Performance Management for the Oil, Gas, and Process Industries

Performance Management for the Oil, Gas, and Process Industries

A Systems Approach

1st Edition - April 6, 2017

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  • Author: Robert Bruce Hey
  • eBook ISBN: 9780128104477
  • Paperback ISBN: 9780128104460

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Description

Performance Management for the Oil, Gas, and Process Industries: A Systems Approach is a practical guide on the business cycle and techniques to undertake step, episodic, and breakthrough improvement in performance to optimize operating costs. Like many industries, the oil, gas, and process industries are coming under increasing pressure to cut costs due to ongoing construction of larger, more integrated units, as well as the application of increasingly stringent environmental policies. Focusing on the ‘value adder’ or ‘revenue generator’ core system and the company direction statement, this book describes a systems approach which assures significant sustainable improvements in the business and operational performance specific to the oil, gas, and process industries. The book will enable the reader to: utilize best practice principles of good governance for long term performance enhancement; identify the most significant performance indicators for overall business improvement; apply strategies to ensure that targets are met in agreed upon time frames.

Key Features

  • Describes a systems approach which assures significant sustainable improvements in the business and operational performance specific to the oil, gas, and process industries
  • Helps readers set appropriate and realistic short-term/ long-term targets with a pre-built facility health checker
  • Elucidates the relationship between PSM, OHS, and Asset Integrity with an increased emphasis on behavior-based safety
  • Discusses specific oil and gas industry issues and examples such as refinery and gas plant performance initiatives and hydrocarbon accounting

Readership

Maintenance facility managers; refinery managers; asset managers; reliability engineers; petrochemical managers; plant managers; process management; risk analysts; quality managers; HSE managers

Table of Contents

  • Chapter 1. What is Performance Management?

    • 1.1. Introduction
    • 1.2. Performance Management Theory
    • 1.3. Why Have a Structured Approach to Performance Management?
    • 1.4. Performance Management Structure
    • 1.5. Performance Improvement Process
    • 1.6. Summary

    Part 1. Systems

    Introduction

    • Overview

    Chapter 2. The Business Unit

    • 2.1. Introduction
    • 2.2. Advantage of the Business Unit Approach Using the Black Box Concept
    • 2.3. The Systems Approach Using the Business Unit
    • 2.4. Boundaries and Content of the Business Unit
    • 2.5. Business Unit Types and Relationships
    • 2.6. International Standards Organization Certification
    • 2.7. Integration
    • 2.8. Summary

    Chapter 3. Models

    • 3.1. Introduction: What Are Models and Why Do We Need Them?
    • 3.2. The Scope of Models
    • 3.3. Business Models
    • 3.4. Mass and Energy Balance Models
    • 3.5. Process Simulation Models
    • 3.6. Utility Models
    • 3.7. Operating Expense Models
    • 3.8. Benchmarking Models
    • 3.9. Summary

    Chapter 4. Management Systems Determination and Requirements

    • 4.1. Introduction
    • 4.2. Analogy and an Example of a System
    • 4.3. Definitions
    • 4.4. Boundaries of a System
    • 4.5. The Key Elements of a System
    • 4.6. Detailed Comparison Between Management Systems and Processes
    • 4.7. Primary Groups of Systems
    • 4.8. Underlying Computer Systems
    • 4.9. System Examples
    • 4.10. System and Process Ownership
    • 4.11. Sustainability of the Systems Approach
    • 4.12. Integrating Systems in a Business Unit
    • 4.13. Integrated Management Systems: Specific and Generic Examples
    • 4.14. Benefits of a Management System Approach
    • 4.15. Summary

    Chapter 5. The Business Cycle

    • 5.1. Introduction
    • 5.2. Strategic Planning (Strategy Formulation)
    • 5.3. Annual Planning and Budgeting (Strategy Implementation)
    • 5.4. Performance Management (Strategy Evaluation and Control)
    • 5.5. Business Cycle Timing
    • 5.6. Benefits of Strategic Management
    • 5.7. Summary

    Chapter 6. Business Process Management

    • 6.1. Introduction
    • 6.2. Flowcharting
    • 6.3. Business Process Management As a Result of Benchmarking
    • 6.4. Evolution of Business Process Management
    • 6.5. Process Industry Focus
    • 6.6. Summary

    Part 2. Governance and Performance

    Introduction

    • Overview

    Chapter 7. What Are the Principles of Good Governance?

