Oil & Gas Benchmarking Services

Why Benchmark? Benchmarking is widely recognised as an essential tool in developing an effective strategy to drive performance improvement.

By benchmarking with us you will receive a comprehensive analysis of performance at the asset-level, comparative rankings to show your asset’s position against industry peers and leading performers, a detailed gap analysis with actionable findings that indicates areas of strength as well as improvement opportunities.

The benchmarking provides:

• A foundation for performance improvement

• A comparison of current performance with an external perspective

• Quantification of improvement opportunity potential

• An understanding of leading practices that enable superior performance

• Identification of strengths & improvement opportunities

• A basis for gap closure to realise ROI

• An evidence-base for decision making

Benchmarking ProgramsWe offer a number of benchmarking programs, each focused on a specific asset type.

• Production & Processing Assets

• Marine Terminals

• LNG Receiving Terminals

• Gas Transmission Systems

• Liquid Pipelines

• Underground Gas Storage

All of these programs are mulit-company consortia and most are run on an annual basis.In addition, Juran Benchmarking offers bespoke internal and external benchmarking tailored to specific client requirements.

Juran Benchmarking has been providing benchmarking services to the oil and gas industry since 1995. During this time we have

compiled an extensive database of performance data from thousands of assets operated by NOCs, IOCs and independent

oil and gas companies worldwide.

Our highly effective normalisation approach, the Juran Complexity Factor© ensures like-for-like comparisons of performance between

benchmarked oil & gas assets to realise actionable results and improvement opportunities.

“Participating in the Juran Benchmarking Program allowed

us to illustrate to our Top Management our strengths and weaknesses compared to other players in our industry and to

seek their support for actions for improvement initiatives”

Asset Director

15% AVERAGE COST SAVINGS POTENTIALIDENTIFIED

20% TYPICAL PRODUCTIVITY IMPROVEMENT LEVELS

Oil and Gas Benchmarking Services

Benchmarking Scope Juran Benchmarking has developed metrics models that describe the key efficiency and effectiveness performance areas associated with the operational performance of an asset. Benchmarking data is collected and analysed in line with these models.

Efficiency Efficiency is determined by measuring operational costs of labour and materials, manpower time employed and energy consumed. KPIs typically address the following performance driving areas:

• Operations• Maintenance• Functional Support (engineering support, HSEQ, security etc.)• Business Overheads (IT, Procurement, HR, Finance etc.)• Energy

The precise KPIs employed will vary between programs to align with the asset type being benchmarked.

All cost and manpower data are normalised by the Juran Complexity Factor© to provide a comparative picture of efficiency.

Effectiveness Effectiveness focuses on the quality of performance outcomes. The KPIs examined vary according to the asset type being benchmarked but include a multitude of performance areas such as; asset availability and reliability, equipment planned and unplanned downtime, lost time incidents and near misses, flaring and venting, emissions and waste generation, and process safety incidents from Tier 3 through to larger Tier 1 incidents. A significant focus is placed on the analysis of maintenance management, including time spent on preventative versus corrective maintenance, planned versus unplanned downtime, maintenance backlog and maintenance planning.

Benchmarking plays a pivotal role in both diagnostics of how we do today and in

long-term planning. We have been able to achieve some impressive savings with the

support of benchmarking outputs”Ops Ex Manager

Gap AnalysisThe second level of analysis is the company-specific gap analysis in relation to the leading performers, which offers a detailed insight into the strengths and improvement opportunities of the asset. Improvement potential is quantified and recommendations provided for gap closure, thereby signposting where improvement activities should be targeted.

Positioning AnalysisA positioning analysis is conducted and for those companies participating over multiple benchmarking cycles, an analysis of performance trends over time is also provided.

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Pacesetter PerformanceThe Juran Performance Index© (JPI) provides a single measurement indicating the operational performance in terms of efficiency (costs and hours) and effectiveness. The performance of an asset is analysed in relation to Juran Benchmarking Pacesetters, which comprise the leading performers over a 5 year period. A dashboard of performance critical KPIs is provided and the percentage of pacesetter performance achieved is calculated for efficiency and effectiveness KPIs, which are added to arrive at an overall JPI score.

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Benchmarking AnalysisThe analysis is conducted on two levels; Performance Comparison and Gap Analysis.

Performance ComparisonThe first level of analysis provides an overview of your asset’s performance compared to the other benchmarkers. A comprehensive analysis is conducted comparing your asset to the benchmarks for all areas of efficiency and effectiveness performance.

