Soft Landings for Ageing Assets: Maximising Value, Minimising Risk
The topic of decommissioning is currently in the spotlight, attracting significant attention. However, the essential precursor to decommissioning, the management of ageing facilities as they near the end of their operational life, is not receiving the attention it merits. Ensuring the integrity, profitability, and effective management of ageing facilities to prevent unforeseen negative outcomes is critical to the energy industry. This directly impacts the costs and timing of future decommissioning efforts.
Prioritising the extraction of maximum value from ageing facilities makes sense from both an environmental and an economic standpoint. It can delay or even eliminate the CO2 emissions associated with constructing new infrastructure. Given that the transition from traditional fuels to cleaner alternatives is a gradual process, efficiently utilising existing resources is pivotal in avoiding excessive investments in new projects.
Scenarios for Ageing Assets
Soft Landing: In the ideal scenario, a company predicts a final depletion target to be achieved next year and schedules the final operation accordingly. The operations teams transition from maintenance and upkeep tasks to preparations for shutdown, where they focus on maintaining critical systems for decommissioning while minimising investments in integrity-related maintenance. The outcome is a cost-effective execution of the decommissioning process.
If an abrupt failure of a critical asset does occur during this process, resulting in a full production shutdown, and consequently, the decision is made to permanently shut down the facility, the effective planning at higher levels and the emphasis on sustaining vital systems can yield valuable benefits.
Hard Landing: A significant crisis emerges when a pivotal asset experiences a catastrophic failure, leading to a complete production standstill. Operations teams are immediately thrust into action, working tirelessly to initiate necessary repairs. This urgency prompts an accelerated engineering response and the swift procurement of essential equipment, albeit at escalated costs. However, as the repair process unfolds and additional faults surface, compounding the complexity of the situation, it reveals a disconcerting reality, the facility can no longer maintain a positive cash flow and the asset must be decommissioned.
Managing Key Risks for Ageing Assets
Identifying and effectively managing risks is important in the management of ageing facilities. Practising decision-making strategies for all scenarios is essential. Here are some of the key risks and recommended approaches for managing them:
Risk 1: End-of-life trigger event
Example End-of-Life Triggers events:
- Minimum economic production rate
- Catastrophic well failure
- Gas turbine major failure, requiring replacement
- Production riser failure
- Control system failure with no replacement hardware available due to obsolescence
- Loss of structural integrity in key platform or hull structure components
- For floating facilities – requirement to dry-dock to complete repairs
Manage this risk by: Identifying and monitoring the top 10 End-of-Life Triggers.
Risk 2: Unmanageable maintenance backlog
The accumulation of a maintenance backlog is common as the facility confronts the challenges presented by the increasing frequency of equipment failures. As the demand for repairs and corrective actions surges, the workforce availability for preventive maintenance and less critical tasks naturally decreases.
Manage this risk by: Implementing a method for prioritising tasks. Conduct an annual assessment of both the backlog and planned maintenance items to reduce the maintenance workload to the lowest feasible level, while ensuring minimal effects on overall facility safety or production risk.
Risk 3: Assets exceeding their rated service life
In the span of 10 to 20 years of a facility, key components must undergo either replacement or a comprehensive examination to seek recertification from the vendor or a certified body.
Manage this risk by: Developing a life extension strategy that guides the timing of the essential component replacements, proactively schedules actions to maintain certification, and integrates these actions into the operational budget. Essential components of the life extension strategy should be incorporated into a 10-year plan, providing management with a clear cost projection for key item replacements or recertification over the next decade.
Risk 4: Loss of Key Personnel
Retaining valuable personnel is a challenging endeavour for any operating asset, particularly in times of low unemployment. Experienced staff who are well-acquainted with the facility and possess strong teamwork skills play a pivotal role in maintaining the ongoing performance of the facility.
In contrast, an inexperienced team lacking historical knowledge and facility-specific insights might inadvertently overlook critical nuances. When teams are replaced on ageing facilities, the newcomers may find themselves grappling with issues they are not equipped to handle, leading to an upswing in operational cost and production downtime.
Manage this risk by:
- Implementing knowledge management systems and databases to centralize critical information and ensure regular updates.
- Implementing knowledge transfer programs that encourage experienced employees to document their knowledge and share it with colleagues.
- Identifying key personnel in critical roles within your organization and develop a succession plan.
Do you have an Action Plan?
BE&R provides a proactive approach, integrating with client teams to curate action plans to suit each prospective scenario that are ready to be deployed at immediate notice. The BE&R team is interested in achieving positive outcomes for its clients, not in implementing over-the-top, complicated and costly add-on processes for investigating every possible system and equipment failure. At BE&R we pride ourselves on our proactive and fit-for-purpose approach to helping our clients.
Effectively managing ageing facilities is crucial for optimising value and mitigating risks. By adopting a soft landing strategy, organisations can extend the life of their facilities, reduce their environmental impact and enhance their financial gains. In an era marked by the shift toward cleaner energy resources, meticulous management of ageing facilities delivers dual advantages, benefiting both the environment and the economy.
Ageing assets and life extension, https://www.nopsema.gov.au/sites/default/files/documents/A783718.pdf, NOPSEMA, 2021.
A Risk Based Approach To Managing The Integrity Of Ageing FPSO Topsides, https://onepetro.org/OTCONF/proceedings-abstract/13OTC/All-13OTC/OTC-24151-MS/37672, OnePetro, 2013.