Implementing Repair Processes For Repairable Spares And Rotating Assets at Cenovus. Pavan Khanna Jose Velazquez

Transcription

1 Implementing Repair Processes For Repairable Spares And Rotating Assets at Cenovus Pavan Khanna Jose Velazquez

2 Agenda Introduction Cenovus Overview Repairable Spares / Rotable Items Concept, need & benefits Key Definitions Blending the Item and Asset Classification Cost Tracking Allocation Scope and Design Implementation Lessons Learned Conclusion Questions

3 Cenovus Overview

4 Advisory FORWARD-LOOKING INFORMATION This presentation contains certain forward-looking statements and other information (collectively forward-looking information ) about our current expectations, estimates and projections, made in light of our experience and perception of historical trends. Forward-looking information in this document is identified by words such as anticipate, expect, plan, forecast or F, target, could, focus, proposed, potential, may, projected or similar expressions and includes suggestions of future outcomes, including statements about our growth strategy and related schedules, projected future value or net asset value, projections contained in our 2014 guidance, forecast operating and financial results, planned capital expenditures, expected future production, including the timing, stability or growth thereof, expected future refining capacity, broadening market access, improving cost structures, anticipated finding and development costs, expected reserves, contingent, prospective and bitumen and petroleum initially-in-place resources estimates, bitumen recovery estimation, potential dividends and dividend growth strategy, anticipated timelines for future regulatory, partner or internal approvals, future impact of regulatory measures, forecasted commodity prices, future use and development of technology, including to reduce our environmental impact and projected increasing shareholder value. Readers are cautioned not to place undue reliance on forward-looking information as our actual results may differ materially from those expressed or implied.2014 guidance, updated February 13, 2014, available at cenovus.com, is based on an average diluted number of shares outstanding of approximately 757 million. It assumes: Brent US$105.00/bbl, WTI of US$102.00/bbl; Western Canada Select of US$76.00/bbl; NYMEX of US$4.00/MMBtu; AECO of $3.30/GJ; Chicago crack spread of US$13.50/bbl; exchange rate of $0.98 US$/C$. For the period 2015 to 2023, assumptions include: Brent US$ US$110.00/bbl; WTI of US$ US$106.00/bbl; Western Canada Select of US$81.00-US$91.00/bbl; NYMEX of US$4.25-US$4.75/MMBtu; AECO of $3.70- $4.31/GJ; Chicago crack spread of US$12.00-US$13.00/bbl; exchange rate of $1.00 US$/C$; and average diluted number of shares outstanding of approximately 782 million. Developing forward-looking information involves reliance on a number of assumptions and consideration of certain risks and uncertainties, some of which are specific to Cenovus and others that apply to the industry generally. The factors or assumptions on which the forward-looking information is based include: assumptions inherent in our current guidance, available at cenovus.com; our projected capital investment levels, the flexibility of our capital spending plans and the associated source of funding; estimates of quantities of oil, bitumen, natural gas and liquids from properties and other sources not currently classified as proved; our ability to obtain necessary regulatory and partner approvals; the successful and timely implementation of capital projects or stages thereof; our ability to generate sufficient cash flow from operations to meet our current and future obligations; and other risks and uncertainties described from time to time in the filings we make with securities regulatory authorities. The risk factors and uncertainties that could cause our actual results to differ materially, include: volatility of and assumptions regarding oil and gas prices; the effectiveness of our risk management program, including the impact of derivative financial instruments and the success of our hedging strategies; the accuracy of cost estimates; fluctuations in commodity prices, currency and interest rates; fluctuations in product supply and demand; market competition, including from alternative energy sources; risks inherent in our marketing operations, including credit risks; maintaining desirable ratios of debt to adjusted EBITDA as well as debt to capitalization; our ability to access various sources of debt and equity capital; accuracy of our reserves, resources and future production estimates; our ability to replace and expand oil and gas reserves; our ability to maintain our relationships with our partners and to successfully manage and operate our integrated heavy oil business; reliability of our assets; potential disruption or unexpected technical difficulties in developing new products and manufacturing processes; refining and marketing margins; potential failure of new products to achieve acceptance in the market; unexpected cost increases or technical difficulties in constructing or modifying manufacturing or refining facilities; unexpected difficulties in producing, transporting or refining of crude oil into petroleum and chemical products; risks associated with technology and its application to our business; the timing and the costs of well and pipeline construction; our ability to secure adequate product transportation, including sufficient crude-by-rail or alternate transportation; changes in the regulatory framework in any of the locations in which we operate, including changes to the regulatory approval process and land-use designations, royalty, tax, environmental, greenhouse gas, carbon and other laws or regulations, or changes to the interpretation of such laws and regulations, as adopted or proposed, the impact thereof and the costs associated with compliance; the expected impact and timing of various accounting pronouncements, rule changes and standards on our business, our financial results and our consolidated financial statements; changes in the general economic, market and business conditions; the political and economic conditions in the countries in which we operate; the occurrence of unexpected events such as war, terrorist threats and the instability resulting therefrom; and risks associated with existing and potential future lawsuits and regulatory actions against us. The forward-looking information contained in the presentation, including the underlying assumptions, risks and uncertainties, are made as of the date hereof. For a full discussion of our material risk factors, see Risk Factors in our most recent Annual Information Form (AIF)/Form 40-F, Risk Management in our current and annual Management s Discussion and Analysis (MD&A) and risk factors described in other documents we file from time to time with securities regulatory authorities, all of which are available on SEDAR at sedar.com, EDGAR at

