Proceeding Simposium Nasional IATMI

25 - 28 Juli 2007, UPN Veteran Yogyakarta

_______________________________________________________________________________

MINIMIZING OIL PRODUCTION LOSS BY OPTIMIZING EQUIPMENT

COMPONENT REPLACEMENT STRATEGY
Oleh :

Toni Darmawan
Manager Maintenance & Facility Engineering
Heavy Oil Operating Unit
Chevron Pacific Indonesia
Duri 28884, RIAU
INDONESIA
e-mail : tdarmaw@chevron.com
ABSTRACT
Maximizing the uptime of the production asset will secure the production coming out from reservoir.
The reliability, maintainability and restorability of production assets determine the achievable
availability that impacts the maximum production capacity.
"Component Replacement Dilemma" states: - if you replace a component today, it may have lasted
quite a while longer; - if you do not replace the component now, it may fail in use and resulting in costly
emergency repairs. The quantitative and economics analyses should be done to yield the optimum
outcomes in setting the component replacement strategy.
In maintaining production assets, depending on the dominant failure modes, we can choose any
replacement strategy: be it replacement only on failures, or doing preventive or block replacements. A
quantitative analysis will be presented to answer the component replacement dilemma above, and it gives
the insights on gaining the maximum uptime as well as economical achievable availability that will
minimize production losses.

INTRODUCTION
Jardine (2006) stated that there are at least
four key areas for anyone who wants to
optimize the life cycle value of any
organizations human and physical assets; they
are:
- Component Replacement
- Inspection Procedures
- Capital Equipment Replacement
- Resource Requirement
This paper will only focus on the effort of
optimizing oil-and- gas production equipment
component replacement in combination with
other reliability engineering techniques and
maintenance strategy in order to minimize oil
production loss.

Here the major component replacements

in one of the surface lifting equipment; i.e.
mechanical pumping units: motors failure
data will be analyzed to find out the failure
mode and set the pre-emptive maintenance
intervention to optimize mechanical pumping
units availability which at the end will
minimize the oil production lose. In setting
the maintenance strategy itself there are
several questions we need to ask. What are our
tolerances to down time? Why we need to take
pre-emptive actions? What are the benefits?

Data Analyses
and

All maintenance actions, materials, tools

manpower data are captured in

________________________________________________________________________________
IATMI 2007-TS-13

Proceeding Simposium Nasional IATMI

25 - 28 Juli 2007, UPN Veteran Yogyakarta

_______________________________________________________________________________

Computerized Maintenance Management

System. This maintenance historical data will
be useful in analyzing the failures and adjust
the maintenance strategy. By Pareto charting
of the failure modes we can attack with the
80/20 rule for prioritization, refer to Figure 1.

situation at hand. Having built in reliability

into design and with proper equipment
operation, in random failure modes, one can
expect for its Mean Time Between Failure
(MTBF) can match with mean life. Other
factors that need to be set up are the
maintenance and restoration strategies to
reduce the Mean Time To Repair (MTTF).
Those two factors affect the operational
availability.
The total costs incurred over the period of
ownership of equipment are often referred to
as Life Cycle Costs (LCC, Refer to figure 2).
Industry statistics shows that the operations
and maintenance cost consume up to 45 54
% of the LCC.
Using the right standard
operating procedures with the appropriate
maintenance strategy this part of the LCC can
be optimized while achieving the equipment
availability to support the business objective:
i.e. production target.
Stages of Equipment Life Cycle

Maintenance Strategy
One of the maintenance objectives is
maximizing operational availability of plant
facilities in a safe and incident free operating
condition. To fulfill the maintenance
objective, the corporation needs:
1. Management skills to integrate people,
policies, equipment, practices, and to
evaluate the maintenance performance and
2. Engineering and technological and
craftsmen skills in order to provide the
best possible preventive maintenance,
repair, overhaul of the ever-increasing
production assets along with its
complexity.
From the business strategy, asset
environment down to tactics in methods or
maintenance diagnostic, maintenance fails
when there is little understanding of the

60%
Percentage of Life Cycle Costs

FIGURE 1. CMMS DATA PARETO

CHARTS

50%

45%

40%

35%

30%
20%
12%
10%

5%

3%

0%
Concept

Design &
Devpt.

Build &
install

Operate
&
Maintain

Decomm.
or Convert

FIGURE 2. LCC
Supposedly that an organization has
chosen its maintenance strategy that tend to
blend of both actions and timing: - run-tofailure, -scheduled component replacement, scheduled overhaul, - ad hoc maintenance, preventive maintenance, - condition-based
maintenance or - design out maintenance; the
challenge is in selecting the best maintenance
tactic. Which actions will yield an optimum in
cost, plant downtime, and risk?

