Gord Masiuk - Case Studies in Continuous Quality Improvement - WCQI Anaheim 2012

World Conference on Quality and Improvement

May 21-23, 2012

Anaheim, California

Case Studies In

Continuous Quality Improvement

Gordon Masiuk, President

Masiuk Consulting Services Ltd. www.business-performance-excellence.ca

MCS

Implementing Quality Improvement

• What has worked well in your organization?

• What are some of your challenges?

• I wish I could….

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“If you think you can, or, if you think

you can’t, you’re right!”

Henry Ford

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Presentation Overview

• Case Study 1: Reducing Downtime and Improving Production in an Oil Field Operation

• Case Study 2: Plant Maintenance Initiative to Reduce Downtime and Improve Production in the First Half Hour of Start-Up

• Case Study 3: Reducing Corporate Wide Rig Release to On-Stream Cycle Time and Increasing Production and Cash Flow For an Oil & Gas Operation

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Focus of the Presentation

• What Was Needed to get the Initiative Started?

• How The Initiative was Identified

• Improvement Methodology Used

• Quality Management Analytical Tools Used

• Implementing and Measuring the Improvements

• Bottom Line Impacts

• During the case studies ask yourself how you might be able to apply the quality concepts, tools and measurements in your organization!

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Improving Production and Reducing

Downtime in an Oil Field Operation

Case Study 1

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What Was Needed to get the Initiative Started?

• This initiative was part of an overall Continuous Quality Improvement (CQI) pilot process – acquired sponsorship of executive and senior management

• Focus was to generate bottom line results: improving production, reducing costs, eliminating waste and downtime

• “Engagement and commitment” of the production supervisor and his operators vs. their “compliance”

• Formal and just-in-time training and coaching of supervisors, operators, engineers and others in practical application of CQI tools and methods, teamwork and leadership effectiveness was critical

• Full time on-site consultant to guide the initiative

• “Diplomatic Immunity” to allow the area to challenge the status quo

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Key Opportunities

• Operations supervisor wanted to involve his

teams in the improvement of production and

reduction of downtime. This would be the first

exposure of the operations crews to a Continuous

Improvement initiative.

• Operations supervisor was very open to learning

and applying performance management and

continuous improvement techniques. His

engagement and leadership was critical to

success.

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Continuous Improvement Approach

• Plan-Do-Check-Act continuous

improvement model

Plan

Act Do

Check

Continuous

Improvement

Model

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Continuous Improvement Approach

• Used the Plan-Do-Check-Act (PDCA) approach to design and implement the improvement.

• Started the process by conducting operations/ engineering team brainstorming sessions to understand their operational issues.

• Identified potential improvement opportunities focused on reducing downtime or improving production (including the “vice on the back of the truck”).

• Reviewed one year of production accounting data to identify specific causes of downtime and lost production (Pareto Analysis) and to establish a baseline of performance.

• Engaged operations staff and other disciplines in problem solving exercises (Root Cause analysis).

• Further fine tuned the accounting data, identified primary improvement opportunity.

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“The best way to get a good idea, is to

get a lot of ideas”

Linus Pauling

Nobel Winning Chemist

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Downtime

Top 12/57 Vital Few

Shortage/Lost Production

Top 12/56 Vital Few

Reason Hours Reason Barrels

Quota Produced 12900 Quota Produced 20337

BH Pump Failure 5330 BH Pump Failure 15848

Pumped Off 2900 Turnaround 10502

Engine Failure 2809 Recover Load Oil 4189

SI (Flared Gas) 2374 Pumped Off 3310

Recover Load Oil 2326 Engine Failure 3069

Turnaround 1982 Pump Change 2656

Line Break 1821 WCT Request 2336

Road Conditions 1080 Line Break 2142

Pump Change 1043 SI (Flared Gas) 2045

WCT Request 1032 Rods Parted 1384

Shut In 864 Gear Box 1054

Vital Few (Top 20%)

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1 Year Baseline Lost Production/Shortage - Pareto Chart

0

5000

10000

15000

20000

25000

Quo

ta P

rodu

ced

BH P

ump

Failu

re

Turna

roun

d

Rec

over

Loa

d Oil

Pumpe

d Off

Engine

Failu

re

Pump

Cha

nge

WCT R

eque

st

Line

Bre

ak

SI (Flar

ed G

as)

Rod

s Par

ted

Gea

r Box

Press

ure

Surve

y

High

Line

Pre

ssur

e

Power

Failure

Fuel G

as

Com

pres

sor D

own

Polishe

d Rod

Pig S

tuck

Shut I

n

Wor

kove

r

Test O

ther

Well

Equipm

ent F

ailure

Wat

er D

ispo

sal P

roblem

Mec

hanica

l Failure

Saddle

Brg

Roa

d Con

ditio

ns

Bent P

olishe

d Rod

SEF

Flow Line

Wax

ed O

ff

DEF

Gen

erat

or F

ailure

Low IG

Spark

Plug

Tank Roo

m W

ater

Prasc

o Fa

ilure

Plug

Upg

rade

Line

Fro

zen

Off

Wat

er S

witc

h

Rod

Hun

g Up

(DEF)

