Let’s get down to brass tax. Your terminal will always cost you money, but it’s not how much you spend, it’s what you spend your terminal budget on that will return results. The trick is to manage your OpEx and CapEx in a strategic way that you are investing in the intrinsic value of your offshore terminal and not the support costs. In this blog, we discuss your terminal investment and how you can make your money work for you with an OpEx strategy that spends money in the right place: Operational Integrity Management.
Assessment of Operational Integrity and current OpEx
The first step is to ascertain a client’s current operational efficiency and Asset Integrity, Reliability and Availability (IRA). This process should be based on a proven, phased methodology that offers measurable data. The goal of such an integrity assessment is to reveal areas in need of optimization and to help you measure success and predict failure.
We conduct the experience-based assessment from a rigorous Operational Engineering position by utilising:
- A quantitative evaluation of existing terminal assets, operations and environment
- An independent, objective and qualitative appraisal by way of a detailed report and workshop
- An established and well-defined roadmap for improvement based on the integrity management program
This involves identifying the categories and impending improvements associated with design, assets, operations, environment and the client’s desire to innovate and the risk appetite implied. Gathering historical asset performance data, operational parameters and site-specific environmental conditions, we are able to create an optimal Operational Integrity Management solution that is custom-designed for the terminal from an operational engineering perspective specific to the client’s unique operating environment and OpEx budget with the endorsement and support of the OEM and Alliance Partners.
Introduction of Operational Integrity Management
Given the completion of analysis, a design is developed and tailor-made for the terminal and OpEx budget at hand. This design aims to maintain an asset in a fit for service condition while aiding the quantification of the remaining useful life consistent with the applicable standards.
MARSOL’s Operational Integrity Management focuses on a holistic system based on data acquisition coupled with over 50 years of experience attained through our long term offshore terminal expertise in preservation, commissioning & planned maintenance system (PMS) programs. This means that our team of expert engineers benchmark the existing terminal activities against industry best practices before developing and implementing the optimal custom Operational Integrity Management solution.
Any changes that are introduced into the terminal, whether mechanical or operational must be performed in the most dependable, safe, and cost-effective manner to achieve sustainability. With this in mind, the design and introduction of Operational Integrity Management will lower risk, the likelihood of failure and the consequence of failure, keeping the risk to the people, environment, asset, and company. as low as reasonably practicable (ALARP).
The Operational Integrity Management Roadmap
Implementing an Operational Integrity Management plan with sustainability in mind means considering OpEx in balance with risk. For this, you need a good O&M strategy that ascertains the asset and operations’ areas of development. With all the data laid out and interpreted by our consultants, the client can make informed decisions by quantifying the financial, functional, and environmental and risk parameters.
With many stakeholders, such as operators, owners, local communities and insurers, it is vital that the entire facility’s environment and operational integrity be understood.
Operational integrity is our basis to provide extended services to cover life prediction and life extension programs. Especially with today’s ageing infrastructure and the low price of oil, this has become more and more relevant in the current market
MARSOL’s strategic approach to Operational Integrity Management ensures the facility’s integrity without compromise, while optimising both capital expenditure (CAPEX) and operational expenditure (OPEX). It directs the client spend towards maintaining the intrinsic value of the asset instead of external support costs and aims to lower risk while baring sustainability in mind.
Is your offshore terminal costing you more than it should? Let’s talk about OpEx and Operational Integrity Management.
As a specialist in offshore SPM / MBM terminals and related infrastructure, MARSOL offers various services aimed at the optimization of offshore terminals, including Terminal Inspection Repair and Maintenance. While both asset repair and maintenance require dedicated OpEx, there is a definite difference in the way they are approached and the risk that they pose.
Marine asset repair implies failure of components or assets. This type of breakdown can cause downtime, pose safety risks and threat reputational damage in case of negative environmental impact or the like.
On the other hand, to us at MARSOL, Offshore maintenance means to maintain our clients’ marine assets in a good working order to avoid breakage and prevent worst-case scenarios. As such, regular maintenance not only mitigates risk, but it also ensures efficiency and reliability.
In most cases, it is highly plausible that there will be a risk of downtime if the marine asset does not undergo adequate offshore maintenance. These concerns are unnoticeable in the first few years, but later the component experiences an accelerated rate of deterioration, due to incorrect and inadequate preservation practices before the system is fully operational.
MARSOL’s preservation practices ensure that the performance of the whole system is consistent throughout its working life.
Choosing an offshore maintenance partner
When taking a holistic approach, it is important to choose a partner that understands your terminal as a whole. This knowledge and understanding will allow your offshore terminal maintenance partner to address root causes and not simply treat symptoms in isolation.
