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Examples of
Operational Excellence
at Some of the World’s
Largest Energy
Companies
7
7 Operational
Excellence Programs
at Oil and Gas
Companies
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Introduction
Oil and gas companies are no strangers to process and operational excellence. The
industry operates in some of the toughest and most politically sensitive places on earth.
Any accidents that occur have a high cost in terms of human life and the environment.
Meanwhile, the volatility of oil prices means that sky high oil prices won’t mask inefficient
operations.
That’s why oil and gas companies have always had to keep a firm eye on how they do
what they do. The CEO of Norwegian oil and gas company Statoil states that "at Statoil,
the way we deliver is as important as what we deliver.”
But with the pursuit of new energy sources such as shale gas and ultra deepwater drilling,
pursuing growth opportunities and maintaining safe operations that are both low-cost and
efficient are proving to be very challenging.
A successful Operational Excellence program can not only save companies millions in
operating costs – it can also enhance business agility, drive innovation, improve regulator
and public confidence and help attract and develop world-class talent. But achieving all of
those aims is easier said than done. So how are some of the world’s leading oil and gas
companies tackling the challenge?
This eBook compiles information about 7 operational excellence programs at oil and gas
companies and includes links to further information and materials. We hope that you find
it interesting!
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Did you know?
Chevron's Tenets of Operation are based on two key principles:
"Do it safety or not at all"
"There is always time to do it right"
Read more at: http://www.chevron.com/documents/pdf/OEMS_Overview.pdf?
Fast Facts:
Number of Employees: 64,550 (2013)
Headquartered: California, USA
Oil and gas giant Chevron has been perfecting its
approach to operational excellence for over two
decades.
The main objectives of the company’s Operational
Excellence Management System (OEMS) include:
Personal Health and Safety -= "Promote a
healthy workforce and mitigate significant
workplace health risks"
Process Safety & Environment
Stewardship - "Identify and mitigate
environmental and process safety risks"
Efficiency - "Efficiently use natural
resources and assets"
Reliability - "Operate with industry-
leading asset integrity and reliability"
Safety, not surprisingly, remains the core objective
of the company’s operational excellence program
with the mantra of “Do it safely or not at all” one
of two key principles on which Chevron’s “Tenets
of Operation are based”.
The company has distilled operational excellence
into a set of easy to understand (and hence follow)
guidelines, and also holds leadership accountable
for setting the vision and demonstrating
commitment to operational excellence through
workforce engagement.
Chevron
“The Chevron Way”
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OpEx Fact:
Implementing best practice operating procedures,
can reduce safety incidents by up to 50% according
to Bain and Co, by helping to identify and mitigate
potential hazards.
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Fast Facts:
Number of Employees: 76,900 (2012)
Headquartered: Texas, USA
According to ExxonMobil’s 2013 Annual Report
“Operational Excellence begins with exceptional
employees.” Thus, the moment someone new
joins the company, they receive extensive
training in best practice procedures to ensure
that everyone understand the right way to do
the right things.
The company reports that it delivered a return
on capital employed of 17% in 2013 and cites
operational excellence as the reason that
upstream reliability performance is 3
percentage points higher at Exxon-operated
assets than it is at those operated by third
parties. Additionally, the 2013 annual report
states, energy efficiency improvements have
reduced cash operating costs at ExxonMobil
Refineries.
Read more about Exxon’s “Operations Integrity
Management Systems” here:
http://corporate.exxonmobil.com/~/media/Broc
hures/2009/OIMS_Framework_Brochure.pdf
ExxonMobil
Watch the video about ExxonMobil
and Operational Excellence > click
here
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OpEx Fact:
Operational excellence practices can improve
machine/facility uptime, increase facility capacity,
and lower maintenance and production costs.
McKinsey estimates that world class oil and gas
operators achieve a facility reliability of 95–98% and
maintenance costs that are 30% lower than the
industry average.
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Creating a Center of Excellence: The ConocoPhillips
Way
Fast Facts:
Number of Employees: 18,400 (2013)
Headquartered: Texas, USA
Operational Excellence is an important part of
the company’s continuous improvement
program, according to the company’s website.
The company says that the mission of the
operational excellence program is to “improve
operational performance and deliver a
sustainable competitive advantage”.
