BG Group - Polyethylene (PE) Asset Integrity Management

Transcription

1 BG Group - Polyethylene (PE) Asset Integrity Management John Costin, Global Operations Manager BG Group John Tonen, Consultant Synthotech Ltd. Introduction: BG Group is engaged in the exploration, development, production, transmission, distribution and supply of natural gas and operates in 27 countries across five continents. BG Group s investments in the transmission and distribution segment are focused upon the fast growing markets of South America and India, where BG Group also has exploration and production interests. This paper considers asset management issues in the context of the polyethylene (PE) distribution networks which BG Group operates in its distribution businesses. These businesses operate in both established and developing economies, and distribution network growth is driven by market expansion and an increasing demand for a clean, safe and economic fuel. In particular expansion in the residential and commercial segments is underpinning substantial levels of PE construction and customer connection activity. There are also legacy cast iron and low pressure steel assets still in operation in some assets, which are being progressively replaced on a risk assessed basis using PE. The levels of activity involved, coupled with the pressure to minimise unit costs of installation and to localise material sourcing reinforces the need for BG Group to ensure fitness for purpose of these assets in terms of materials, construction and operability. This requires a fully integrated approach to asset integrity management in order to reduce societal risk, and to protect BG Group s reputation with regard to health, safety and the environment. BG Group s four distribution assets and areas of operation are, Comgás São Paulo, Brazil Metrogas Buenos Aires, Argentina Gujarat Gas Surat, Ankleshwar, Bharuch, India Mahanagar Gas Mumbai, India BG Group is viewed as a leading international oil and gas business, and against that background it seeks to operate to world class standards, which in many

2 cases exceed local statutory requirements. This presents significant challenges for the distribution assets, particularly in the context of achieving an installed cost performance necessary to sustain adequate investment returns in supplying these relatively low per capita unit volume segments. This challenge is exacerbated by the requirement to meet the requirements of three different regulatory regimes. In BG Group s view this simply reinforces the need for effective asset integrity management. Project background/definition: In 2005/6, BG Group conducted an Asset Integrity Baseline Assessment (AIBA) review across its businesses worldwide. This included technical process reviews at all asset life cycle stages, and of asset management of change and communications procedures. It also included site audits of physical assets. A number of areas of integrity management improvement were identified and prioritised in each asset. The process also focused strongly on identifying and transferring best practice between assets. With the anticipated growth of PE utilisation within the four distribution assets, BG Group believed that a specific, detailed and independent review of integrity management practices with respect to PE systems could now add additional value and build upon improvements implemented as a result of AIBA. BG Group decided that Synthotech Ltd had the necessary expertise and experience to carry out such a review, and contracted them to undertake the work. Objectives: Method: o To determine the actions that BG Group needs to take to achieve world class asset management practices for its PE systems o Identify opportunities for cross asset transfer of knowledge and best practice o Develop consistent practice where applicable o Ensure optimisation of long run whole life costs Synthotech Ltd is an internationally renowned developer and supplier of niche products to the gas distribution industry, and prides itself on its capability to produce value adding products and provide customer support in its global market. In recent years the company has developed a consultancy business

3 employing recognised industry experts with many years of international experience. Synthotech s proposal to review BG Group s current asset integrity management practices for PE systems built on the foundation of the improvements identified in the 2005 AIBA review. In conducting the review Synthotech used its international experience to identify gaps between current BG Group practices related to PE assets and recognised international practices. In Synthotech s experience, some of the best asset management practices worldwide are to be found in the UK and Australia. In the UK, the BSi Publicly Available Specification PAS 55: Asset Management, supported by the Institute of Asset Management (IAM) is widely utilised. From a utility perspective, the UK Office of Gas and Electricity Management (OFGEM) has required all gas and electricity network operators to obtain PAS 55 certification. Certification is awarded by independent bodies such as Lloyd s Register or Den Norske Veritas (DNV). PAS 55 certification has also been obtained by gas distribution companies around the world, e.g. Intergas Netbheer in the Netherlands and Hong Kong and China Gas based in Hong Kong. It may therefore be reasonably assumed that application of PAS 55 confers a consistent set of guidelines which provide confidence that assets may be effectively managed. In Australia, the Asset Management Council of Australia carries out broadly similar functions to the IAM. Although the Council was initially formed as the Maintenance Society of Australia, in more recent years its focus has changed towards a more holistic approach to the management of assets. It works closely with Standards Australia to ensure that appropriate asset management requirements are detailed in any new or revised standards. The publication of an asset management manual that described good practice as case studies was a useful document to Australian industry as a whole. Regulation of the gas industry in Australia is controlled by individual state regulators although there is also overarching federal regulation in place. State regulators are increasingly requiring gas network operators to demonstrate asset management practices within their Safety and Operating Plans (SAOP). The SAOP is broadly similar to a UK Safety Case but requires inclusion of information relating to planned activity and monitoring indicators. Whilst neither the UK nor Australian documents nor organisations are specifically directed towards utility operations the practices advocated merit consideration. However in such consideration their application must be tailored to suit both the type of company to which the practices may be applied and any country specific requirements.

