AMCouncil WA Chapter, RAM Seminar 2010 Author: Ernst Krauss CPEng, FIEAust Presented by: Guan Peh 1

AMCouncil WA Chapter, RAM Seminar 2010 End of Asset Life… 2

AMCouncil WA Chapter, RAM Seminar 2010 End of Asset Life… Decision making is less important We ‘let things deteriorate’ – we do not need them any longer Resources and People needed elsewhere / can not afford to keep them on this Asset We not always consider ‘Salvage value’ – what is the Asset worth to others Focus on other Assets Financial decline Support need misunderstood Diminished value 3

AMCouncil WA Chapter, RAM Seminar 2010 End of Asset Life… 4

AMCouncil WA Chapter, RAM Seminar 2010 Asset Management applied Asset Life Extension Life Extension Planning 5

AMCouncil WA Chapter, RAM Seminar 2010 Financial Decision making  COO / ROI / CB These are the most commonly used financial measures used in decision making:  Cost of Ownership – extent of operating cost including all support costs – budget  Return on Investment measuring the benefits gained from an investment  Cost Benefit Analysis – the decision support tool evaluating the incremental benefits from an investment decision 6

AMCouncil WA Chapter, RAM Seminar 2010 Modelling principles revisited Step 1 Study Basis Step 2 Model & Results 1.Agree study outcome, which capability measures (i.e. availability) are studied 2.Agree scope and boundaries 3.Gather PFSs and make RBD from it 4.Collect failure data 5.Describe operational flexibility 6.Collect preventive maintenance scheme 1.Make model 2.Run model to obtain availability measures 3.Report results and explain 7

AMCouncil WA Chapter, RAM Seminar 2010 Project modelling 8

AMCouncil WA Chapter, RAM Seminar 2010 Operations Phase 9 Identify and assessSteady State DefineProjects OperateAbandon DefineLife Extension Identify and assessSteady State Availability, Maintenance, Reliability monitoring, optimisation, project value screening Capability confirmation End of Life Strategy Requirements and Targets DeliveryRequirements and Targets Optimised maintenance, equipment retirement Production optimisation Short Term Business Plan / Maintenance Optimisation Long Term Business Plan, Major improvements /upgrades Verification Optimisation Delivery Capability confirmation Repair / Replace

AMCouncil WA Chapter, RAM Seminar 2010 AVAILABILITY : choose the right position on the curve 10 Considering the project in its entirety generally reveals there is no point in improvement on some part of the system in isolation. In Termination phase, the same applies. Best identify the “bad actors”, improve on those, and position the total system as desired.

AMCouncil WA Chapter, RAM Seminar 2010 Case study  This Decline Study enabled the optimisation of future operational and maintenance strategies thus reducing the cost of maintenance, and hence OPEX.  Reduced levels of throughput create additional redundancy in the system allowing for the decommissioning of certain items, with time, where excess redundancy exists  The study determined how equipment use can be phased to match the reservoir decline prediction  It includes an economic assessment of proposed strategies to evaluate the resulting cost-benefit trade-off in terms of net present value (NPV) 11

AMCouncil WA Chapter, RAM Seminar 2010 Case study The approach used for this study: Functional Block Diagrams to assist in the understanding of interactions of systems Reliability model to understand the sources of production impact that exist in the current systems Decline Model to model decline scenarios, what if options and worst case situations 12

AMCouncil WA Chapter, RAM Seminar 2010 Case Study – Functional Block Diagram 13

AMCouncil WA Chapter, RAM Seminar 2010 Case study – production profile 14 The Production profile graph indication the current capability to meet production requirements. The blue line is a ‘regular’ operating period, where the red line shows the production during a major shutdown year.

AMCouncil WA Chapter, RAM Seminar 2010 Case Study – Reliability Block diagram 15

AMCouncil WA Chapter, RAM Seminar 2010 Case study – capability matched

AMCouncil WA Chapter, RAM Seminar 2010 Case Study – Production capacity 17

AMCouncil WA Chapter, RAM Seminar 2010 Case Study – Scenario evaluation 18 Gaps are larger in the P50 situation, other solution needed

AMCouncil WA Chapter, RAM Seminar 2010 Case Study – OPEX / Revenue evaluation 19 P50 case (most likely) analysis:

AMCouncil WA Chapter, RAM Seminar 2010 Conclusions  Reliability models are useful in estimating opportunities to optimise the decline (or abandonment phase) in an Asset life cycle  Good data important, it contributes to high confidence in models  The accuracy of predictions are in direct proportion to the accuracy of model logic and input data  A structured approach and clear understanding of expectations and outcome focus is required (as for all models)  The value of modelling for the decline phase is valuable in optimisation of Production revenue in a constrained environment  It leads to improved understanding of issues and limitations that may exist in business acceptance or system capability 20

AMCouncil WA Chapter, RAM Seminar 2010 Thank you for your interest… Your Questions please 21