2012 Keynote Address

Driving Product Reliability and Service Quality in the Oil
Service Industry
June 14, 2012
Randolph Phillips
Vice President, Enterprise Reliability
© 2010 Baker Hughes Incorporated. All Rights Reserved.
Randolph Phillips
Hopeful Takeaways
• VP of Reliability at Baker Hughes responsible for the Corporate Reliability
1. Reliability, Quality and Risk Management
Program across all product lines and services.
Challenges facing the Oil & Gas industry now . .
. . . and going forward
• In 2006, joined Baker Hughes as the VP of Reliability and Quality for the
INTEQ Division of Baker Hughes.
• Prior to that, 22 years at General Electric with Aircraft Engines, Aerospace,
Transportation and Energy Divisions.
2. What the Community of Reliability and Quality
• Served on faculty at Villanova University where he also received his BS
professionals can do to support this industry
Electrical Engineering. Received MS and PhD in Electrical Engineering form
the University of Illinois.
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Baker Hughes
© 2010 Baker Hughes Incorporated. All Rights Reserved.
Customers
INTEQ
Hughes
Christensen
FY2011
Revenues: > $20 billion
~ 55000 employees
Facilities in > 72 countries
Baker Oil Tools
Operates in > 90 countries
Baker Hughes
Drilling Fluids
USE TO BE: 8 INDEPENDENT
PRODUCT LINE BASED P&Ls.
NOW: 9 P&L REGIONS SELLING
ACROSS PRODUCT LINES.
Baker Atlas
Centrilift
Baker Petrolite
BJ Services
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
Competitors
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Energy Demand - 2030
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
Global Oil Field Services (OFS) Market
Market Share
TAM for BHI Portfolio: Up 16% YOY
Millions
$400,000
$350,000
Pressure Pumping
13%
Offshore Drilling
$300,000
$250,000
Off. Construction
42%
13%
10%
Land Drilling
OCTG
$200,000
$150,000
Geophysical
Wireline
4% 4% 6%
8%
Others
$100,000
$50,000
$0
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
~$140B Market
~$340B TAM
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Source: Spears & Associates Oilfield Market Report, Oct 2011
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© 2009 Baker Hughes Incorporated. All Rights Reserved.
Drilling Systems
Technology Advancements . . .
OnTrak
BCPM
AutoTrak G3
Drilling Fluids
Pressure
Resistivity
Directional
Azimuthal Gamma + image
Vibration & Stick-Slip
Drilling Optimization
SoundTrak
LithoTrak
Directional
Drilling
Drill Bits
~ 25000 runs per year
Caliper
Porosity
Compressional &
Shear acoustic
TesTrak
Formation Pressure
& mobility
• Miles of wire. Sensors. PCBs. Connectors. Seals. Etc.
6/28/2012
Directional Drilling
Directional Drilling
• From standard well profiles…
• To advanced well designs . . . . 7+ miles long
30 inch
True Vertical Depth (m)
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Density + image
Bi-directional
Communications &
Power Module
18.625 inch
X-23 Y2H TD 7,076M MD
X-23 Y3H TD 7,230M MD
13.375 inch
X-23 Y1HT4 TD 4,513m MD
X-23 Y1HT2
9.625 inch
X-23 Y1HT2 Wellpath
X-23 Y1HT4 Wellpath
X-23 Y2H Wellpath
X-23 Y3H Wellpath
Wire Line Systems
Completion Systems
Fluid
Sampling
Pumping
Services
Integrated
Formation
Evaluation
Sand Control
Completions
Multilateral
Systems
Expandable
Completions
Wire line
Logging
Logging
While Drilling
Perforating
~ 25000 per year
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6/28/2012
6/28/2012
Pressure Pumping
Oilfield
Chemicals
Progressing
Cavity Pumps
Workover
Services
Fishing Services
Electric Submersible
Pump Systems
Production Logging
~ 23000 active
~ 8000 installs per year
6/28/2012
Intelligent Well
Systems
~ 35000 per year
Production Systems
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Flawless
Execution
Coring
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
The Role of Reliability and Quality: Part 1
“Performance Risk Management”
Cumulative Annual Growth Rates
C&P
D&E
PP
10,000 on-rig failures per year (BH only)
TAM $B
•
Non Productive Time (NPT) ~ Downtime
– Cost to Operators ~ $6B (all SC)
– Cost to BHI ~ $1B
•
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Rig Costs: NPT Means “Rigs not being utilized”
CoF/CoPQ/CoQ
© 2010 Baker Hughes Incorporated. All Rights Reserved.
Challenge #1
• What Can the Reliability and Quality professional do to
help reduce on-rig failures and reduce NPT & CoF?