Wat

er In

jection Pro

blem

Tank Sw

itch

Ignitio

n

High

Tank

Lev

el

Clutch

Weigh

ts M

oved

Well H

ead

Hole

in T

ubing

Oil Sw

itch

High

Disch

arge

Pre

ssur

e

Coo

ler F

roze

n

High

Press

ure

Batte

ry D

own

Low O

il

Reasons for Lost Production/Shortage

Ba

rre

ls o

f O

il

BHP failures accounted for 20.1% of annual lost production out of the 56 categories

of downtime

Production Accounting Pareto Analysis

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1 Year Baseline Downtime Hours - Pareto Chart

0

2000

4000

6000

8000

10000

12000

14000

Quo

ta P

rodu

ced

BH P

ump

Failu

re

Pumpe

d Off

Engine

Failu

re

SI (Flar

ed G

as)

Rec

over

Loa

d Oil

Turna

roun

d

Line

Bre

ak

Roa

d Con

ditio

ns

Pump

Cha

nge

WCT R

eque

st

Shut I

n

Gea

r Box

Mec

hanica

l Failure

Upg

rade

Rod

s Par

ted

SEF

Test O

ther

Well

Tank Roo

m W

ater

Press

ure

Surve

y

Fuel G

as

Com

pres

sor D

own

Equipm

ent F

ailure

Rod

Hun

g Up

(DEF)

High

Line

Pre

ssur

e

No

Nom

inat

ion

High

Tank

Lev

el

Wor

kove

r

Pig S

tuck

Spark

Plug

Power

Failure

DEF

Saddle

Brg

High

Press

ure

Polishe

d Rod

Well H

ead

Flow Line

Wax

ed O

ff

Low IG

Hole

in T

ubing

Ignitio

nPlu

g

Wat

er D

ispo

sal P

roblem

Clutch

Bent P

olishe

d Rod

Weigh

ts M

oved

Gen

erat

or F

ailure

Line

Fro

zen

Off

Wat

er S

witc

h

Oil Sw

itch

Prasc

o Fa

ilure

High

Disch

arge

Pre

ssur

e

Wat

er In

jection Pro

blem

Coo

ler F

roze

n

Batte

ry D

own

Low O

il

Tank Sw

itch

Reason for Downtime

Ho

urs

of

Do

wn

tim

e

BHP Failures accounted for 11.7% of the total downtime out of the 57

categories, about 222 - 24 hour days

Production Accounting Pareto Analysis

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Depth: 1300 – 1500 meters

(4200 – 4900 feet)

Bottom Hole Pump

Oil Producing Formation

Bottom Hole Pump

Oil Producing Formation

Pump Jack

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Bottom Hole

Pump Failures

Operators Methods

Machines Environment

Operators don ’ t know optimum production level

Equipment at wrong speed/temp

Different Shifts operate differently

Wrong start up/shut down

Wrong strokes/minute

Poor Training

“ Wait till it breaks ”

Inadequate maintenance

Lack of Procedure Budget cuts

Materials

Improper

Chemicals

Improper

Dewaxers

Failures in specific wells

Formation

Corrosion Plugs Pump

Temperature

Pressure

Seats/balls failures

Pump specs not to acid level

Rod impacts damage pump

Rod Stretch

Low cost/low quality pumps

Inadequate pump for application

Inadequate orientation/on - the job training

Engineers provide inaccurate data

Inadequate orientation/on - the job training


Lack of Procedure

Poor

Training

Poor

Training

Bottom Hole Pump Failure – Root Cause Analysis

Bottom Hole

Pump Failures

Operators Methods

Machines Environment

’




Poor Training

“ Wait till it breaks ”



Materials

Improper

Chemicals

Improper

Dewaxers


Formation

Corrosion Plugs Pump

Temperature

Pressure




Rod Stretch



-

-

Lack of Procedure

Poor

Training

Poor

Training


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Bottom Hole

Pump Failures

OperatorsMethods

MachinesEnvironment

Operators don’t know optimum production level



Operators not fully trained



Poor Training

“Wait till it breaks”



Materials

Improper

Chemicals

Improper

Dewaxers


Formation

Acid

Gas

Corrosion

Sand

Plugs Pump

Temperature

Pressure




Pump jack speed

Rod Stretch


Low Bid Policy

High failure rate


Inadequate orientation/on-the job training





Lack of Procedure

Poor

Training

Poor

Training


Bottom Hole

Pump Failures

OperatorsMethods

MachinesEnvironment

Operators don’t know optimum production level






Poor Training

“Wait till it breaks”



Materials

Improper

Chemicals

Improper

Dewaxers


Formation

Acid

Gas

Corrosion

Sand

Plugs Pump

Temperature

Pressure




Pump jack speed

Rod Stretch


Low Bid Policy

High failure rate







Lack of Procedure

Poor

Training

Poor

Training


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Improvement: Discovery

• Upon determining that the root cause of BHP failures was the physical design limitations of the pump, we needed to determine which wells had the problem.