5 Advisory OIL & GAS INFORMATION The estimates of reserves and contingent resources were prepared effective December 31, 2013 and the estimates of bitumen initially-inplace were prepared effective December 31, All estimates were prepared by independent qualified reserves evaluators, based on definitions contained in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument Additional information with respect to the significant factors relevant to the resources estimates, the specific contingencies which prevent the classification of the contingent resources as reserves, pricing and additional reserves and other oil and gas information, including the material risks and uncertainties associated with reserves and resources estimates, is contained in our AIF and Form 40-F for the year ended December 31, 2013,available on SEDAR at EDGAR at and on our website at cenovus.com. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of those resources. Actual resources may be greater than or less than the estimates provided. Total bitumen initially-in-place (BIIP) estimates, and all subcategories thereof, including the definitions associated with the categories and estimates, are disclosed and discussed in our July 24, 2013 news release, available on SEDAR at sedar.com and at cenovus.com. BIIP estimates include unrecoverable volumes and are not an estimate of the volume of the substances that will ultimately be recovered. Cumulative production, reserves and contingent resources are disclosed on a before royalties basis. All estimates are best estimate, billion barrels (Bbbls). Total BIIP (143 Bbbls); discovered BIIP (93 Bbbls); commercial discovered BIIP equals the cumulative production (0.1Bbbls) plus reserves (2.4 Bbbls); sub-commercial discovered BIIP equals economic contingent resources (9.6 Bbbls) plus the unrecoverable portion of discovered BIIP (81Bbbls); undiscovered BIIP (50 Bbbls); prospective resources (8.5 Bbbls); unrecoverable portion of undiscovered BIIP (42 Bbbls). Any contingent resources as at December 31,2012 that are sub-economic or that are classified as being subject to technology under development have been grouped into the unrecoverable portion of discovered BIIP. Petroleum initially-in-place (PIIP) estimates for Pelican Lake are effective December 31, 2012 and were prepared by McDaniel. All estimates are best estimate discovered PIIP volumes as follows: Mobile Wabiskaw total PIIP (2.11 Bbbls); discovered PIIP (2.11 Bbbls); cumulative production (0.11 Bbbls); reserves (0.25 Bbbls); contingent resources (0.03 Bbbls); unrecoverable discovered PIIP (1.72 Bbbls); undiscovered PIIP (0 Bbbls). Mobile Wabiskaw development area total PIIP (1.62 Bbbls); discovered PIIP (1.62 Bbbls); cumulative production (0.11 Bbbls); reserves (0.25 Bbbls); contingent resources (0 Bbbls); unrecoverable discovered PIIP (1.26 Bbbls); undiscovered PIIP (0 Bbbls).Immobile Wabiskaw total PIIP (1.33 Bbbls); discovered PIIP (1.33 Bbbls); cumulative production (0 Bbbls); reserves (0 Bbbls); contingent resources (0 Bbbls); unrecoverable discovered PIIP (1.33 Bbbls); undiscovered PIIP (0 Bbbls).Certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of one barrel (bbl) to six thousand cubic feet (Mcf). BOE may be misleading, particularly if used in isolation. A conversion ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the well head.net asset value With respect to the particular year being valued, the net asset value (NAV) disclosed herein is based on the number of issued and outstanding Cenovus shares adjusted for the dilutive effect of stock options or other contracts as at December 31. We calculate NAV as an average of (i) our average trading price for the month of December, (ii) an average of net asset values published by external analysts in December following the announcement of our budget forecast, and (iii) an average of two net asset values based primarily on discounted cash flows of independently evaluated reserves, resources and downstream data and using internal corporate costs, with one based on constant prices and costs and one based on forecast prices and costs. Non-GAAP measures Certain financial measures in this document do not have a standardized meaning as prescribed by IFRS such as, Operating Cash Flow, Cash Flow, Debt, Capitalization and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ( Adjusted EBITDA ) and therefore are considered non-gaap measures. These measures may not be comparable to similar measures presented by other issuers. These measures have been described and presented in order to provide shareholders and potential investors with additional measures for analyzing our ability to generate funds to finance our operations and information regarding our liquidity. This additional information should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Readers are encouraged to review our most recent Management s Discussion and Analysis, available at cenovus.com for a full discussion of the use of each measure, with the exception of Net Debt which includes Cenovus s short-term borrowings, current and long-term portions of long-term debt and the current and long-term portions of the Partnership Contribution Payable, net of cash and cash equivalents and the current and long-term portions of the Partnership Contribution Receivable. TM denotes a trademark of Cenovus Energy Inc Cenovus Energy Inc.

