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FeedsHome: October 2007 › Lead Story › Creating more value
Creating more value
06/11/2007 | Channel: Technology, Exploration & Production
SIGNIFICANT PERFORMANCE IMPROVEMENTS CAN BE ACHIEVED THROUGH THE USE OF BENCHMARKS
Information drawn from the experiences of participants in Shell’s benchmarking programme allows performance to be tracked against carefully selected industry benchmarks, providing a vital tool for making comparisons with current performance.
To date, Shell Global Solutions’ benchmarking group has provided a comparison of operational performance for 80 refineries, 10 LNG Plants, 40 LNG Ships, 12 gas plants and 120 upstream production facilities. These, including joint venture and non-Shell participants, have gained a valuable external perspective of their business.
Using these benchmarks, companies can identify opportunities to improve their performance – and set about creating more value in their business. “Why reinvent the wheel,” says Diederick Bax, business development director at Shell Global Solutions. “When instead you can learn from other people’s experiences and their successes and how they have found out what to do, and maybe what not to do as well.”
Any participation in this pool of experience is done on a confidential basis and is fully compliant with competition and anti trust law regulations. Sites are invited to submit data monthly, quarterly or annually which enables key performance indicators to be calculated and then be used to compare one operation with another.
Alternatively, one-off benchmarking exercises are carried out as a part of an Opportunity Confirmation Programme (OCP) that directly links the benchmarking with Shell’s Business Improvement Programme (BIP).
The OCP uses a structured review, carried out by a team made up of participants from the customer and Shell Global Solutions, to identify opportunities for improvement. The opportunities are ranked, to identify ‘low hanging fruit’ and what requires a longer-term approach.
The BIP is based on the outcome of the OCP; and aims to deliver on the selected opportunities identified in the OCP through structured and joint engagement by the customer and Shell Global Solutions. During this programme Shell Global Solutions supports the creation of the required capabilities within the customer organisation.
“Benchmarking is, above all else, about sharing ‘lessons learnt’ and about recognising that any identified performance gaps need to be seen as opportunities to improve,” says Diederick.
“It’s one of the key steps a business in this sector has to take if it is to succeed. In a world where resources are scarce and shareholders expect their money’s worth, benchmarking will support those who are looking to improve. More importantly, the benchmarking will assist in prioritising the gaps and thus in deciding how to move forward.”
One company looking to make such a move was Statoil, a major supplier of natural gas in Europe and a leading global producer of crude oil. The company commissioned a benchmarking study to explore improvement opportunities in response to gas price spikes caused by tight demand at the Kollsnes gas treatment plant in Norway. Although the study revealed a good cost-per-standard-cubic-metre ratio, potential for improvement was identified in the cost-per-complexity factor and maintenance costs.
“The way we approached the benchmarking study at Statoil was typical of the way we work in this area,” says Diederick. “The client’s operational effectiveness was put under the microscope and their performance was then compared with the industry benchmarks we have established. That enables you to assess where the company is underperforming which gives you the basis on which you can improve. Statoil also illustrates the importance of what the benchmarking study led on to – the response which then emerged.”
Specifically the company commissioned Global Solutions to conduct an asset management improvement study, which involved close working between Statoil and Shell staff to raise plant reliability and availability and reduce maintenance costs.
All aspects of the operation are rigorously analysed under the benchmarking programme including health and safety, personnel, asset management, operating costs, asset utilisation and availability, production and energy and environmental impact. Consultants will help quantify any performance gaps and from there confirmation of the potential value and prioritisation can begin.
This crucial next step involves leveraging on the experience of other discipline specialists within the Shell Global Solutions organisation, says Diederick. “They can then help establish how best to respond to the results of the benchmarking. This is what sets us apart really – we have the people on the ground to actively support customers in closing the gaps identified in benchmarking; to help them develop a deeper analysis of operational performance. And that is vital if improvements are to be sustainable. Crucially these are much more than ‘desktop’ specialists – they are subject matter specialists with a proven operational track record.”
Sustainable improvements in business performance and operational excellence can therefore be achieved in a range of areas across the organisation.
“For example, operating costs, energy consumption and hydrocarbon losses, can usually all be reduced once these have been identified by benchmarking as areas requiring improvement,” says Diederick. “Similarly benchmarking can identify opportunities to improve in the area of occupational health, safety and environmental performance; plant reliability, and asset utilisation and therefore refinery margins. Overall, it can mean enhanced business focus and ultimately the creation of a more effective organisation.”
At Statoil, for example, the structured work processes and successful industry practices, which were introduced following the benchmarking study, has enabled Kollsnes to become one of Statoil’s leading facilities.
Nils Halland, site manager at Kollsnes, says: “Our operations and maintenance functions now support our business processes; previously responsibilities were scattered and there was no clear accountability.
“We knew from the start that there was room for improvement, but the results of this project have exceeded our expectations. It’s really important that the information obtained by a benchmarking programme can be used by the client, and we work hard to help ensure that it happens.
Diederick concludes: “The strength of our offer in the field of benchmarking stems ultimately from the cumulative experience we have from many years of operating in the oil and gas industry, which allows us to propose pragmatic gap closure approaches.
“Using this as a starting point we’re able to deliver a methodology for the client to monitor current performance levels and compare those against established peers. From there it’s about ensuring improvements are delivered – and that they are sustainable.”
