Optimal Service Points (OSP) for PHM Enabled Condition Based Maintenance for Oil and Gas Applications



Published Jun 29, 2021
Atuahene Barimah Octavian Niculita Don McGlinchey Babakalli Alkali


In recent times, the oil and Gas industry has faced many challenges resulting from a tightening climate policy environment on oil and gas exploration, as well as the increasing risk of oversupply due to new discoveries globally. This has given stakeholders in the industry an incentive to integrate new technologies to optimize the operational efficiency of their assets, leading to the optimal recovery of hydrocarbons especially in marginal fields.  Various Original Equipment Manufacturers (OEM) now provide different service offerings using data driven methods to provide condition monitoring of assets for oil and gas operators. However, a significant part of the value proposition by OEMs in their service delivery focuses on value generated at the component level with a reduction in asset downtime. This limits the broad economic benefits that a condition-based approach can provide, at the enterprise level.  

Therefore, the purpose of this paper is to develop a cost benefit analysis framework for assessing the implementation of condition and performance monitoring of oil and gas assets used in surface applications. The framework utilizes a combined technical-economic approach to determine a minimum predictive requirement for the implementation of condition-based principles to maintenance of assets in a hydrocarbon project from first oil to abandonment. This financial analysis framework uses a condition monitoring approach based on prognostics as well as a regression approach for fault detection and system performance. The paper will present a case study to evaluate the costs and benefits associated with implementing a condition-based maintenance approach for a set of valves in a Christmas tree subsystem, as part of a typical onshore production system.  

The framework illustrated using the case study compares a constant failure rate Time-Based approach to the PHM enabled condition-based maintenance. The results demonstrate that a prognostic enabled system can provide commercial benefits at the component level for a Condition Based Maintenance strategy but not necessarily at the enterprise level for an oil and gas project. The cumulative reduction in downtime at the component level over a project lifecycle offsetting the present value of the total cost of integrating a PHM enabled system into the overall maintenance strategy creates the ideal situation for commercial viability.  

However, the commercial viability of the PHM integration would depend on the accuracy of predicting failure events and monitoring asset degradation by the PHM enabled system which ultimately defines the performance of the condition-based maintenance approach. The accuracy level of asset failure therefore  provides OEMs with a benchmark for executing their condition-based maintenance services with a minimum performance threshold.  

Secondly, an enterprise level financial viability, as well as OEM profitability in the implementation of a condition-based maintenance approach, requires an Optimal Service Point (OSP) which is a function of the minimum predictive requirement of the PHM system. The utility that the OSP provides is that, it gives the minimum value of the framework’s decision criteria that an operator can use a basis for incorporating a condition-based approach in its maintenance strategy. It also provides the maximum Annual Service Fee (ASF) derived from the cumulative OEM NPV needed for structuring and pricing servitization agreements with operators.  

This OSP cost benefit analysis approach ultimately provides OEMs and operators with a practical guide in the provision as well as the adoption of condition-based maintenance strategies respectively. It balances the risk of PHM integration by operators with a minimum PHM system performance threshold required for commercial viability for project lifecycle.  

How to Cite

Barimah, A. ., Niculita, O. ., McGlinchey, D. ., & Alkali, B. . (2021). Optimal Service Points (OSP) for PHM Enabled Condition Based Maintenance for Oil and Gas Applications . PHM Society European Conference, 6(1), 15. https://doi.org/10.36001/phme.2021.v6i1.2850
Abstract 68 | PDF Downloads 45



Optimal Service Point (OSP), Condition Based Maintenance, Annual Service Fee (ASF), Minimum Predictive Requirement

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