Standards Strategy Task Force Update TC 67 and ECS Discussion Dallas, Texas

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Standards Strategy Task Force Update TC 67 and
ECS DiscussionDallas, Texas

• Co-Leaders Bruce Reynolds, ChevronTexaco, ECS
  Chair
• David Miller, API Standards Director
• Work Team Standards Leaders, COPM, CRE, ECS,
  API
• ECS Contributors
• D. Nair, S. Bergholdt, C. Stark, G. Devlin, J.
  Smith, API Staff

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Background Summary

• API Upstream Committee, General Committee on
  Refining and Executive Committee have confirmed
  that API Standards are strategic business assets
  and API standardization needs to continue.
• SSTF developed three recommendations to address
  resource issue
• Systematic Standards Review
• Resource Model
• Governance Changes
• APIs standards committees have begun to
  implement the SSTF recommendations
• ECS needs your continued support in standards
  development work

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Update on Industry Resource Issues Impacting
Standards Work

• Making good progress on efficiency improvement
  recommendations made by SSTF
• Standards prioritization, technical editing,
  governance, etc.
• But, SSTF preferred strategy (improving way API
  works w/ ISO to deliver global standards) does
  not solve longer term resource issues
• New General Committee accountable to address
  longer term issue
• API Upstream Committee wants a ECS business plan
  that details the resource solution by October,
  2004.
• Upstream Comm wants API to maintain a viable
  standards program for both the good of the
  industry and as a key support mechanism for its
  US Advocacy efforts
• SSTF Recommendations Called for Detailed Plan to
  be developed in 2005 planning cycle for 2006.
• US pool of technical resources to support
  standards still shrinking

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Update on Industry Resource Issues Impacting
Standards Work

• US Oil and Gas Extraction Industry Downsized by
  11 from 2001 to 2003 (now 293000 employees)
• Includes US EP oil companies, contractors, and
  service companies

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Update on Industry Resource Issues Impacting
Standards Work

• US OG Ext Engineering Mgmt down by 26 between
  2001-2003
• More Finance Mngrs than Technical Mngrs

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Update on Industry Resource Issues Impacting
Standards Work

• US Oil and Gas Ext. Engineering has reduced by
  16 between 2001-03
• Disciplines primarily supporting Standards down
  by /-25

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Update on Industry Resource Issues Impacting
Standards Work

• Income Increasing Manpower and RD Budgets
  Shrinking

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GCSP Background

• Formation approved by API Executive Committee in
  March 2004
• GCSP will be resource committee for Segment
  Committees and have financial oversight of APIs
  non-dues programs, assuming former responsibility
  of Self-Supporting Program Oversight Group
• GCSP membership will include individuals from
  member companies and the Chairs of Standards
  Committees
• GCSP will meet 2-3 times a year
• GCSP will report to the API Executive Committee
  and work with Segment Committees
• Existing segment committee reporting
  relationships will continue (ie ECS to
  Upstream Committee)

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Changes in API Standards Governance
New General Committee ECS, COPM, CRE Business
Leaders
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API Standards Needs from the GCSP

• Establish Priority
• Regularly assess relative priority of standards
  priority compared to overall business needs of
  the industry (Needed to support resource
  allocation decisions)
• Provide Influence
• Re-inforce concensus view on standards business
  priority within own member company, API, and
  other venues (collective opinions need to lead to
  individual commitments on resource issues)
• Frame Direction
• Set goals and high level strategy for overall API
  Standards activities and workplans (global
  emphasis, emerging industry needs, quality
  assurance expectations, revenue/expense budgets,
  resource requirements, etc)
• Validate the Plan
• Review and approve annual work plan, resource
  requirements, and budget recommendations (to
  ensure plan is aligned with goals and strategy)

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TC 67 and ECS Collaboration Issues

• Finalize ECS company representatives
• API member companies eligible
• International, independent, and non-active
  companies targeted
• Work together to deliver business plan to API
  Upstream Committee and newly formed GCSP by Oct
  2004
• Suggest a Work Group from ECS w/ joint TC-67
  participation
• Develop common format for annual workplan
• Adopt as much of TC 67 format and tracking as
  reasonable
• Consider sponsoring global assessment of ISO
  member country technical resource pool that can
  support standards development efforts
• Data much more difficult to obtain globally as
  compared to mature US industry
• Jointly decide if ISO or API should drive the
  solution to the longer term standards resource
  issues
• SSTF opinion that API should do this for the oil
  and gas industry
• Other Ideas?