Many off-shore rig day rates are over $1M / day
“Rigzone.com”
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
The Role of Reliability and Quality: Part 2
“HS&E Risk Management”
Top Oil & Gas “Spill” Issues Since Macondo
• Nigeria
• France
• Brazil
• UK
• US
• China
• Canada
• India
• Italy
• India
Explosion in Gulf of Mexico in 2010 changed Regulatory
Requirements for Operators and Service Companies
. . . . in the Gulf of Mexico and WW
• US
• US
• China
• Egypt
• US
• US
• Singapore
• Nigeria
• US (GoM)
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December 21, 2011
December 16, 2011
November 7, 2011
August 10, 2011
July 1, 2011
June 4, 2011
April 29, 2011
January 21, 2011
January 11, 2011
August 7, 2010
July 27, 2010
July 26, 2010
July 16, 2010
June 16, 2010
Jun 11, 2010
May 25, 2010
May 25, 2010
May 1, 2010
April 20, 2010
Increased Visibility
Increased Financial
Accountability
© 2010 Baker Hughes Incorporated. All Rights Reserved.
The Role of Reliability and Quality: Part 2
“HS&E Risk Management”
Challenge #2
• What Can the Reliability and Quality professional do to
Regulatory Agencies
identify and reduce HS&E events on-rig/downhole?
– “Raising the bar” on standards that further mitigate HS&E risks
o Training & Competency Assurance
o Traceability
o Standard Operation Procedures
o Risk Management Program for Products and Services
FMEA
IOCs and NOCs
– Driving “country specific“ standards into their own “Supplier
Qualification Specs”
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
Bow-Tie
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
Operations Reliability
Mitigating Risks Across the Product Life Cycle
Focus of New Standards
• Pre Macondo – “Little” Oversight or Standards
• Post Macondo – Regulatory Mandate
Customer
Where failures
come from?
50%
DFMEA
Reliability Risk
Mitigation
Processes
10%
Manufacturing
QA/QC/L6σ
Design For
Reliability
DFM
Reliability
Testing
Supplier
QA/QC
– Training & Competency
40%
Training &
Competency
FRACAS
Standard
Operating
Procedures
RCA/Life
Data
Analysis
PFMEAs
Mission
Data
QMS/
Audit
Program
– Standard Operating
Procedures (SOP)
– Centralized OS & QMS
– Material Traceability
– Product and Service
Risk Assessments
(PFMEA)
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
Where Are We Today?
How Do We Address Our Challenges?
• Regulatory Initiatives focusing on Operations: People that
• What can the R&Q professional do to reduce on-
execute Oil Field Services On-rig or in Repair Centers
rig/downhole HS&E events?
– “Data Driven” Risk Management Program on “Critical Services”
• Reliability & HS&E become one!
• What’s Next? More Oversight “upstream”
• What Can the R&Q professional do to reduce on-rig NPT
– Supply Chain
– Design
failures?
– ROI models for NPT and CoF/CoQ reduction investments
Aerospace?
– Design for Reliability and Supply Chain Quality Management
• Execute Existing Best Practices
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
Risk Management Process Phase 1:
Services Risk Matrix Based on SME Estimates on “S” and “O”
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DE
CP
PP
DE
PP
Leadership Challenges: Required Investments
• “Quality” Field Data.
PS
PP
PS
PP
CP
• What failed? Why? Mission Profile? Who Owns?
• World Class RCA and FRACAS
• Hold Design, Supply Chain and Operations leaders accountable to results.
DE
CP
CP
PP
DE
DE
DE
Severity
• Supplier Reliability Assurance
PS
PS
DE
DE
• Design for Reliability
• Execute. No short cuts.
CP
CP
1
DE
1
• FMEA Strategy: All Services
CP
CP
• Maintain as “Controlled” Documents
DE
DE
DE
Likelihood/Occurrence
DE
DE
10
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Reliability Labs and Test Equipment
© 2010 Baker Hughes Incorporated. All Rights Reserved.
What this means to the R&Q Professionals
• From R&Q Engineers . . . . to Product & Service Risk Managers
• Broaden your horizons!!
• Understand Performance and HS&E risks across all O&G Product Life
Cycle functions (Design, Supply Chain, Operations)
• For Certain Critical Services (Pf < 10-6)
• Field Data Capture Requirements
• You are the experts! What field data is needed?
• Be Business Leaders!
• Develop credible CoF/COQ/CoPQ models with Finance ~ 1B$ opportunity !
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© 2010 Baker Hughes Incorporated. All Rights Reserved.
Summary
Oil & Gas Industry is going through a Risk
Management and Service Quality “Revolution”
1. Standards which have been driving Aerospace, Aviation, Medical Systems
and Automotive will become requirements for certain Critical O&G Services
2. Operators and Service Companies must invest now in a Products &
Services Reliability & Risk Management Strategy
• Compliance
• Minimize liability/reduce insurance premiums
• Improved Contribution Margins
3. 3rd Party Initiatives
• API Task Group on Product Life Cycle Management
• SPE Forum of Reliability in the Oil & Gas Industry
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© 2010 Baker Hughes Incorporated. All Rights Reserved.