API Spec Q2 Quality Requirements for E&P Service Providers

Stacey Hagen – Global Quality Team Lead

March 06, 2012

Operator Perspective

Objectives Provide history and operator expectations on API Spec Q2

Outline • Business Drivers • Overview API Subcommittee 18 Task Group 5 – API Spec Q2 • API Spec Q2 Elements Specific to Drilling Services • Beta Test Audits • Expectations for Compliance

Agenda

• Non-Productive Time (NPT) Failures, unreliability,

breakdowns, inefficiencies, plans gone wrong, time wasted and money wasted

Problem events with Drilling’s stewardship which interrupt the critical path activity − Planned operations required

in order to complete the stewarded work

Business Drivers

• Increasing complexity of wells Need for improved service technology

and equipment / tool reliability • Increasing spread rates on rigs Need for systems to ensure

uninterrupted operations

Business Driver

Business Driver

• Root Causes for NPT Competency / Training Lack of procedures Not following procedures Lack of inspection/test No Contingency Planning Lack of a Preventative

Maintenance, Inspection , Test Programs

Lack of Use History Logs

Business Driver

• Inconsistent Global Quality Business Driver

• ExxonMobil Requirements Not always specified API Spec Q1 for

manufacturing Contract requirements

specific to customer Variation in customer

requirements leads to inconsistent global Quality

Business Driver

• ExxonMobil Critical Quality Requirements

• Created Task Group 5 under SC18 • Developed and balloted document

in less than 9 months • Published December 15, 2011 • Standardizes the expectations for

execution of upstream services including well construction, intervention, production and abandonment

• Two regulatory agencies looking at document for application in offshore and line pipe construction activities

Need for Industry Standardization

SC18

TG 1 TG 2 TG 3 TG 4 TG 5 TG 6 TG 7

Auditor Effectiveness

CSOEM

API Spec Q1

Monogram Program

Min. Mfg. Requirements

API Spec Q2

Welding Life Cycle Management

Sub Committee 18 Structure

Operators:

• ExxonMobil • BP • Chevron • Hess • Shell • Total

Service Companies

• Baker • Cameron • FMC • Halliburton • NOV • Schlumberger • Tenaris • Transocean • Weatherford

Interested Parties:

• TIEC • QSI

SC18 Task Group 5

• Competency / Training of Personnel • Risk Assessment and Management • Contingency Planning • Purchasing Control for Critical / Non-Critical Services • Service Quality Plan • Preventative Maintenance, Inspection and Test • Service Performance Validation • Management of Change

Drilling Service Specific Additions

• Appropriate Education

• Training • Skills • Experience

Competency of Personnel

• Testing • Practical • Problem

Solving

• Identify risks (potential and real) • Select, communicate and implement

mitigation or preventive control measures to reduce or avoid exposure to loss

• Notify customer of remaining risks that may impact the service

Risk Assessment and Management

- Actions required for significant risk - Assignment of responsibility & authority - Internal and external communications

Integration

Disruption Prevention

Mitigation Measures

Contingency Planning

• History • Risk • Reliability • Spares

Service Quality Plan • Details for execution of service • Identifies acceptance

inspection (W, M, H and DR) • Identifies control of

subcontracted activities • References to procedures,

specifications, work instructions

• Identifies acceptance criteria • Communicated to the

customer

Preventive Maintenance, Inspection, Test

• Preventive maintenance • Use History Logs • Critical Spare Parts • Controls for Equipment Integrity

Reso

urce

s

-90+ 0 40 10 20 160+ 80

Risk Assessment

Drilling Operations

Design of Service

PM Programs

Contingency Planning

Maintenance & Critical Spares

• Assembly Insp / Test

QA/QC

• Service Performance

Validation •BHA Inspections

•MOC

Critical Suppliers

Time ( rig days) (AFE) Spud

Operations Support

• Well Integrity Reduction of NPT

Contractor Influence

API S

pec

Q2

• Tool Insp @ delivery

Competency

Service Quality Plans

Development of a Users Guide • Identifies expectations for requirements • Provides guidance to Industry for implementation • Utilized to train API Auditors / Staff • SC18 TG5 SC18 TG5 Chairman: Jim Hood – Chevron Jim.Hood@chevron.com

Forward Plan for API Spec Q2

Industry Forum • Held on February 23, 2012 in Houston, Tx • Used to gain input from industry on the type of

certification program that is needed • Attempt to identify the impact to Drilling Service

Industry • Address API Staff questions • Determine time line to implement requirements

Forward Plan for API Spec Q2

• Beta Test Audits − gaps, hurdles and milestones for auditing to Q2 − Identify competencies / training for API Staff / Auditors − Identify needed resources − Types of certifications needed to meet industry needs

Forward Plan for API Spec Q2

• Baker • Weatherford • Halliburton

ExxonMobil Expectations

• Compliance to API Spec Q2 (Inclusion in Contracts) • Service Suppliers to develop gap analysis and

communicate to customers • Service Suppliers to identify a global roll-out plan

based on risk and activity • Hot spots will require immediate attention • Target for certification - Year End 2013

Forward Plan for API Spec Q2

API Spec Q1 Monogram

License

API Spec Q2

• API Spec Q1 is being re-written to match Q2 Flow • Rewrite enables single system for dual applications

Questions?