Nelson P. RepenningFaculty DirectorBP Operations Academy

Continuous Improvement for Engineering and HSSE

This document is classified BP Confidential. Distribution is limited to BP authorised recipients only. Except for use among those individuals, reproduction is prohibited. Further dissemination requires consent of originator, and the adherence to BP Group guidelines for handling classified information

CI for Engineering and HSSE

Nelson P. RepenningFaculty Director BP Operations Academy

Acting Head of Group Operations Capability Developmentnelson@mit.edu

BP Engineering Conference

28 October 2009

Name that Company• X is an energy/transportation company that:

– Is responsible for more than 40% of the volume that goes to customers in the US market and over 20% worldwide

– The closest competitor has less than 30% in the US– Has operating margins nearly twice that of its nearest competitor

and it hasthe lowest cost per unit– Has beat DJIA handily over the past two decades– Who is it????

General Motors in 1975

Name that author

--Exxon 2007 annual report

Out of 23 photos in the 2007 report, only 2 show an operator at work.

“…the management must take over and perform much of the work which is now left to the [operator]; almost every act of the [operator] should be preceded by one or more preparatory acts of the management which enable [the operator] to do his work better and quicker than he otherwise could.”

“Our systems define equipment operating procedures and limits, establish routine maintenance schedules and verify that integrity programs are completed. Management is involved and accountable for decisions that impact the performance and reliability of our facilities.”

--Frederick Winslow Taylor, 1911

The Fundamental Premise• Exxon is more like the GM of 1975 than the Toyota

of today

• There is room at the top for the company that manages to engage all of its workforce in the practice of disciplined operating and problem solving

* Adapted from S. Spear, Chasing the Rabit

So What Separates High Performers?• The ability of individuals to solve problems and have the organization

learn something in the process*

The Big Three

Toyota and Honda

* See Steve Spear (2008), Chasing the Rabbit

• In 2006 Japanese manufacturers saved:– $150 per car due to less warranty– Almost $1,000 per car due to standard parts– $70 per car in reduced absenteeism– $70 per car in less idle work time

Capability

• Organizational capability behaves just like any other asset or vessel– It takes time to build– And it can be neglected for long periods of time before it begins

to decline

CapabilityInvestments Erosion

CapabilityInvestments Erosion

Time

Capability

Actual Performance

Time

* =

The Capability Trap

Endicott crews take action for continuous improvementBenefit75% reduction in work time

8 failures per year reduced to 2

Value of reduced pump seal failures = net benefit $981,500/yr

Endicott has two produced-water pumps used for water re-injection. For years the pumps plagued operators because their buffer seals would fail, resulting in unscheduled plant shutdowns, lost oil production and costly repairs.

Using a CI team approach, the crew investigated and discovered there was some seal revamping that would provide a permanent fix. Replacing the seal allowed them to switch from a glycol seal flush, costing about $800,000 per year, to a less-expensive water flush.

“This project…gave us production benefits, cost savings, risk reduction, environmental benefits, a large reduction in activity and contributed to our Endicott vision of ‘silent running.’ “…we have always been doing these kinds of things, but there is something new. We sense more support and participation in Continuous Improvement from our management – especially from our local management.”

-Jack Page, Operations Lead Tech

How can such high return projects be just lying around?

•15% behind schedule.

•Time to move rig averages 5 days and varies significantly.

•Can CI be applied here to reduce rig move time?

Background

Moving Rigs in NAG

Initial findings• Number of truckloads

required estimated between 12 and 20.

• Actual number as captured by time-lapsed photos

30!

What Really Happens?

• Red sticker placed on every item.

• Sticker removed if item used.

Actions

• 30% of equipment never used.

• Items not used stored offsite within 30 minutes of field.

• These items never used.Photo: Gemba Research

How Much Stuff Do We Need?

Photo: StongerTogether

• Contractual terms gave trucking contractor strong incentive to start move at beginning of day

• Adding an average of a .5 days to each rig move

How Long Does it Really Take?

Measurement

• Move cost has fallen by 10k (20 moves a years)

• Decrease in safety incidents

Start of project

The Results

The Big Payoff

RigYear

H&P 110H&P 252H&P 225H&P 189H&P 1582008200720082007200820072008200720082007

11

10

9

8

7

6

5

4

3

2

Rig Move

Boxplot of Rig Move

1 million + in annual direct cost reductions andProject created a “Phantom Rig” (15-20 million

1st CIproject

“If a man write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build his house in the woods, the world will make a beaten path to his door.”

Ralph Waldo Emerson

So Why Did This Work?