    • 7.1. Introduction
    • 7.2. Two Questions
    • 7.3. Definitions of Corporate Governance
    • 7.4. Discussion of Corporate Governance Codes
    • 7.5. Core Principles
    • 7.6. The Extractive Industries Transparency Initiative
    • 7.7. Governance Surveys
    • 7.8. Leaders in Corporate Governance
    • 7.9. Summary

    Chapter 8. Governance Framework

    • 8.1. Introduction
    • 8.2. Before and After
    • 8.3. The Model Governance Framework (GF)
    • 8.4. Physical Picture of the Model Governance Framework
    • 8.5. The Model Governance Framework Document: Discussion of Contents
    • 8.6. Examples From Industry
    • 8.7. Benefits of a Good Governance Framework
    • 8.8. Summary

    Chapter 9. How Does Governance Affect Performance?

    • 9.1. Introduction
    • 9.2. Governance Principles
    • 9.3. Attitude to Risk and Adverse Selection
    • 9.4. The Board: The “Fulcrum” of Business Performance
    • 9.5. Conflict of Interest and Ethics Corporate Statements
    • 9.6. Governance, Risk, Integrity, and Performance
    • 9.7. Procurement and Governance
    • 9.8. The Cancer of Corruption
    • 9.9. Whistleblowing
    • 9.10. Summary

    Chapter 10. Alignment

    • 10.1. Introduction
    • 10.2. Vertical Alignment
    • 10.3. Horizontal Alignment
    • 10.4. Alignment and Systems
    • 10.5. The Development of a Policy or Direction Statement
    • 10.6. Alignment and Organization
    • 10.7. Document Hierarchy
    • 10.8. Summary

    Part 3. Risk and Performance

    Introduction

    • Overview

    Chapter 11. Risk Management

    • 11.1. Introduction
    • 11.2. Risk Definition
    • 11.3. ISO 31000, Risk Management
    • 11.4. Categories of Risk
    • 11.5. Risk Appetite
    • 11.6. Statement of Risk
    • 11.7. The Four Strategies of Risk Control
    • 11.8. Three Lines of Defense
    • 11.9. Assurance Services
    • 11.10. Individual Risks and the Risk Management Framework
    • 11.11. Risk Maturity
    • 11.12. Risk Management Survey
    • 11.13. Potential Benefits of Enterprise Risk Management
    • 11.14. Summary

    Chapter 12. Risk Control Mechanisms

    • 12.1. Introduction
    • 12.2. Accident/Incident Causation Theory
    • 12.3. Three Ps
    • 12.4. Swiss Cheese
    • 12.5. Bow Tie
    • 12.6. Scenario Planning
    • 12.7. Black Swan
    • 12.8. Tools for Operational Risk and Performance Analysis and Evaluation
    • 12.9. Environmental Aspects and Risk Registers as Required by ISO 14001 and OHSAS 18001
    • 12.10. Summary

    Chapter 13. Merging Performance and Risk

    • 13.1. Introduction
    • 13.2. Procurement Risk and Performance
    • 13.3. Outsourcing: A Risk Reduction and Performance Improvement Tool
    • 13.4. How Do Performance Management Systems and Enterprise Risk Management Come Together?
    • 13.5. Prioritization of Risks and Opportunities
    • 13.6. The Risk and Opportunity Cycle
    • 13.7. ISO 14001, Environmental Management, and ISO 45001, Health and Safety Management
    • 13.8. Production Performance and Risks
    • 13.9. Ernst & Young “Top Risks and Opportunities”
    • 13.10. Summary

    Chapter 14. Incident Preparedness and Operational (Business) Continuity Management

    • 14.1. Introduction
    • 14.2. Definitions
    • 14.3. Applicability of Standards
    • 14.4. Establishing Incident Preparedness and Operational Continuity Management
    • 14.5. Incident Preparedness and Operational Continuity Management Plans
    • 14.6. The Relationship of Incident Preparedness and Operational Continuity Management Plans to ISO 31000, Risk Management Process
    • 14.7. Incident Preparedness and Operational Continuity Management Sequence
    • 14.8. Emergency Response Plan Development
    • 14.9. Safety Cases
    • 14.10. Scenarios for Emergency Response Planning
    • 14.11. Business Resilience
    • 14.12. Accidents and Knowledge Transfer: Do We Learn from Mistakes?
    • 14.13. Incident Preparedness and Operational Continuity Management Key Performance Indicators
    • 14.14. Summary

