Integrity Management: Issues & Trends Facing the 21st Century Energy Industry

Table of Contents
Disclaimer ........................................................................................................................................ 5
Confidentiality............................................................................................................................... 5
Copyright ...................................................................................................................................... 5
Executive Summary ......................................................................................................................... 6
Abstract ........................................................................................................................................ 6
Summary Findings ....................................................................................................................... 6
Integrity Management............................................................................................................... 6
Equipment Integrity .................................................................................................................. 7
Other Areas of Interest ............................................................................................................. 7
Concluding Comments................................................................................................................. 7
Introduction ...................................................................................................................................... 8
Major Areas of Investigation ........................................................................................................ 8
Overview of the Methodology ...................................................................................................... 8
Online Survey............................................................................................................................... 9
Study Organization ...................................................................................................................... 9
Integrity Management .................................................................................................................... 11
Familiarity with Integrity Management ....................................................................................... 11
Integrity Management Process .................................................................................................. 11
Importance of Integrity Management ......................................................................................... 12
Functional Value ........................................................................................................................ 13
Management of Change ............................................................................................................ 14
Functional Organization ............................................................................................................. 15
Regulatory Compliance .............................................................................................................. 16
Prcis ......................................................................................................................................... 18
Equipment Integrity ........................................................................................................................ 19
Risk Management ...................................................................................................................... 19
Cost of Failure ............................................................................................................................ 20
Effect of New Processes ............................................................................................................ 22
Future Trends............................................................................................................................. 23
Equipment Integrity Management Processes ............................................................................ 25
Prcis ......................................................................................................................................... 29
Other Areas of Interest .................................................................................................................. 30
Asset/Equipment Monitoring ...................................................................................................... 30
Best Practices ............................................................................................................................ 30
Economic modeling .................................................................................................................... 30
Environmental Concerns ............................................................................................................ 31
Role of Regulators ..................................................................................................................... 31
Governance & Sustainability ...................................................................................................... 32
Asset Equipment Integrity Governance Framework .............................................................. 32
The Sustainable Organization ................................................................................................ 33
Safety Case................................................................................................................................ 34
Software and Other Tools .......................................................................................................... 34

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Integrity Management: Issues & Trends Facing the 21st Century Energy Industry
Technology Trends .................................................................................................................... 35
Training & Organizational Learning ........................................................................................... 35
Prcis ......................................................................................................................................... 36
Concluding Comments .................................................................................................................. 37
Appendix IGlossary of Terms..................................................................................................... 38
Appendix IIResearch Methodology ............................................................................................ 44
Generally Accepted Practices .................................................................................................... 44
Specific Approach Used Herein ................................................................................................. 45
Appendix IIIOrganizations .......................................................................................................... 46
Private or Academic ................................................................................................................... 46
Government & Public Agencies ................................................................................................. 54
Select Industry Players .............................................................................................................. 58
Miscellaneous ............................................................................................................................ 59
Key Words/Terms ...................................................................................................................... 62
Appendix IVAdditional Survey Material ...................................................................................... 63
Recommended changes to MOC processes ............................................................................. 63
Additional Comments ................................................................................................................. 67
Demographics ............................................................................................................................ 68
SM-Pending
Appendix VEconomic Value Proposition Matrix
............................................................ 70
EVPM Overview ......................................................................................................................... 70
Cost Takeout .......................................................................................................................... 71
Cost Avoidance ...................................................................................................................... 71
Productivity & Efficiency Gains .............................................................................................. 72
One-Time Cash Flow Impact ................................................................................................. 72
Intangible ................................................................................................................................ 72
Appendix VIBibliography ............................................................................................................ 73
Endnotes ........................................................................................................................................ 86

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Integrity Management: Issues & Trends Facing the 21st Century Energy Industry

Tables and Figures

Integrity Management Familiarity .................................................................................................. 11

Integrity Management Process Underway .................................................................................... 12
Importance of Integrity Management ............................................................................................. 12
Integrity Management Importance Rank Order ............................................................................. 13
Integrity Management Value .......................................................................................................... 14
Integrity Management Value Rank Order ...................................................................................... 14
Management of Change ................................................................................................................ 14
Integrity ManagementFunctional Organization .......................................................................... 15
Functional Correlation Table ......................................................................................................... 16
Importance of ISO Certification ..................................................................................................... 17
ISO Certification by Region ........................................................................................................... 17
Equipment IntegrityRisk Management ....................................................................................... 19
Elements of Risk Management ...................................................................................................... 19
Cost of Failure ............................................................................................................................... 20
Components of Downtime ............................................................................................................. 21
Downtime Attributed to Equipment Failure .................................................................................... 21
Importance of New Processes....................................................................................................... 22
Level of Importance ....................................................................................................................... 22
New Process Rank Order .............................................................................................................. 23
Use of Predictive Maintenance ...................................................................................................... 23
Equipment Integrity in Three Years ............................................................................................... 24
Knowledge of Equipment Integrity Techniques ............................................................................. 25
Integrity Management ProcessesGroup 1 ................................................................................. 26
Integrity Management ProcessesGroup 2 ................................................................................. 27
Integrity Management ProcessesGroup 3 ................................................................................. 27
Integrity Management Processes Rank Order .............................................................................. 28
Integrity Management Processes Quartile .................................................................................... 28
Organizations with Governance Failure ........................................................................................ 34
MOC Taxonomy............................................................................................................................. 63
MOC Comments ............................................................................................................................ 64
DemographicsIndustry Experience ............................................................................................ 68
DemographicsRole .................................................................................................................... 68
DemographicsIndustry Segment................................................................................................ 68
DemographicsGeography .......................................................................................................... 69
DemographicsType Organization .............................................................................................. 69
Components of Value Matrix ......................................................................................................... 71
Integrity Management Process Underway .................................................................................... 12
Importance of Integrity Management ............................................................................................. 12
Integrity Management Importance Rank Order ............................................................................. 13