Our ApproachThe Juran Benchmarking Cycle© provides a well-established systematic approach to the benchmarking.

Preparation and PlanningA kick off meeting is held, during which the purpose, scope, methodology, and schedule are reviewed and agreed.

Benchmarking TrainingAn onsite benchmarking training workshop provides each participant with a detailed understanding of the benchmarking, the metrics to be used and their definitions prior to data collection commencing.

Data Collection and ValidationEach participating facility completes a data collection document and returns it to Juran Benchmarking by the agreed date. Help Desk support is provided during the entire data collection process such that any client questions are answered promptly. All data is thoroughly validated through our rigorous and unique three stage validation process to ensure accuracy prior to analysis.

Data Normalisation The challenge in any benchmarking program is to ensure that performance comparisons between participating assets are made on a like-for-like basis but how can this be achieved for assets that are of differing sizes and designs?

Typically, comparisons are made on the basis of volumes produced or transported ($/boe). Whilst this provides an important commercial perspective, it is not representative of efficiency as production volumes will drive variable costs, leaving fixed costs largely unchanged. Low utilisation, low volume assets will always be disadvantaged in such an analysis.

Instead it is critical to reflect the drivers of cost and manpower, that is the installed equipment that must be operated and maintained, in any effective normalisation approach. The Juran Complexity Factor© does just this. Our unique

methodology, developed over more than 30 years using empirical industry data, is statistically proven as a highly effective way to normalise the performance of oil and gas assets. Using this approach, benchmarkers can be confident that direct comparisons between assets of differing technical complexity and size are made on a truly like-for-like basis, are valid and therefore result in actionable findings.

Data Analysis and ReportingJuran Benchmarking will analyse the data, develop a comprehensive suite of charts and tables and prepare a detailed written report of the benchmarking results, tailored for your company and including a company-specific performance gap analysis. Uniquely the comprehensive report includes around 200 key performance indicators examining all aspects of your asset’s operational performance.

100%OF CLIENTS SAY THEY WOULD RECOMMEND US

The Juran Benchmarking

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Company Management PresentationsA detailed post-report debrief presentation of the benchmarking analysis is delivered to the company management teams providing an excellent opportunity to communicate the findings of the benchmarking. Presentations are made either face to face at company premises or via an online meeting.

Sharing Leading PracticesFollowing the benchmarking analysis and issuing of the report, Juran Benchmarking will host a Best Practice Forum. This is exclusive to the benchmarking participants, enabling companies to exchange leading working practices in a knowledge sharing workshop, under the protection of a confidentiality agreement.

Developing Action PlansThrough our Leading through Enhanced Action Planning (LEAP) workshop, Juran Benchmarking will work with your company to support you at the start of your improvement journey. Together, we will develop a detailed action plan of how to implement improvement activities relevant to your benchmarking results, enabling you to realise a return on your investment.

Confidentiality & Anti-TrustJuran Benchmarking undertake all activities in line with the APQC and EFQM Benchmarking Codes of Conduct. We ensure all benchmarking programs are compliant with anti-trust / competition law and all companies sign a confidentiality agreement. Company data are anonymised and treated with utmost care with a rigorous process in place to ensure your data are protected. All data are held in an encrypted format and our highly secure members website enables data to be exchanged safely and securely.

“In our opinion, benchmarking is one of the best ways to improve our performance.

Participation in the Juran Benchmarking program allows us to understand where

and how we can improve.”Facility Manager

OVER 1000ASSETS BENCHMARKED TO DATE 91% OF OUR CLIENTS

HAVE RETURNED TO US OVER THE PAST 10 YEARS

Production & Processing AssetsJuran Benchmarking’s production and processing benchmarking program has been running since 1995. It was initially introduced to a consortium of assets in the North Sea area, but now it has become a global event that attracts assets from all over the world. The program encompasses both oil and gas production and processing assets.

Marine TerminalsJuran Benchmarking’s marine terminals benchmarking program has been running on an annual basis since 2003. During this time, the program has gained global recognition and has attracted leading marine terminal operators. The program encompasses terminals exporting and importing crude oil, liquified gas, derived products and petrochemicals.

LNG Receiving TerminalsIn 2012, Juran Benchmarking established a benchmarking program specifically tailored for LNG receiving terminals. The scope of benchmarking is determined by the participating companies and focuses on the operational efficiency and effectiveness of LNG receiving terminals.

