Top Banner
A magazine exploring the oil and gas industry What leads to a Process Safety Incident? 12 08 02 Awarding Contracts Do it better with “Lean” Protecting our assets A Beautiful Landmark A fount of knowledge Issue four 2014
20

al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

May 25, 2020

Download

Documents

dariahiddleston
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

A m a g a z i n e e x p l o r i n g t h e o i l a n d g a s i n d u s t r y

What leads to a Process Safety Incident?

120802Awarding Contracts

Do it better with “Lean”

Protecting our assets

A Beautiful Landmark

al manhal

A fount of knowledge

Issue four 2014

Page 2: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,
Page 3: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

‘The great ambitions of nations and peoples are not achieved accidentally or by depending on others. They are only achieved by

self-reliance, hard work, creative efforts, wholehearted and responsible participation. This is what we call upon you today to achieve, for our

country and in the future.’

His Majesty Sultan Qaboos bin Said

Page 4: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

© 2014 Petroleum Development OmanArticles from al manhal may be reprinted without specific permission on condition that: the text be neither edited nor abridged; the maga-zine and Petroleum Development Oman be credited; and a copy of the reprinted article be provided to al manhal’s managing editor.

Production ManagerKarima Al Shahaibi

Graphic Design Mohammed Al Mahrazi

Design ConsultantsUnited Media Services LLC

Translation & EditingSaleh Al Alawi, Ikhlas Al Waili & Zahran Al Ruqeishi

PrinterLoay International LLC

Advisory BoardSuleiman Al Manthari, External Affairs and Communications Manager, PDOAbla Al Riyami, In-Country Value Director, PDOIntisaar Al Kindy, Exploration Director, PDODr. Saleh Al Anbouri, Ministry of Oil and GasDr. Rashid Al Maamari, Sultan Qaboos UniversityProf. Sobhi Nasir, Sultan Qaboos University

Address editorial correspondence to:Corporate CommunicationsPDO, P.O. Box 81Muscat 100, [email protected]

Dear Readers,A very warm welcome to this new edition of al manhal, a

magazine dedicated to providing the inside story of Oman’s oil and gas industry and the people who work within it.

We often focus our features on what gets done to extract oil and gas successfully. For this issue much of our emphasis is on how things are done, and in particular how they can be done faster, better and most importantly, safer.

Our main industry topic puts the spotlight on the safety aspect. We investigate the new initiatives being adopted by PDO which will help the Company to maintain the structural integrity of its oilfield equipment, while also ensuring its people operate each piece safely. This is known as asset integrity-process safety management (AI-PSM) and it is a very hot topic within the oil and gas industry just now.

We also look at how PDO is sharpening up the way it works through the adoption of the Lean process improvement methodology. This concept started life in the automotive industry – it’s at the heart of Toyota’s incredible rise up the global pecking order – but now it also has a home in the oil and gas business. We find out about PDO’s Lean experience and highlight some of the big successes to date.

Our picture feature this time around is a real billion dollar story, since it looks at the way PDO awards contracts. With around 80% of the Company’s annual operating budget spent with third party suppliers, getting value for money is essential, but there is more to it than that, as our feature explains.

For our popular Day in the Life strand we also have big numbers to focus on. In this case they relate to Oman’s oil and gas production, which is recorded, checked and reported on by Head of Hydrocarbon Allocation and Forecasting, Suleiman Al Rahbi, and his team. He reveals the behind-the-scenes secrets of how the production numbers you see in newspapers and TV news reports are calculated.

Finally, the latest in our new series of centrespread photo features focuses its lens on the extraordinary Grand Mosque. Once again, we are grateful to our own Mohammed Al Mahrazi for supplying us with yet another stunning image.

We hope you enjoy this issue of al manhal and, as ever, if you have any comments, questions or feedback we would love to hear from you. You can find all the relevant contact details in the adjoining column.Regards,Team al manhal

Distributed every quarter to Sultan Qaboos University, local private and government colleges, and schools.