As with other oil and gas companies, safety is a
big focus for their operational excellence
program. The company’s most recent annual
report, for instance, says that in 2013,
ConocoPhillips lowered its combined total
recordable safety incident rate, which has
resulted in a 56 percent improvement over the
past six years.
Also in 2013, the company launched what it calls
the “8 Life Saving Rules,” which are meant to
reduce the risk of incidents and guide the
behavior of employees and contractors.
Read more at:
http://www.conocophillips.com/sustainable-
development/safety-health/Pages/operations-
excellence.aspx
ConocoPhillips
Greg Bussing, Director of
Continuous Improvement,
ConocoPhillips
A PEX Network Interview
Greg Bussing, Director of Continuous Improvement at ConocoPhillips, discusses why his company has gone
down the route of setting up a Centre of Excellence, offers his perspectives on the reasons why you’d want
to set one up and identifies the potential pitfalls to avoid.
To read this interview, go to http://goo.gl/bbPg2e
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OpEx Fact:
McKinsey estimates that frontline workers at
operationally excellent oil and gas companies
spend 50-60% of their time on value-adding
activities, compared to an industry average of
half that.
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The eight lines of inquiry mirror the eight defects that can be found to have contributed to industrial
accidents. It consists of a series of questions that operational leaders can use with frontline staff. They
relate to the following areas:
Routine Operations:
Layers of protection
Safety-critical equipment and instrument
The capability of people performing work
Following procedures
Non-routine operations:
Preparedness for abnormal operations
Breaking containment
Avoiding overfilling or overpressurising
vessels or containers
‘Right material, right place’
BP’s “Eight Lines of Inquiry”
Number of Employees: 83,900
Headquartered: London, UK
While the causes of the Deepwater Horizon
disaster have been endlessly discussed and
debated, since the disaster, BP’s CEO Bob Dudley
has publicly affirmed his commitment to placing
safety and operational risk management at the
heart of everything the oil giant does.
In the year following the disaster, BP set up a new
group called the Safety and Operational Risk
Organization (S&OR), which has the remit and
expertise to provide an independent assessment
of operational risks. But the company is keen to
stress that ultimate responsibility for safety lay
with the line management at platforms, refineries,
ships or chemical plants.
In a 2012 speech to the Rio Oil & Gas Conference,
Richard Morrison, Vice President - Global
Deepwater Response, explained that BP is "further
standardizing the way we identify, quantify and
review risks and execute risk action plans" right
from "the Board Room to the job site."
One example of a new approach that the company
has introduced since Deepwater Horizon is
something called “Eight Lines of Inquiry”. This
technique is a specific set of questions that BP’s
operational leaders can use when observing and
talking with frontline staff, and is based upon the
notion that there are 8 defects that contribute to
industrial accidents.
Read more about operational excellence and
safety at BP here:
http://www.bp.com/en/global/corporate/press/b
p-magazine/issue-two-2012/operational-
excellence.html
BP
Fast Facts:
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OpEx Fact:
Bain and Co. estimates that more efficient execution of
maintenance activities can lead to a reduction of
emergency and reactive work by 80% to 90% in oil and gas
companies.
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Fast Facts:
Number of Employees: Approx. 23,000
Headquartered: Stavanger, Norway
In the Statoil Book, a publicly available company
handbook, CEO and President Helge Lund
writes that "at Statoil, the way we deliver is as
important as what we deliver.
The handbook goes on to outline the company’s
approach to corporate governance, its operating
model and corporate policies. As with other oil
ad gas companies, the centrality of health and
safety permeates much of the material.
One thing that does set Statoil apart, though, is
its People@Statoil process, which includes an
interesting approach the company calls
“Ambition to Action.”
Bjarte Bogsnes, VP of Performance
Management Development, Statoil writes that
“Ambition to Action has three purposes 1)
Translate strategic choices into more concrete
objectives, KPIs and actions 2) Secure flexibility
and room to act and perform and 3) Activate
our values and our people and leadership
principles”
Find out more about Statoil’s Ambition to Action
here http://goo.gl/VQfs5T
Statoil
Taking Realit y Seriously: Towards More Self
Regulating Management at Statoil
There's often a gap between what leadership says it wants and the types of behaviors that their
management processes actually encourage, writes Bjarte Bogsnes, VP of Performance Management
Development at Statoil . Here's the story of how this Norwegian oil and gas company started to close that
gap.
