Operation management within maintenance operation in Maersk Oil Qatar - Essay Example

Proposal for dissertation on operation management within maintenance operation in Maersk Oil Qatar Introduction Mærsk Olie og Gas AS (also known as Maersk Oil) along with its subsidiaries is part of the A.P. Moller – Maersk Group. They are owned by A.P. Møller – Mærsk A/S. Maersk Oil was set up in 1962, when Mr A.P. Møller was handed the Concession for oil and gas exploration and production in Denmark. At present Maersk Oil is a medium sized international oil and gas company operating an oil production of about 650,000 barrels per day and a sales gas production of up to some 1,000 million cubic feet per day. The company has a net equity production of more than 550,000 barrels of oil equivalents per day from fields in the Danish and British part of the North Sea, offshore Qatar, in Algeria and in Kazakhstan (www.maerskoil.com). Maersk Oil signed an Exploration and Production Sharing Agreement with Qatar Petroleum on behalf of the Government of Qatar in 1992. According to this agreement Maersk Oil would assess the ability of setting up a commercial oil production from block 5- an area of originally 3,500 square kilometers offshore Qatar. In 1994 oil production from the Al Shaheen Field in Block 5 started. They have over the years further expanded this venture and by 2008 they produce 330,000 barrels per day on average. Maersk Oil has explored new avenues and come up with new innovative and unconventional technologies. Thanks to this innovative and unconventional approach, this company has been able to increase its oil and gas production at much lower costs and has become a leading company in a variety of aspects in oil and gas production at a global level. In 1987, Maersk Oil bored the world’s first horizontal well that consisted of a well cemented liner and multiple levels of sand propped fissures for draining that ultimately led to productivity enhancement. These fissures were hydraulically induced. Maersk Oil Qatar has in 2008 accounted for a record by boring of the longest well in the world to a length of 40,320 feet (12.3 km). The horizontal section of the well of 35,770 feet (10.9 km) also accounts for a world record. The reservoir of the horizontal well contained such a perimeter that equipment for maintenance required special attention. Maersk Oil together with the service industry came up with the PSI system and other well technologies that allowed it to be more appropriate in punch-driving, stimulating and identifying individual zones in horizontal wells. Maersk Oil has successfully carried out approximately 550 sand-propped fissures. Each fissure or fracture required almost 2.1 million pounds of sand for the filling. Almost 18 sand-propped fissures have been carried out in one horizontal well. Thus in 1991, these fractures led to the establishment of a world record by filling 12.4 million pounds of sand into a well that was almost 5000 feet long.. In addition to this Maersk Oil has carried out over 160 acid fractures in horizontal wells and Maersk Oil’s technology continues to reach new heights. Recent developments at Qatar facility include water jetting for stimulation and well controlled acid jetting. They were used in stimulation of advanced reaching outside the tube coiling segments (Bradbury, 2009). These developments have led to a parallel development in the equipment maintenance department. For example the company now needs to focus attention on the modern equipment and tools maintenance operations that can be required to facilitate smooth operations across a number of tasks. Thus the inevitable conclusion is that cost has been playing very significant role all along these new outcomes. Maersk Oil has decided to add two new departments to its organization - Corporate Technology & Projects and Global Production Operations, so as to increase its focus on operational, technical and business development techniques. 2. Research hypothesis Maintenance operations management sphere is increasingly being characterized by a degree of primacy and immediacy in respect of its operational capabilities concerning cost efficiency and equipment life cycle perspective (Olorunniwo, 1992). The problem of cost efficiency is centered on the dual phenomenon of causality and the utilization of environment friendly technologies. On the other hand the problem of equipment life cycle determination is increasingly determined by the management’s desire to prevent frequent breakdowns in operations due to equipment failure. This notion is particularly strong at Maersk Oil Qatar. Thus what is the extent of the impact of these outcomes on overall operational capabilities of MOQ is of paramount importance. 3. Research Objectives and Questions The purpose of the study is to gauge the extent of the influence operation management on maintenance need to examine possibility and new concepts and their financial feasibility, to improve reliability of the equipments. In the fast changing global equation of socio economic development high quality of product needs to be disbursed to the customers who are going in for their day-to-day requirements. The study of the factors which may hinder the continuity of the equipment reliability concerning cost efficiency and equipment life cycle perspective must be undertaken and efforts need to be made to mitigate the influence of those factors. The frequent failure of equipments and higher maintenance cost has led to a considerable impact which in turn has affected the operational activities of the organizations to a greater extent. This paper seeks to and uses the different innovative approaches, new unconventional technologies and horizontal well equipped with a liner and hydraulically induced perspective between on the subject. Thus its purpose is to focus attention on the current dilemma in meeting day-today expenses related to their operational activities. 