Petroleum Development Oman

PDO Oman

Petroleum Development Oman – PDO

Page 5: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

Contents02

0812

14

Protecting our assets: new initiatives to safeguard PDO

Do it better: how ‘Lean’ thinking is helping PDO to sharpen up

How PDO awards contracts

A day in the life of...Suleiman Al Rahbi

16Sultan Qaboos Grand Mosque

Page 6: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

What leads to a Process Safety Incident?

al manhal looks at new initiatives to safeguard the thousands of wells, pipelines, pumps – and of course people – spread throughout PDO’s vast concession area.

As regular readers of al manhal will know, safety is a top priority at PDO. It has to be, given the potentially hazardous working environments that are commonplace within the oil and gas industry.

Companies like PDO have to deal with high pressures, high temperatures and highly toxic chemicals as a routine part of the job. However, this routine nature does not make the consequences of an incident any less severe, so complacency is one of the toughest enemies in the business.

The process of maintaining the condition of our oilfield equipment is known as asset integrity (AI) management. This covers the whole life of the asset, including ensuring that during design the relevant specifications and standards are met; also that our assets are continually and carefully maintained to reduce the risks of something going wrong to as low as reasonably practicable.

This sounds reasonably simple in theory, but in the real world of oilfield operations the practice is

much more complicated. People in the front lines of oil and gas production work very hard in often harsh environments. Also, irregular hours of work and work patterns that include night and early morning shifts can lead to disruption of the internal body clock,

sleeping difficulties and fatigue. If workers are fatigued, they will be less alert, their reaction time will be slower, they will find it harder to concentrate and they may make poor decisions. This can lead to accidents and injuries. Occasionally low morale can be an issue, as can a lack of appropriate training for the job.

Process safety can also be compromised by the constantly changing operating environment. Take a pipeline as a typical example. If It is designed with a certain

lifespan in mind, say 30 years, then the pipeline specifications are based on a certain type of fluids, particularly in terms of their corrosive nature which forms the basis of the design. Generally speaking, the material of construction and thickness of the pipeline

The process of maintaining the condition of our

oilfield equipment is known as asset

integrity (AI) management.

02

Protecting our assets

Page 7: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

What leads to a Process Safety Incident?03

Page 8: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

are dependent on the corrosivity and pressure of the fluid.

Often, however, the nature of the fluids will change as PDO brings new wells on stream or makes other changes to its production processes in order to maximise output. Sometimes this means the fluids passing through the pipeline will become more corrosive than originally planned for, and if this change is not managed properly the integrity of the pipeline might be compromised, causing it to leak.

When pipelines leak, the fluids released most probably will be hazardous as they could be flammable or toxic and will harm the surrounding environment. If the quantity of hazardous material released exceeds a particular threshold quantity than this becomes a process safety incident.

Sometimes fires, explosions and other community evacuations also fit into the definition of a process safety incident.

As PDO’s exploration and production operations are increasing in complexity, maintaining the integrity of all the Company’s assets and reducing the risk of process safety incidents are paramount. The scale of the challenge is mind-bogglingly vast: PDO’s concession area spans some 91,000 sq km and within it are more than 7,500 wells, around 20,000 km of pipe/flowlines and 52 oil stations, several of which date back to the 1960s.

To ensure this sprawling infrastructure is both safe and fit-for-purpose is a mammoth and very expensive undertaking, but it is a challenge PDO is meeting head-on by placing maximum priority on its asset integrity-process safety management (AI-PSM) regime.

One important aspect of this is strengthening the area of corrosion management. A couple of years ago PDO introduced a new Corrosion Inspection & Management System, which has all the information relevant to managing the effects of corrosion on PDO’s assets stored within it. The system uses a ‘traffic light’ classification of red, yellow and green based on the required thickness for the metal casing to be safe and secure, with any that fall into the ‘Red’ category (which means a risk of failure

inside six months) triggering an immediate work order to correct the problem.

