Asset Integrity Life Cycle Management

- A Regulator’s Perspective John Kennedy, P. Eng., CRSP

Director of Operations C-NLOPB

Who

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• Established in 1985 under the Atlantic Accord to provide regulatory oversight in four areas: • Safety • Environment • Resource Management (includes Exploration) • Industrial Benefits

• One of three Canadian offshore regulators, along with CNSOPB and NEB

• Board reports to federal and provincial Ministers of Natural Resources, plus Minister of Service

NL

• Accord Acts dictate a permissive regulatory regime but place ultimate responsibility for safety and environmental protection on operators, who are required to mitigate risk to a level as low as is reasonably practicable (“ALARP”)

• Regulatory tools include legislation, regulations, guidance, codes of practice and conditions

• Enforcement and compliance tools include notices of non-compliance, orders, revocation of authorizations, prosecution and administrative monetary penalties

C-NLOPB - Regulator for the Canada – Newfoundland and Labrador Offshore Area

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THE BOARD

Chair and CEO – Scott Tessier Jointly Appointed by Government of NL and

Government of Canada

Vice Chair – Ed Williams Appointed by Government of NL, Endorsed by

Government of Canada

6 Board Members 3 Appointed by Government of Canada - Lidija

Cicnjak-Chubbs, Cynthia Hickman and One Vacancy

3 Appointed by Government of NL – Ed Williams, Ted O’Keefe and One Vacancy

C-NLOPB Organization Structure

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All maps used in this presentation are subject to the following disclaimer:

“Any sector, parcel or licence depicted on this map beyond 200 nautical miles off the coast of Newfoundland and Labrador is not represented by the Board to reflect the full extent of Canada's continental shelf beyond 200 nautical miles. Canada has filed a submission regarding the limits of the Outer Continental Shelf in the Atlantic Ocean with the Commission on the Limits of the Continental Shelf, the review of which is pending. Any call for bids based on a sector or parcel identified in this map and any licences issued in those areas will be subject to approval as a Fundamental Decision under applicable legislation. The boundaries of sectors, parcels or licences in areas beyond 200 nautical miles may be revised to reflect the limits of the Outer Continental Shelf established by Canada. All interest holders of production licences containing areas beyond 200 nautical miles may be required, through legislation, regulation, licence terms and conditions, or otherwise, to make payments or contributions in order for Canada to satisfy obligations under Article 82 of the United Nations Convention on the Law of the Sea.”

Canada - Newfoundland and Labrador Offshore Area

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• The current active fields are located in the Jeanne d’Arc

Basin, about 350 km southeast of St. John’s, NL

• Other active areas include the Flemish Pass which is

+450km northeast of St. John’s, NL

Canada - Newfoundland and Labrador Offshore Area

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TerraNova FPSO

Hibernia Platform

Transocean Barents

Henry Goodrich

SeaRose FPSO

Current Operating Facilities and Rig Locations

Hebron Platform

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Other Rigs Include…..

Sedco 714 RG VI

Eirik Raude

Stena Carron Skandi Constructor

GSF Grand Banks West Aquarius West Hercules

Bill Shoemaker

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Environment

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Offshore oil and gas exploration and development carry a high level of inherent risk. High risk industries require high reliability operations to ensure consistent and robust application of good (and best) practices to reduce the probability of an incident or accident to as low as reasonably practicable. These good practices must be applied throughout: • the design, integration, commissioning, operation and maintenance of equipment and systems • the development and application of operation and maintenance procedures • the training and assurance of competency of the personnel carrying out the activities In the context of asset integrity, all components of this high reliability equation are equally important. • Equipment must be, and remain fit for purpose • Equipment must be operated within its design envelope • Equipment must be operated and maintained by competent and qualified individuals.

A breakdown in any area can, and with time will, compromise the integrity of equipment and systems with the end result being the realization of the consequence of hazards that would have otherwise been mitigated.

High Risk Industry

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Harsh Environment

• Local environment referred to as “Hostile”

• Severity and frequency of storm conditions

• Harsh environment demands rigid adherence to a comprehensive

Asset Integrity Management program (taking into consideration

design, quality, operation, maintenance, competency, etc.)