• 89 wells had bottom hole pumps – to replace them all may not have been the right solution.

• As the field operators would rotate through the area, no one really knew the extent of the problem, or where it really was.

• A second Pareto Analysis was done to pinpoint the actual BHP failures and impacts by well.

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Second Pareto to Pinpoint the Opportunities

Bottom Hole Pump Failure - Affected Wells:

Impact on Lost Production

86

6 3.6 2.3 1.1 0.3 0.3 0.2 0.1 0.090

10

20

30

40

50

60

70

80

90

100

D4 B57 D80 B63 D59 D82 D6 D85 D99 B74

Affected Wells

Perc

en

tag

e o

f L

ost

Pro

du

cti

on

Out of the 89 wells with BHPs, 10 had BHP failures in the past year and

one of those wells had 86% of the lost production!

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Second Pareto to Pinpoint the Opportunities

D4 accounted for 25% of the 5330 hours of downtime: 1332.5 hours,

or 55.5 – 24 hour days


Impact on Downtime

25

7

28

5

10

15

5

3.3

1 0.7

0

5

10

15

20

25

30

D4 B57 D80 B63 D59 D82 D6 D85 D99 B74

Affected Wells

Perc

en

tag

e o

f D

ow

n T

ime H

ou

rs

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“A problem well defined,

is a problem half solved!”

Peter Scholtes

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Improvement: PLAN

• D4 was targeted to have its current BHP replaced with the highest quality 100HP BHP, the next time a failure occurred.

• D4 was down for an average of almost 5 days per month due to BHP failures in the past year.

• After installation of the high quality BHP, the team would monitor the failure rate, downtime hours, production impacts and related costs.

• A determination would be made after a 90 day test period what impacts the new BHP might have.

• The cost of replacing the BHP was $10,000/day charged by service rig contractors – usually required about 3.5 to 4 days per incident. If the BHP failures could be reduced, it would save service rig costs as well.

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Improvement: DO

• Within one month, the BHP failed at D4. The old

BHP was replaced with the new 100HP BHP.

• A few weeks thereafter, another BHP failed in a

different well, B57 which had the second highest

rate of lost production due to BHP failures at 6%.

• The team decided to install and test another high

quality 100HP BHP in B57 as well.

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Improvement: CHECK

• Over the next three months, no downtime occurred in D4 or B57 since installation of the new BHPs.

• However, an unexpected bonus was realized. The higher quality pump was also performing more efficiently than the low quality BHP. The result was an incremental increase in production from 339 BOE/day to 433 BOE/day, an increase of 94 BOE per day (28%) in D4.

• As with the production increase with D4, B57 also experienced a production increase, but in this case the increase was from 81.6 BOE/day to 157 BOE/day, an increase of 75.4 BOE/day, a 92% increase.

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Lost Production/Shortage After Improvement - Pareto Analysis

0

5000

10000

15000

20000

25000

Quo

ta P

rodu

ced

BH P

ump Fa

ilure

Turna

roun

d

Rec

over Loa

d Oil

Pum

ped Off

Eng

ine Fa

ilure

Pum

p Cha

nge

WCT R

eque

st

Line

Break

SI (

Flar

ed G

as)

Rod

s Parted

Gea

r Box

Pre

ssure Sur

vey

High Line

Press

ure

Pow

er Failure

Fue

l Gas

Com

pres

sor D

own

Polishe

d Rod

Pig S

tuck

Shu

t In

Wor

kove

r

Tes

t Other W

ell

Equ

ipmen

t Failure

Water D

ispo

sal P

roblem

Mec

hanica

l Failure

Sad

dle Brg

Roa

d Con

ditio

ns

Ben

t Polishe

d Rod

SEF

Flow Line W

axed

Off

DEF

Gen

erator F

ailure

Low IG

Spa

rk P

lug

Tan

k Roo

m W

ater

Pra

sco Fa

ilure

Plug

Upg

rade

Line

Fro

zen Off

Water S

witc

h

Rod

Hun

g Up (D

EF)

Water In

jection Problem

Tan

k Switc

h

Ignitio

n

High Ta

nk Lev

el

Clutch

Weigh

ts M

oved

Well H

ead

Hole in Tub

ing

Oil Switc

h

High Disch

arge

Pre

ssure

Coo

ler F

roze

n

High Pre

ssure

Battery D

own

Low O

il

Reasons for Lost Production/Shortage

Barrels

of

Oil

The reduced downtime generated a 92% reduction in lost production

In this category

Pareto After Improvement Implemented

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Impact on Production After Improvement

0 03.6 2.3 1.1 0.3 0.3 0.2 0.1 0.09

0

10

20

30

40

50

60

70

80

90

100

D4 B57 D80 B63 D59 D82 D6 D85 D99 B74

Affected Wells

Perc

en

tag

e o

f L

ost

Pro

du

cti

on

The improvement generated a 92% reduction in lost production

In this category


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Downtime Hours After BHP Improvement - Pareto Analysis

0

2000

4000

6000

8000

10000

12000

14000

Quo

ta P

rodu

ced

BH P

ump Failure

Pum

ped Off

Eng

ine Failure

SI (Flare

d Gas

)

