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    Integrity Management: Issues & Trends Facing the 21st Century Energy Industry

    Page 1 of 87

    Table of Contents

    Disclaimer ........................................................................................................................................ 5Confidentiality............................................................................................................................... 5Copyright ...................................................................................................................................... 5

    Executive Summary ......................................................................................................................... 6Abstract ........................................................................................................................................ 6Summary Findings ....................................................................................................................... 6

    Integrity Management ............................................................................................................... 6Equipment Integrity .................................................................................................................. 7Other Areas of Interest ............................................................................................................. 7

    Concluding Comments ................................................................................................................. 7Introduction ...................................................................................................................................... 8

    Major Areas of Investigation ........................................................................................................ 8Overview of the Methodology ...................................................................................................... 8Online Survey............................................................................................................................... 9Study Organization ...................................................................................................................... 9

    Integrity Management .................................................................................................................... 11Familiarity with Integrity Management ....................................................................................... 11Integrity Management Process .................................................................................................. 11Importance of Integrity Management ......................................................................................... 12Functional Value ........................................................................................................................ 13Management of Change ............................................................................................................ 14Functional Organization ............................................................................................................. 15Regulatory Compliance .............................................................................................................. 16Prcis ......................................................................................................................................... 18

    Equipment Integrity ........................................................................................................................ 19Risk Management ...................................................................................................................... 19Cost of Failure ............................................................................................................................ 20Effect of New Processes ............................................................................................................ 22Future Trends............................................................................................................................. 23Equipment Integrity Management Processes ............................................................................ 25Prcis ......................................................................................................................................... 29

    Other Areas of Interest .................................................................................................................. 30Asset/Equipment Monitoring ...................................................................................................... 30Best Practices ............................................................................................................................ 30Economic modeling .................................................................................................................... 30Environmental Concerns ............................................................................................................ 31Role of Regulators ..................................................................................................................... 31Governance & Sustainability ...................................................................................................... 32

    Asset Equipment Integrity Governance Framework .............................................................. 32The Sustainable Organization ................................................................................................ 33

    Safety Case................................................................................................................................ 34Software and Other Tools .......................................................................................................... 34

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    Integrity Management: Issues & Trends Facing the 21st Century Energy Industry

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    Technology Trends .................................................................................................................... 35Training & Organizational Learning ........................................................................................... 35Prcis ......................................................................................................................................... 36

    Concluding Comments .................................................................................................................. 37Appendix IGlossary of Terms ..................................................................................................... 38Appendix II

    Research Methodology ............................................................................................ 44Generally Accepted Practices .................................................................................................... 44

    Specific Approach Used Herein ................................................................................................. 45Appendix IIIOrganizations .......................................................................................................... 46

    Private or Academic ................................................................................................................... 46Government & Public Agencies ................................................................................................. 54Select Industry Players .............................................................................................................. 58Miscellaneous ............................................................................................................................ 59Key Words/Terms ...................................................................................................................... 62

    Appendix IVAdditional Survey Material ...................................................................................... 63Recommended changes to MOC processes ............................................................................. 63Additional Comments ................................................................................................................. 67Demographics ............................................................................................................................ 68

    Appendix VEconomic Value Proposition MatrixSM-Pending

    ............................................................ 70EVPM Overview ......................................................................................................................... 70

    Cost Takeout .......................................................................................................................... 71Cost Avoidance ...................................................................................................................... 71Productivity & Efficiency Gains .............................................................................................. 72One-Time Cash Flow Impact ................................................................................................. 72Intangible ................................................................................................................................ 72

    Appendix VIBibliography ............................................................................................................ 73Endnotes ........................................................................................................................................ 86

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    Integrity Management: Issues & Trends Facing the 21st Century Energy Industry

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    Tables and Figures

    Integrity Management Familiarity .................................................................................................. 11Integrity Management Process Underway .................................................................................... 12Importance of Integrity Management ............................................................................................. 12Integrity Management Importance Rank Order ............................................................................. 13Integrity Management Value .......................................................................................................... 14Integrity Management Value Rank Order ...................................................................................... 14Management of Change ................................................................................................................ 14Integrity ManagementFunctional Organization .......................................................................... 15Functional Correlation Table ......................................................................................................... 16Importance of ISO Certification ..................................................................................................... 17ISO Certification by Region ........................................................................................................... 17

    Equipment IntegrityRisk Management ....................................................................................... 19Elements of Risk Management ...................................................................................................... 19Cost of Failure ............................................................................................................................... 20Components of Downtime ............................................................................................................. 21Downtime Attributed to Equipment Failure .................................................................................... 21Importance of New Processes ....................................................................................................... 22Level of Importance ....................................................................................................................... 22New Process Rank Order .............................................................................................................. 23Use of Predictive Maintenance ...................................................................................................... 23Equipment Integrity in Three Years ............................................................................................... 24Knowledge of Equipment Integrity Techniques ............................................................................. 25Integrity Management ProcessesGroup 1 ................................................................................. 26Integrity Management ProcessesGroup 2 ................................................................................. 27Integrity Management ProcessesGroup 3 ................................................................................. 27Integrity Management Processes Rank Order .............................................................................. 28Integrity Management Processes Quartile .................................................................................... 28Organizations with Governance Failure ........................................................................................ 34MOC Taxonomy............................................................................................................................. 63MOC Comments ............................................................................................................................ 64DemographicsIndustry Experience ............................................................................................ 68Demographics