As a commercial and technical marine service solutions provider, MARSOL covers Engineering, Project Management, Operations & Maintenance, Inspection Repair & Maintenance (IRM) and Integrity management among other subsea and maritime services. This means that all influencing factors are taken into account when offshore maintenance is done.
Terminal maintenance and design
In order to maintain an offshore terminal or to repair assets, it is important to understand its environment and its design. Our Engineering Services Division offers a comprehensive package for all Mooring and Hose Analysis for SPM terminals, including validation of third-party analysis from terminal designers. We use our operational and practical onsite experience for model validation to ensure the model output is aligned with the specific requirements of the terminal.
Through applying integrity-based Inspection Repair and Maintenance (IRM) and creating a marine asset history, MARSOL can modify operations and maintenance philosophies and associated work programmes periodically to reflect changes brought about by any influencing factors and unusual events. By finding the perfect balance between efficiency, risk and operational expenditure, we greatly reduce risk to the system and encourage sustainability and longevity.
These changes create the opportunity for us to review the current programme, identify areas of improvement and design changes on the system components to safely and economically optimise future activities and schedules and related OPEX costs all the while ensuring all updated IRM philosophies are agreed by the OEM/ CLASS as needed.
Whether greenfield or brownfield, every optimization starts with the perfect plan.
Terminal Maintenance and marine asset lifespan extension
Increasing an asset’s lifespan through offshore maintenance instead of periodic asset repair means saving money in the long run, limiting downtime and reducing risk, but only if it is done properly. Our highly qualified team manages local partners to deliver these ongoing programmes, always focusing on international safety and quality standards to ensure that the client and its stakeholders’ reputations are protected.
We draw on our experience to validate and modify the requirements as outlined by the OEM for an operational facility. Through data capture, we create a strategy to perform the offshore maintenance on the most suitable techno-commercial manner and get the necessary approvals for the same before execution from the Contractor, CLASS and OEM as needed.
This strategy lets us achieve the following objectives:
- Protection of the facility
- Retention of the intrinsic value of the marine assets
- Continuity of service
- Maintenance of warranty
- Maintenance of Class
- Avoidance of incidents and resultant pollution
- Compliance with statutory / permit requirements and international operating OCIMF, ISGOT, IMCA, and IMO guidelines
- Protection of 3rd party customers/transporters
- Protection of the buoy and constantly maintaining it in an “as new” condition
- Ensuring Company Reputation is upheld and built upon
In every scenario, prevention is better than cure. Finding the right terminal maintenance partner can save you time, money, risk and reputational damage. Consult with MARSOL to find the right long-term offshore maintenance plan for your terminal.
Terminal Integrity Management serves to ascertain asset integrity, reliability and availability (IRA). To ensure that your offshore terminal operates efficiently throughout its service lifespan, you need operational integrity management that is unique to your terminal, your team and your environment – while remaining consistent with applicable standards. This plan should include measurement and analysis that quantifies progress, optimisation and Operational expenditure (OpEx).
In order to measure progress and predict maintenance requirements, it is important to conduct an As-is analysis first.
Terminal Integrity Assessment
Whether you are tackling a greenfield or brownfield project, you need to conduct a terminal integrity assessment. At MARSOL we use a proven, phased process to ascertain the client’s current operational efficiency and asset IRA. This data-driven approach serves to maintain assets in a fit-for-service condition and aids in the quantification of its remaining useful life within safety regulations.
The goal of this assessment is to gather and analyse data to arrive at the best possible operational and mechanical design for the site. The perfect design should increase efficiency and safety while lowering OpEx and risk.
With new insight and consultation, you are empowered to verify the design and re-engineer it to validate design assumptions.
Your terminal operational integrity assessment should include
- Data Acquisition
- Failure Mode and Effects Analysis (FMEA)
- Material Degradation Analysis
- Mooring & Hose Analysis
Marine Hose Integrity and Life Extension
Marine hose integrity management is often only performed periodically when required by OEM recommendation or after an emergency. Prevention is better than cure. Consider a complete lifecycle service that interfaces with your overall terminal integrity management strategy, so as to expand the reach of your data acquisition and analysis. This data will aid in the prediction of maintenance requirements and measure performance in real-time.
Marine Hose Integrity Management should include
- Hose Testing
- Marine Hose Dynamic Analysis
- Hose Repair
- Destructive Testing
Integrity Management Consulting
Acquiring data is one thing. Interpreting data for a plan of action is something else altogether. Consider a consultation partner that tells it like it is. At MARSOL we focus on lowering operational expenditure, operability, design and engineering, with particular insight into how each aspect influences the other.
Understanding the balance of factors at play in your terminal means managing and controlling risk to ensure as little as possible damage and impact to assets and the environment.