High Sea States

• Regional mean wave heights range from 3 m in the western region

to 4.5m in the east across February*

• Maximum wave heights can reach up to 16+ m

11 *Data from Strategic Environmental Assessment study of Eastern Newfoundland

Harsh Environment

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High Winds

• We have had Maximum wind speeds reported above:

• 148 km/h, gusting to 167 km/h, at a height of 50 m

• 157 km/h, gusting to 175 km/h, at a height of 139 m

Icebergs, Pack ice

• In the last 15 years, there have been several occasions where the offshore

production facilities undertook precautionary production shutdowns (in

preparation for possible disconnect) due to pack ice and icebergs

encroaching within safety zone

Fog

• The offshore NL region has some of the highest occurrence rates of fog in North America

• These conditions impact visibility and awareness and vary geographically and seasonally

• The Flemish Cap region sees poor or very poor conditions ( < 2 km ) for 40% of some months*

• The Flemish Cap region sees less than good visibility ( < 10 km) for 57% of the year*

• On average in the last five years, installations reported cancelations to all flights 79 days annually, due to weather conditions such as fog, wave heights, and wind conditions

*Data from Strategic Environmental Assessment study of Eastern Newfoundland

Harsh Environment

• The Fleming-Drover Harshness Index was

developed by Nalcor in their Metocean study to

compare overall degree of harshness across

offshore regions

• The values are generated from parameters that are

highly important to offshore operations,

specifically:

• Sea Ice (Pack Ice) Concentration

• Sea State

• Iceberg density

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*Data and information from “Nalcor Metocean Climate Study Offshore Newfoundland and Labrador - Study Full Report Volume 2”

Remote Environment

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• Production platforms and MODUs are operating more than 350+ km from shore

• In comparison to other jurisdictions the infrastructure in this region is relatively small - currently we have 4

production facilities and 2 MODUs operating in the offshore NL region; with some additional seismic and

construction vessels during the summer months

• Typically includes standby vessels for each facility unless operating in the same field

• Travel can take 90 to 180 minutes by helicopter or up to 18-24 hrs by vessel under normal conditions

ASSET INTEGRITY IS CRITICAL IN THIS HARSH, REMOTE ENVIRONMENT

Regulations

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Definition of Installation

INSTALLATION REGULATIONS

Definitions:

Installation – diving installation , drilling installation, production installation or accommodation

installation;

Diving installation – diving system and any associated vessel that function independently of an

accommodation installation, production installation or drilling installation;

Drilling installation – drilling unit or a drilling rig and its associated drilling base and includes any

associated dependent diving system;

Production installation – production facility and any associated platform, artificial island, subsea

production system, offshore loading system, drilling equipment, facilities related to marine activities

and dependent diving system.

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Installation Regulations

Facilities for Inspection and Maintenance

6 An installation shall be designed and equipped in such a manner as to allow for the

monitoring, maintenance and periodic inspection of the installation, including

(e) means to assist maintenance personnel, including those doing underwater maintenance,

to perform their work safely and effectively

Innovations for Installations

41 The design of an installation shall not involve the use of any design method, material,

joining technique, or construction technique that has not previously been used in

comparable situations, unless

(a) there have been engineering studies or prototype or model tests that demonstrate the

adequacy of the method, material or technique; and

(b) the operator implements a performance monitoring and inspection program that is

designed to permit the determination of the correctness of the method, material or

technique.

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Installation Regulations

PART II Analysis and Design - General Design Considerations

37(1) Every installation and every component of an installation shall be designed in accordance with

good engineering practice, taking into account

a) The nature of the activities on and around the installation;

b) The type and magnitude of functional loads, environmental loads and foreseeable accidental loads;

c) Operating and ambient temperatures;

d) Corrosion conditions that may be encountered during the construction, operation and maintenance of the installation;

e) The avoidance of damage to any part of the installation that may lead to the progressive collapse of the whole installation and;

f) Soil conditions.

(2) The design of an installation shall be based on such analyses or model tests of the installation,

including simulations to the extent practicable, as are necessary to permit the determination of

the behaviour of the installation or anchoring systems, under all foreseeable transportation,

installation and operating conditions.

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Installation Regulations

Repair, Replacement and Modification of Installations

67 (1) Subject to subsection (2), no holder of a certificate of fitness in respect of an installation shall

make any repair, replacement or modification to the installation, or bring on board any equipment,

that could affect the strength, stability, integrity, operability or safety of the installation, without the

approval of the Chief and the certifying authority.

(4) The operator of an installation shall notify the certifying authority and the Chief immediately if

the operator notices any deterioration of the installation that could impair the safety of the

Installation or damage the environment.