Rec

over

Loa

d Oil

Tur

naroun

d

Line

Bre

ak

Roa

d Con

ditio

ns

Pum

p Cha

nge

WCT R

eque

st

Shu

t In

Gea

r Box

Mec

hanica

l Failure

Upg

rade

Rod

s Parted

SEF

Tes

t Other W

ell

Tan

k Roo

m W

ater

Press

ure Surve

y

Fue

l Gas

Com

pres

sor Dow

n

Equ

ipmen

t Failure

Rod

Hun

g Up (D

EF)

High Line

Pre

ssure

No Nom

ination

High Tan

k Le

vel

Wor

kove

r

Pig S

tuck

Spa

rk P

lug

Pow

er F

ailure

DEF

Sad

dle Brg

High Press

ure

Polishe

d Rod

Well H

ead

Flow Line W

axed

Off

Low IG

Hole in Tub

ing

Ignitio

n

Plug

Water D

ispo

sal P

roblem

Clutch

Ben

t Polishe

d Rod

Weigh

ts M

oved

Gen

erator F

ailure

Line

Froze

n Off

Water S

witc

h

Oil Switc

h

Prasc

o Failure

High Disch

arge

Press

ure

Water In

jection Problem

Coo

ler Fro

zen

Battery D

own

Low O

il

Tan

k Switc

h

Reasons for Downtime

Do

wn

tim

e H

ou

rs

The improvement generated a 32% reduction in downtime in this category


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The improvement generated a 32% reduction in downtime in this category


Impact on Downtime After Improvement

0 0

28

5

10

15

53.3

1 0.7

0

5

10

15

20

25

30

D4 B57 D80 B63 D59 D82 D6 D85 D99 B74

Affected Wells

Perc

en

tag

e o

f D

ow

nti

me


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Production Before and After Improvement Bottom Hole Pump

(BHP): 40% Improvement in Production

420.4

590

0

100

200

300

400

500

600

700

D4 + B57 Average Production With

Existing Pump

D4 + B57 Average Production With

Improved Pump

Barr

els

of

Oil E

qu

ivale

nt

(BO

E)

Pro

du

ced

Per

Day

Production Improvements

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Benefits and Costs

Costs:

• 4 meetings, 1 hour each for 11 operators, 1 production engineer, 1

facilities engineer and 1 production supervisor. These meetings

were integrated into the unit’s monthly production meetings.

• Cost of Pareto Analysis/data gathering by business analyst.

• Onsite consultant cost.

• Incremental costs of 2 new BHPs.

Pareto Analysis, data gathering 30 Hrs X $50/Hr $1,500

Quality Consultant Support $3,000 $3,000

Cost of New 100HP BHP 2 X $12,000 $24,000

Less , Cost of old BHP 2 X $7,000 -$14,000

$14,500

Cost Category/Description Value & Calculation Final Cost

Total Cost

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Benefits and Costs Reduction in annual Downtime for BHP Failures:

• D4 = 55.5 days

• B57 = 15.5 days

• Total = 71 downtime days eliminated

Reduction in Service Rig Costs:

• Service rig time = 53 days

• Service rig costs reduced by: 53 days X $10,000/day = $530,000/year

Oil That Could Have Been Produced Annually Without Downtime:

• D4 + B57 lost production = 14,580 BOE

• 14,580 X $23 net/BOE = $335,300/year

Additional Oil Being Produced With The 100HP BHP:

• D4 (94 BOE/day) + B57 (75.4BOE/day) = 169.4 BOE/day increase (AVG)

• 169.4 BOE/day X 365 days/year = 61,800 BOE/year

• 61,831 BOE/year X $23 net/BOE = $1,422,000/year

Annual Cost Savings by Not Replacing BHPs

• 14 BHP failures in D4 and B57 X $7,000/BHP = $98,000.

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Benefits Summary

Benefits Summary:

• 61,800 BOE annual production increase (40%) from incremental production ($1,422,000 revenue increase).

• 14,580 BOE annual shortage eliminated (92%) with reduction in downtime ($335,300 revenue increase).

• $530,000 annual savings in service rig costs.

• $98,000 annual savings by not replacing bottom hole pumps.

• Total Benefits = $2,385,300 (less $14,500) = $2,370,800

• With the low bid policy, the company was saving $5,000 per BHP, but was losing $2,370,800 per year in production revenues, incremental production and service rig costs!

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“End the practice of awarding business

on the basis of price tag alone.

Instead, minimize total cost.”

Dr W. Edwards Deming

Point #4

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Improvement: ACT

• After the success of this initiative, the team’s recommendation to leadership was to run all wells requiring a replacement bottom hole pump with the higher quality, high reliability pumps.

• This initiative prompted a corporate change in the field procurement policy led by the VP of Operations from low bid alone, to considering price, quality, reliability and serviceability equally in critical equipment purchases from that point onward.