6 Cenovus Maximo Overview Maximo at Cenovus: Asset Management Maximo for Oil and Gas Spatial Linear Asset Manager Scheduler Calibration Mobile Informer (Warehouse Mobile Scanners)

7 Concept Need Cenovus requires a way to track repairable spares (internally & externally) within Maximo to provide for greater visibility into repair work (this includes repairable spare parts and rotable assets) Ways to deliver One Cenovus approach for managing repairs across all sites using Maximo. Currently used at our Christina Lake, Foster Creek and Pelican Lake facilities

8 Benefits This initiative simplified the movement, maintenance and management of repairable spare parts and rotable assets. The solution provides better insight into availability, status, and maintenance history and costs of repairable spare parts and rotable assets.

9 Key Definitions Repairable Spare Parts: Repairable spare parts are basically spare parts that, through repair, can be returned to an as new, or refurbished, condition. An example of this could be a pump mechanical seal. Rotable Assets: A rotating, or rotable, asset is an individual asset or piece of equipment that can be rotated from inventory into operations, if need be, thru repair, and ultimately back into inventory. An example of this could be a replaceable motor in a pump, or even the pump itself.

10 Key Definitions Item Master is Mandatory for Repairable Spares and Rotable Assets : for purchasing and usage tracking Only Items can be put in Spare Parts List Only Items can be put on a Shelf in the Storeroom Only Items can be planned for on a Job Plan Storerooms Main: Storerooms where inventory is stored. Items are issued or returned to and from this location. Items can be transferred between storerooms. Quarantine: Used to record that an item is being repaired internally, externally or an on-site workshop by trade staff.

