Obsolescence Management: Adopting a Risk-Based Approach to Optimizing Equipment Availability and Asset Lifecycle Extension
Authors: Memuletiwon D. T. , Zimughan J. T. , Nwajiuba C. U. , Alayerogun A. A. , Etukudoh B. I. , Eruvbetine A. V. 
Published: April 2017

A critical aspect of asset preservation and life extension is maximizing the availability of the equipment installed base over the lifecycle of the facility in which they are deployed. Over the last decade the Oil and Gas industry has witnessed rapid technological advancement which has been instrumental to unlocking new potentials and breaking new frontiers. However a significant ensuing challenge has been the issue of Obsolescence which over the years has demanded significant CAPEX/OPEX to manage. Obsolescence is a significant cost driver and when considered over the entire lifecycle of a facility, may easily erode any gains that may accrue to implementing new technologies. It poses a major threat to system availability as its impact is most pronounced when an equipment failure occurs and replacement parts are no longer available or the equipment can no longer be supported by the OEM. Consequently, managing this equipment would come with high premium cost and attendant production loss due to equipment downtime. Obsolescence occurs when the prevailing technology is superseded leading to end of Life (EOL) for an existing product. In some cases, support may no longer be available due to OEMs going out of business or changes in legislation or within the market. Traditional approaches to managing obsolescence has centered around upgrades with consideration to factors such as cost and ease of deployment etc however such interventions are rather discrete, not fully integrated and may lack alignment with longer term strategic business direction. Furthermore, current realities within the Oil & Gas industry places a demand on business to adopt a more robust, proactive and integrated strategy that supports the application of appropriate intervention efforts in the areas of greatest exposure.

This paper presents highlights from a recently developed Obsolescence management model developed to help operators/suppliers implement a risk-based and cost effective approach to managing the challenges of obsolescence. This paper further demonstrates, using an innovative tool known as the ORAT (Obsolescence Risk Assessment Tool), the analysis and determination of quantitative obsolescence risk based on identified critical factors and weighting criteria. The model has been developed based on several industry-wide studies while taking into account both supplier and customer perspective. The ORAT creates visibility and alignment of intervention efforts, product lifecycle plans and overall integrated field development plans which is key to achieving significant cost savings. In addition, the paper discusses a portfolio of obsolescence management strategies and applicable context as this is critical in ensuring only optimal interventions are implemented right from concept selection, to detailed design, construction, operation and abandonment. Finally this paper features novel technological approach to managing obsolescence based on the principle of system virtualization.