4. Literature Review Operations management is a segment of business that focuses on the production of goods and services. It focus is to make sure that business operations are efficient in that it uses as little resources as possible and effective in terms of meeting customer requirements and expectations. It focuses on managing the process that transfers inputs (in the forms of materials, labor and energy) into outputs (in the form of goods and services). Major operations management and problem solving techniques pertaining to the oil and gas industry include: estimating, organizing, modeling, planning and controlling resources and schedules with the aim of optimizing project performance and quality (Shim &Siegel, 1999). Due to intense competitiveness, companies need to look for differentiating elements in the products and services they offer (Tsang, & Jardine, 1999). After the business and service strategies have been identified, the management of productive and logistic operations plays a crucial role in the development of products and services to be supplied. Once the requirements of various clients have been identified, the operations management is applied to assess, define, schedule and monitor the resources and capacities needed to provide the solutions they want. Operations management is needed so as to make sure the efficiency and effectiveness of the flows of materials from the supplier, through the productive and distribution systems, to the customer, along with the related information flows (Liyanage, 2007). Operations managers play a vital role in operations management. According to Donald Waters operations managers are responsible for all aspects of the operations (Walters, 1999). They overlook all the processes that are directly concerned with making a product. That is the process of collecting inputs and converting them into delivered products that satisfy customer demand. Their job includes overlooking planning, organizing, staffing, directing, motivating, allocating, monitoring, controlling and informing activities. Maintenance management is an orderly and well planned approach to planning, organizing, evaluating and monitoring maintenance activities and their costs (Lenahan, 2006). In the case of an oil and gas company this involves maintaining all their equipment so as to maximize the production. A good maintenance management system along with skilled and capable maintenance employees can prevent health and safety problems and environmental damage; bring about longer asset life with less breakdowns; and result in lower operating costs and a higher quality of life. The organization need to identify the endogenous environmental factors before starting the maintenance operational activities in maintenance department premises. The installation of the equipment involved both calibration and matriculation processes. The trained staff should carry out the on-site inspections including the preparation. The prototype experimentation successfully avoided cost overruns in the implementation phase and as a result testing of equipment after the installation was very successful. The word “Operation” is usually linked with “Maintenance”. Operations is the performing of activities or services and the provision of materials and energy to make sure the daily functioning of an asset: the work activities needed to smoothly operate an oil or gas plant. It has a direct impact on the operating cost of an asset (R S Means Engineering, 1996). Maintenance is the work performed on an asset, (e.g. equipment used in an oil or gas company) so as to keep it in as near its original condition as possible and to realize its normal life expectancy. Overall maintenance can be categorized in to the following: (a) Preventive – adjustments, lubrication and inspection made from time to time of the equipment used at a oil and gas company such as drilling equipment to make sure they are in good working condition; (b) Routine - ongoing maintenance activities which are required because of continuous use of the facilities; (c) major activities such as replacing Rock drill bits, which are performed once every few years; and (d) emergency - unexpected breakdowns of assets or equipment. These are unpredictable or reactive type of maintenance and are more difficult to schedule than the above three categories. Repair is putting in order an asset by replacing a part which is broken or damaged, or reconditioning that part to its original or acceptable working condition. The need for repairs can result from normal wear and tear, misuse, improper maintenance or vandalism. Finally the maintenance operational management structure at the implementation level in the MOQ was designed with a degree of flexibility required for such diverse environments. The company’s ability to control maintenance operation management processes without increasing cost overheads is remarkable in the whole process of equipment life cycle. 5. 