The Company is also establishing world class in-house equipment repair workshops with Omani staff.

Knowledge kills complacencyThe impact of AI-PSM can be seen in the way PDO

handles – and more importantly learns from – process safety incidents such as pipeline leaks. Whereas a decade ago a leak would mean arresting it, area remediation etc. would be the end of the story, today every leak is investigated thoroughly by a dedicated team of engineers to find the underlying causes to prevent any future leaks. The investigation team then report their findings to a process safety working group, which challenges

the findings to ensure they stand up to scrutiny, then passes them on to the director in charge of the area where the leak occurred. That is not all: the findings and recommendations are also studied and challenged by a committee led by Managing Director Raoul Restucci before being passed for implementation.

It is the thoroughness of this approach which is at the heart of learning from process safety incidents. To do it requires deep knowledge of the processes involved, analysing and figuring out at each step what went wrong and also understanding the influence of human behaviour on it.

It also means clarifying lines of accountability so that people at all levels know what is expected of them and act accordingly. PDO’s workforce is always encouraged to intervene and report if they have any concerns which can have an impact on AI-PSM performance.

Training is being beefed up across the board, in particular through the implementation of a Total Reliability – Maintenance Integrity Execution (TR-MIE) programme, which is founded on continuous site coaching and training.

Knowledge kills

complacency

04

Page 9: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

Making a difference through TR-MIETR-MIE is an initiative of the Shell group, which has

its origins in operational excellence programmes such as Toyota’s TPS continuous improvement methodology (see article on page 11). PDO has modified TR-MIE for its own use and initially implemented it in six assets, including the Marmul, Lekhwair and Qarn Alam fields.

The initiative has been a huge success, with each of the six pilot TR-MIE assets achieving calculative status for maintenance execution. Now TR-MIE has spread to three further assets, with the Company aiming to implement it across all assets as soon as possible.

Where TR-MIE has really come into its own is when PDO has been able to combine it with the Company’s ‘Lean’ process improvement ethos. In particular, a ‘5S’ (sort, set, shine, standardise, sustain) toolbox is being used to create lasting change, with a perfect example being provided at the Marmul Mechanical Maintenance Workshop.

At its heart, TR-MIE challenges the work people do each day, so that jobs can be better prioritised following

a strictly risk-based criteria. This helps in identifying maximum priority jobs which could have an immediate impact on health, safety and environment against others which could have a low impact or are not production critical, which will be ranked lower on the priority scale.

PDO had a number of process safety incidents this year and while process safety incidents cannot be eliminated overnight, the Company’s unrelenting efforts are undoubtedly having a positive effect. AI-PSM performance has even made its way onto PDO’s performance scorecard, accounting for 10% of the total, such is the importance placed on it by senior management.

For the future, work will continue to ensure every member of the organisation and contracting staff are on board as far as asset integrity and process safety are concerned, so that each one of us plays their part in protecting the integrity of our assets. And such efforts are being replicated in oil and gas companies right across the world. This is, after all, the only way to successfully reduce the number of process safety incidents.

05

Page 10: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

06

Page 11: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

Using ‘5S’ to create lasting solutions to process safety issues

Marmul’s Mechanical Maintenance Workshop has six storerooms where tools, spare parts and other equipment are kept. Like many busy places, the storerooms over time became disorganised, making it difficult and time-consuming for technicians to locate the right part at the right time. In addition, poor stock control saw too much money being tied up in an excessive inventory and, worse still, items becoming damaged among the chaos.

It was clearly time for action, and so the TR-MIE and Lean programmes’ action plan known as ‘5S’ (sort, set, shine, standardise, sustain) was put into place. It had a number of key objectives:

• Reduce value of inventory held by 50%

• Reduce number of stock items by 50%

• Recover 40% of wasted floor area

• Cut searching time by 80%

• Reduce damaged material costs by 50%.