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“At first I was really sceptical about this

quality stuff. But now, even if the company

were to cancel the program, I would still

operate my field and facilities this way

because it’s become “my operation” and

it’s the right thing to do”

Field Operator

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Plant Maintenance Initiative to Reduce

Downtime and Improve Production in the First

Half Hour of Start-Up in a Sawmill Operation

Case Study 2

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How was the Initiative Identified?

• The Plant Manager and Area Supervisor sponsored the Continuous Improvement process for the plant.

• Focus was on three priorities: – Achieve 1 million board feet per day

– Top quartile in margin

– Improve Recovery (LRF) from 268 – 278

• It was agreed that the CI projects needed to address one or more of the three priorities to be approved.

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• The Area Supervisor, Plant Manager and consultant held CI awareness sessions with each division, maintenance and support functions.

• The “on the bus” expectation was delivered.

• Discussions, meetings and relationship building with the Maintenance supervisor and crew were critical.

• Identification of the pain points of maintenance and the operation.

• Gathering of data to pinpoint the opportunities.

• Development and implementation of an improvement plan.

• Implementation of a reinforcement plan.

• Weekly gathering and posting of progress – the “Continuous Improvement Wall”.

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“What occupies most of the work of

Maintenance?”

“Completing maintenance orders to fix

equipment breakdowns!”

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Categories of Work Typical Breakdown by %

(Adapted From Bill Conway)

•20% of work is value added from the customer’s perspective

•30% of work consists of doing rework (NVA)

•20% of the time people are performing unnecessary work and not working

•Continuous improvement focuses on increasing the % of VA work, by eliminating duplication, rework and unnecessary work from the process

Not Working

(Authorized)

Value Added Work

Unnecessary Work

(Rework)

Necessary Work (Non-Value Added)

Unnecessary Work (Non-Value Added)

15%

20%

10% 15%

30%

Not Working

(Unauthorized) 10%

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Sawmill Flow

28” Canter

Merchandiser/

Cutoff Saw

Debarkers

20” Canter

Board Edger Unscrambler Trimmer

J-Bar

Stacker

Out-feed Log Yard Green

Yard

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Setting the Stage: The Focus on Results

Meetings with Maintenance Manager and team to identify potential areas of improvement

Plant – 3 Priorities

• Improve Recovery (LRF) from 268 – 278

• Achieve 1 million board feet per day

• Top quartile in margin

Achieve 1 million board feet per day

• Current Production Baseline: 938,000 board feet per day (58,625 board feet per hour)

• Desired Production: 1,000,000 board feet per day

• Record Production Day: 1,064,000 board feet per day

• To achieve 1 MM board feet per day, there needs to be an increase in Mill Production of:

• 62,000 board feet per day (6.6%), or

• 31,000 board feet per shift, or

• 3,875 per hour (based on 16 hours of operation).

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Identification of Potential Improvement Opportunities

Top Areas of Focus

• Determine specifics around plant downtime (e.g.. what are the downtime categories, what are the associated hours, costs, or losses for each downtime category etc.)

• Chips need the right bark content

• Chips quality is determined by chipper set up

• Saw Quality/Deviation (in progress)

• PMs – need more people to fully put in place, need to track how many jobs are currently being done and completed

• Control of costs and where costs are going needs to be addressed

• Need full alignments twice a year, currently once a year (in progress)

• 16 other Areas of Focus were also identified

Next Steps:

• Determine what data (e.g.. downtime is available)

• Meet to review CI projects from the sawmill and planer mill to ensure Maintenance CI projects are aligned with their CI projects

• Develop plans for one or two CI projects (including KPIs) for Maintenance

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High Level Improvement Plan

CI Project Focus:

Reduce Plant Downtime in the first 30 minutes of start-up

Data Gathering:

• Gather plant downtime or start up issues during the first half hour of the plant start up on both plant streams to create performance baseline.

• Start Nov 29 – Dec 24 (20 days, 40 data points).

• Graveyard Supervisor to collect the information using check sheets completed daily and data entered into the tracking spreadsheet.

• Data includes: Where the downtime occurred (equipment or location), cause, length of downtime.

• Areas of Focus include: canters, trimmer, debarkers.

Discovery:

• Identify key downtime categories causing downtime to production

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High Level Improvement Plan Plan:

• Develop action plans to address most critical downtime issues first.

• Ensure tracking system is in place, data is gathered daily, graphs posted weekly.

• Reduce maintenance issues, Increase uptime, Increase throughput.

Do:

• Implement solutions.

• Track and communicate results to the plant/supervisors/superintendents, graveyard crew.

Check:

• Review downtime daily, weekly and over the next 5 weeks.

• Compare to baseline downtime.

• Impacts to production.

• Impacts to downtime.

Act:

• Standardize improved maintenance practices.

• Continue to monitor downtime in the first 30 minutes of startup.

• Focus on new areas of improvement.