Remedial Action

68 Where an inspection reveals conditions that threaten the integrity of the foundation or platform

of an installation, the operator shall take remedial action to restore the integrity of the installation to

the satisfaction of the certifying authority

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Drilling and Production Regulations

5 Management System

(2) The management system shall include

(c) the processes for identifying hazards and for evaluating and managing the associated risks;

(d) the processes for ensuring that personnel are trained and competent to perform their duties;

(e) the processes for ensuring and maintaining the integrity of all facilities, structures, installations, support craft and equipment necessary to ensure safety, environmental protection and waste prevention;

(g) the documents describing all management system processes and the processes for making personnel aware of their roles and responsibilities with respect to them

8 Safety Plan

The safety plan shall set out the procedures, practices, resources, sequence of key safety-related activities and monitoring measures necessary to ensure the safety of the proposed work or activity and shall include

(c) a description of the hazards that were identified and the results of the risk evaluation;

(d) a summary of the measures to avoid, prevent, reduce and manage safety risks;

(e) a list of all structures, facilities, equipment and systems critical to safety and a summary of the system in place for their inspection, testing and maintenance

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Drilling and Production Regulations

19 Safety and Environmental Protection

The operator shall take all reasonable precautions to ensure safety and environmental protection, including ensuring that

(f) any drilling or well operation is conducted in a manner that maintains full control of the well at all times;

(g) if there is loss of control of a well at an installation, all other wells at that installation are shut in until the well that is out of control is secured;

(i) all equipment required for safety and environmental protection is available and in an operable condition;

(j) the inventory of all equipment identified in the safety plan and the environmental protection plan is updated after the completion of any significant modification or repair to any major component of the equipment;

(l) a sufficient number of trained and competent individuals are available to complete the authorized work or activities and to carry out any work or activity safely and without pollution;

25 Wells, Installations, Equipment, Facilities, and Support Craft

The operator shall ensure that

(a) all wells, installations, equipment and facilities are designed, constructed, tested, maintained and operated to prevent incidents and waste under the maximum load conditions that may be reasonably anticipated during any operations

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Drilling and Production Regulations

27 Rectification of Defects

(1) The operator shall ensure that any defect in the installation, equipment, facilities and support

craft that may be a hazard to safety or the environment is rectified without delay.

(2) If it is not possible to rectify the defect without delay, the operator shall ensure that it is rectified

as soon as circumstances permit and that mitigation measures are put in place to minimize the

hazards while the defect is being rectified.

72 Experience, Training and Qualifications

The operator shall ensure that

(a) all personnel have, before assuming their duties, the necessary experience, training and

qualifications and are able to conduct their duties safely, competently and in compliance with these

Regulations

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History Context

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IRF - 2007 Asset Integrity

• December 2007 conference in Miami

• theme of the conference was asset integrity

• delegates requested IRF to more clearly define what was meant by the term, what should be

included and what IRF expectations were with respect to the key processes which should be in

place to ensure asset integrity.

In response to this request the following definition and key processes set out the views of the

regulators who form the IRF (of which the C-NLOPB is one of ten)

Definition

An asset (which includes structure, process plant and connected wells and pipelines) has integrity

when it meets design performance standards for effective control of risks and when the

management systems effectively support those standards.

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IRF - 2007

Process :

Effective integrity management means knowing:

• all about the design and safe operation of all plant, equipment and systems,

• what can go wrong.

• effective measures are in place to prevent and control undesired outcomes.

• personnel are trained and competent.

• monitoring, inspection and auditing arrangements will verify that the desired outcome is achieved.

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IRF - 2007

Process (cont’d):

The following represent IRF’s reasonable expectations for what needs to be in place for

companies to demonstrate effective management of the integrity of an asset.

• effective leadership from the top demonstrating understanding of integrity issues and

commitment to safe operation.

• clear and effective performance indicators.

• appropriate management metrics at all levels of management.

• effective management of integrity data.

• meaningful and effective performance standards.

• appropriate design standards

• comprehensive operations and maintenance management systems.

• effective risk assessment tools and procedures

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IRF - 2007

Process (cont’d):

• effective audit of integrity management performance.

• effective cross business and cross industry learning.

• continuity of records during the lifetime of the asset.

• trained and competent workforce.

• clear management of change procedures.