After providing the warehouse team with 5S training, several practical solutions were put in place. These included improved labelling and shelving in the storerooms, the establishment of ‘Red Tag’ areas to segregate unwanted and/or damaged materials, implementing a proper process for returning unused stock to the warehouse and the creation of a visual control board for all planned work activities.

The result of these activities in Marmul and other warehouse facilities (including Fahud and Nimr) has been a reduction in the overall spares inventory of more than 70%, freeing up millions of dollars in capital that can be

used more productively elsewhere. The improved storeroom conditions have also made it much easier and quicker for people to get hold of the parts they need, creating productivity improvements which again feed through to the bottom line.

‘5S’ (sort, set, shine,

standardise, sustain)

07

Page 12: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

Enthusiastic support from the very top of the organisation has seen the process improvement ethos known as ‘Lean’ take a firm hold within PDO, leading to some impressive results.

One of the most powerful developments in the corporate world over the past few decades has been the rise of business process improvement. Companies everywhere have been forensically examining all their ways of working with the aim of making things quicker, cheaper and better.

Very often these initiatives are huge successes and deliver tangible rewards. But, human nature being what it is, things have a tendency to slip back again and the benefits are eventually diluted, and sometimes even lost completely.

Do it better: how ‘Lean’ thinking is helping PDO to sharpen up

The process improvement methodology known as ‘Lean’ is not just about making the initial improvements; it is specifically designed to eliminate backsliding, thanks to its built-in systems of ongoing oversight as well as its relentless urge for continual improvement.

The ideas behind Lean have their origins in the car industry (see panel on page 11), but these days it touches just about every business sector. PDO’s own Lean journey began in 2009, as part of a wider initiative within the Shell group.

What is Lean?Before describing the PDO Lean experience it is

worth discovering what Lean is all about. In essence it is a philosophy based on making small but incremental improvements to the way things are done. This is one of the most significant ways Lean differs from traditional

08

Lean in action

Page 13: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

09

process improvement programmes, which are often broad in scope and can involve implementation teams of anything up to fifteen people at a given time, making it harder to maintain focus and momentum.

By breaking the job down into bite-sized chunks it is possible through Lean to create small, rigorously focused teams that are not just charged with delivering an improvement project but also with sustaining and building on it in future, as well as devising ways for it to be replicated elsewhere within the organisation.

Crucially, these Lean teams involve all the people who own the processes that come under the microscope. In each case, a Lean practitioner is nominated from within the relevant team or department: this person drives the improvement from within, a set-up that works more effectively than parachuting in external consultants to take charge.

PDO’s Lean experiencePDO’s initial experience of Lean was confined to a

pilot group of around a dozen projects designed to prove the concept could make a difference. The response was excellent and the projects duly delivered their benefits to amply demonstrate that Lean really could work within PDO.

What was missing, however, was sustainability. Upon review, six months after the projects were completed, it was discovered that some of the benefits had ebbed away… there was clearly work still to be done before PDO could truly declare itself a ‘Lean enterprise.’

Two of PDO’s most senior leaders, People and Change Director Ibtisam Al Riyami, and Deputy Managing Director Abdullah Al Lamki (now retired), were tasked with finding out how other organisations had gone about embedding and sustaining Lean improvements. Their global fact-finding tour and its learnings played a vital role in the creation of PDO’s very own Lean deployment model, and the stage was set for Lean to fully take root.

One of the two most important elements of the model is its stipulation that Lean has to be delivered from the top; and for PDO this means the very top, since Managing Director Raoul Restucci is a firm advocate. For example, in an interview for the Omani publication The Business Year he noted: “We are driving Lean increasingly across all our projects. In each area, we are developing a practice to eliminate waste, drive efficiency, optimise workflows and employ standard operating procedures. Waste is disrespectful to people, and as you pervasively address this, you dramatically reduce costs and more importantly increase productivity and value creation.”