5. Research Methodology 5.1. Introduction The objective of this current research study was to understanding the process of operation management within maintenance operation in Maersk Oil Qatar and the degree of primacy and immediacy in respect of its operational capabilities concerning cost efficiency and equipment life cycle perspective. The philosophical approach of this study would be interpretivist and deductive in nature and encompass elements of both qualitative and quantitative research also, so that better and more accurate conclusions could be achieved. Interpretivist consists that only through the subjective interpretation of and the study of phenomena in their natural environment is key to the interpretivist philosophy. Thus those researchers cannot avoid affecting those phenomena in their particular study. As such, researcher in this scenario admit that there have been different interpretations of reality, but maintain that these interpretations are in themselves a part of the scientific knowledge. Deductive research approach is usually begins with the general and ends with specific approach. In fact research arguments were based on rules and accepted principles of maintenance operations management and conclusions were basically draws based on the available facts in the study of MOQ. Since the research involves the study of the impact of increased cost of operations management within maintenance operation with special emphasis on examine possibility of innovative ways with cost efficiency and impact of these outcomes on overall operational capabilities of MOQ. A sample size of comprising of randomly selected employees at MOQ would be taken. 6. Research Methods, Issues of Ethics and Access 6.1. Data Collection This research paper basically collects its required data through both the approaches of primary and secondary. The researcher hopes to undertake a questionnaire and survey among 40 odd senior managers down warding the executives in the maintenance department at the MOQ as to collect primary research data for the study. The structured interview process has been conducted under this research method. The questionnaire and a survey was designed and planned according to the weighting given in accordance with value attached to each question and response. Value parameters of the questionnaire and the survey would be determined by the amount of importance that each question and response takes in the context of the senior managers’ attitudinal changes to maintenance operation management. This questionnaire and survey would adopt semi-structured interviews while structured and unstructured interviews would be ruled out. Semi-structured type of interviews helps the methodically structured interview guide, which includes ratings and substantially open-ended questions. Semi-structured type of interviews is the most suitable choice to gather data since it allows the researcher to lead informal conversations based on prior decided topics. In ordinary language an interview is a social communication process between two people, with one person gathering facts from the other. It’s the interaction that distinguishes the direct methodology from indirect methodology. Semi-structured interviews permit the interviewer to ask each interviewee the same questions in the same manner. A well controlled and structured schedule of questions and a formal format are used, that resemble a questionnaire. While responses to the survey has been recorded with much more accuracy and detail and responses to the questionnaire were sifted and collated to identify significant trends and regressions of the employees changing attitudes against the operation maintenance management structure at MOQ ant its increase reliability in operation (West Europe Sponsor, 2008). Secondary data was collected through an extensive research effort conducted both online and in libraries. The questions in the questionnaire were planned in advance and the researcher has exercised some discretion as to how these questions might explained but the aim is to standardize data as far as possible and to eliminate biases and prejudices due to different patterns in wording. The questions in the questionnaire may be phrased in such a manner that the respondent might exercise some discretion in answering or not. The possible answers are predefined so that the respondent’s freedom in responding to the question is limited to one of the pre-coded responses and thus data analysis is rendered easier. Measurement techniques would comprise of questionnaires and interview schedules. Primary data collection would be collected through detailed and qualitative and quantitative questionnaires prepared, keeping in mind the business viability of ecommerce activity in promoting business activities. Sampling area would comprise of individual employees at MOQ. Special interview schedules would also be used to gauge the responses of the people towards innovative operational management activities at MOQ carried through internet. 