Four Reasons That CI Techniques Work

• They help beat the capability trap

• They change mental models in ways that allow people to “see” new defects

– “Improvement comes from seeing differently”

• They foster commitment over compliance

– Effective CI cannot be mandated

• They foster increasingly disciplined problem solving

- Participants use their collected knowledge more effectively

Escaping theCapability Trap

Time Spent Working

Effort

Time

Time Spent Improving

Capability

Time

* =

Actual Performance

Time

Seeing Differently

• The human brain seeks efficiency in its effort to process information

• A byproduct of this effort is that cues deemed irrelevant to the problem at hand are filtered out

I Love

Paris In TheThe Springtime

• But, “relevance” is based on our existing understanding of what determines the performance of the system we are in

The Big Three Improvement Perspectives• 5S+

– Performance Model- Clutter impedes performance– In the rig move case the used “red tags” to organize the work

place

• Value Stream Mapping– Performance model- lower cycle times lead to improved

throughput– In the rig move case a simple “process walk” revealed a wasted

half-day

• Variance Reduction– “It is not enough to meet specifications (p.334). [The production

worker’s] job...is to continually reduce variation” --W. Edwards Deming

Commitment vs. Compliance• While CI processes and tools are very powerful, they won’t

work unless the front line participates willingly– Effective CI cannot be mandated

• Remember the front line always knows more about the process than you, so

• Without commitment to the process nobody will every tell you where the real defects are– Did the rig crew have to reveal the equipment that they didn’t use?

• How do you achieve commitment to CI and Energize People?

An Experiment• The art experiment

– Kids asked to paint a picture– Two groups

• One given “controlling instructions”—”don’t make a mess”, “be good”• One given more rationale and less control—”I know its fun to make a mess,

but other students need to paint as well.”

– Second group approached tasked far more enthusiastically and produced better pictures (as judged by independent panel)

• Other results– Participants in weight-loss studies lose more weight and keep it off longer

when they report being in the program for themselves (as opposed topressure from a doctor or loved one)

– Patients are more likely to take medication regularly when they can articulate rationale for their own treatment as opposed to because ‘the doctor told me to”

Compliance vs. Commitment • Compliance

– People exhibit a particular behavior because they seek reward or fear retribution

– People exhibit a behavior because an action-outcome link was asserted

• Commitment

– People exhibit a particular behavior because they believe it’s the best thing to do

– People exhibit a behavior because they believe that there is an important action-outcome link

Costs and Benefits of Commitment*

• Costs– Commitment takes time and is not under your direct control

• Benefits: Committed employees show:– More attention to the right thing when nobody is watching

– Lower turnover rates

– Higher performance, particularly in customer service and continuous improvement

– Higher attention to “out of role” and citizenship behaviors

– Higher degrees of creativity and spontaneity

– Higher degrees of persistence in new behaviors

See Meyer and Allen,1997, Chp. 3, Tyler and Balder, AMJ, 2005.

Effective CI Fosters Commitment• People are more motivated when they feel they have autonomy over

the conduct of their work– CI supports autonomy by giving those that do the work a voice in

designing and improving it

• People are more motivated when they can engaged the world with a sense of competence– CI fosters a sense of competence by recognizing and capitalizing on

knowledge gained through doing work

• A sense of inter-personal connection also enhances motivation– CI’s emphasis on team-problem solving support sense of connectedness

• There are two theories. One says “there’s a problem, let’s fix it.” The other says “we have a problem, someone is screwing up, let’s go beat them up.” To make improvement we could no longer embrace the second theory, we had to use the first.

Project NameContact Name and Phone1. Define the Problem

5. Build & Execute Plan

4. Propose Improvements

2. Go See & Assess

3. Identify Root Cause 7. What did We Learn & What’s Next?

6. Validate & Sustain Results

Background Guidelines

DoDo

PlanPlan

CheckCheck

ActAct

DoDo

PlanPlan

CheckCheck

ActAct

Learning Across Assets

DoDo

PlanPlan

ActAct

CheckCheck

Major ProjectsOperating Assets

Engineering and HSSE Professionals Are Critical to Making Inter-Asset Learning

Possible

Learning Across Time

Continuous Improvement through Sustainable Engineering Defect Elimination- Small Bore Piping and Tubing Project

Victor SinghEngineering Manager, Trinidad

This document is classified BP Confidential. Distribution is limited to BP authorised recipients only. Except for use among those individuals, reproduction is prohibited. Further dissemination requires consent of originator, and the adherence to BP Group guidelines for handling classified information

BP Confidential

High Value Learning – Where Did It Start?

ATLANTIS Small bore piping failure

BP Confidential

BP Confidential

Walk-downs – What Did We Find?