The other key element of the model is that Lean deployment must be structured using a ‘value stream’ approach. What this basically means is that Lean spans the entire end-to-end of a particular process, not just selected elements. For example, if delivering a well is in the spotlight, the focus is not just on the actual drilling of the well, it is everything from the initial well pick right through to the eventual abandonment of the well once it has served its useful purpose. The thinking is that only by adopting this holistic approach can real and lasting improvements be made.

Lean in action

Page 14: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

10

PDO Lean Value Streams

Senior executives from ADNOC, GASCO, Shell Abu Dhabi, Brunei LNG & SEPI have visited PDO to learn more about Lean deployment and effectively reshape continuous improvement in their respective organisations.

Value Stream Map

And so far it is working. With more than 100 Lean improvement projects across the value streams, the improvement projects are delivering the intended benefits in terms of improved productivity, gains in production and reduced deferment, plus cost avoidance and savings. As a snapshot, here are just a few selected highlights:• 25% time saving to complete rig moves and 50% less

time to move a frac (hydraulic fracturing) unit• 83% less time taken to validate Permits to Work• 75% time reduction for approving well proposals• 45% reduction in consumption of well chemicals• Workshop spare parts inventories cut by 70% and

wellhead spares inventory down 80%• Deferment (lost oil production) cut by 250m3 per day

thanks to process simplification and standardisation.

So impressive has been the progress of Lean that its deployment was selected for a Gold Award in the 2013 PDO Chairman’s Awards of Excellence – the Company’s top internal recognition awards scheme. Lean initiatives have also garnered a host of other awards both within the Shell group and externally.

And this is just the beginning: an intensive campaign of training means the number of qualified Lean practitioners and coaches within PDO is rising fast; Company managers are also having their Lean leadership skills honed so they can help sustain the continuous improvement culture that is so critical to success.

All this means Lean is here to stay within PDO, and that can only be good news for the Company, its employees, its shareholders and, of course, the nation.

Page 15: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

11

A brief history of LeanThroughout history there have been great leaps

in the way we make things or accomplish tasks. Harnessing fire, devising the wheel, the mechanisation made possible by the Industrial Revolution and the birth of the production line to make Ford Model Ts – every step helped us get to the modern world we enjoy today.

The origins of Lean can be traced back to Henry Ford’s produc-tion system - or rather its limitations. The great Japanese industrialist Kiichiro Toyoda, the driving force behind the Toyota Motor Corpora-tion, looked at Ford’s process and realised that the logical next step was to build in greater variety in what was being produced (Ford had famously said of the Model T “You can have any colour as long as it is black”, so rigid were the pro-duction parameters).

So, with the help of colleague Taiichi Ohno, he set about creating the Toyota Production System (TPS), and in doing so changed motor manufacturing forever, as well as enabling his company to become the world’s largest carmaker by volume.

The TPS was the first to look at the flow of the vehicle throughout the entire manufacturing process. By creating smaller machines that were more suited to the volumes of parts required, then lining them

up in process sequence and enabling them to be set-up quickly on demand, it became possible to obtain low cost, high variety, high quality and very speedy throughput times that allowed Toyota to respond amazingly quickly as its customers’ tastes and desires changed. This system is often dubbed ‘just-in-time’ manufacturing.

Equally important as the technical innovations, though, was the accompanying philosophy where waste is the enemy. Kiichiro Toyoda believed that: “The ideal conditions for making things are created when machines, facilities, and people work together to add value without generating any waste.”

The TPS is also founded on the idea of making daily improvements, something that feeds directly through to the continuous improvement ethos that is such a crucial part of Lean programmes. The corporate world has much to thank the visionary Mr Toyoda for.