SHELL GLOBAL SOLUTIONS
Shell Global Solutions provides business and operational consultancy, technical services and R&D expertise to the energy and processing industries worldwide.
For further information please visit: www.shellglobalsolutions.com
To date, Shell Global Solutions’ benchmarking group has provided a comparison of operational performance for 80 refineries, 10 LNG Plants, 40 LNG Ships, 12 gas plants and 120 upstream production facilities. These, including joint venture and non-Shell participants, have gained a valuable external perspective of their business.
Using these benchmarks, companies can identify opportunities to improve their performance – and set about creating more value in their business. “Why reinvent the wheel,” says Diederick Bax, business development director at Shell Global Solutions. “When instead you can learn from other people’s experiences and their successes and how they have found out what to do, and maybe what not to do as well.”
Any participation in this pool of experience is done on a confidential basis and is fully compliant with competition and anti trust law regulations. Sites are invited to submit data monthly, quarterly or annually which enables key performance indicators to be calculated and then be used to compare one operation with another.
Alternatively, one-off benchmarking exercises are carried out as a part of an Opportunity Confirmation Programme (OCP) that directly links the benchmarking with Shell’s Business Improvement Programme (BIP).
The OCP uses a structured review, carried out by a team made up of participants from the customer and Shell Global Solutions, to identify opportunities for improvement. The opportunities are ranked, to identify ‘low hanging fruit’ and what requires a longer-term approach.
The BIP is based on the outcome of the OCP; and aims to deliver on the selected opportunities identified in the OCP through structured and joint engagement by the customer and Shell Global Solutions. During this programme Shell Global Solutions supports the creation of the required capabilities within the customer organisation.
“Benchmarking is, above all else, about sharing ‘lessons learnt’ and about recognising that any identified performance gaps need to be seen as opportunities to improve,” says Diederick.
“It’s one of the key steps a business in this sector has to take if it is to succeed. In a world where resources are scarce and shareholders expect their money’s worth, benchmarking will support those who are looking to improve. More importantly, the benchmarking will assist in prioritising the gaps and thus in deciding how to move forward.”
One company looking to make such a move was Statoil, a major supplier of natural gas in Europe and a leading global producer of crude oil. The company commissioned a benchmarking study to explore improvement opportunities in response to gas price spikes caused by tight demand at the Kollsnes gas treatment plant in Norway. Although the study revealed a good cost-per-standard-cubic-metre ratio, potential for improvement was identified in the cost-per-complexity factor and maintenance costs.
“The way we approached the benchmarking study at Statoil was typical of the way we work in this area,” says Diederick. “The client’s operational effectiveness was put under the microscope and their performance was then compared with the industry benchmarks we have established. That enables you to assess where the company is underperforming which gives you the basis on which you can improve. Statoil also illustrates the importance of what the benchmarking study led on to – the response which then emerged.”
Specifically the company commissioned Global Solutions to conduct an asset management improvement study, which involved close working between Statoil and Shell staff to raise plant reliability and availability and reduce maintenance costs.
All aspects of the operation are rigorously analysed under the benchmarking programme including health and safety, personnel, asset management, operating costs, asset utilisation and availability, production and energy and environmental impact. Consultants will help quantify any performance gaps and from there confirmation of the potential value and prioritisation can begin.
This crucial next step involves leveraging on the experience of other discipline specialists within the Shell Global Solutions organisation, says Diederick. “They can then help establish how best to respond to the results of the benchmarking. This is what sets us apart really – we have the people on the ground to actively support customers in closing the gaps identified in benchmarking; to help them develop a deeper analysis of operational performance. And that is vital if improvements are to be sustainable. Crucially these are much more than ‘desktop’ specialists – they are subject matter specialists with a proven operational track record.”
Sustainable improvements in business performance and operational excellence can therefore be achieved in a range of areas across the organisation.
“For example, operating costs, energy consumption and hydrocarbon losses, can usually all be reduced once these have been identified by benchmarking as areas requiring improvement,” says Diederick. “Similarly benchmarking can identify opportunities to improve in the area of occupational health, safety and environmental performance; plant reliability, and asset utilisation and therefore refinery margins. Overall, it can mean enhanced business focus and ultimately the creation of a more effective organisation.”
At Statoil, for example, the structured work processes and successful industry practices, which were introduced following the benchmarking study, has enabled Kollsnes to become one of Statoil’s leading facilities.
Nils Halland, site manager at Kollsnes, says: “Our operations and maintenance functions now support our business processes; previously responsibilities were scattered and there was no clear accountability.
“We knew from the start that there was room for improvement, but the results of this project have exceeded our expectations. It’s really important that the information obtained by a benchmarking programme can be used by the client, and we work hard to help ensure that it happens.
Diederick concludes: “The strength of our offer in the field of benchmarking stems ultimately from the cumulative experience we have from many years of operating in the oil and gas industry, which allows us to propose pragmatic gap closure approaches.
“Using this as a starting point we’re able to deliver a methodology for the client to monitor current performance levels and compare those against established peers. From there it’s about ensuring improvements are delivered – and that they are sustainable.”
SHELL GLOBAL SOLUTIONS
Shell Global Solutions provides business and operational consultancy, technical services and R&D expertise to the energy and processing industries worldwide.
For further information please visit: www.shellglobalsolutions.com
