API 18 LCM Life Cycle Management Report back

API 18 LCM (Life Cycle Management) Report back to SC 17 August 27, 2015 Review Team: Dave Wilkinson, John Strut, Smarty John, David Saul, Peter Moles

What is API 18 LCM? • Newly drafted API standard – likely to be balloted prior to YE’ 15 • Goal : “provide a means of maintaining and demonstrating continued conformance of product to original and/or current product definition” from cradle to grave. • Scope: “to address the management life cycle for products in the petroleum and natural gas industry”

How does it work? (1/2) • Applied to products in the petroleum and natural gas industry • It is not clear which equipment it is to be applied to or who will make this determination – user, owner, regulator, API? • Unclear if use is intended to be restricted to only products manufactured in accordance with API standards & specifications; could apply to any product regardless of pedigree. • Interpreted as requiring data tracking to lowest component level • Requires development of LCM plans for management of data pertaining to each product – Implemented by LCM Service Provider (LCMSP) of whom these entities are is intentionally left to be defined • Five levels of requirement are currently defined in the draft document – but next draft may only include three levels

How does it work? (2/2) • Determination of ongoing LCM status will be by LCMSP based on: • Product identification • Product definition • Technical specifications, verification & validation tests, acceptance criteria, assembly & testing requirements, preventative maintenance requirements • • Manufacturing records Traceability Usage history Repair and maintenance history

Where does it fit in? • Because it defines and manages hardware compliance, it must be a higher level document: • Q 1 > Q 2 > 18 LCM > 17 D > 17 N > 17 Q…. ? • 18 LCM > Q 1 > Q 2 > > 17 A? • If hardware is modified, the need for qualification is not identified in 18 LCM; perhaps add verbage for qualification per RP 17 N?

What’s missing? • What are the criteria for determining what equipment should be managed per 18 LCM? • • Related to well control/integrity? Hydrocarbon pressure containing? All API equipment? All equipment? • How is the appropriate LCM level determined? • HES risk based? • Production loss / downtime risk based? • Transition plan • Deployment to be defined outside of API 18 LCM • Can existing equipment be “grandfathered”? • Lead in time for application?

How will it impact the market? • Changes to hardware offshore become very difficult – Spotlight on MOC requirements – Potentially send some modifications underground and unreported – Tend to encourage continued conformance to OEM specified parts. • Implementation – Initially difficult due to incomplete documentation of systems – huge demand on manufacturers (costs) – Grandfathering would be required for existing hardware – Rolling deployment on critical new hardware to start – Monogrammable? • Management – Once enacted, becomes an unstoppable train - probably put into law – Success dependant on strong documentation collection (discipline) and ongoing management (software) • Silver lining – Massively improved access to data for integrity and risk assessments

Subsea Equipment Examples Tree SCM Manifold Subsea Tree USV (1) C/WO Riser Std 17 F RP 17 P Spec 17 D RP 17 G (2) Monogrammable? No No No Yes No Hydrocarbon containing? No Yes Yes Part of well containment envelope? No No Yes Yes Routinely retrieved to be maintained or modified? Yes No No No Yes Typically owned by Operator Contractor High (Often repaired) Low Medium (Usage history) High (Often repaired) API Document Effort required to track LCM status Recommend application of 18 LCM? No. Not a critical part of well containment envelope. (1) Including valve actuator (2) Being upgraded to Standard? Yes. Critical part of well containment envelope, therefore consequence of life cycle failure potentially high.

Next Steps • CSOEMR – Need co-ordinated approach • Across all relevant SCs • Evaluate benefits versus costs • Define grandfathering process and limits on initial application - to HSE critical equipment? • Defer publishing until co-ordinated implementation plan in place • SC 17 – Define applicable hardware – Define appropriate LCM levels – Prepare detailed application examples

Take aways • Potentially huge cost and operational impact on the industry – once deployed, never removed • How widely deployed in industry? What really matters – qualitative cost versus benefit analysis required • Need a co-ordinated and predefined application plan prior to publishing document