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Quality Tools Used

• PDCA

• Check sheets

• Pareto Analysis

• Root cause/5 Why’s

• Company trouble shooting, problem solving

techniques and preventative maintenance

practices

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Baseline: Downtime - First 30 Minutes of Start Up

Baseline: Total Downtime Minutes Nov 29 - Dec 24

0

10

20

30

40

50

60

70

80

90

100

Deb

arke

rs

Gan

g - M

echa

nica

l

No

Logs

Can

ter -

Mec

hanica

l

Can

ter -

Electric

al

Mer

ch

Jam

Ups

Cur

ve -

Electric

al

Opt

imizat

ion

No

Logs

DLI

- M

echa

nica

l

DLI

- Ele

ctric

al

Log

Stuck

Chip

Was

te S

yste

m

Knife

Cha

nge

PLC O

ptim

izatio

n

Chip

Was

te S

yste

m

Photo

Eye

Downtime Categories393 Total Minutes of Downtime Over 20 Production Days

19.65 Average Minutes of Downtime in the First 1/2 Hour of Production Per Day

Do

wn

tim

e in

Min

ute

s

MCS

Next Steps

• Now that we had a baseline we could measure the impact on production and downtime: – 19.65 min of downtime per day in the first 30 minutes

of production

– 1 hour of production = 58,625 board feet

– 1 minute of production = 977 board feet

– 19.65 min of downtime in the first 30 minutes was reducing production by 19,200 board feet per day.

– Based on 250 production days per year, this downtime had an impact of 4,800,000 board feet per year – approximately 5 production days annually!

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Next Steps

• With all of the key downtime categories identified with the proper metrics, the Maintenance Team began targeting the downtime issues with the biggest impacts.

• A variety of problem solving tools were used including root cause analysis, mechanical trouble shooting, and the “5 Why’s”.

• The targeted improvements were implemented focusing on the “critical few” first then on the “trivial many”.

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Results After Implementing Improvements

Total Downtime in the First 30 Minutes of Production

Dec 27 - Jan 28

0

10

20

30

40

50

60

70

80

90

100

Canter -

Electrical

Optimization Curve Saw

Change

Lumber Line Curve -

Electrical

PLC

Optimization

Canter -

Mechanical

Downtime Categories113 Total Minutes of Downtime - 25 Production Days

4.5 Average Minutes of Downtime Per Day

Do

wn

tim

e M

inu

tes

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Pareto Comparison Before & After Improvement

Baseline: Total Downtime Minutes Nov 29 - Dec 24

0

10

20

30

40

50

60

70

80

90

100

Deb

arker

s

Gang

- Mech

anical

No

Logs

Can

ter -

Mec

hanica

l

Can

ter -

Electric

al

Merc

h

Jam

Ups

Cur

ve -

Electric

al

Optim

izat

ion

No

Logs

DLI

- M

echan

ical

DLI

- Ele

ctric

al

Log S

tuck

Chip W

aste S

yste

m

Knife C

hange

PLC Optim

izatio

n

Chip W

aste S

yste

m

Photo

Eye

Downtime Categories393 Total Minutes of Downtime Over 20 Production Days

19.65 Average Minutes of Downtime in the First 1/2 Hour of Production Per Day

Do

wn

tim

e in

Min

ute

s

Total Downtime in the First 30 Minutes of Production

Dec 27 - Jan 28

0

10

20

30

40

50

60

70

80

90

100

Can

ter -

Ele

ctric

al

Opt

imizat

ion

Cur

ve S

aw C

hang

e

Lum

ber L

ine

Cur

ve -

Elect

rical

PLC O

ptim

izat

ion

Can

ter -

Mec

hani

cal

Downtime Categories113 Total Minutes of Downtime - 25 Production Days

4.5 Average Minutes of Downtime Per Day

Do

wn

tim

e M

inu

tes

The net impact from the improvement was a reduction in downtime

from 19.65 minutes to 4.5 minutes per day - a 15.15 minute or a

77% reduction in downtime in the first 30 minutes of production.

On an annualized basis, the impact to production was 14,803 board feet

increase per day, or 3,700,000 board feet annualized increase.

This was the equivalent of approximately 4 days of added production

MCS

Performance Improvement Comparison Downtime Minutes and Categories:

Performance Before and After Improvements

0

5

10

15

20

25

30

35

Nov

29-

Dec

3

Dec

6-1

0

Dec

13-

17

Dec

20-

24

Impr

Imple

men

ted

Dec

27-

31

Jan

3-7

Jan

10-1

4

Jan

17-2

1

Jan

24-2

8

Time Frames

Avg

Do

wn

tim

e M

inu

tes P

er

Day

0

2

4

6

8

10

12

Nu

mb

er

of

Cate

go

ries P

er

Week

Avg DT Minutes/Day # of DT Categories/Week

Avg DT Minutes/Day: 19.65

Avg DT Minutes/Day: 4.5

Baseline Avg: 19.68 minutes DT, 6.75 Categories/Week Improvement Avg: 4.5 Minutes DT, 2.5 Categories/Week

MCS

Benefits Summary Production

• 14,800 board feet increase per day (3.7MM Board Feet/Year)

• This increase contributed to 23.9% of the production target increase to help the plant achieve a 1,000,000 board feet per day level

Downtime

• 19.65 min to 4.5 in the first 30 minutes, (77% reduction)

• 98 minutes of downtime/per week in the first 30 minutes, to 22.6 min

• Number of downtime categories reduced from 18 to 7, (61% reduction)

Revenue

• Mill net price per 1000 board feet averaged $340

• 3.7MM board feet of additional annual production added $1,258,000 in additional annualized revenues

MCS

Reducing Corporate Wide Rig Release to

On-Stream Cycle Time to Increase Production

and Cash Flow For an Oil & Gas Company

Case Study 3

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How was the Initiative Identified?