Operational Stability(Levelled Production /Standard Work)

Just

-in-T

ime

Con

tinuo

usim

prov

emen

t

Mac

hine

-Man

Har

mon

y(Ji

doka

)

ToyotaProduction System

Mr. Kiichiro Toyoda

Mr. Henry Ford

Page 16: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

12

How PDO awards contractsExploring for – and producing – oil and gas is a complex and expensive undertaking, which requires armies of sector specialists capable of solving thorny problems as well as all sorts of high-tech materials and equipment to deploy in the field.

Thus it is no surprise that the value of goods and services purchased each year by PDO runs into billions of dollars. The vast majority of this spending is ‘outsourced’ via contracts with external suppliers. But how does the Company go about making sure it gets bang for its considerable buck? That contracts are awarded in good time to the best possible supplier? Also, that chosen suppliers deliver what they have promised? Here is how…

Category Management & Contracting ProcessPlanning

AndAppraisal

BusinessNeeds

MarketAnalysis

SupplyChainCost

Modeling

StrategySelection

ContractManagement

Sourcing &Award

• Identify Improvement Opportunities

• Develop CP Business plan

• Integrate CP Business plan with the resource planning process

• Deliver CP Business Plan, track measure and report value

• Establish Team

• Establish Scope, Spend & Complexity

• Review Business Requirements & Identify Opportunities

• Identify IndustryStructure

• Identify Levers in Supply Market

• Assess Current,New & Non TraditionalSuppliers

• Summarize Improvement Opportunities

• Build Supply Chain Process Map / Identify Opportunities

• Build Cost Models

• Identify Cost & Value Drivers / Prioritise Opportunities

• Develop Strategy

• Develop SourcingTactics

• Confirm Suppliers

• DevelopSourcing Package

• Manage Sourcing Process

• Evaluate & Award Contract

• Initiate Start up

• Manage Performance & Relationship

• Execute Close Out & Feedback

Share Learning

Manage Risk & Enhance Value

The guardians of PDO contractsAround 80% of PDO’s annual operating budget is spent

with third parties, a high level of outsourcing that is typical of a modern day upstream energy company. Though the business lines themselves manage the day to day operation of all these contracts, the job of making sure they are properly set up belongs to the Company’s Contracting & Procurement (C&P) Department. It’s a big task: at any given time there may be as many as 750 contracts running throughout the organisation, each worth anything between a few thousand dollars to more than a billion.

Strategy and tactics: the science of the contract

The first step in the contract awarding process sees the business line tell the C&P team what is required from the contract. This is used as a basis to develop the strategy and the tactics for awarding the contract. The strategy basically defines the best way to deliver the goods or services to PDO. Factors to consider include whether the contract needs to be split between more than one contractor; also, what is the current market situation – are there likely to be many bidders or is this a niche service? Are there bidders available locally, or will PDO have to look further afield? The C&P team assesses all this intelligence to set out the strategy, then it is time to look at tactics: for instance, what is the optimal method to pay the contractor(s)? If it is materials that are needed, what are the current commodity prices that could affect the contract price? To work all this out they need to be economists and commodity market sages as much as contracting experts!

Page 17: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

13The technical and commercial proposals: the heart of the process

In most cases, PDO asks interested parties to submit two sets of proposals for consideration. The first is the technical proposal, in which the tenderer demonstrates that they understand what PDO requires, then details how they will go about meeting these requirements. The commercial proposal covers how much they are going to charge PDO for carrying out the contract. The standard procedure is for C&P to evaluate the technical proposals first, with the bidders who pass this stage having their commercial proposals compared to find the best value option. There are exceptions, though, with one example being if there are large numbers of bidders, meaning that evaluating all the technical proposals would soak up too many manhours. In these cases the cut is made on the commercial side, with only the two or three best value bids being technically assessed. The balancing act for PDO is opening up the marketplace wide enough to get a good range of options, but not repeatedly wasting suppliers’ time and money by asking them to prepare proposals with no chance of success.