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Changes in API Standards Governance
Upstream Committee
General Comm. Special Programs
Company Representatives
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Backup detail
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SSTF Reviewed Five Wide-Ranging Options

• After careful consideration the SSTF recommended
  that API follow current strategy while making
  significant process and procedural improvements.
  These process and procedural improvements include
  the following
• Conduct Systematic Standards Review
• Develop Resource Model and Outsourcing Plan
• Initiate Significant Changes in API Standards
  Governance Structure
• SSTF Report and recommendations accepted
• by the Upstream Committee in October 2003
• by the General Committee on Refining in February
  2004
• by the API Executive Committee in March 2004

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SSTF Recommendation 1

• Conduct Systematic Standards Review
• Systematic Standards Review will result in a
  report that will evaluate all API standards
  against the following four criteria
• Regulatory, or Advocacy Significance
• Company Use/Broad Industry Need
• Sales/Usage History
• Certification Program Application
• Objective Rank each standard from highest to
  lowest in accordance with the four criteria.
• Timeline API standards staff to circulate a
  first-cut of matrix for standards committee
  review by June 1, with report for review and
  approval by the standards and segment committees
  by year end.
• Deliverable Standards committee report and
  matrix prioritizing the standards for segment
  committee review and approval.

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Standards Review Format
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SSTF Recommendation 2

• Develop Resource Model and Outsourcing Plan
• Industry develops about 25 new API standards or
  major revisions per year
• On average, industry contributes 4200 hours over
  3.5 years for each
• Globalization with ISO increases this amount by
  25 on average
• Recent experience with contracted experts
  demonstrated industry can save between 20-30 of
  required time commitment
• Contracted experts are typically annuitants with
  a great deal of industry experience
• Average cost 35,000/year when using annuitants
  

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SSTF Recommendation 2

• Develop Resource Model and Outsourcing Plan
• Using approved report and matrix developed during
  the systematic standards review, the standards
  committees will determine how best to resource
  each standard
• Industry volunteer committees
• Contracted experts
• Standards withdrawal
• This information will then be used to develop the
  2006 budget request, impact on other related
  programs and collaborative work program for joint
  standards
• Objective Determine how to obtain resources
• Timeline Second quarter 2005 for use in the 2006
  budget recommendation
• Deliverable Comprehensive 2006 budget
  recommendations and plan for the programs
  continued viability

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SSTF Recommendation 3

• Initiate Significant Changes in the API Standards
  Governance Structure
• The SSTF made several recommendations on updating
  the standards governance structure to streamline
  it and elevate the resource issue
• These included
• Eliminate four Upstream Standards Committees
• Reorganize the Technical Advisory Group for
  ISO/TC67, Materials, Equipment, and Offshore
  Structures for the Petroleum, Petrochemical, and
  Natural Gas Industry
• Transfer responsibilities of the Self-Supporting
  Program Oversight Group to the new General
  Committee on Special Programs, or GCSP

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SSTF Recommendation 3

• Initiate Significant Changes in the API Standards
  Governance Structure
• API standards committees will continue to report
  to their applicable segment committees
• The chairs of the Committee on Refinery
  Equipment, the Executive Committee on
  Standardization of Oilfield Equipment and
  Materials, and the Committee on Petroleum
  Measurement will sit on the GCSP representing
  both their specific standards committees and
  their respective segment committees
• Objective Enhanced standards governance
• Timeline All the changes to be in place by
  December 31, 2004
• Deliverable New committee structure with
  streamlined and better coordinated governance