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Integrity Management: Issues & Trends Facing the 21st Century Energy Industry
Integrity Management Value .......................................................................................................... 14
Integrity Management Value Rank Order ...................................................................................... 14
Management of Change ................................................................................................................ 14
Integrity ManagementFunctional Organization .......................................................................... 15
Functional Correlation Table ......................................................................................................... 16
Importance of ISO Certification ..................................................................................................... 17
ISO Certification by Region ........................................................................................................... 17
Equipment IntegrityRisk Management ....................................................................................... 19
Elements of Risk Management ...................................................................................................... 19
Cost of Failure ............................................................................................................................... 20
Components of Downtime ............................................................................................................. 21
Downtime Attributed to Equipment Failure .................................................................................... 21
Importance of New Processes....................................................................................................... 22
Level of Importance ....................................................................................................................... 22
New Process Rank Order .............................................................................................................. 23
Use of Predictive Maintenance ...................................................................................................... 23
Equipment Integrity in Three Years ............................................................................................... 24
Knowledge of Equipment Integrity Techniques ............................................................................. 25
Integrity Management ProcessesGroup 1 ................................................................................. 26
Integrity Management ProcessesGroup 2 ................................................................................. 27
Integrity Management ProcessesGroup 3 ................................................................................. 27
Integrity Management Processes Rank Order .............................................................................. 28
Integrity Management Processes Quartile .................................................................................... 28
Organizations with Governance Failure ........................................................................................ 34
MOC Taxonomy............................................................................................................................. 63
MOC Comments ............................................................................................................................ 64
DemographicsIndustry Experience ............................................................................................ 68
DemographicsRole .................................................................................................................... 68
DemographicsIndustry Segment................................................................................................ 68
DemographicsGeography .......................................................................................................... 69
DemographicsType Organization .............................................................................................. 69
Components of Value Matrix ......................................................................................................... 71

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Executive Summary
One of the most important contemporary challenges the energy industry faces is the development
and implementation of integrity management solutions that enable safe and environmentally
friendly operations. Inherent to the sustainable organization is a governance model that
incorporates integrity management into it as part of enterprise risk management.
This study addresses a broad range of integrity management issues and the necessary
processes to assure effective equipment and other process integrity components. It is comprised
of four major subdivisions; a review of literature on the subject (see bibliography), an industry
survey, listing of major public and private organizations that play critical roles on a global basis,
and finally analysis and summation.

Abstract
There is a substantial amount of information in this report. Even the summary findings that follow
have 22 specific points in three major categories. The appendices and associated web links is a
substantial body of work in its own right. However, these three points summarize the key findings
form the study:

Integrity management is a fundamental part of the enterprise risk management and

governance model and can be expected to play an even more important role going
forward
There are substantial resources, including technology, public and private organizations
and best practices available to enable robust integrity management processes
Equipment Integrity is viewed by an overwhelming number of survey respondents as a
critical aspect of enterprise risk management and fundamental to HSE and production
operations

It is difficult to summarize the substantial data and information in this report into three bullets.
Interested readers are invited to explore the data in more detail and take advantage of the web
links (believed to be live at the date of publication) for more information and insight.

Summary Findings
The following is a synopsis of the main points from the study. They are broken out to be aligned
with the section of the report to which they are attributed. Moreover, they are highlighted at the
end of each segment of that section so readers can see how the data analysis drove the
conclusion.

Integrity Management
Integrity management is well known in the sector and a substantial body of work and
expertise exists about the subject; on a global basis.
ISO maybe a source of Best Practices for emerging integrity management standards, and
even new regulatory compliance requirements.

Equipment Integrity
Equipment Integrity (EI) is a major component of enterprise risk management (ERM).
The sector well versed in many of the major equipment integrity management methods
but gaps continue to exist.

Other Areas of Interest

1. The use of real time data acquisition is well established and is now being augmented with
mobility driven solutions.x
Change will be the mantra going forward and organizations will need to train and retain
organizational knowledge.

Concluding Comments
The genesis of this research was the belief that integrity management was a field that was very
important and would most likely grow in significance in the future. The data and information
obtained during this research supports this fundamental hypothesis.
It is not surprising that a wealth of information on this subject is available, nor was the fact that
these issues are not restricted to just the United States in a post-Macondo world. These
challenges are global and there are a number of international organizations working to make
operations safer, more environmentally friendly while assuring limited unplanned production down
time.
It is hoped that this body of work will assist organizations better attain operational excellence.
Integrity management is a broad field and all indications are that it will expand rapidly in a
comprehensive manner.