________________________________________________________________________________
IATMI 2007-TS-13

Proceeding Simposium Nasional IATMI

25 - 28 Juli 2007, UPN Veteran Yogyakarta

_______________________________________________________________________________

Campbell (1994) stated from a number of

studies that provide some important tips about
how equipment should be maintained:
- Failure is not usually related directly to
age or use
- Failure is not easily predicted, so
restorative or replacement maintenance
based on time or use will not normally
help to improve the failure odds
- Major overhauls can be a bad idea because
you end up at a higher failure probability
in the most dominant pattern
- Age-related component replacements may
be too costly for the same reason.
Although having those tips it does not
mean that we just do nothing and wait till the
equipment fails and replace them. Economic
factors also play an important role in
maintenance as the bottom line in doing
business.
Preventive Maintenance can reduce
failures and costly emergency repairs. It
promotes equipment awareness and discipline
inspection. The CMMS failures data provide a
goal mine in putting the appropriate
maintenance tactics. How could we set the
best maintenance and replacement decisions?
This paper will focus on the replacement
strategy to increase the equipment availability
economically. By having increased availability
we reduce down time and at the end we
minimize the production lose.
Systems do not fail, but components do.
At least there are three options on replacement
policy:
- Replace only on failure Policy (ROOFP):
under
this
policy,
only
failure
replacements are carried out and there is
no preventive replacement.
Average cost per unit time= (cost of
failure replacement) / Mean life of
component
- Age-based preventive replacement Policy
(APRP): under this policy, preventive
replacements occur for items which reach
a certain specified age, and failure
replacements occur if a component fails

before the specified age. Determinations

of the specified age are the key part of the
policy. Average cost per component =
(cost of failure replacement) X
(probability of failure replacement + cost
of preventive replacement X probability
preventive replacement.)
Block Preventive Replacement Policy
(BPRP): under this policy, preventive
replacements occur for the entire
component under consideration at regular
intervals of elapsed time. Failure
replacements occur for items which fail
between
block replacements.
The
determination of the time between block
replacements is the key part of the policy.

Optimization
When will preventive replacement be
worthwhile? Preventive replacement will only
be worthwhile if two conditions hold:
1. the failure rate of the component is
increasing, or will increase before
another
preventive
replacement
opportunity occurs; and
2. the cost of failure replacement is
greater than the cost of preventive
replacement
In order to apply the best policy the
economic analyses of failure replacement and
preventive replacement are the keys. Factors
in the economic of component replacement
include:
- the cost of the component itself,
- other charges such as taxes, freight ,
packing and handling
- inventory carrying cost: cost of capital tied
up, warehousing , and insurance
- exceptionally, cost might be lowered if
available spares are excessive in quantity
for some reason or coming out from
cannibalization
- the cost of lost production
The timing of when we are going to
replace the component itself affects the
economics. In this case:
- Replace after failure

________________________________________________________________________________
IATMI 2007-TS-13

Proceeding Simposium Nasional IATMI

25 - 28 Juli 2007, UPN Veteran Yogyakarta

_______________________________________________________________________________

Replace before failure

The consequence is on the down time of
the mechanical pumping units themselves.
Replacing after failure will at least give more
than 24 hours down time; while if we can have
planned and scheduled replacement we can do
it within a couple of hours.
Below is an example in finding the optimum
replacement strategy.
Motors in mechanical pumping units
Check and find out the total populations:
1. Number of components at risk
2. Failure and suspension sample data

plot above, we can set with our failure

tolerant strategy of how many percentage of
the motor population do we want to see prior
to taking any intervention; e.g. 10% of
population ( B10) or the mean life ( w/ B63.25).

REGION I
<1
FAILURE
RATE

INFANT
MORTALITY

REGION II

REGION III

=1

>1

RANDOM

WEAR-OUT

FAILURES

FAILURES

FAILURES

TIME

BATHTUB CURVE
Motor failures = 79 units
Still running
= 319 units
(Suspended data)

Based on the beta values, the anticipated

failure modes and its relevant maintenance
strategy can be set accordingly.
Earlier in this paper we said we need to
take the preemptive strategy in this component
replacement task. What we meant by that is
we need to replace the motor prior to its
failure. Why? In order to reduce the downtime
and to have the resources planned and
scheduled. Taking that strategy then we
should analyze the economics for any
maintenance strategy that we choose, and then
optimize the component replacement timing.