    Part 4. Performance Indicator Selection

    Introduction

    • Overview

    Chapter 15. Performance Focus

    • 15.1. Introduction
    • 15.2. Definitions
    • 15.3. Discussion of Approach
    • 15.4. How to Select Indicators
    • 15.5. Target Audience for a Common Data Source
    • 15.6. Key Elements of a Key Performance Indicator
    • 15.7. Primary Indicators
    • 15.8. Performance Gap
    • 15.9. Competitiveness and Efficiency
    • 15.10. Health, Safety, Environment, and Integrity: Change of Focus
    • 15.11. Scorecards and Numbers
    • 15.12. Summary

    Chapter 16. Key Performance Indicator Selection Guidelines

    • 16.1. Introduction
    • 16.2. Elements of Good Performance Indicators
    • 16.3. Approach to Selection
    • 16.4. Development Process
    • 16.5. Consequences of Poor Selection and Definition
    • 16.6. Center for Chemical Process Safety2 Focus
    • 16.7. Physical Asset Integrity Key Performance Indicators: An Introduction
    • 16.8. Examples of High-Level Key Performance Indicators
    • 16.9. Summary

    Chapter 17. Relationships

    • 17.1. Introduction
    • 17.2. Size and Complexity
    • 17.3. Mass, Volume, and Heating Value
    • 17.4. Utilization and Availability
    • 17.5. Money of the Day and Real Terms
    • 17.6. Human Capital
    • 17.7. Energy
    • 17.8. Greenhouse Gases
    • 17.9. Competitiveness, Efficiency, and Effectiveness
    • 17.10. Soft Relationships
    • 17.11. Summary

    Part 5. Asset Performance Management

    Introduction

    • Overview

    Chapter 18. Types of Assets and Applicable Standards

    • 18.1. Introduction
    • 18.2. Summary of Types of Assets
    • 18.3. Primary Relationships
    • 18.4. Standards
    • 18.5. Reputation: An Intangible Asset
    • 18.6. Third-Party Compliance Checks
    • 18.7. Summary

    Chapter 19. Information

    • 19.1. Introduction
    • 19.2. Organizational Capability: The Information Asset Aspect
    • 19.3. Control of Information
    • 19.4. Information Governance Policy and Suggested Format
    • 19.5. Information Security
    • 19.6. Information Systems
    • 19.7. Collection and Utilization of Information
    • 19.8. The Maturity of Information Systems
    • 19.9. Data Flow for Performance Improvement
    • 19.10. Information Key Performance Indicators
    • 19.11. Summary

    Chapter 20. Human Capital

    • 20.1. Introduction
    • 20.2. Organizational Capability: The Human Capital Aspect
    • 20.3. Organizational Effectiveness and Learning
    • 20.4. Competencies
    • 20.5. Process Safety Management and Safety Culture
    • 20.6. Human Asset Key Performance Indicators
    • 20.7. Summary

    Chapter 21. Finance

    • 21.1. Introduction
    • 21.2. Standards
    • 21.3. Financial Risks and Underlying Computer Systems
    • 21.4. Operating Expense
    • 21.5. Capital Expense/Investment
    • 21.6. Financial Statements—The Basics
    • 21.7. Cost Escalation
    • 21.8. Carbon Credits
    • 21.9. Profit and Investment
    • 21.10. Finance Key Performance Indicators
    • 21.11. Summary

    Chapter 22. Physical Assets

    • 22.1. Introduction
    • 22.2. Asset Management System Standards
    • 22.3. Asset Performance Management and Integrity
    • 22.4. LOPC: Analogy Between an Aircraft and a Process Plant
    • 22.5. Asset Integrity and Process Safety Management
    • 22.6. Application of Asset Performance Management
    • 22.7. Maintenance
    • 22.8. Inspection
    • 22.9. Asset Performance Management Software
    • 22.10. Energy Management
    • 22.11. Reviews and Benchmarking
    • 22.12. System Maturity
    • 22.13. Suggested KPIs
    • 22.14. Summary

    Chapter 23. Turnarounds

    • 23.1. Introduction
    • 23.2. Definition
    • 23.3. Why Effective Turnaround Management Is Critical
    • 23.4. Basic Requirements for Optimization of the Turnaround
    • 23.5. Turnaround Risk Profile
    • 23.6. Innovative Ideas for Reduction in Turnaround Duration
    • 23.7. Strategic Planning and Run Length Determination
    • 23.8. Turnarounds and Profit Relationship
    • 23.9. Turnaround Critical Success Factors and Key Performance Indicators
    • 23.10. Summary

