work throughout the year.

• Load level resources with Capital Project scope.

FinancialEvaluate financial rewards in application of this strategy.

• Capture Direct & indirect cost savings.• Capture lost production through reduction in plant

shutdowns.

Market Drivers

Strategically removeConocoPhillips from the major shutdown campaign in Alberta.

• Resource Requirements do not present market risk.• Continue to execute work with a focus on repeatedly

seizing opportunities to further reduce costs and risks.

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Shutdown Management: Projectize Your Work

Shutdown Management: Develop a Program Plan

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2017 2018 2019 2020 2021

Scope Freeze for 2018

Work Packages completed for

shutdown event

Train Major Shutdown Event

Major Shutdown

Event

Execution begins 2018 EOScope Freeze for 2019

Scope Freeze for 2022Execution For EO

CPF and Train Major Shutdown Event

Major Shutdown

Event

Train Major Shutdown Event

Work Packages Complete for 2018

Work Packages Complete for 2019

Work Packages Complete for 2020

Work Packages Complete for 2021

Scope Freeze for 2020Execution for 2019 EO

Scope Freeze for 2021Execution for 2020 EO

Work PackagesComplete for 2022

Shutdown Management: Planning Strategy

• Develop robust planning packages to improve execution efficiency

• Build program flexibility through early planning and material availability

• Integrate execution contractors in planning and estimate process

• Apply DIBM to your planning packages

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Ensure you capture your actual costs at the end of the event and update your packages

Shutdown Event180 DaysShutdown Planning

Complete

Equip Outage Event90 DaysEquipment Outage and PSV Planning

Complete

Shutdown Event360 DaysScope frozenSchedule developed

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Shutdown Management - Philosophy

• The old philosophy was to have entire facilities down for a period of time.

• The new philosophy is to change the culture and make a step change in the industry moving from a shutdown mentality to implementation of an equipment outage program based over regulatory cycles.

• Leverage your facility to not become a cost burden in maintaining equipment, but a cost opportunity to execute scope more efficiently.

• This will realize savings both in indirect and direct labor and lost barrels.

Old Shutdowns Planning

New philosophy: Equipment outage

Surmont Maintenance Shutdowns

Facility 2017 2018 2019 2020 2021 2022 2023 2024 2025

Surmont 1 X X X

Surmont 2 Train A X X

Surmont 2 Train B X X

Surmont 2 Train C X X

Surmont 2 Common X X

Well-Pads 3 3 5 3 3 3 5 3 3

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• Step Change in philosophy needs careful communication to get everyone onboard.

• The scope we discussed today was asset integrity and planned maintenance that has to be completed in certain durations. Other groups like Capital Projects need to be onboard and integrated into the plan to optimize opportunities with any future developments or debottlenecking.

• Data is limited on the indirect cost savings so although the theory is robust the practice has yet to be demonstrated.

Shutdown Management: Challenges

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Imagination is more important than knowledge.

The important thing is not to stop questioning. Curiosity has its own reason for existing.

Anyone who has never made a mistake has never tried anything new.

Questions