The value of standardisation

This document outlines the benefits of standardisation activities. The OGP (formerly the E&P Forum) and API believe that the benefits of standardisation at an international level are of such significance that standardisation should be considered as companies develop their business plans and strategies, for example engineering and R&D projects.

The value of standards seems fairly obvious; consider for example, tubular goods and oilfield valves. The E&P industry’s achievements would not have been possible without standards for these and many other products. Research and business development require new or modified standards and the E&P industry is no exception. Therefore, standardisation activities must be continued and internationalised so that the E&P industry remains at the leading edge of value added technology for equipment, materials and services.

In today’s cost-conscious environment, participants in industry, national and international standardisation activities must justify their time and expenses. These expenses can be justified based on such benefits as increased safety, reduced environmental and health risks; savings in engineering man-hours for developing and maintaining company standards; lower engineering cost, readily available equipment that performs as required; reduced government regulations; technology transfer opportunities from the shared expertise and experience of many companies; and the opportunity for networking, learning, and problem solving outside the realm of standardisation. Several real examples of the magnitude and types of savings a company can achieve through standardisation are cited in a document dated May, 1995, entitled, The Value of Standardization by Norman W. Hein, Jr., Conoco, Chairman, US Technical Advisory Group to ISO/TC67. Examples in the document are:

• Development of voluntary standards for US Offshore Safety and Environmental Management Programmes resulted in savings to US offshore operators of 200 million USD in the first year and 20 million USD per year in subsequent years.
• A North Sea operator incorporated standards to reduce the variety of subsea christmas trees and lowered the cost of the trees by 30 per cent.
• A valve manufacturer estimated the cost of these commodities could be lowered by 10–75 per cent by eliminating non-value-added customization.
• Through its Cost Reduction Initiative in the New Era (CRINE) programme, the UK offshore industry analysed the four-fold cost differential of operating in the North Sea versus the Gulf of Mexico, and found that 25 per cent of the increase was due to cultural aspects that could be rationalized through effective standards and specifications.
• A Norwegian oil industry activity (NORSOK) aims to cut the investment cost of future North Sea projects by 50 per cent and operating costs by 25 per cent, by various actions, including development of common standards to replace individual company specifications.
• Individual internal oil company studies have demonstrated:
  • an 8 to 1 return on investment for its participation in industry standards activities;
  • a 1 to 5 ratio of engineering manpower required for its work on industry versus company standards.

With the kinds of benefits cited, it is not surprising that companies can justify supporting standardisation activities and are using standardisation as a strategic tool to increase competitiveness. Standards can be a critical factor in business success.

There is a worldwide movement in standardisation activities to change processes to meet the requirements and needs of the oil and gas industry.

Specifically addressing internationalisation of standards, the main objective of the E&P industry activities is to develop and maintain one set of core E&P industry international standards. Much effort by industry standardisation leaders has been devoted to reviewing the scope and objective for E&P international standardisation; reviewing the international standards work plan to ensure it meets industry needs; looking at the work priorities; reviewing target dates for completion of work; management and monitoring of the work plan; reviewing the resources required to perform the necessary standards work, and finally, reporting and communication with industry management.

Since costs to perform work are spotlighted, there have been recent actions to ensure that company resources are being used efficiently and effectively and these actions include the following:

• A Standards Summit meeting was held in early 1995 between leaders of 9 standardisation organizations to discuss various issues and to develop an action plan to address them including periodic reviews of progress. The vision for success is to have partnering networks between standards bodies and to have coordinated/prioritized international and industry work plans. A second Summit is being planned for early 1996.
• An international standardisation programme for the E&P industry is well under way in ISO/TC67.
• The European standards activities of CEN/TC12 are well aligned with the international activities in ISO/TC67.
• API has established a procedure to follow when adopting ISO as API standards.
• Industry recognises the need for both functional and prescriptive standards and efforts are under way to understand where each and / or a combination of both is most useful.
• Both the ISO, CEN, and API work plans are being reviewed with the goal of linking them in a common database which will be available for company review and use in planning internal standardisation activities. (Contact Mr Mike Spanhel, API, Dallas). Also the database will become a tool to further avoid duplication of effort within existing bodies.
• Companies are being encouraged to reduce their reliance on internal company standards by utilising international, national or industry standards where they exist. (Ref. ‘Standardization programme for the petroleum and natural gas industries including database of standards used in Europe’ which may be obtained from CEN, Brussels). Companies can also avoid duplication between internal and external activities by participation in industry standardisation activities and tying back their industry standardisation activities to their internal business plans.

Companies can realise many tangible and intangible benefits from supporting industry standardisation efforts. These benefits will be maximised when both upper and middle management business plans include provisions for standardisation resources, including both time and funding. Standardisation work needs to be done as part of every company business plan. The users of standards must share the responsibility in their development. Industry standardisation organisations are making fundamental changes in their standardisation processes to meet the users’ needs for standards that incorporate the best and most current value-added practices. To meet this goal, however, continued participation and support from both users and manufacturers is required. The best way for petroleum and related equipment companies to be competitive in today’s environment of continuous improvement with shrinking technical support is by leveraging each company’s manpower through industry standardisation efforts. Standardisation activities definitely merit continued company support.

Therefore, join the growing team of international oil experts and support the experts that develop and maintain the standards of the exploration and/or production industry. Information on international standards activities may be obtained by contacting the following organisations:

Organisation		Location		Telephone		Fax
ISO		Geneva		+41 22 749 01 11		+41 22 733 34 30
CEN		Brussels		+32 25 50 0811		+32 25 50 0819
ANSI		New York		+1 212-642-4900		+1 212-398-0023
API		Dallas		+1 214-953-1101		+1 214-748-7962
E&P Forum		London		+44 171 292 0600		+44 171 434 3721