• The initiative was driven by the executive team which established “Reducing Rig Release to On-Stream Cycle Time by 10%” as a corporate goal.

• This goal had been in place for the previous 2 years without any visible improvement. In fact, cycle time was actually increasing each year.

• Challenges: – A specific improvement approach was not in place;

– Performance metrics were not consistently understood;

– Significant data integrity issues, and;

– Operations teams were rewarded on different criteria than cycle time reduction.

MCS


• Engagement and support of the executive team, and the Business Process Council.

• Conducted an AS-IS assessment of the process from “Rig Release to On-Stream”.

• Defined and standardize the various terms of the process.

• Created an understanding of what data is available, and the quality of that data.

• Engagement of Asset Teams and establishment of improvement goals.

• Identification of causes of issues and improvement opportunities at the interface points within the process.

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Corporate Goal:

“Reduce Rig Release to On-Stream Cycle

Time by 10%”

• Challenge to the organization was lack of

understanding regarding:

– What is Rig Release to On-Stream Cycle

Time? Why is it important?

– How is rig release determined?

– How is On-Stream determined?

– 10% reduction from what baseline?

– How would performance be tracked?

MCS

Rig Release to On-Stream Model

Rig Release

(from lease) On-stream

Tie In Start

To End

Completion

Start to End

Well Drilled

Rig Release

To Completion

Start

Completion

End to Tie-in

Start

Tie-In End

To On-stream

Demonstrated

Capability to

Produce

Rig Release

(from lease)

Completion

Start to End

Tie In Start

To End

Rig Release

(from lease)

Completion

Start to End On-stream

Tie In Start

To End

Rig Release

(from lease)

Completion

Start to End

Rig Release

(from lease)

Completion

Start to End

Tie In Start

To End

Rig Release

(from lease)

Completion

Start to End On-Stream

Tie In Start

To End

Rig Release

(from lease)

Completion

Start to End

Rig Release

To Completion

Start

Completion

End to Tie-in

Start

Tie-In End

To On-Stream

Rig Release

To Completion

Start

Completion

End to Tie-in

Start

MCS

Rig Release to On-Stream Model

Rig Release

(from lease) On-stream

Tie In Start

To End

Completion

Start to End

Well Drilled

Rig Release

To Completion

Start

Completion

End to Tie-in

Start

Tie-In End

To On-stream

Demonstrated

Capability to

Produce

Rig Release

(from lease)

Completion

Start to End

Tie In Start

To End

Rig Release

(from lease)

Completion

Start to End On-stream

Tie In Start

To End

Rig Release

(from lease)

Completion

Start to End

Rig Release

(from lease)

Completion

Start to End

Tie In Start

To End

Rig Release

(from lease)

Completion

Start to End On-Stream

Tie In Start

To End

Rig Release

(from lease)

Completion

Start to End

Rig Release

To Completion

Start

Completion

End to Tie-in

Start

Tie-In End

To On-Stream

Rig Release

To Completion

Start

Completion

End to Tie-in

Start

Core Tasks

Cycle Time Focus on Handoffs in the “White Space”

MCS

Key Findings in the AS-IS Analysis

• Lack of understanding by asset teams of the impacts of cycle time on cash flow – rewarded on NPV. Asset teams were not reinforced or measured on cycle time.

• Communication issues between disciplines, lack of understanding of internal customer needs.

• Lack of a standardized planning process.

• Drilling was highly correlated to the winter season and availability of budget at the beginning of the calendar year.

• Data capture system training was inconsistent, data not properly entered or maintained, terms and definitions not well understood.

MCS

“Success requires putting attention on

your intention”

Deepak Chopra

Wellness and Motivational Speaker

MCS

Recommendations Planning • Implement a disciplined and standardized planning and

scheduling approach.

• Plan well in advance to take advantage of contractor availability.

• Focus drilling on identified season, rather than only when capital is available.

• A corporate approach to Physical Execution i.e.: Western Canada macro planning, load leveling, resource optimization, allocation, redeployment.

• Drill wells that will only be tied in within 4-6 months, reduce stranded capital and delayed production.

• Contingency planning should be encouraged among teams.

• A regular review of wells that carry over between seasons or years, to limit future occurrences.

MCS

Recommendations

Communication • More frequent (daily) communication between ALL

stakeholders, would help to understand and quickly address other’s issues and identify onset of potential problems/delays.

• Earlier communication between the Asset Teams and Joint Interest would help address 3rd party issues before delays manifest.

• Similarly, early discussion with Surface Land would help to identify known contentious land issues and possibly develop alternate routes/locations.

• Handoffs between asset teams and service groups AND Facilities with Production Operations need to be more clearly defined and optimized.

