1. Update of API Standards for Supply Chain Management API Standard 20J – Qualification of Distributors

2. “To facilitate the availability of safe, interchangeable, off-the-shelf equipment and materials for use in the petroleum drilling & production industry”. Monogram Program Identifies companies capable of manufacturing oilfield equipment, materials and services in accordance with API quality and product standards

4. Key Industry Drivers for Supply Chain Standards : Ongoing industry issues with materials and processes that are critical to the safety and reliability of the final products used in the Oil and Gas industry. Increased sourcing of materials and services through global markets having a limited history with oil and gas standards and practices. Increasing requirements for quality and integrity of components, including regulatory compliance.

5. API SC 20: Supply Chain Standards

6. Qualification of Distributors of Metallic Materials for Use in the Petroleum and Natural Gas Industries API Standard 20J:

7. The 20J Standard has NOT YET BEEN PUBLISHED by API! Before publication, a document has to be approved by the voting membership of the committee (SC20). The ballot for 20J was completed on April 28, 2016 with 100% approval. (No negative votes) So the Standard is coming, and will likely be published by the end of 2016. Compliance with the standard is VOLUNTARY. To be an API Qualified Distributor in compliance with API Standard 20J, you will have to submit an application to API, pay the associated fees and pass an API Audit. The Audit will cover applicable parts of the API Q1 Quality Standard and the requirements contained in Standard 20J. Some Important Information:

8. A Look into the FINAL DRAFT of Standard 20J

9. - equipment to receive and ship materials to customers - a facility to store and maintain physical inventory - appropriate handling and lifting equipment - inspection and test equipment

10. API Specification Q1 is the standard for Quality Programs for the Petroleum & Natural Gas Industry. It is very similar ISO 9001.

11. In Addition to a Quality Management System, the following Distributor Process Control requirements will apply: 1) Review of Order Requirements (7.2) A detailed review of the customer’s order is performed prior to committing to delivery. Procedures shall define methods for customer order review 2) Control of Mills (7.3) There must be a list of Approved Mills Requirements for Approval of Mills a. Initial Approval -Verification that the mill has an accredited Quality System (API License, ISO certificate) -Verification of an initial order b. Periodic Evaluations c. Review of Mill Order Requirements - Perform an order review with the mill

12. 3) Control of Sub-Distributors and Service Providers (7.4) a. Requirements for Approval of Sub-Suppliers b. Requirements for Approval of Service Providers -Service providers are those who perform machining, material testing, heat treatment or non- destructive testing c. Periodic Re-Evaluation of Sub-Distributors and Service Providers

13. 4) Distributor Performed Processes (7.5) If performed by the distributor, Heat Treatment, NDE, and/or Material (metallurgical) Testing must be performed in accordance with applicable industry standards 5) Sampling for Material Testing (7.6) Documented procedures for gathering and traceability of samples for material testing 6) Inspection Requirements (7.7) Receiving Inspection In-process or interim inspections -(Assessment of material in inventory) Final (out-bound) inspection 7) Identification and Traceability (7.8)

14. 8) Nonconforming Product (7.9) Documented procedures for control of nonconforming product to prevent unintended delivery 9) Customer-Supplied Property (7.10) 10) Preservation of Product (7.11) 11) Measuring & Test Equipment (7.12)

15. WHERE WOULD WE START? 1. Obtain a copy of API Q1, 9 th Edition This document is available from API or from retail outlets that specialize in standards, specifications, etc.

16. 2. Appoint a Management Representative 3. Watch for the 20J Standard to be published late 2016/early 2017 4. Work with your Pipe Mills 5. Remember that participation is VOLUNTARY

17. What NOT to Do The full text of this Advisory is available at www.api.org