Service Quality in the Petroleum Industry - Measuring Up Josh Ritchie Schlumberger

1. Service Quality in the Petroleum Industry - Measuring Up Josh Ritchie Schlumberger Service Quality Compliance Manager – Drilling & Measurements Argentina, Bolivia, Chile

2. Agenda • Measuring Up • Quality Improvement in the Service Industry • Attention to Quality • Management System • Risk Analysis

3. Measuring Up – Tire Industry • Well known tire manufacturer produced 6,000,000 tires, 2,000 which failed and caused accidents. • 4.9 Sigma (99.977% efficient) versus 3.4 Sigma (99.36% efficient)

4. Measuring Up : Medical Industry • 3.4 Sigma – 99.36% efficient • 5,000 incorrect surgical procedures per week in the U.S. • 200,000 incorrect drug prescriptions annually in the U.S.

5. Measuring Up : Airlines • Heathrow Airport in London is the busiest airport in the world: 468,000 flights per year • Based on fatality rate from airline safety records, 1 fatality incurs every 5 years • 6.42 Sigma (99.99999997% efficient) versus 3.4 Sigma (99.36% efficient)

6. How can we improve? • Defining and Measuring Quality • Focus on Quality – incorporating into the organization • Management Systems • Knowledge Management

7. What is Quality? Wikipedia: • ISO 9000: "Degree to which a set of inherent characteristic fulfills requirements." • Six Sigma: "Number of defects per million opportunities." • Peter Drucker: "Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for."

8. Measuring Quality • Lost time / Operating time (efficiency) • Failures per pumping hour or per meter drilled (MTBF) • Net Pay / Gross Interval drilled • < 5 deg/100’ dogleg severity

9. Power of Focus • Doubled in size since 2003 • Injury Rate held constant (companywide focus on Safety) • Increase in Serious Quality Incidents, directly proportional to company growth

10. Focus on Quality • Raise importance of SQ to that of HSE • Culture change in organization • You would stop a job if Safety was compromised • Would you stop it if Quality was compromised?

11. Quality Management System

12. Commitment, Leadership and Accountability • The foundation of the Quality Management System (QHSEMS) is leadership, commitment and accountability from top management and its readiness to provide adequate resources for QHSE. • Particular attention is drawn to the importance of senior management providing a visible expression of commitment. • Failure to do so will undermine the credibility of Quality policy and objectives.

13. Policies and Objectives • Dictate limits and requirements. • Define the restraints under which business is conducted. • Give the personnel clear and precise communication about principle issues. • Provide a certain level of control over identified risk.

14. Organization and Resources • Organization • Resources: • Information Management • Personnel (Training and Competency) • Standards • Sets of rules for implementing policies that define the requirements and minimum acceptable criteria • Guidelines (companion documents to standards) • Provide additional technical or procedural information to ensure compliance with standards

15. Risk Management • Hazard Analysis and Risk Control (HARC) • New Activities and Services • Existing Activities where the rate of occurrence of undesired events is abnormally high • Management of Change • Existing Activities with new exposures • Infrequent / irregular activities

16. A simple, one-page form that: • Guides employees at any level through the HARC • Process • Classifies Quality Hazards • Facilitates implementation of prevention and mitigation measures to reduce risk HARC

17. HARC Work flow

18. C M S L N HARC: Likelihood and Severity • Likelihood • Severity • Multi-Catastrophic • Catastrophic • Major • Serious • Light

19. HARC: The Risk Matrix • Risk Matrix: A two-dimensional matrix used to quantify Risk Level by plotting Likelihood versus Severity. • Potential Risk: Risk Level (as defined on the Risk Matrix) before the implementation of Risk Control measures. • Residual Risk: Risk Level (as defined on the Risk Matrix) after the implementation of Risk Control measures.

20. HARC • Mitigation and Prevention measures are put in place to reduce the likelihood and severity

21. Audits and Reviews • How well do you conform to your Standards? • Performed annual by each location • HQ Audit every 3 years • Personnel from various locations • Output are Remedial Work Plans put into place to ensure changes are made where non-conformance lies: ongoing cycle of improvement.

22. Management System - Recap Plan Do Feedback Check

23. Conclusions • The Petroleum Industry has much room for improvement with respect to Quality – our current performance would cause 13,565 deaths annually in the airline business • Define Quality with your Service Providers • Power of Focus • Management Systems • Computer code – everyone working in the same fashion • Risk Control for Quality