• knowledge and understanding of risk control barriers at all levels

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In 2007/2008 C-NLOPB undertook a project to establish a common understanding of the scope of

Asset Integrity

Project involved review of:

• other regulators expectations

• Industry associations in other jurisdictions

• Certifying Authorities

• Local industry programs

Outcome was a view that the Step Change in Safety KP3 program provided the most consolidated

summary of expectations in respect to Asset Integrity and Asset Integrity Management

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C-NLOPB 2007/2008

Asset Integrity Life Cycle Management

Asset Integrity – The ability of an asset to perform its required function effectively and efficiently

while still protecting health, safety and the environment.*

Asset integrity management – the means of ensuring that the people, systems, processes and

resources that deliver integrity are in place, in use and will perform when required over the life cycle

of the asset. *

Asset Integrity is very broad in scope and applies to all equipment on facilities including:

• Pressure equipment (vessels and piping)

• Structures, Hulls

• Subsea equipment

• Wells and Trees

• Electrical systems

• Controls and Instrumentations

• Pipelines/Offloading Systems

• Machinery

• Telecommunication Equipment

• Safety Equipment

• Fire Systems

*Health and Safety Executive Key Programme 3 – Asset Integrity

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KP3 Program

The Step Change program identifies six key elements or tools that need to be appropriately

addressed at each of the six stages in a facilities lifecycle. The six key elements are:

• Identification, assurance and verification of Safety* Critical Elements (SCE)

• Measures for assessment, control and monitoring of risk

• Competence of personnel, including 3rd party contractors

• Planning associated with integrity management

• Management of maintenance, inspection and testing

• Quality assurance and auditing

(* Safety refers to Safety of Life and the Environment)

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KP3 Program

The Step Change program identifies six stages in a facilities lifecycle:

• Design

• Construction and Hookup

• Commissioning

• Operations

• Modifications

• Decommissioning

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Life Cycle Stages and Challenges

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Lifecycle of an Installation

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Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Design to Decommissioning

Lifecycle of an Installation

Regulatory Compliance

• Drilling & Production Regulations

• Installation Regulations

• OHS Regulations

• Certificate of Fitness Regulations

• Marine Statutory Compliance

• Flag and Class Requirements

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Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Design to Decommissioning

Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Asset Integrity at the Design Stage

Design Considerations - Designing for the full lifecycle

• Safety Studies / Concept Safety Analysis / Quantitative Risk Analysis / Major Accident Hazards

• Planning at the design stage for potential impairments, upset conditions, contingencies

• Redundancy - does the design allow for impairments

• Designing in Features that enable ongoing inspection, testing and maintenance of systems to

enable ongoing validation and maintenance of equipment integrity

• Identification of safety critical elements and development of related performance standards

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• Consideration of potential change in operating conditions,

e.g. sweet to sour

• Consideration of potential change in facility features/capacity

• Consideration of potential change in overall required life

• Specifying equipment that is appropriately certified

Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Challenges at the Design Stage

• Application of regional standards

• Materials selection

• Cold bend/Impact requirements for cabling

• Accessibility for inspection and maintenance

• Maintenance over the life including off-station

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• Future operating conditions e.g. H2S

• Facilities specific operational requirements

and circumstances e.g. man riding

capability for cranes

• Regional specific environmental conditions

e.g. fog, extreme waves and winds

• Human machine interface

Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

• Baselining equipment/system conditions at commissioning;

• Quality assurance and quality control inspection;

• Materials and fabrication inspections;

• Adequate protection from the environment including materials, equipment and

personnel;

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Asset Integrity - Construction/Commissioning Stage

• Comprehensive commissioning

procedures including thorough testing of

integrated systems;

• Software/Firmware Version Control

Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Challenges at the Construction/Commissioning Stage

• Changes during the construction phase;

• Clarity on pass/fail criteria during commission/testing of equipment

• Use and management of temporary equipment

• Weight control

• Interface between project and operations team as systems get handed over

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Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Asset Integrity at the Operations Stage

• Ensuring systems are only operated within their design envelope

• Timely Maintenance

• In-service inspection, maintenance and repair

• Ongoing monitoring of SCEs health status

• Frequency of testing and inspection of SCEs

• The ability of testing and inspecting SCEs

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• Ongoing revalidation of Basis of Design –

Performance Standards

• Consistent means for evaluating the severity of

an impairment.

• Clear strategies for addressing impairments to

return to intended design basis

• Operation and Maintenance conducted by

qualified personnel

Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Challenges at the Operations Stage

• Consistent classification of the degree or severity of impairments

• The desire to continue operating with impairments ……”Risk Assessed”

• Timeframe to address impairments

• Intent to return to original design state (“I don’t need to do

anything…or …I can get extended life from temporary

repair”)

• Integrity of temporary equipment

• Inconsistent and/or inadequate classification of

impairments as being safety critical

• Sufficient POB space to allow the necessary personnel to

conduct the inspections, tests and maintenance AND to

address impairments in a timely manner

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Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Integrity at the MOC Stage

• Robust Risk assessment and categorization

processes

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• Robust, thorough MOC Process

• Also considers processes and competency impacts

• Multi-discipline input

• Covers organization, personnel and procedural changes as well as equipment and software changes

• Always assessing impact on Basis of Safe Operation

• Always assessing impact on QRA and assumptions made in Safety Studies

Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Challenges at the MOC Stage

• Initial understanding and identification of a change;

• Poor assessment of risk impact of changes;

• Incomplete identification of all of the related impacts;

• Procedural and training/competency impacts not thoroughly implemented and becoming

secondary considerations once the equipment is ready;

• Input not obtained from all affected disciplines.