Risk managers should conduct initial feasibility studies, concept definition and high- level risk assessments which have a direct influence on the whole risk management programme.
Whether greenfields or brownfields, the design phase must never be underestimated. As new technologies arise and regulations change, one must always be able and willing to adjust.
Consider a strategic approach to your requirements and the options at hand to meet them. This type of consultation is particularly important from the Front-end Engineering and Design (FEED) phase through to the Commissioning stage.
To ensure that you have a team of specialised experts focussed on every separate aspect of your terminal, it is likely that you will have various third parties involved. Having a single point of contact in charge of managing these moving parts will not only give you a good overview of progress and budget spend, but also ensures successful completion of the projects, particularly during start-up until the commissioning phase.
At MARSOL we firmly believe that strategy streamlines all deliverables. Work with the execution team and experienced consultants to determine start and completion dates, milestones and responsible persons. This style of project management will give clarity to all parties when the project has achieved its goals.
Asset, Operations and Maintenance Optimisation
This process utilises the right resources such as personnel, equipment and vessels for specific activities which only engage when required, resulting in reduced operational costs applied for standby time.
When it comes to operational expenditure and efficiency, numbers are everything. It is important to plan and execute, but equally so, it is important to measure. It is only through the collection of data and the analysis thereof that deterioration can be understood and optimisation appreciated.
When it comes to offshore construction, investors and owners often miss one valuable piece of the puzzle – long term continuous operation and maintenance (O&M). O&M is not something to be considered an afterthought, but instead, an investment to be considered from the very beginning, with holistic application throughout the project lifecycle. In this way your terminal will not only function more efficiently, but also at a better OpEx, with smaller CapEx.
Offshore construction with O&M in mind
When it comes to designing and constructing an offshore terminal, it is of paramount importance to determine two aspects before proceeding. What are the requirements in terms of throughput? How is the terminal going to be operated? Once this has been established, the basis of design can be finalised incorporating al the operational needs and design requirements. Thus, giving a blend of design parameters that ensure optimisation of both CapEx and OpEx. Typically, this would be intrinsic to establishing the budget and the EPC Contractor would need to construct in line with the above parameters. Is it thus fair to ask: “Have the interests of all stakeholders been considered?”
When approaching offshore construction holistically, it stands to reason that those who will use and regulate the facility should be involved in the design and construction process to ensure capital costs and operating expenses are optimised, while the ongoing integrity of the system is maintained.
Decisions should not be governed simply by minimising the design and fabrication costs. Instead, start by creating an operating philosophy document for O&M that deals with the entire value chain and lifecycle of the project.
Discrepancies from FEED to O&M
Over the years it has become obvious throughout the development process, that there were inconsistent contractual priorities when converting the Front-end Engineering & Design (FEED) concepts into reality (conflict between project management being short-term and operational management being long-term having different priorities and consequences).
We have to keep in mind that the owners, or financiers, will not be the operators of the terminal. This means that by the time these facilities are completed, the contracting structure (from FEED through to project champion) will involve investors’ consultants, the EPC contractor, contractors’ consultants, subcontractors and vendors.
The ‘Missing Man’ here is the future operator, who will inevitably take full care and custody of the facility under the O&M contract.
The needs and vulnerabilities of this stakeholders are often not considered by the preceding contractors, as it’s not the scope of any individual participator, leading to discrepancies between what is functional, what is required and what is constructed. In such cases, a lot of time and money has gone to waste.
To ensure that this does not happen to you, we suggest reaching out for a holistic approach based on the principle of interface management.
This very important consideration should not be stitched on in the end, but instead, be integrated into the design, engineering, fabrication, installation and operation processes right from the start of the project design.
The focus here will be on operational costs, to save on construction while building a terminal perfectly suited and regulated to meet your site-specific needs.
Optimising OpEx with O&M
For any project there needs to be a minimum viable product (MVP) with focus on OpEx (operational cost) optimisation. This is in part achieved through the conversion of the O&M philosophy into a basis of design, thus ensuring that operability is considered and catered for in the end design.
OpEx optimisation is best achieved by influencing the facility’s design and engineering at the early stages of the project because changes made at this stage can be made with the lowest cost impact while, at the same time, maximizing the design effect on long term OpEx. This is MARSOL’s operational engineering approach.
There are numerous components involved in ensuring the integrity of the system throughout its operating life, including design life realization, life expectancy and possible life extension, which should all be considered as part of the base of design inputs.
As an operating company, MARSOL is not only focused on sound design principles in order to optimize OpEx, but also to ensure sound design and component inputs to offer an underwritten long-term integrity management service.