11 Key Definitions- Condition Enabled Spares Condition Code Description Base Condition Rate (%) NEW New 100 RFB Refurbished 50 CORE Core Salvage 10 QRTN Quarantined 0 Maximo requires that all storerooms have a 100% condition cost record for condition enabled items in that storeroom Quarantine Storerooms will have a new (NEW) balance (which must remain at 0 balance) and are the only Store Types to have Core Salvage (CORE) and (Quarantined) QRTN balances Core Salvage (CORE) and Quarantined (QRTN) will not be allowed on standard storerooms

12 Blending Asset and Item Classifications Classifications from the Asset and from the items were merged for the new Rotating item to be able to have both Standard Modifier Dictionary (SMD) and ISO classifications. When Items get created an automated script verifies if the item with SMD classification has a corresponding ISO classification, so it would go for revision by CMMS Techs to apply the classification or add more if required. Attributes coming in with SMD classification are applied to the blended classifications attributes.

13 Cost Allocation tracking Repairable Spare Item Repair: Internal: The item (Spare) is sent to a repair Location, Materials used are collected in the Repair account and then when the spare repaired item is returned to the Storeroom the cost get charged to inventory account. **The Repair Work Order needs to be closed. External: Repairable item(spare) is sent on a PO, the vendor completes the repairs and send back, the costs are added to the PO line, when The PO is received the costs gets charged to inventory account. Rotable Asset Item Repair: Internal: The item (Asset) is sent to a repair Location, (The Asset needs a Rotating Suspense Account Added in the Asset Record), Materials used are collected in the suspense account and then when the Asset gets swapped to Storeroom the cost get transferred with the Asset to inventory account. **The Repair Work Order needs to be closed for the costs to be transferred. External: The Rotating item (Asset) is sent back on a PO, the vendor completes the repairs and send back, the costs are added to the PO line, when The PO is received the costs are transferred to inventory account with the Asset.

14 Repair a Spare (Item) Plan Repair of Item Internal Work Order Send away junk Get back Refurbished Refurbished Items returned to Store External Purchase Order Send away junk Get back New or Refurbished New or Refurbished

15 Repair an Asset (Rotable) Internal Cenovus Repair Return to Inventory Plan Repair of Item (WO) External Vendor Repair Return to Operations

16 Create an Item Create Item in Struxure Item Classification based on Struxure data & Reparability Item Repairable Spare (Item) Rotating Item Detail Level How much I care about this Item Item created in Maximo

17 Creating a Repairable Spare 1. Select one of the Complete Repairable Spare Setup assignments from the Inbox. 2. Click the Condition Enabled? checkbox. 3. Click the Add Condition Codes button. 4. Condition codes are populated in Condition Codes section. 5. Click the Save icon on the toolbar. 6. Click the Route Workflow icon on the toolbar. 7. Status is now set to ACTIVE.

18 Create Rotable Item 1. Select one of the Complete Rotating Item Setup assignments from the Inbox. 2. Click the Rotating? checkbox. 3. Select the Specifications tab. 4. Optional Select a New Classification if necessary. 5. Click the Apply New Classification button.

19 Create Rotable Item continued The system displays a message with a list of the attributes that will not be added to the blended classification as well as attributes that will not be added as a result of a data type mismatch or domain error. Click OK. 7. Click the Save icon on the toolbar. 8. Click the Route Workflow icon on the toolbar. 9. Status is now set to ACTIVE.

20 Repair a Repairable Spare - Internal Process Outline 1.Maintenance Tech creates a follow-up work order. 2.Inventory Tech creates an inventory usage record to return the repairable spare to the Quarantine store. 3.Maintenance Planner plans the labour and parts required for the repair of the repairable spare. 4.Inventory Tech creates an inventory usage record to issue the repairable spare to the repair work order. 5.Maintenance Planner records repair used during the labour and verifies parts issued. Repair cost is calculated outside of Maximo. 6.Inventory Tech creates an inventory usage record to return the repairable spare to the Main store. 7.Maintenance Planner completes the work order.