Going before the Tender BoardYou would not expect PDO’s vast contract expenditure to take place without

a lot of senior level oversight. This comes from the Tender Board, or more precisely the Company’s two such bodies: a Minor Tender Board (with all internal participants) for contracts worth between $250,000 and $10 million, plus a Major Tender Board (which includes representatives from government and PDO’s shareholders) for anything above $10m. Contracts below $250K are not subjected to this additional level of governance, as such sums are considered routine expenditure where internal measures / controls are placed to ensure compliance to procedures . The Tender Boards meet every week to review the strategy and tactics that the C&P team has devised, the values that have been ascribed to the contracts, the lists of selected bidders and the technical/commercial evaluation models. For contracts already underway the boards will also look at the results to date and resolve any major issues that have cropped up.

Awarding and managing the contractOnce the best combination of technical prowess and value for money

has been chosen, the winning bidder is informed and the contract can be formally signed. At this point a contract management plan will be established, detailing the responsibilities both for PDO and the contractors, as well as the key performance indicators (KPIs) that will be used to measure what is being delivered. As mentioned, the day-to-day work of the service or materials supplier is supervised by the business lines, but the C&P Department also keeps a close eye on things through its team of quantity surveyors, who compare what the contractor is supplying against the terms of the contract to ensure that PDO is getting what it is paying for. C&P is also on hand to advise and support the contract holders in keeping everything running smoothly throughout the life of the contract.

The contract reaches its endEvery contract has a lifespan, and once they have run their course the

biggest contracts are closed out with a final review by the Tender Board. Here, the whole life of the contract is examined, with all the important learnings documented so they can be fed back into the strategies and tactics created for future contracts. And with that, the cycle begins again…

Soft-ware

Rankedin order

Commercial Bid

SubmissionVia

On-Line Bid

Commercial Bid Submission

ViaConventional

Process

Lowest Commercial, Technically Acceptable

Tender

Highest Commercial, Technically Acceptable

Tender

TenderBoard orContract Engineer

Page 18: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

14A day in the life of...Suleiman Al Rahbi,Head of Hydrocarbon Allocation & Forecasting

Oman’s oil and gas production is a matter of national importance, with the figures scrutinised by the public, the media and numerous other commentators whenever they are published. Behind the scenes, detailed analysis of production data also plays a vital role in helping operators like PDO get the most from their various fields. So the numbers matter, but have you ever wondered where they come from and how they are put together? Suleiman Al Rahbi, Head of Hydrocarbon Allocation & Forecasting at PDO, has the answer…

8.30amThe calm before the storm…

I’ve been Head of Hydrocarbon Allocation & Forecasting at PDO since 2010. It’s a challenging and very high profile position, because with my team I’m responsible for ensuring that PDO’s daily oil and gas production (and that of third party operators in Oman) is accounted for and reported to all interested parties. These reports, which we prepare on a daily basis and also once a month, provide a very public snapshot of the health – and worth – of our national oil and gas sector, so we have to make sure they are both timely and as accurate as humanly possible. Before the daily reporting process starts, though, I have some tasks relating to my role as custodian of PDO’s corporate production database, which is called Energy Components (EC). I receive, and try to resolve, enquiries from EC users across the Company, while also liaising with the various oilfield teams to ensure that any operational changes which have taken place are incorporated into the system, so it is fully up-to-date.

10.00amThe daily reporting process is underway!

At 10am the nature of our working day changes. This is the point that the field production data start flowing into our EC database, and from this moment on the clock is ticking before our 2.30pm final deadline to produce the daily report. All the Company’s major production streams feed automatically into EC, to help minimise the need for manual data input. However, the various third party operators in Oman can’t link directly to EC for security reasons, so each of them sends us signed-off figures that we verify and then input ourselves. These are included so we can provide the complete production figure for the nation (only a very small amount of production from the Mussandam area is excluded). We are able to verify third party production data since their oil flows into the Main Oil Line to the Mina Al Fahal export terminal, both of which are managed by PDO.