4 The key element of both the Australian and UK model is the linkage of the physical assets to the strategic business vision in a systematic way which enables the enterprise to achieve the growth, performance and sustainability objectives set by its various stakeholders. This linking of corporate direction to stakeholders needs to ensure that physical assets deliver appropriate performance and also requires a holistic approach that takes into account the required duty of the assets, their technical and financial management, and the necessary skills and resources required. Indeed in the context of a gas transportation company, the serviceability of the physical assets, the appropriate management of risk, and the generation of adequate returns on investment are all prerequisites for business sustainability. In developing its approach to the assessment of the management of BG Group s PE assets, Synthotech determined a structure based upon PAS 55 but tailored to include elements of Australian practice where in Synthotech s opinion these could provide a more appropriate methodology for the BG Group review. Synthotech then developed a structured series of requirements against which it tested the current practices within BG Group assets. The objective being to understand how current activities were managed and executed, thus facilitating evaluation against international practices. For the field work, Synthotech determined a schedule of managers within each of the BG Group companies for site interviews and discussion on asset management practice. Synthotech tested the information it received from these discussions both during the course of other discussions at different levels in the organisation (and in various functions), and by obtaining supporting documents and records. In this way, management perceptions and assumptions were tested and validated, and a more holistic view of the effectiveness of practices and controls was obtained. Extensive notes were taken during the course of the discussions which were reviewed each day and information gaps identified were closed during the following days discussions. The discussions took place in company offices or work sites as appropriate. During this phase of the assignment Synthotech involved representatives from all levels in the company (from directors to operatives), and from all functions. In this way a diagonal slice of the organisation was involved, which ensured the assessment and conclusions were as robust as possible. Synthotech considered compliance issues with regard to local regulatory requirements. Whereas in Argentina and Brazil regulation is well established, in India regulation it is still evolving and only recently has technical regulation been developed. BG Group India and key staff from its Indian transmission and distribution assets have been influential in shaping and detailing the technical regulations being developed there.

5 Effective asset management requires competent people at all levels of an organisation. It also requires asset managers to understand how activities involving engineering, finance, legal, human resources and information skills need to be managed in order to deliver the corporate strategy effectively. As part of the review work, Synthotech assessed the effectiveness of inter functional coordination within the companies and whether further development and assurance of competency skills was necessary. Having completed the field work in each asset, Synthotech analysed the information and using its international experience compared the findings with recognised international good practice and identified existing and potential gaps. In drafting its report Synthotech provided BG Group recommended actions and solutions on a risk based approach which scoped potential solutions based on practicality and cost considerations. Draft findings and recommendations were tested for factual accuracy with the individual companies. These discussions with the asset operational directors were a key factor in ensuring a successful outcome to the assessment. Synthotech was able to identify a number of pan-asset and inter-asset issues of benefit to BG Group. The pan-asset issues were generally activities where there was inconsistency across the companies. An example would be the absence of a consistent review mechanism for lower level technical documents (although this process was found to be robust at the more strategic level of policy documents). The inter-asset issues centred on opportunities to transfer good practice from one company to the others. An example was the methodical management of equipment maintenance found to be performed in one company, with detailed repair records, issue control and storage of equipment ensuring its fitness for purpose at all times (including during emergency response). Synthotech has developed recommendations with BG Group identifying these areas for further consideration by the four companies. Synthotech has also worked with BG Group to develop some PE specifications related to materials that set the minimum acceptable standards for use by the four companies. It is anticipated that further work will refine the development of minimum requirements statements with regard to other activities identified as pan or inter-asset issues. Results: The four assets are clearly at different stages of maturity. The established gas companies (Metrogas and Comgás) have a long operating history and their