Tubing with

unsupported loadUnsupported

gauges

Small bore piping

Incorrectly supported

Improper design of

Small bore connection

Improper bracing of

Small bore piping

Small bore injection port

Incorrectly designed

BP Confidential

BP Confidential

Production Losses due to Small Bore Piping and Tubing System Failures (2005-2008)

Over 1.5 mmboe of production losses over the past 4 years

BP Confidential

Cross-SPU Survey Revealed Many Small-bore Failures

Failure Group Failure mode Alask

aAnde

anAngo

laAsi

a Pac

ific

Azerb

aija

nEgy

ptG

oM Mid

E a

nd S

ANor

th A

frica

North S

eaSou

ther

n Cone

Trinid

adUS N

AGO

vera

ll Rat

ing

DesignInadequate line sizing l h h 11

Inadequate supports / packing l h h h h l 22Unsuitable materials l 1

Fabrication Poor / incorrect welding h h h 15Misalignment h 5

Maintenance

Overtightening of pressure fittings h l 6Undertightening of pressure fittings l h 6

Loose bolts or fittings h 5Non-fitment of fittings following maintenance l h 6

Incorrect seal materials 0Poor control of work l l h 7

Inspection Missed on visual inspection 0Missed on NDT inspection 0

Inadequate Inspection Plan h h h 15

Management Inadequate MoC h h 10Incorrect interpretation of Lesson Learned h h 10

Inadequate competency h l 6Lack of awareness of failure potential l h h h 16

Inadequate procedures l h l 7Inadequate training h l 6

Vibration

Mechanically-induced fatigue h l h h l l h 23Flow-induced fatigue h h h h 20

Pulsation-induced fatigue h h 10Acoustic fatigue 0

Fretting h h h 15

Corrosion Internal corrosion h h l 11External corrosion h h 11

Corrosion under insulation (CUI) 0Sand erosion h h 10Thermal Thermal fatigue 0

Thermal shock 0Low temperature fracture 0

Hydrate formation h 5AccidentalMechanical damage h 5

Vehicle impact 0

h Failure mode implicated in severe incident(s) or HIPO, scores 5l Failure mode implicated in minor incident(s), scores 1

Bu

ild

Op

erat

ion

Dag

rad

atio

n

l

Atlantis

BP Confidential

Failure Group Failure mode Alask

aAnde

anAngo

laAsi

a Pac

ific

Azerb

aija

nEgy

ptG

oM Mid

E a

nd S

ANor

th A

frica

North S

eaSou

ther

n Cone

Trinid

adUS N

AGO

vera

ll Rat

ing

DesignInadequate line sizing l h h 11

Inadequate supports / packing l h h h h l 22Unsuitable materials l 1

Fabrication Poor / incorrect welding h h h 15Misalignment h 5

Maintenance

Overtightening of pressure fittings h l 6Undertightening of pressure fittings l h 6

Loose bolts or fittings h 5Non-fitment of fittings following maintenance l h 6

Incorrect seal materials 0Poor control of work l l h 7

Inspection Missed on visual inspection 0Missed on NDT inspection 0

Inadequate Inspection Plan h h h 15

Management Inadequate MoC h h 10Incorrect interpretation of Lesson Learned h h 10

Inadequate competency h l 6Lack of awareness of failure potential l h h h 16

Inadequate procedures l h l 7Inadequate training h l 6

Vibration

Mechanically-induced fatigue h l h h l l h 23Flow-induced fatigue h h h h 20

Pulsation-induced fatigue h h 10Acoustic fatigue 0

Fretting h h h 15

Corrosion Internal corrosion h h l 11External corrosion h h 11

Corrosion under insulation (CUI) 0Sand erosion h h 10Thermal Thermal fatigue 0

Thermal shock 0Low temperature fracture 0

Hydrate formation h 5AccidentalMechanical damage h 5

Vehicle impact 0

h Failure mode implicated in severe incident(s) or HIPO, scores 5l Failure mode implicated in minor incident(s), scores 1

Bu

ild

Op

erat

ion

Dag

rad

atio

n

l

CI Project Scope

Cross-SPU Survey Revealed Many Small-bore Failures

BP Confidential

What Had We Already Done to Address Failures?

Engaging the Mechanical Network to Codify Learnings

BP Confidential

BP Confidential

Guidance notes being developed by SPU TAs

Do we know enough to provide BP Guidance?

BP Confidential

BP Confidential

CI Project Output

• Plant walkdowns within SPUs to identify piping and tubing at risk

• Active sharing and defect elimination through the Network

• Education of contractors around key focus areas

• Small bore piping-related incidents and failures will be tagged to production losses to monitor business impact

BP Confidential

BP Confidential

Key Learnings

• Reducing unplanned losses will have significant business impact

• Significant value can be realised by leveraging our collective Network knowledge

• Working with EPMS contractors and key suppliers provides the framework for CI

• Trending performance in a measureable way is key

Continuous Improvement is a Competitive Advantage

BP Confidential