Page 19: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

15

12.15pmThe reporting deadline is looming

By midday we have received all our incoming data and we can begin the process of verifying their integrity before the reporting deadline. Of course, the sheer scale of PDO’s operations – with thousands of wells and production stations sending data – means things are never 100% perfect. So as a team we go through the numbers and look for anomalies, which we then follow up with the teams responsible for those assets. This is where my past experience in the field (I worked in a number of oilfields including Yibal and Bahja) comes in really handy, because I know what I’m looking at with these numbers. By 1pm we will hopefully have resolved all the issues and can start comparing our collected production data with the volumes reported by the Mina Al Fahal terminal, which as the final sales point offers the highest data accuracy available. Again, if there are any discrepancies we may need to seek further clarification from the field. Once we’ve done this we can publish the final production report on PDO’s intranet and then despatch it via email to the Company’s various shareholders. At this point I lock the system to ensure no further changes can be made.

3.30pmIt’s monthly reporting time too

We do our production reports every day, taking no regard of things like weekends or public holidays (these are covered by the team on a duty roster basis). The beginning of each month is also a particularly busy time, as we must complete the consolidated production report for the previous month. This report, which has to be ready by the fifth working day of the month, correlates all our crude production with the volumes exported by tanker as well as those sent to domestic refineries. It is used by our finance team to calculate the royalties and taxes due to the government; plus it also drives decision-making among the oilfield teams, particularly in terms of strategies and investments to boost production. The importance of the production report gives me a high profile among senior management, including with Technical Director Amran Al Marhubi. This is a big responsibility but it’s also one of the things I find most satisfying about my job.د

Page 20: al manhal A fount of knowledge Issue four 2014 A Beautiful ... Doc Librar… · ha la a oc a nnt? al manhal looks at new initiatives to safeguard the thousands of wells, pipelines,

For the third of our series showcasing the work of PDO employee and keen photographer Mohammed Al Mahrazi, we feature one of our country’s most important – and beautiful – landmarks: Sultan Qaboos Grand Mosque.

The mosque took more than six years to build and features finely sculpted Indian sandstone as well as marble from Oman, India, Italy and Egypt. It was inaugurated by His Majesty in May 2001 and it is both Oman’s principal mosque as well as being a scientific and intellectual source of knowledge across the Islamic world.

Worshippers (or those who pray) and visitors (the mosque is open to non-Muslims daily apart from Fridays) cannot fail to be impressed by the stunning interior of the Grand Mosque, which is clad entirely in white and dark grey marble, decorated with inset mural panels. The ceiling designs, meanwhile, have been inspired by Omani forts, one of many nods to the country’s rich cultural heritage that can be found in the mosque’s design.

The main prayer hall can accommodate up to 6,500 people. Its central dome rises 50 metres above ground and from it hangs a dazzling, 14-metre long Swarovski crystal chandelier. Probably the most impressive feature of the prayer hall, though, is its carpet: handmade by some 600 weavers and covering a 4,200 square metre area, it is believed to be the second-largest single-piece carpet in the world.

Emphasising the mosque’s role as a centre of study as well as prayer, the building incorporates a 20,000-volume library of reference works on science, Islamic culture and humanity. And the site is also home to the Institute

Sultan Qaboos Grand Mosque

16

Photos by: Mohammed Al Mahrazi

of Islamic Sciences, where young people can come to learn the disciplines of religious knowledge.

Finally, no visit to the Grand Mosque is complete without a stroll through the delightful ornate gardens. As well as offering the opportunity for quiet contemplation, the gardens afford views of the mosque from all angles,

which help to underline the skill, effort and investment that went into creating such a wonderful building.

So if you live in the Sultanate and have not been

to the Grand Mosque, make it a place to visit because you will be amazed.