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Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Asset Integrity - Design Life Extension

• Technical and risk assessments to review current condition and remaining life of Safety Critical Elements and supporting systems

• Material degradation

• Obsolescence

• Organizational Issues

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• Ageing of equipment and facility – include physical inspection to clearly understand the current health of systems

• Thorough assessment of the maintenance and impairment history and trends, of equipment and systems, to truly understand their performance to date in the actual working environment

• Analyzing barrier systems’ performance

Current Facility Summaries

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Active Offshore Facilities:

Hibernia Terra Nova SeaRose Hebron Henry Goodrich Transocean

Barents

Year Entered Service

1997 2002 2005 2017 1985 2009

Design Life 2027 2022 2025 2047 2005* 2029

Current Age (Years)

20 15 12 0 32 8

Major Upgrades

- Southern Extension

(2010)

- Drilling Upgrades (2016)

- Living Accommodation

s Upgrade (2012)

- Off Station Upgrade and

Repairs (2012)

- Off Station Upgrades and Repairs (2012)

* Initial design life extended

- Periodic Survey and Upgrades (2010, 2016)

*Periodic Fatigue Assessments performed for continued operations

Design

Construction and Commissioning

Operation

Management of Change

Design Life Extension

Decommissioning

Asset Integrity - Decommissioning Stage

• Planning for this at the early stages

• Plug and Abandonment programs that isolate flow to surface and cross flow within a well

• Clearly defined End of Life of the facility

• A decommissioning program that returns environmental conditions to what they were prior to

the commencement of the project

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Common Asset Integrity Challenges

• Corrosion under insulation (CUI) – inspection programs/technologies

• Fabric Maintenance

• Corrosion issues with produced water caisson, open drain systems (drain boxes and piping)

• Corrosion of hydrocarbon piping

• Use and extent of composite repairs (Temporary Repairs)

• Condition monitoring technologies for machinery/electrical

• Lack of comprehensive maintenance on low running hour equipment

• Frequent false alarms from fire/gas detectors due to fog and heavy precipitation conditions

• Temporary Safe Refuge Integrity Impairments

• Pipe Support deterioration

• Mooring Chain Integrity (general wear and bending stress, repairs require offstation)

• Well Integrity impairments – DHSV and Master and Wing valves failing to meet leak rates as well as

tubing leaks

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Common Asset Integrity Challenges

• Deficiencies in general visual inspection (GVI) not clearly identifying the scope of what was

inspected and what was not (eg pipe behind other pipe not easily visible yet line indicated as fully

inspected)

• Crane integrity issues – slewing pinion gear, crack indications on lattice etc

• Impairments to lifeboats

• Impairments to helideck fire monitors due to extended sub zero temperature

• Management of deferred maintenance – an expanding backlog both in number of routines and in

person hours to execute

• Internal corrosion (pitting) in crude export, produced water and gas compression systems

(microbial corrosion)

• Hydraulic hose issues (cold weather and corrosion of end fittings)

• Pipe erosion (high velocity of fluid and bends in system piping caused pipe erosion)

• Valve issues on ballast control system

• Uncontrolled void space flooding due to corrosion

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Summary

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Key Take Away Points • This is a high risk industry that requires high reliability operations

• This is a harsh/hostile environment – Mother Nature is our harshest critic

• Our regulatory regime requires good/best practice taken in the context of good/best practice in similar operating environments

• We expect a conservative thorough approach to asset integrity management – this expectation is shared by our regulatory counterparts in the IRF

• Asset integrity must be considered and accounted for through the entire life cycle of an installation

• Asset Integrity must ensure that equipment and systems are tested, inspected, maintained and operated by qualified personnel to ensure safety and environmental protection under the maximum load and operating conditions that may be foreseeable during any operation and continues to perform in accordance with the original design standards

• This is not the first time any of us have turned our attention to Asset Integrity Management - It will not be the last time

• While good progress continues to be made in this area, there is still lots of work to do and improvements to be made

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Thank You

Questions ?

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