Gas Transmission SystemsJuran Benchmarking has been benchmarking gas transmission systems annually since 2005, and our extensive database contains performance data form leading gas transportation companies from Europe, South America, South East Asia, the Middle East and the United States. The database contains more than 400,000km of pipeline and more then 30,000 above-ground installations.

Liquid PipelinesJuran Benchmarking enables liquid pipeline operators to identify areas for improvement, determine gaps in performance, estimate the financial stake these gaps represent whilst identifying and prioritising actions necessary to achieve breakthrough performance. As with all Juran Benchmarking programs, there is a focus on both operational efficiency and effectiveness.

Underground Gas StorageEstablished in 2017, this benchmarking program has been designed to analyse the operational performance of UGS assets, including those storing gas in salt caverns, acquifers and depleted fields. The focus of the benchmarking is on operational efficiency and effectiveness, and includes operations, maintenance, functional support, business overheads, sub-surface activities and energy.

Oil & Gas Production

and Processing

Marine Terminals

LNG Receiving Terminals

Liquid Pipelines

Underground Gas Storage

Juran Benchmarking Programs

Gas Transmission

Systems

Due Diligence AssessmentsA key element of any due diligence process relating to mergers and acquisitions is determining both asset value and risk exposure. Juran Benchmarking has developed a tool for conducting such evaluations, using actual peer data from our operational performance databases to evaluate the operating costs, manning levels, and the performance effectiveness of the assets being considered. Using Juran Benchmarking’s extensive datasets, our approach provides an evidence-based comparative assessment of the operational performance of the target asset, removing reliance on subjectivity.

As part of the assessment, we will calculate the Juran Complexity Factor© of the target company. Based on this Complexity Factor Juran Benchmarking will indicate what the performance should be for a facility of this complexity. The acquirer can now assess, by comparing this estimate to the real performance, what the post-acquisition upward improvement potential will be.

This method for normalisation has a high degree of correlation with operational expenditure and man hours. It is also highly repeatable and fully flexible, enabling the addition of new equipment as the need arises. Most important, it allows like-for-like comparisons and is statistically verifiable.

Operational Expenditure Forecasts and Manpower EstimatesJuran Benchmarking possesses a wealth of accurate and up-to-date operational performance data derived from the large number of benchmarking studies conducted every year. This data relates to the operational efficiency of oil and gas assets from across the value chain and includes details of OPEX and manpower time for all aspects of operations, maintenance, support services, and business overheads.

Because of the excellent correlation between the Juran Complexity Factor, OPEX, and manpower, we are able to predict operational costs and manning levels simply by calculating the Complexity Factor of an asset. This can be done based upon technical designs, thereby enabling forecasts to be made prior to construction and commissioning. Estimates can be made assuming industry average and first quartile performance and include:

• Manning level estimates of company staff and third-party labour for both planned and operational assets.

• OPEX forecasts for assets prior to construction and commissioning based upon actual industry data.

• Expenditure estimates for specific functions (e.g. maintenance, HSE) across assets and business units.

• Synergy and due diligence studies for mergers and acquisitions to enable the assessment of the expected post-acquisition upward improvement potential.

Other Services

Benchmarking TrainingJuran Benchmarking offer a wide range of benchmarking training programs for both current and new clients. Our expert consultants and trainers can provide training tailored to meet your specific requirements, ranging from one day introductory workshops to a five day in-depth training engagement that provides your team with a detailed understanding of the requirements for successful benchmarking.

The content and delivery mode of all of our training will be adapted to meet your need and reflect your business interests. Case studies, interactive sessions, and group exercises are all developed to align specifically with your business.

CASE STUDY

SituationA crude oil and LPG terminal benchmarked its performance for the first time. Located in Europe, it had been commissioned in the late 1970s and employed around 200 personnel (including contractors). It had four output products, four berths and a roadcar loading rack. In terms of storage, the terminal had 16 tanks with a 9.6mn barrel storage capacity and a throughput of approximately 250mn b/y.

Benchmarking FindingsPrior to benchmarking, the terminal believed that it would be amongst the highest performers. However, the results of the study found otherwise. Key findings are detailed below:

• Performance was fourth quartile in many areas including operations and maintenance expenditure and manpower time• Total expenditure was nearly twice as high as the average for the benchmarking group; with a staggering nine-fold gap to the lowest cost terminal• The biggest performance gap lay in the maintenance expenditure and manpower time, which were both the highest of the study• They had very high third-party (contractors and services) costs and manpower time

Performance Improvement ActionsWith any benchmarking program, it is only worthwhile if, once the analysis is complete and understood, the benchmarker takes action to improve the performance gaps.