21 Repair a Repairable Spare - Internal 1. Maintenance Tech creates a follow-up work order. a) Click Select Action > Create > Work Order. b) Fill out all required and relevant fields on the work order. c) Route the work order through workflow.

22 Repair a Repairable Spare - Internal 2. Inventory Tech creates an inventory usage record to return the repairable spare to the Quarantine store. a) Add a Description. b) Enter the Quarantine storeroom in the From Storeroom field. c) Enter the source work order in the Work Order field.

23 Repair a Repairable Spare - Internal 2. Inventory Tech creates an inventory usage record to return the repairable spare to the Quarantine store. d) Click New Row. e) Select a Usage Type of Return. f) Enter the Repairable spare part number in the Item field. g) Enter the Quarantine Bin number in the From Bin field. h) Enter the Staging Bin. i) Select a Condition Code of QRTN. j) Record the Quantity of items in the Quantity field. k) Click the Complete Inventory Usage button on the toolbar.

24 Repair a Repairable Spare - Internal 3. Maintenance Planner plans the labour and parts required for the repair of the repairable spare.

25 Repair a Repairable Spare - Internal 4. Inventory Tech creates an inventory usage record to issue the repairable spare to the repair work order. a) Add a Description. b) Enter the Quarantine storeroom in the From Storeroom field. c) Enter the repair work order in the Work Order field.

26 Repair a Repairable Spare - Internal 4. Inventory Tech creates an inventory usage record to issue the repairable spare to the repair work order. d) Click New Row. e) Select a Usage Type of Issue. f) Enter the Repairable spare part number in the Item field. g) Enter the Quarantine Bin number in the From Bin field. h) Enter the Staging Bin. i) Select a Condition Code of QRTN. j) Record the Quantity of items in the Quantity field. k) Click the Complete Inventory Usage button on the toolbar.

27 Repair a Repairable Spare - Internal 5.Maintenance Planner records repair used during the labour and verifies parts issued. Inventory Tech will determine repair cost from WO Actuals (Parts only). In the future when we have rates for labour we can include this in the repair cost.

28 Repair a Repairable Spare - Internal 6. Inventory Tech creates an inventory usage record to return the repairable spare to the Main store. a) Add a Description. b) Enter the Main storeroom in the From Storeroom field. c) Enter the repair work order in the Work Order field.

29 Repair a Repairable Spare - Internal 6. Inventory Tech creates an inventory usage record to return the repairable spare to the Main store. d) Click New Row. e) Select a Usage Type of Return. f) Enter the Repairable spare part number in the Item field. g) Enter the Main Bin number in the From Bin field. h) Enter the Staging Bin. i) Select a Condition Code of RFB. j) Record the Quantity of items in the Quantity field. k) Record the cost of the repair in the Unit Cost field. l) Click the Complete Inventory Usage button on the toolbar.

30 Repair a Repairable Spare - Internal 7. Maintenance Planner completes the work order. This will be accomplished by routing the work order through the standard workflow process.

31 Repair a Repairable Spare - External Process Outline 1.Inventory Tech creates an inventory usage record to return the repairable spare to the Quarantine store. 2.Inventory Tech creates purchase requisition for vendor repair services and the return of the repairable spare to the main store. 3.Purchaser creates PO from PR and approves record. 4.Receiver will receive both lines on the PO.

32 Repair a Repairable Spare - External 2. Inventory Tech creates an inventory usage record to return the repairable spare to the Quarantine store. a) Add a Description. b) Enter the Quarantine storeroom in the From Storeroom field. c) Enter the source work order in the Work Order field.

33 Repair a Repairable Spare - External 2. Inventory Tech creates an inventory usage record to return the repairable spare to the Quarantine store. d) Click New Row. e) Select a Usage Type of Return. f) Enter the Repairable spare part number in the Item field. g) Enter the Quarantine Bin number in the From Bin field. h) Enter the Staging Bin. i) Select a Condition Code of QRTN. j) Record the Quantity of items in the Quantity field. k) Click the Complete Inventory Usage button on the toolbar.

