© 2016 Cairn India Limited

Converting Maintenance Costs to Savings

Swapnil Sharma Operations Manager Cairn India Ltd

2

AIM Video

3

Agenda

Converting Maintenance Costs to Savings: Critical Assessment and Evaluation to Ensure the Management Maintenance and ROI of your Assets

Applying best practice for your critical assessment: Evaluating what is best for the size of your plant, asset and your strategic plan

Planning for financial consequences: Highlighting anomalies in your repetition plans to identify affected areas before they become problematic

Fighting time and resource: Examining long and short term contingency plans to extend the life of structures and prolong upgrades

Re-establishing the importance of powerful prediction and inspection tools to ensure sustainability and higher returns on your investments

4

Declining energy prices increasing other cost of living

This outcome has puzzled many observers, who had believed that oil-price declines would be a net plus for the world economy

0.0

10000.0

20000.0

1990 1995 2000 2005 2010 2014 2015 2020 2025 2030 2035

CO

NS

UM

PT

ION

IN

M

TO

E

YEAR

World Energy Consumption

Total Oil & Gas Total Energy Energy India

5

Challenges

Situations Impact Resolution

• Cash constraint

• Declining asset uptime

• Performance measurement & governance

• Expectation to “achieve more with less”

• Misappropriation fuelling losses

• Employees’ become less engaged

• Random cuts and slowed growth

• Instability in achieving prod/rev targets

• Capitalize ideas & leverage best practices

• Thorough investigation to thwart further losses

• Low Cost efficiency & repetitive processes

• Employees perspective

• Integrated business planning approach

• Asset reliability and integrity management

• Governance framework, defined operating model to gain consistency

• Forensic analysis of tech/ops/financial data contract negotiations

• Compress duplicate/ over/ and erroneous payments/works

• Embed and assist with Communication

Stay ahead of the curve

6

Critical Assessment and Evaluation

Management Information System

Budget Analysis

• Spent Analysis• Avenues of Cost optimization

Old Vs New Success Factor

• Size Speed• Role Clarity Flexibility• Specialisation Integration• Control Innovation

Low oil prices : effects of inefficiencies

Maintenance Strategy

Strategy to OEM Recommendation

Enhanced Maintenance Performance

Focus on production over exploration

• Expenditures • Cost Effectiveness• Tactical Operating Performance

7

Best Practices: Management Information System

Periodic Business Assurance Audit

Consolidated Statement

Supplier and contractor

management

HSE Incidents Reporting and Follow up

Integrated Business and Activity Planning

8

Budgeting Process

Objective EnablerSteps

Work Program - Commercial /Execution feasibility

Spent Analysis• Activities / Program quantities including Production-

Injection-Downtime- Resources

Budget Challenge Session• Opex , SBU Financials- w/assumptions & risks

Detailed Execution Plan with

milestones• Opex Projects

Avenues for cost Optimisation• Consolidation , roll up

• Consolidated Financials (with sensitivity)

Submission & Approval

-

Roll-Out Defined needs and wants1

2

3

4

5

6

7

Predictable Volumes

Regulatory Requirement

Flexible and Responsive But

Cost Effectiveness is essential

Operational Efficiency

Translating to Production

Requirement

Identifying important

interface areas

Barriers

Technological

Change/Contingency

Core Competencies

Strategic Role of Technology

Clear & Mutually Acceptable

Goals

Knowledge Strategy

Cost Consciousness, Global

Market

Competitive priorities

9

Maintenance Strategy: diagnosis and treatment

Recurring problems with equipment

Budget blow-outs from costly fixes

Unplanned downtime

Using equipment that is not performing at 100%

Risk of safety and environmental incidents

Risk of catastrophic failure and major events

Strategy sticks to OEM recommendation

10

Strategy to OEM recommendation

Only – a starting point

OEMs have never maintained in the field

Highly priced Spare parts

Solution “One Size Fits All”

Create own optimized strategy

Meaningful, Reliable Information

Creative,

Doable

Alternatives

Clear Values and Tradeoffs

Commitment to Action

Commitment to Action

Logically Correct

Reasoning

Logically Correct

Reasoning

11

Enhanced Maintenance performance

Tactical factors

•Prequalification &BEC

•Visibility to contractor and supplier risks

• Site Management & Performance Evaluation

Supplier & contractor relationships Mgt

• Major Cost Driver • Interdependency

• Production Optimization• Economies of Integration

Efficient Cost ManagementAsset Reliability & Integrity

•Focused predictive maintenance

•Better STO

• Gated RFSU

•Data Analytics

Strategic factors

•Siloed design architecture• Decision governance

•Performance management•Standard policy & enforcement

An effective operating model

•Leadership & maturity•Strategy framework

•Translating strategy into operations

Integrated business and activity planning

1

1

2

32

12

Efficient Cost Management

Depletion of surplus.

Blocked Material code of surplus

Issue surplus w/o approval on first come first basis.

Physical verification &

Vendor reconciliation

Consolidation of Services & Materials

Company-wise Annual Rate Contract

Standardize Scope of Work

Inventory Optimization

13

Planning for Financial Consequences

Safety & environment leadership

Long-term vision & market analysis

Technological innovation

Significant experience in O&M,

Use templates for consistency and comprehensive coverage

Define Work Category

Define plan ofexecution to meet business objectives

Financial Success

Work Execution

Prioritization

Identify the preparation requirements for each review

Work Closure Feed back & Documentation

Conduct focused meetings based lesson learnt

2

3

4

5

6

1Metrics Planning

Proforma

Limitations

Has the company prepared annual financial plans for two or more prior years?

14

Fighting time and resource

Consistency

Complexity

Collaboration

Common system & standard work processes

Integrity

Ingenuity

Reliability

Benchmarking

15

Re-establishing the importance of powerful prediction

and inspection tools

Plant Measurements & Historian Information

Control Systems

PAM

EAM / CMMS

Maintenance Operations

* EAM: Enterprise Asset Management

CMMS: Computerized Maintenance

Management system

AM Information Flow

AM Systems

EAM

CMMS

Real-Time

AM Systems

Real Time Future ReadyBig DataIntelligent

Analytical Engine

16

Questions??