6 assets contain significant lengths of older cast iron and steel pipes. The Indian assets are relatively young and predominately constructed of PE. These differences mean that operating experience and management practices exhibit subtle differences. Nevertheless the foundations of good asset management practices existed in all assets. It became clear that PE network assets were not generally perceived as an integrity risk area. The most significant risk identified by the four companies was predominantly as a result of third party interference damage. In India, rodent attack on buried service pipes is a particular integrity issue. However during the assessment of the available asset data during the company visits it was confirmed that some leakage from PE systems is occurring as a result of component failure or operator installation error. Effective asset management requires a good understanding of company objectives and the strategic business plan across all functional directorates of the business. This vision should be communicated to all employees who have a part to play in ensuring the physical assets deliver what is required. Some businesses fail to ensure that non-technical functions (e.g. Finance, HR) clearly understand the role they must play in delivering effective asset management. In the case of the BG Group assets it was identified that good communication exists between all functional directorates and that directors fully understand their responsibilities in terms of meeting business objectives, and the role they play individually and collectively in achieving asset integrity performance requirements. However the effectiveness of communication of these requirements to lower levels of the businesses was generally inconsistent. The more mature assets were (as may be expected) more successful at communicating and ensuring good understanding of business and asset integrity management requirements at lower levels in the organisation, and they exhibited effective interfunctional integration at all levels. This is an area, where cross company learning should facilitate significant improvements elsewhere, and this will be enhanced by the secondment or exchange of asset based staff (something BG Group is keen to encourage when opportunities to do so occur). Naturally in applying this learning the cultural challenges of operating in three different countries is something to be taken into consideration in the future. All four companies have asset integrity management systems in place, and again the level of maturity of the company impacts on the effectiveness of the system. It is a common fallacy that developing and installing a management system is sufficient to assure good management practice. Whilst this was not true of any of the four companies the translation of the management system into a living part of everyday work activity within the companies was more effective in some than in others. This is largely a function of asset management maturity but local culture and circumstances also have some bearing on it. For example, within the

7 two companies based in India there is a high degree of illiteracy amongst lower level operatives. More visual methods are therefore necessary to facilitate communication within the Indian assets. This may tend to create a barrier to complete understanding of the requirements of field workers with regard to asset management practices. This is not the case in those companies based in Argentina or Brazil. As such, communication in the South American assets is effective in both written and oral form across the whole organisation. Furthermore the Indian assets tend to have more bureaucratic organisational cultures which may not be as effective at communication as the more open methodologies adopted in the companies based in Brazil or Argentina. Within all the companies review mechanisms exist for the documented asset management systems. Generally these are applied effectively to higher level documents such as policy, strategy or asset management plans, but less rigorous approaches tend to be applied to supporting documents such as technical procedures, which may not therefore always reflect the latest developments. Some of the companies have formal procedural approval to implementing stages of asset management policy and strategy, e.g. authorisation by managers of asset integrity, maintenance and finance of annual maintenance plans. A key part of an effective asset management system is ensuring that technical practices are clearly documented and understood, coupled with effective training and competency assessment processes. At lower operational levels these technical practices were found to be generally sound (with few exceptions). A typical example of this would be the lack of inspection of the first metre of PE pipe inserted into the bore of a metallic pipe to determine if unacceptable gouging had occurred. All field operatives were assessed with regard to competence and approved for work on the network. This process was subject to regular review. BG Group has implemented a Technical Steering Group (TSG) which involves membership of senior engineers from each of the four companies. The TSG endeavours to ensure consistency across the assets; however it was found that good practices were not always effectively shared. An example would be the very effective and low cost methodology used in Metrogas to protect PE pipe from UV degradation which would benefit Indian assets where this is obviously very much an issue. The BG Group distribution businesses are staffed almost exclusively by local employees, and few individuals have worked in any other gas distribution company. This reinforces the need to share experience and good practice between assets and BG Group is keen to exploit this wherever possible.