    Part 6. Benchmarking

    Introduction

    • Overview

    Chapter 24. The Benchmarking Process and Consultant Selection

    • 24.1. Introduction
    • 24.2. Integration Into the Business
    • 24.3. Why Benchmark?
    • 24.4. Generic Process
    • 24.5. Benchmarking Categories
    • 24.6. Benchmarking Consultant Selection
    • 24.7. Peer Groups
    • 24.8. Process Categories for Benchmarking
    • 24.9. Definition of Pacesetter
    • 24.10. Project Benchmarking
    • 24.11. Turnaround (TA) Benchmarking
    • 24.12. Benchmarking Code of Conduct
    • 24.13. Business Improvement Program (BIP) Categories for Operational Benchmarking
    • 24.14. Benefits of Benchmarking
    • 24.15. Summary

    Chapter 25. Common Denominators and Indices Used in Benchmarking

    • 25.1. Introduction
    • 25.2. Primary Common Denominators
    • 25.3. Consultants’ Proprietary Common Denominators
    • 25.4. Common Denominator Relationships
    • 25.5. Proprietary Indices
    • 25.6. Summary

    Chapter 26. Benchmarking Data Verification

    • 26.1. Introduction
    • 26.2. Monthly Performance Modeling
    • 26.3. Benchmarking Data Input Tables
    • 26.4. Benchmarking Model
    • 26.5. Benchmarking Consultant Audit
    • 26.6. Assessment
    • 26.7. Summary

    Chapter 27. Using Benchmarking Results

    • 27.1. Introduction
    • 27.2. Benchmarking Envelopes
    • 27.3. Output Formats
    • 27.4. Where to Apply the Benchmarking Results
    • 27.5. Competitiveness, Efficiency, and Effectiveness
    • 27.6. Benchmarking Top Indicators
    • 27.7. Summary

    Part 7. Assessment, Strategies, and Reporting

    Introduction

    • Overview

    Chapter 28. Assessment Overview

    • 28.1. Introduction
    • 28.2. Assessment Objective
    • 28.3. Assessment Groups and Generic Process
    • 28.4. Business Risks and Opportunities and Performance Assessment
    • 28.5. Categorization
    • 28.6. Performance Focus
    • 28.7. Evaluation and Prioritization
    • 28.8. Quick Assessments
    • 28.9. Summary

    Chapter 29. Identification, Analysis, and Evaluation of Gaps

    • 29.1. Introduction
    • 29.2. Focus Areas
    • 29.3. Approach
    • 29.4. Assessment Methods
    • 29.5. Preparation for Workshops
    • 29.6. Benchmarking Gap Troubleshooting Workshops
    • 29.7. Best Practice Scorecards
    • 29.8. Mapping Using the 80:20 Rule
    • 29.9. Performance Assessment Timeline
    • 29.10. Assessment by Consultants
    • 29.11. Summary

    Chapter 30. Strategies and Actions

    • 30.1. Introduction
    • 30.2. Questions to Assess Action Based on Competitive Position
    • 30.3. Target Setting
    • 30.4. Strategies: Plans and Actions
    • 30.5. Mechanical Availability Drill-Down
    • 30.6. Change Management
    • 30.7. Visualization of Targets
    • 30.8. Summary

    Chapter 31. Reporting

    • 31.1. Introduction
    • 31.2. Reporting for Optimal Decision-Making by Decision-Makers
    • 31.3. Common Reports
    • 31.4. The Use of Graphic Displays
    • 31.5. Intranet-Based Reporting
    • 31.6. BP&Bs and Performance Reports
    • 31.7. Affiliate Performance Reports for the Shareholder
    • 31.8. Business Performance Software
    • 31.9. Summary

    Part 8. Business Oversight

    Introduction

    • Overview

    Chapter 32. Business Relationships

    • 32.1. Introduction
    • 32.2. The Value of Partnerships
    • 32.3. Types of Companies
    • 32.4. Agreement Documentation
    • 32.5. Policy, Regulation, and Operation Related to a National Oil Company
    • 32.6. Summary

    Chapter 33. The Opportunity Lifecycle

    • 33.1. Introduction
    • 33.2. Portfolio Management
    • 33.3. The Investment Cycle
    • 33.4. Investment Risk Assessment
    • 33.5. Project Risk Mitigation
    • 33.6. Investment Framework and Policy
    • 33.7. Approval Package
    • 33.8. Investment Decisions
    • 33.9. Sustainable Development Projects
    • 33.10. Integration With the Business Planning Cycle
    • 33.11. Partnering
    • 33.12. Exit/Divestment or Termination/Decommissioning Decision-Making
    • 33.13. Summary