34 Repair a Repairable Spare - External 2. Inventory Tech creates purchase requisition for vendor repair services and the return of the repairable spare to the main store. a) Click New Purchase Requisition. b) Enter a Description. c) Select a Vendor in the Company field. d) Populate any other relevant fields.

35 Repair a Repairable Spare - External 2. Inventory Tech creates purchase requisition for vendor repair services and the return of the repairable spare to the main store. d) Select the PR Lines tab. e) Click New Row. f) Select a Line Type of Item. g) Select the Quarantine storeroom in the Storeroom field. h) Populate the Item field with the repairable spare item number. i) Select a Condition Code of QRTN. j) Enter a negative value for the Quantity field. k) Select a Required Date.

36 Repair a Repairable Spare - External 2. Inventory Tech creates purchase requisition for vendor repair services and the return of the repairable spare to the main store. l) Click New Row. m) Select a Line Type of Item. n) Select the Main storeroom in the Storeroom field. o) Populate the Item field with the repairable spare item number. p) Select a Condition Code of RFB. q) Enter a value for the Quantity field. r) Optional If known the cost of the repair may be added to the Unit Cost field. s) Select a Required Date. t) Click the Save icon on the toolbar. u) Click the Route PR Approval Workflow icon on the toolbar.

37 Repair a Repairable Spare - External 3. Purchaser creates PO from PR and approves record. a) Select the PR from the Inbox / Assignments portlet. b) Click Route PR Approval Workflow. Select Assign Myself to PR. Click OK. c) Click Route PR Approval Workflow. Select Create PO from PR. Click OK. d) Click the Autonumber button. Click OK.

38 Repair a Repairable Spare - External 3. Purchaser creates PO from PR and approves record. e) Open the generated PO in Purchase Orders (Oil). f) Select an Approver. g) Click Route PO Approval Workflow. Select Submit PO for Approval. Click OK.

39 Repair a Repairable Spare - External 4. Receiver will receive both lines on the PO. a) Open the approved PO in Receiving. b) Click the Select Ordered Items button. c) Check each line. Click OK. d) Click the Save icon on the toolbar. e) The Receipts status should now be COMPLETE.

40 Repair an Asset Questions Addressed on Principal Repair Work Order A. Does the asset has a redundant service/asset? B. Are we replacing the asset? C. Will the repair be done by Cenovus (Internal) or by a vendor (External)? D. Will the repair be done in situ? E. Will the asset be replaced by a new asset or one from inventory? F. Will the asset be decommissioned? G. Will the asset be returned to operations or inventory? H. Is the asset rotable?

41 Repair an Asset Assumptions 1. If the asset is decommissioned, then the following questions are moot: Internal Repair? Repair in Situ? Return to Ops? 2. An asset will never be replaced and then returned back to its original operating location. 3. If a repair is done in situ (internal or external) then it is assumed that the asset is being returned to operations. 4. If a repair is done in situ (internal or external) then it is assumed that the asset is not being replaced.

42 Internal Repair Create WO-Repair Repair Details and Estimates Recommended: Move Asset to Repair Location or Swap with Replacement. Mark Asset as Down. Execute Repair Track Progress Opt. Mark Asset as Up when Completed Record Costs on WO Inventory parts used PO receipts Internal Labor Complete Final Moves Move Asset to new home WO must be closed to transfer costs

43 Repair an Asset Use Move/Swap/Modify to move the Asset from Operating Location to Repair Location, then to Storeroom

44 Lessons Learned Rotating Asset suspense account Diligence in assigning Condition Code for spare Items & Rotating flag for Rotating Asset Item. WO Closure for cost transfer (Asset Repair) Identifying current Repairable & Rotating Assets

45 Conclusion Repairable spares project implemented in three Maximo client sites: Foster Creek, Christina Lake & Pelican Lake. The functionality is working in Maximo, some business processes need to be improved to assign roles and responsibilities.

46 Questions/Comments 46