6.2. Data Analysis Qualitative and quantitative data analysis would be undertaken in this study and all the answers to the іntervіew questions were entered into a structured database (SPSS) upon receipt and was ultimately examined by respondent category. Due to the subjective nature of сategorіzіng respondents’ questions and extracting themes from thе answers, іndіvіdual analyses of all questionnaires will be performed separately by different analysts. After іndіvіdual analysis, the different analysts would meet together and сompіle a list of all the іdentіfіed issues and themes. Overlapping issues and themes between analysts would be subsequently removed or renamed to produce a more сonсіse list for сodіng analysis. The сodіng scheme would generate in this first stage of analysis, the analysts іndіvіdually will scan the respondents’ texts and сategorіze all respondents’ answers. Respondents’ answers will be coded several times if they сontaіn more than one theme (Dillman, & Bowker, 2001). Secondary research was carried out through an extensive research effort conducted both on the internet and in libraries. This researcher extensively used the books written on the topic and also studied research journals, reports, graphs, articles and newspaper articles. References were taken from most of the research material available in the field. This study depends on the secondary data to a greater extent, because theoretical analysis is much well facilitated by it than primary material which is basically limited to responses in the questionnaire and the survey. The available literature has been analyzed with specific focus on the strategic initiatives being adopted at the MOQ to identify the maintenance operation management to prevent frequent breakdowns in operations due to equipment failure. This researcher has tried to show the most important aspectual overview of the research in the Literature Review. Also there is considerable reflection on the state and relevance of current research. 6.3. Ethical Considerations The rapid globalisation has brought in an era of pluralistic society and large segment of employees fraternity comprise of employees from different race, color, culture and nationality. Therefore, one often comes across moral and ethical dilemma while dealing with people with cross cultural values. Efforts would be made to understand cross cultural values so as to maintain a conflict free atmosphere while interacting with people coming from different cultural background. Any personal information that reveals the identity and personal characteristics of the individuals has been excluded on the subject and it has focused only relating to the subject of research study to draw the conclusion. 7. Action Plan The proposal is designed to study the impact of operational capabilities concerning cost efficiency and equipment life cycle perspective of the productivity enhancement. Though, many researchers have undertaken to study the various aspects that affect maintenance operational management activities at MOQ, but the specific factor like the role of increasing equipment failures and maintenance cost in the financial budgeting of the corporation, has yet to be taken. This study is designed to compensate the gap in the research area. The affect of increasing oil and gas cost is not only limited to the expenditure pattern of the customers but it has much more wider implications that are detrimental to the overall performance of the organizational activities. The research proposal would be making efforts to study the paradigm shift in the perspective of the discretionary overhead expenses trends of the corporate level and the rescheduled priorities with innovative approaches of operational activities especially in maintenance department. Action Plan Issue Start date End date Duration Completion Writing Research Proposal 29.01.2010 19.03.2010 About 2 months 100% Field Work March 2010 June 2010 About 2 months 5% Compilation of data September 2010 October 2010 About 1 month 0% Data entry and processing October 2010 November 2010 15 days 0% Data analysis and evaluation November 2010 January 2011 2 months 0% Writing and Completing January 2011 February 2011 1 month 0% REFERENCES 1. Bradbury, J 2009, ‘Management moves at Maersk Oil’ Retrieved from, www.oilport.net on 27th February 2010. 2. Dillman, DA & Bowker, DK 2001, The Web questionnaire challenge to survey methodologists, In U.-D. Reips & M. Bosnjak (Eds.), Dimensions of Internet Science (pp.159-178), Pabst, Lengerich, Germany. 3. Lenahan, T 2006, Turnaround, Shutdown and Outage Management: Effective Planning and Step-by-Step Execution of Planned Maintenance Operations, Butterworth-Heinemann, Oxford. 4. Liyanage, JP 2007, ‘Operations and maintenance performance in production and manufacturing assets: The sustainability perspective’, Journal Of Manufacturing Technology, vol.18, no.3, pp.304-314. 5. Marsek Oil Annual Report 2008, Retrieved from, www.maerskoil.com, on 26 February. 6. Olorunniwo, FO 1992, ‘Life-cycle Cost Policy when Equipment Maintenance Is Imperfect’, International Journal Of Quality Reliability Management, vol.9, no.6. 7. R S Means Engineering, 1996, Cost Planning & Estimating for Facilities Maintenance: Evaluating & Budgeting Operations, Maintaining & Repairing Major Building Components, Applying Means ... Maintenance & Repair Cost Data, specia, R.S. Means Company, Massachusetts. 8. Shim, JK & Siegel, JG 1999, A streamlined Course for Students & Business People Operations Management, Barron Educational, New York. 9. Tsang, AH & Jardine, A 1999, ‘Measuring maintenance performance: a holistic approach,’ International, Journal Of Operations & Production Maintenance, vol.19, no.7, pp.691-715. 10. Waters, D 1999, Operations Management, Kogan Page, London. 11. West Europe Sponsor, 2008, Maersk Oil North Sea UK Takes the Initiative With its Process Safety Report and Action Plan, Retrieved From, www.oilvoice.com ,On 26 February 2010. Read More