    Chapter 34. Roles and Responsibilities

    • 34.1. Introduction
    • 34.2. Value Chain Oversight and the Changing Risk Profile
    • 34.3. Roles and Responsibilities Rollup
    • 34.4. Roles and Responsibilities Related to Type of Agreement
    • 34.5. Affiliate Roles and Responsibilities—Details
    • 34.6. Potential Conflicts Between Roles
    • 34.7. The Value of Secondees
    • 34.8. Shareholder Oversight Focus Areas
    • 34.9. Summary

    Chapter 35. Management Review

    • 35.1. Introduction
    • 35.2. Selling a Strategic Issue
    • 35.3. Levels of Review
    • 35.4. Review Meeting Evolution
    • 35.5. Management Review Responsibilities
    • 35.6. Shareholder Review
    • 35.7. Independent Review: R/P Ratio
    • 35.8. Summary

    Part 9. Oil and Gas Issues

    Introduction

    • Overview

    Chapter 36. Hydrocarbon Accounting

    • 36.1. Introduction
    • 36.2. Mass Balance
    • 36.3. Measurement System Classification
    • 36.4. Measurement System Details
    • 36.5. Identifying Inputs and Outputs
    • 36.6. The Measurement, Reconciliation, and Allocation Process
    • 36.7. Models
    • 36.8. Balancing Problems
    • 36.9. The Value of Using Models
    • 36.10. The Limits of Using Models
    • 36.11. Summary

    Chapter 37. Fuel Oil Refineries

    • 37.1. Introduction
    • 37.2. Refinery-Specific Performance Issues Covered in Previous Chapters
    • 37.3. Refinery Performance Initiatives
    • 37.4. Refinery Profitability
    • 37.5. Refinery Top Key Performance Indicators
    • 37.6. Summary

    Chapter 38. Gas Plants

    • 38.1. Introduction
    • 38.2. Gas Plant–Specific Performance Issues Covered in Previous Chapters
    • 38.3. Gas Plant Performance Initiatives
    • 38.4. The Process Safety Program
    • 38.5. Gas-to-Liquid Process
    • 38.6. Gas Plant Top Key Performance Indicators
    • 38.7. Summary

    Part 10. Conclusion

    Introduction

    • Overview

    Chapter 39. Alignment to Achieve Recognition for Excellence

    • 39.1. Introduction
    • 39.2. Excellence Definitions and Criteria
    • 39.3. OE Awards
    • 39.4. Self-assessment
    • 39.5. Excellence and Certification Standards
    • 39.6. Alignment and Continuous Improvement
    • 39.7. The Learning Organization
    • 39.8. Sustainability
    • 39.9. Summary

    Appendix A. Glossary of Terms

    Appendix B. KPIs

    Appendix C. Oil and Gas Rules of Thumb

    Appendix D. Operational Performance Health Checker Example

Product details

  • No. of pages: 740
  • Language: English
  • Copyright: © Gulf Professional Publishing 2017
  • Published: April 6, 2017
  • Imprint: Gulf Professional Publishing
  • eBook ISBN: 9780128104477
  • Paperback ISBN: 9780128104460

About the Author

Robert Bruce Hey

Robert Bruce Hey is a consultant and professional engineer with experience in corporate consulting in oil and gas companies as well as managing a wide range of projects in the petrochemical, power, and other heavy industries in the Middle East and South Africa. Previously, he was a Senior Shareholder Advisor for Qatar Petroleum working with the largest LNG and GLT plants in the world. He has also worked as a Senior Business Analyst and Senior Auditor for Qatar Petroleum, and has also worked for Chevron, Bahrain Petroleum Company, and Damelin College. Hey earned a BSc in Mechanical Engineering and a Graduate Diploma in Industrial Administration, both from the University of Cape Town South Africa. He is a registered project management professional (PMP) and project management institute (PMI) in the USA, a registered professional engineer (Pr Eng) in South Africa, and a member of the South African Institute of Mechanical Engineers.

Affiliations and Expertise

Consultant and Professional Engineer, Malaysia

Ratings and Reviews

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  • WalkerMonteiro Sun Dec 16 2018

    Real good source of information

    Real good source of information with a overview of important points of performance management