8 Specialist support is routinely provided between assets through project reviews, peer assists and consultancy assignments and this is provided on site where appropriate. This then tends to promote ongoing interaction between staff in different assets, and complements the co-ordination and knowledge sharing focus of the TSG. Some unexpected gaps emerged, one example being the formal assessment of management competency. Although operative competency assessment is embedded and generally the softer skills are assessed in the management ranks, the skills that engineers and managers require to ensure fully effective management of the assets are generally not routinely assessed on a formal basis. The potential therefore exists for knowledge gaps to develop, which would be identified by a more formal approach to competency assessment. The PAS approach a BG Group perspective This project provided a different integrity review perspective to that adopted in the AIBA exercises in 2005/6, principally with respect to; a) the use of external independent consultants, rather than predominantly an internal team b) the use of a standard model framework, rather than an internally generated protocol (based largely on existing corporate knowledge and anecdotal evidence of integrity issues) c) a specific focus on one asset element, rather than a complete review of the whole distribution system and facilities In addition to the specific objectives of the project listed above, BG Group saw value in undertaking the project arising from; o validation of the key AIBA findings and the provision of feedback on progress since AIBA in key areas o the facility to specifically address local issues with respect to PE system management (e.g. the rodent infestation problem in India, utility interference in Argentina); and o specific guidance on resin selection and material specification in India (which hitherto had been based on prescriptive and relatively conservative advice from BG Group) BG Group was also conscious that the principal high risk findings from AIBA were in general related to the integrity issues associated with legacy metallic systems in its South American assets, and these have received a great deal of management attention in the intervening period. This review therefore provided the opportunity to redress the balance to an extent, and to ensure that the

9 integrity issues relating to the rapidly growing PE networks were also brought clearly into focus. Furthermore BG Group was aware that their PE system standards were outdated and that technical developments had moved on some way since then. This project provided the opportunity for BG Group to review their overall approach to PE standards and to set a new baseline for assets to work from. The key internal issues which BG Group faced in implementing this project were around communicating the purpose and objectives of the project to the assets and in securing their engagement and the TSG were engaged to facilitate this process. The Group met in the UK for a two- day kick off workshop with Synthotech that considered corporate governance and risk management issues and was also used to provide a technical update on PE systems and specifications. TSG members were then tasked with briefing asset managers and facilitating the Synthotech site visits. Looking to the future beyond this project, BG Group anticipates that the key longer term issues which will need to be addressed by the assets involved will be; o The implementation of strategic recommendations relating to PE integrity management o The impact on BG Group s ongoing programme and rollout of competence assurance and development systems o The adoption of long run whole life costs as a key performance metric and investment appraisal input o The impact on asset contracting and procurement strategies, and leveraging of economies of scale opportunities o Sustaining integrity management performance through the TSG, and inter-asset exchanges of good practice and lessons learned Conclusions: The assessment of the asset management systems with regard to the PE assets has concluded that generally sound practice is in place in individual companies. There is however a lack of overall consistency which is to be expected given the cultural, regulatory and economic related issues of individual countries. There is scope for change in developing optimised specifications and practices related to the procurement of materials, installation and operational practices. BG Group emerged from the former British Gas which operated predominantly low pressure distribution networks within the UK. BG Group s current assets operate PE assets at pressures up to 4 bar. Therefore improved fault data collection

10 related to PE failure (supported by a risk model) is critical to provide BG Group with the necessary assurance that the distribution networks are operating within appropriate safety levels. BG Group believes that the provision of support for the introduction and implementation of new technologies and methodologies together with improved sharing of information through its TSG initiative will be beneficial to both the Group and the four companies. Improved competence assessment applied consistently across the companies with a tailored asset management focus will further ensure the continued application of world class standards. Acknowledgments: Directors and staff of Gujarat Gas Ltd, Metrogas, Comgás and Mahanagar Gas Ltd. without whom this could not have been achieved. BG Group directors and Synthotech directors for permission to publish.