Long-term integrity O&M
If your terminal is long passed its FEED stage, you can still optimise. MARSOL has invested years of experience and knowledge of the field into the creation of Marsol’s Advanced Systems Integrity Management (ASIM). ASIM uses data collection, analysis, holistic field condition data and methodologies (both physical and operational) to arrive at the optimum design for the site and service. This is of paramount importance as quite often, the operating environment in the modern-day context is changing, and thus the design parameters are no longer relevant and modifications may be needed.
Although ideally applied through design and construction, ASIM is effective at any point in the project lifecycle, because it follows the Marsol continuous improvement cycle which is aligned with The Deming Cycle.
The Deming Cycle (also known as PDSA Cycle), is a logical sequence of four repetitive steps for continuous improvement and learning.
The only constant we know is change. As investors and management, it is paramount to fully understand the implications of the changes, and adjust accordingly, as part of the integrity management regime.
Over the last 50 years, Marsol International Personnel has developed engineering solutions for the fabrication, commissioning and operation of offshore terminals and infrastructures. During that period, we have increasingly identified and reengineered points of failure in many different systems. Some were generated by design and engineering, but many by the changing environmental conditions and by operational practices not suited to that particular facility.
Controlling your CapEx with O&M
Although operating expenditure is crucial to a project’s success, the up-front capital expenditure (CapEx) is equally important. It is true to say that a sound OpEx Minimum Viable Product is maximised by sound design and engineering at the CapEx stage. However, if CapEx is considered in isolation, OpEx can be negatively affected. Costing you more in the long run.
This being the case it is vital to focus on design and engineering optimisation that not only takes into account the end goal and client requirements, but also considers expediency and cost-effective fabrication, material and component selection, installation methodologies, the operating environment and personnel.
Within the CapEx there are separate cost drivers that should be identified and accommodated. Right from the outset, during the FEED process design, decisions should not be governed simply by minimising the design and fabrication costs.
Consideration should include the cost of installation and operation, including preventative, and corrective and preservation maintenance principles. Assigning the responsibility for design and installation to an EPC contractor may facilitate the first step, but not the second; generally, the design has been approved already (often a variation of a generic design) by the client before issuing the tender. This places you back in the realm of discrepancy between FEED and long-term O&M.
An example of the above is the pipeline design: a pipeline needs specialist equipment, which in itself will require significant mobilisation and operating costs; at this stage, the advantages that could be gained by acquiring a more robust and costly pipe (one that could eventually result in savings in installation costs and have potential for a longer lifespan) will have been forsaken.
It is the same principle as the OpEx optimisation model: First we need to take the O&M philosophy, and resultant basis of design inputs, and then create a design, engineering and installation regime that encompasses all the requirements. It must optimise fabrication and installation costs while at the same time supporting the long term integrity management service.
When all is said and done, a facility that has a reduced risk of failure and the potential for life extension allows the parties to offer and underwrite such a service. This approach then addresses not only the client’s requirements, but also the needs of the other stakeholders, with regards operability.
Decisions should not be governed simply by minimising the design and fabrication costs.
Starting with an MVP
Marsol has developed a holistic approach to CapEx optimisation that has been established with a focus on SPM integrity management. This means that by combining the two skills sets, the client can be offered a full turnkey solution from FEED to operations, supporting the owner, EPC contractor, OEMS and future operators responsible for O&M.
This approach allows the smooth transition from FEED to long-term operations and protects all parties’ interests, avoiding costly (and potentially reputation-damaging) contractual discussions and disputes and replaces the blame game with sound technical solutions.
It is important to remain cognisant of your impact on the environment throughout the entire process. This is not only limited to -for example- a loss of containment incident and the obvious subsequent spill, but also the knock-on effect to unrelated parties (fisherfolk as an example) who are stakeholders to the environment in which your facility operates. Important to note that your day to day operations (without any incidents) may also affect these stakeholders in a negative way.
ASIM was originally developed to address similar criteria at brownfield installations without the benefit of being involved at FEED or basis of design phase. The principle of ASIM is to enter an existing field with the intent of establishing a holistic picture of the field and its operations. Then through the assessment of design criteria, historic information, new data and using experience gained on multiple sites, at different geographic locations, over extended periods of time, arrive at a site-specific integrity protocol. By creating the history you are providing managers the tools to make informed decisions, thus fulfilling their fiduciary duty.
By adopting a rounded, full lifecycle approach it is possible to ensure that all stakeholders take an approach that optimises both cost and operational efficiency at the minimum acceptable risk level over the entire life of a facility. The result is a win-win situation for all concerned.
Starting a new project with your eyes on CapEx optimization? Don’t settle for mediocre: Talk to the experts.
Ready to optimize an existing project’s O&M? Let’s discuss.