    Role .................................................................................................................... 68

    DemographicsIndustry Segment................................................................................................ 68DemographicsGeography .......................................................................................................... 69DemographicsType Organization .............................................................................................. 69Components of Value Matrix ......................................................................................................... 71Integrity Management Process Underway .................................................................................... 12Importance of Integrity Management ............................................................................................. 12Integrity Management Importance Rank Order ............................................................................. 13

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    Integrity Management: Issues & Trends Facing the 21st Century Energy Industry

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    Integrity Management Value .......................................................................................................... 14Integrity Management Value Rank Order ...................................................................................... 14Management of Change ................................................................................................................ 14Integrity ManagementFunctional Organization .......................................................................... 15Functional Correlation Table ......................................................................................................... 16Importance of ISO Certification ..................................................................................................... 17ISO Certification by Region ........................................................................................................... 17Equipment IntegrityRisk Management ....................................................................................... 19Elements of Risk Management ...................................................................................................... 19Cost of Failure ............................................................................................................................... 20Components of Downtime ............................................................................................................. 21Downtime Attributed to Equipment Failure .................................................................................... 21Importance of New Processes ....................................................................................................... 22Level of Importance ....................................................................................................................... 22New Process Rank Order .............................................................................................................. 23Use of Predictive Maintenance ...................................................................................................... 23Equipment Integrity in Three Years ............................................................................................... 24Knowledge of Equipment Integrity Techniques ............................................................................. 25Integrity Management ProcessesGroup 1 ................................................................................. 26Integrity Management ProcessesGroup 2 ................................................................................. 27Integrity Management ProcessesGroup 3 ................................................................................. 27Integrity Management Processes Rank Order .............................................................................. 28Integrity Management Processes Quartile .................................................................................... 28Organizations with Governance Failure ........................................................................................ 34MOC Taxonomy............................................................................................................................. 63MOC Comments ............................................................................................................................ 64Demographics

    Industry Experience ............................................................................................ 68

    DemographicsRole .................................................................................................................... 68DemographicsIndustry Segment................................................................................................ 68DemographicsGeography .......................................................................................................... 69DemographicsType Organization .............................................................................................. 69Components of Value Matrix ......................................................................................................... 71

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    Executive Summary

    One of the most important contemporary challenges the energy industry faces is the developmentand implementation of integrity management solutions that enable safe and environmentallyfriendly operations. Inherent to the sustainable organization is a governance model that

    incorporates integrity management into it as part of enterprise risk management.This study addresses a broad range of integrity management issues and the necessaryprocesses to assure effective equipment and other process integrity components. It is comprisedof four major subdivisions; a review of literature on the subject (see bibliography), an industrysurvey, listing of major public and private organizations that play critical roles on a global basis,and finally analysis and summation.

    Abstract

    There is a substantial amount of information in this report. Even the summary findings that followhave 22 specific points in three major categories. The appendices and associated web links is asubstantial body of work in its own right. However, these three points summarize the key findingsform the study:

    Integrity management is a fundamental part of the enterprise risk management andgovernance model and can be expected to play an even more important role goingforward

    There are substantial resources, including technology, public and private organizationsand best practices available to enable robust integrity management processes

    Equipment Integrity is viewed by an overwhelming number of survey respondents as acritical aspect of enterprise risk management and fundamental to HSE and productionoperations

    It is difficult to summarize the substantial data and information in this report into three bullets.Interested readers are invited to explore the data in more detail and take advantage of the weblinks (believed to be live at the date of publication) for more information and insight.

    Summ ary Findings

    The following is a synopsis of the main points from the study. They are broken out to be alignedwith the section of the report to which they are attributed. Moreover, they are highlighted at theend of each segment of that section so readers can see how the data analysis drove theconclusion.

    Integrity ManagementIntegrity management is well known in the sector and a substantial body of work andexpertise exists about the subject; on a global basis.

    ISO maybe a source of Best Practices for emerging integrity management standards, andeven new regulatory compliance requirements.

    Equipment IntegrityEquipment Integrity (EI) is a major component of enterprise risk management (ERM).

    The sector well versed in many of the major equipment integrity management methodsbut gaps continue to exist.

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    Other Areas of Interest

    1. The use of real time data acquisition is well established and is now being augmented withmobility driven solutions.x

    Change will be the mantra going forward and organizations will need to train and retainorganizational knowledge.

    Conclud ing Comments

    The genesis of this research was the belief that integrity management was a field that was veryimportant and would most likely grow in significance in the future. The data and informationobtained during this research supports this fundamental hypothesis.

    It is not surprising that a wealth of information on this subject is available, nor was the fact thatthese issues are not restricted to just the United States in a post-Macondo world. Thesechallenges are global and there are a number of international organizations working to makeoperations safer, more environmentally friendly while assuring limited unplanned production downtime.

    It is hoped that this body of work will assist organizations better attain operational excellence.

    Integrity management is a broad field and all indications are that it will expand rapidly in acomprehensive manner.