MCS

Recommendations

Well Launcher (Data Capture System) • Standardize all WL fields/definitions, especially “tie in end”.

• Mandatory WL training for all Asset Team members.

• Asset Managers need to be accountable for ensuring WL status/data is accurately entered and up to date.

MCS

Recommendations

Goals

• All teams to set and monitor cycle time goals for their areas, and sub teams facilitated by team leads.

• Recommend that cycle time goals be stated using medians and average.

• Link Asset Team goals directly to the corporate goal – report performance on a regular basis using a balanced scorecard approach vs. a single metric.

Teams would report on:

• RR to OS cycle time by asset team.

• Production impacts (delays or acceleration).

• Data integrity (% of WL fields/statuses that are complete and accurate per project).

MCS

“If I had 1 hour left to live, I would

spend 55 minutes planning,

and 5 minutes executing”

Albert Einstein

MCS

Improvement Methodology and Tools

• Business Process Management/Improvement.

• Cycle time analysis to focus on reduction of cycle time at interface points within the process (the “white space”).

• Cross functional team engagement and reinforcement

• Charting of performance and development of a Performance Dashboard.

• Team feedback, reinforcement and recognition.

• We did not focus on improving the actual work in the core activities, but rather addressed delays between the core activities in the “white space”.

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Performance Baseline Measurement

MCS

Cumulative Average Cycle Time

2006-2007 Rig Release to Onstream Comparisons

164

155

145142

144147

150153

157154

158 159

60

80

100

120

140

160

180

Jan Feb March April May June July Aug Sep Oct Nov Dec

Cycle

Tim

e D

ays

2006 (Baseline) 2007 (Baseline)

131


MCS

Cumulative Average Cycle Time 2006-2007 With

2008 Target

164

155

145142 144

147150

153157

154158 159

60

80

100

120

140

160

180


Cy

cle

Tim

e D

ay

s

2006 (Baseline) 2007 (Baseline) 2008 (Target)

143

131


MCS

Improvement Plan/Execution

• Work with each of the 11 asset teams and leaders to Establish clear cycle time goals for each asset team.

• Implement identified improvements specific to each team.

• Establish and implement a reinforcement plan: – Establish a team and corporate scorecard for cycle time and

track/publish results on a monthly basis to the company intranet

– Support teams in analyzing performance data, pinpointing opportunities, and implementing improvements

– Engage executive leadership and the Physical Execution Council on a monthly basis

– Coach Asset Managers in providing positive reinforcement to their teams

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Performance Improvement Measurement

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Cumulative Average Cycle Time 2006-2007 With

2008 Target

164

155

145142 144

147150

153157

154158 159

60

80

100

120

140

160

180


Cy

cle

Tim

e D

ay

s

2006 (Baseline) 2007 (Baseline) 2008 (Target)

143

131


MCS

Cumulative Average Cycle Time

2006-2008 Rig Release to Onstream Comparisons

164

155

145142 144

147150

153157

154158 159

129 127

9592 92 94

99 98 96

8580 80

60

80

100

120

140

160

180


Cycle

Tim

e D

ays

2006 (Baseline) 2007 (Baseline) 2008 Actuals 2008 (Target)

143

131


MCS

Benefits Summary: Process Improvements

• 49% reduction in rig release to on stream cycle time (79 days).

• Data quality (completeness and accuracy) improved from 72% to 97% compared to base year.

• Key delays were discovered in internal administrative handoffs between departments with improvement in the completion process, and a slight increase in the tie-in process. All handoff delays were reduced through:

– a focus on continuous improvement, with team goals tied to the corporate goal,

– reinforcement of team performance with the performance scorecard and leadership follow through:

• improved communication and planning within and between functions and teams,

• clarification of roles and responsibilities,

• creating awareness of impacts of delays on cash flow.

• This led to changes in managing cross functional business/admin processes and creating a focus on continuous improvement.

MCS

Benefits Summary: Bottom Line Impacts

• 49% reduction in rig release to on stream cycle time (79 days).

• One time cash flow impact for 2008 was approximately $43MM, due to a production increase of 741,000 BOE for 2008 (approximately 2030 BOE/day increase).

• Each day the cycle time was reduced, generated over $550,000 in additional cash flow in 2008.

MCS

Considerations From the Case Studies

MCS

Considerations From The Case Studies

• Be clear/specific on the business results the initiatives are trying to improve – acquire sponsorship at the right levels.

• Engage affected individuals and teams in the planning and implementation of the improvements.

• Establish a few specific metrics, supported by reliable data.

• Establish good baselines of performance and track progress to illustrate the impact and magnitude of the improvements - use charts and make them visible.

• Utilize the right Quality Tools and methods for each initiative, vs. a “one size fits all”.

• Be disciplined in using your chosen improvement methodology – results can take time, but shortcuts don’t work!

• Provide recognition, feedback and reinforcement on a frequent basis, especially from the immediate supervisor, and senior leaders whenever possible.

MCS

Questions?

Contact Information:

Gordon Masiuk (403) 880-0917

[email protected]

[email protected]

www.business-performance-excellence.ca

Thank You!

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