WEIBULL PLOT
Collecting the CMMS motor life data,
then putting them into the Weibull analysis
________________________________________________________________________________
IATMI 2007-TS-13

Proceeding Simposium Nasional IATMI

25 - 28 Juli 2007, UPN Veteran Yogyakarta

_______________________________________________________________________________

The results of these efforts show the

pumping unit backlog and its availability.
P.Unit Down Backlog
40.00

BOPD
100.10%
100.00%36.7

99.96%
99.91%
99.88%
99.88%

99.90%
99.80%

24.00
20.00

17.9

99.30%
99.20%
99.12%
99.10%
99.00%

32.00
28.00

99.70%
99.60% 99.57%
99.50%
99.40%

36.00

16.00
12.00
8.00

5.2 5.1 3.9

1.6

4.00
0.00

20042005
2006JanFebMarAprMayJunJulAugSepOctNovDec

OPTIMUM COMPONENT
REPLACEMENT
From here on we have a set of economical
and
optimized
equipment
component
replacement timing that will minimize the
down time. Since the output usually not a
rounded number, we can input the rounded
value and re-run the case to get the unit
maintenance costs.
Once we set that, for timing assurance to
answer the component equipment replacement
dilemma, we could utilize any of relevant
predictive maintenance technologies; such as
motor diagnostics, IR Thermograph, etc.
Having that component replacement
schedules, then the Inventory Management
can prepare their procurement plan
accordingly. Having the right parts at the right
timing is also impacting the asset availability.
In addition to that we can also set the
other resources needed to accomplish the tasks
that are manpower and tools.
Minimizing down time with the preemptive strategy by planned and scheduled
maintenance will increase our mechanical
pumping units availability. Having higher
equipment availability means we also
minimizing our oil production lose.

Using the same steps and principles above

we can implement the strategy for all critical
equipment in our operational assets to increase
their reliability and maintainability that will
yield higher asset availabilities.
CONCLUSIONS
High quality historical maintenance data
stored in CMMS is the most valuable starting
point information in choosing the maintenance
as well as replacement strategies.
Life data analyses will provide an
estimation of the running life of the
components.
The
right
component
replacement timing will optimize the
maintenance costs while meeting the objective
of the assets to support the production targets.
Any relevant predictive maintenance tools will
provide the confirmation of the current
component
conditions
compared
to
statistically remaining running life prediction.
The predictive maintenance technologies
are used not only to prevent catastrophic
failures but also to optimize the chosen
maintenance strategy to avoid unnecessary
replacements.
Inspections done by the Operations as
well as Maintenance as the front line of
increasing equipment reliability efforts

________________________________________________________________________________
IATMI 2007-TS-13

Proceeding Simposium Nasional IATMI

25 - 28 Juli 2007, UPN Veteran Yogyakarta

_______________________________________________________________________________

provide the early information to take actions.

Early responses to the asset deteriorations,
taking pre-emptive actions at the right time,
will reduce the asset down time economically.
Another important aspect is the materials
and parts availability.
Having the above
strategy creates planned and scheduled
replacements. Scheduled replacements of all
populations yield quantified materials and
parts requirements for Inventory Management
to procure the needed materials and parts. At
the end of the day it will also minimizing the
idle inventory in the warehouse.
This strategy is one of the many means to
minimize oil production loss by optimizing the
equipment component replacements.

Monash University,
Reliability, Australia

2006, Understanding

Monash University, 2007, Machine Condition

Monitoring & Fault Diagnosis, Australia
Monash
University,
Reliability, Australia

2007,

Advanced

AUTHOR

REFERENCES
AICE, 1998, Guidelines for Improving Plant
Reliability through Data Collection and
Analysis, New York
Campbell, J.D., 19944, Uptime,
Central Queensland University,
Maintenance Management, Australia.

2004,

Darmawan, Toni, 2007, Journey from RCMbased Inspection to Optimization. 2007

Reliability
Congress,
Kuala
Lumpur,
Malaysia.
Jardine, A.K., Tsang A.H.C., 2006,
Maintenance Replacement and Reliability:
Theory and applications, Taylor & Francis
Group, London, UK.

Toni Darmawan (tdarmaw@chevron.com) is

currently the Manger Maintenance and Facility
Engineering Heavy Oil Operating Unit Chevron
Pacific Indonesia, Indo Asia Business Unit, Duri.
He holds a BS in Civil Engineering, a Master of
Business Administration (University of Leicester, UK)
and has taken postgraduate courses in Maintenance
Management and Reliability Engineering (CQU and
Monash Universities, Australia). Toni Darmawan has
more than 20 years of experiences in Primary,
Secondary, and Tertiary in Oil and Gas recovery
methods; Facility Design, Engineering and Construction
including the Operations, Maintenance & Reliability of
Oil and Gas surface facilities. He is a Six Sigma black
belt, was Certified Project Management Professional
(PMP), Certified Value Specialist (CVS). He is a
Certified Maintenance and Reliability Professional
(CMRP) from Society of Maintenance and Reliability
Professional SMRP, USA.

Mitchell,
J.,
2002,
Physical
Asset
Management Handbook, Third Edition,
Clarion technical Publisher, USA.
Monash University, 2006, Basic Quantitative
Skills for Reliability Engineering, Australia

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IATMI 2007-TS-13