In this case, the terminal established a performance improvement team led by a newly appointed Performance Improvement Manager. An action plan was developed that focused upon the weaknesses identified in the benchmarking exercise. Key improvement actions are detailed below:

• Differentiate costs – management parked the costs which they agreed could no be reduced (in the initial term), and focussed on those areas which were controllable and represented the biggest performance gaps.• Organisational design review – restructuring ensured clear accountabilities for key areas. A series of step change programmes were initiated to realise rapid improvements to performance. Part of the reorganisation involved a move from inefficient hierarchies to more efficient self-directing work teams. The new structure also closed the gap between front line workers and management, improved communication and led to more efficient team working. As a result, downtime reduced, as did man-power time, and therefore costs.• Shift working patterns revised – they moved from 8-hour to 12-hour shifts, which led to a 30% reduction in handover preparation time, decreasing non-value adding activity and reducing interruptions to ongoing work tasks. Furthermore, operative technicians were trained to be multi-skilled and undertake basic equipment care activities on shift, resulting in a doubling of the amount of planned maintenance carried out by operators.

CASE STUDY

• Contractor management process transformed – this gave the terminal better control over their third-party service providers and contractors,and they made better use of management systems, resulting in a 30% reduction in contractor spending.• Work planning and execution processes were re-engineered – this reduced very high levels of non-value-added activities. Seven- day plans were developed and adhered to, ensuring that only the highest priority corrective work was permitted to take precedent over planned preventive work. A monitoring system was put in place to ensure all cost and schedule metrics were tracked and any deviations reported and actioned.• They adopted a risk-based approach to maintenance based upon failure rate and criticality data they possessed – this optimised maintenance work frequencies and increased preventative activities.

Participation in any benchmarking exercise is only worthwhile if the benchmarker takes action to improve performance – only then will terminals begin to realise a return on investment. Subsequent improvement activities can help terminals save valuable time and money, and improve operational efficiency and effectiveness.

ResultsThe terminal was benchmarking its performance on an annual basis and, over the next 2 years, began to see the fruits of its performance improvement initiative. Key results are detailed below:

• Total expenditure shifted from fourth to third quartile.• Total expenditure was reduced to 25% higher than the group average and the gap to the lowest cost terminal reduced to a factor of 3.5 (previously it was almost 50% higher than the group average and the gap to the lowest cost terminal was a factor of 9)• Total storage and loading costs were reduced by some 27% during this period.• The terminal was now a first quartile performer in terms of operations expenditure and manpower time.• The terminal’s maintenance expenditure had shifted from fourth to third quartile, and maintenance manpower time from fourth to second quartile – representing a 58% reduction in costs and a 50% reduction in manpower time for maintenance. Much of this saving was attributable to reductions in expenditure and manpower time of third party contractors and services.

It was clear to everyone involved that this was a remarkable achievement, but what is also important is that the performance improvement team viewed the new performance levels as sustainable in the long term.

About Juran Benchmarking & PTAIJuran Benchmarking, an affiliate of Philip Townsend Associates Inc (PTAI), is based near Edinburgh, Scotland and has been running multi-company benchmarking programs tailored for the oil and gas industry since 1995. Our team combines management consultants with oil and gas process engineers, analysts and statisticians enabling us to provide a robust and high quality benchmarking service to our clients. We pride ourselves on being responsive to our clients’ needs, providing tailored benchmarking solutions that add value.

Founded in 1972 and based in Houston, Texas, USA, PTAI started benchmarking in 1992 and now executes over 55 benchmarking programs worldwide.

All of our benchmarking programs are led from our Houston and Edinburgh offices.

Next StepsIf you would like further information about this benchmarking program, please contact Juran Benchmarking:

Dr Brad WoodT: +44 131 564 0610bwood@juranbenchmarking.com

Lochleven Mills, Kinross, KY13 8DH, Scotland

www.juranbenchmarking.com

company/juran-benchmarking

“Participating in the Juran Benchmarking Program has enabled us to justify our cost levels.

Benchmarking is like looking into a mirror, it allows you to understand the gaps in your performance

compared to the other benchmarkers and enables you to learn from the best practices of others.”

Plant Manager

Juran Benchmarking – providing operational performance benchmarking services to the oil and gas industry since 1995

www.juranbenchmarking.com