Read the full article here: http://goo.gl/VQfs5T
Bjarte Bogsnes, VP of
Performance Management
Development, Statoil
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Shell’s Philip Sullivan on the Evolving Role of the
Process Professional
Fast Facts:
Number of Employees: Approximately 92,000
Headquartered: The Hague, The Netherlands
Shell's 2014 strategy cites operational
excellence as one of the key differentiators for
its business in the year ahead. "Intense
competition exists for access to upstream
resources and to new downstream markets. But
we believe our technology, project-delivery
capability and operational excellence will
remain key differentiators for our businesses,"
the company states on its website.
The company has been using Lean and Six Sigma
methodologies as part of its operational
excellence program for many years, but the
focus has moved from experts doing Lean and
Six Sigma to the business to something that is
embedded within the business itself.
“I think the big shift in Shell in the last five or six
years has been enabling the business line and
building capability within those lines through
coaching skills,” explains Phillip Sullivan, Senior
Consultant - Process Leadership at Shell.
Shell
Oil giant Shell has been finding success by looking at ways of getting process improvement out of the heads of a
few subject matter experts and into the hands of everyone in the business.
“By moving away from project models only and working with the people to look at their work [...] you embed
the capabilities and the operational performance management into the way people work,” says Phillip Sullivan
Senior Consultant, Process Leadership, at Shell. “That sets people up to continually look for improvement
opportunities with the process that they're operating.”
In this interview, Sullivan offers his advice on enabling that cultural shift about the impact this shift has had on
the skills required by process professionals. To read this interview, go to http://goo.gl/hWkk5q
Philip Sullivan
Senior Consultant,
Shell Process
Leadership
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Fast Facts:
Number of Employees: 82,300
Headquartered: Rome, Italy
Italian energy company eni says that “the
constant and systematic search for operational
excellence is a fundamental component of eni’s
culture and a key value to sustain its
competitive advantage and guarantee constant
attention to safety, health and environmental
protection.”
In a short booklet that details the company’s
approach to operational excellence the
company briefly describes what it sees as the
“culture of operational excellence” as well as
the keys to reaching it. It includes “encouraging
the dissemination of operational excellence
culture at all levels,” setting, monitoring and
“remodulating” performance targets, and the
planning and development of competency
training.
ENI
(Extracted from eni’s operational excellence policy booklet)
“eni considers innovation as a key element for operational excellence and stimulates creative
processes providing incentives for virtuous behaviours.
eni pursues the continuous improvement of processes, competencies and products as a lever to
enhance operational performance.
eni is committed to increasing the efficiency of its activities while promoting respect for health,
safety and the environment, paying constant attention to the effectiveness and reliability of the
company’s processes.”
Read the full policy here: http://goo.gl/OTtWLF
Eni’s Culture of Operational Excellence
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Delivering best in class operational performance is
no longer an option – it's a central imperative.
Taking place in London, September 23rd-25th, this year’s event provides a unique opportunity for the
industry’s operational excellence leaders to share proven best practices for operations performance
transformation, including how to:
Achieve operational excellence across the value chain to ensure capital and operational
efficiency
Improve collaboration with oilfield services to improve logistics
Create value in multi-field operations
Use operational excellence to improve refinery processes
Secure frontline engagement from the start
Make the connection between improved data management and process improvements
Use metrics as a "vital sign" of the effectiveness and the efficiency of operational improvement
efforts
Create networks of excellence and enable knowledge transfer to maximise process excellence
Enable predictable business results with improved project information control
Use high performing OE tools to assess capital investment risk
Featured speakers include:
Hear from Statoil, Shell, Centrica, GDF Suez
and more!
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PEX Network is a free to join online network, with a library of multimedia resources from top
executives on BPM, Operational Excellence, Lean Six Sigma, Continuous Improvement and other
process excellence related topics. Becoming a member is easy and lets you instantly tap into insight
and information from your peers from around the world!
In addition to online resources, PEX Network organizes 30+ targeted face-to-face events globally
per year with industry specific focuses on Financial Services, Telecoms & Utilities, and Energy. We
also hold major cross industry summits on process excellence in Orlando, FL (PEX Week) and in
London, England (Process Transformation Week) every January and May.
Join 95,000 + process professionals by
becoming a member of PEX Network today!
What are you waiting for? Join your peers and
get networking!
http://www.pexnetwork.com/join
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