Neil Flemming, managing director, Asset Integrity Engineering talks about the essential role integrity management plays in the oil and gas industry
What risks do you see emerging as a result of deferred spending through the last few years of the oil and gas downturn?
It is our opinion that the oil and gas industry has many areas where efficiencies can still be identified and safely managed out. The downturn made the industry take a focused view on cost reduction and a great number of efficiencies have been made some of which I don’t believe would ever have happened this rapidly if the oil price would have remained above US$100 per barrel.
As a business our core focus is the efficient management of major incident risk and so far, we have not seen a significant uptrend in catastrophic incidents, although by nature these are generally large scale and infrequent events. Major incidents do however generally lag key strategic decisions such as spending cuts by up to 5 years or more if we take learnings from the past, which remains a concern. We have been made aware of a growing trend of smaller HSE related incidents across the industry which can be indirectly attributed to poorly thought-out cost cutting strategies.
The workforce across the industry has been reduced dramatically although we frequently witness that not all processes and systems have been adjusted or optimised down to the current manpower and skills which companies now have available to run their operations reliably and safety. This means that many safety critical processes are either being bypassed or not implemented fully whilst visibility of this risk to senior management is somewhat limited.
If you had a single piece of advice for organisations to ensure cost cutting does not create or increase major incident risk what would it be?
Drives on cost reduction and efficiency can be implemented via various strategies across most areas of the business. Change by very nature creates risk and this needs to be managed via a robust management of change process (MOC). I have seen too often that MOC process is vigorously applied for managing plant equipment change although for areas such as organisational change it is often bypassed.
Operators should always understand their safety critical roles and processes within their organisations and understand the risk they bring to the business when these are changed out or removed entirely. By enforcing the proper use of the MOC process a fair evaluation of the benefits and safety considerations of any cost opportunities can be made.
How has the downturn changed the way integrity services are practiced in the industry?
Previously, integrity services were setup or engaged mainly for the benefits of risk reduction and improvements in technical safety. These are still important objectives although the industry is now very much more focused towards drives on operating cost reduction and improvements in plant reliability whilst optimising the remaining life of assets.
Solutions or services which create additional costs to operators are now very difficult to get off the ground and only those which truly add value and can be monetarised are experiencing demand in the current market. As a business the majority of our revenue comes from analysis of data and a smaller percentage from data gathering such as inspection and field testing. We are heavily focused on reducing inspection and maintenance costs for clients whilst standardising processes and making maximum usage of data. We have fed this philosophy into the way we build optimised integrity and maintenance management systems and for this reason, AIE is one of the only integrity service providers who have actually grown through the downturn.
In what ways is AIE trying to move the integrity industry forward?
We remain heavily focused on standardisation and technology to drive the industry forward whilst moving reliance away from an inspection-biased strategy. We are actively engaged in learning from the aviation industry where a more condition-based approach is adopted, and plant integrity and reliability is more optimally achieved.
We are also building 3D integrity management applications and we have recently launched our new corrosion and chemical management software (Veracity CCM) which is now being integrated with real time monitoring applications to offer a leading cost effective technology solution for our clients. Another area we are committed to moving the industry forward relates to gender diversity which we believe brings a number of benefits to the workplace.
Our industry is typically male dominated which originates from an inspection bias to the way integrity services were historically practiced. Within AIE we take a more holistic and different approach to risk management and to date 49 per cent of our staff are female which is fairly unique statistic in such a typically male dominated industry sector.
What are the next steps for AIE?
2018 is another big year for AIE as we launch a range of new integrity management software modules and we continue to implement our office expansion strategy which will this year create a regional AIE headquarters in South East Asia.
We remain firmly committed to the protection of the environment and helping our clients run more efficient, reliable and sustainable operations is at the heart of what we do. Later this year we will be launching our new business stream “Sustainability Services” which will further broaden our service offering whilst bringing a new innovative and systematic approach to how sustainability is operationalised for heavy industry.
Finally, we are proud to be developing a new Integrity management executive decree and law for a local government within the MENA region. This is an area I am extremely passionate about as I believe it will ensure the lasting safety of the public and protection of the environment for many generations to come.