Process Control

Counting the Cost of Cutting Corners in the Oil and Gas Industry

Counting the Cost of Cutting Corners in the Oil and Gas Industry, Offshore Rig, Parker Hannifin -- Instrumentation Products Division History is littered with examples of how cutting corners has led to near or actual disaster. Despite advances in instrumentation and tubing, small bore tubing assemblies still represent the second largest source of hydrocarbon releases from offshore installations.   

There are around 45 million tube fitting assemblies installed in the UK and the North Sea alone. Statistics show that as many as 26% of these may have the potential for allowing a leak or worse. Furthermore, 20% of all reported leaks are related to small bore tubing assemblies. Around 11% of these cases are classified as major severity events, yet there is a culture to install product manufactured at the lowest cost by sub optimum vendors and install with low grade, essentially unskilled and untrained operators.

There are also environmental consequences to consider, with fines now running into millions for any breaches, the simple fact is that specifying a lower cost product and installation practices may not be the most prudent financial decision in the long run.

Drive towards lower costs can compromise safety

An important reason for this unacceptable situation may well be the decision to select and install product being made purely for cost reasons, without proper consideration of test data or long term performance. This can result in inferior materials or workmanship and/or untested designs being selected, which can seriously impact on safety. Often a manufacturer, even European-based and relatively credible at first glance, can recommend a product to an EPC or end customer without taking into account the demanding nature of certain applications in the oil and gas industry. Validating the credentials of manufacturers and contractors right at the start is essential to avoid issues further down the line.

Counting the Cost of Cutting Corners in the Oil and Gas Industry, Parker Hannifin, Instrumentation Products DivisionOne reason that some companies are able to produce valves and fittings at a lower cost may be because they have not invested in years of engineering leadership, research and development, metallurgists and rigorous testing and they do not have the backup of a strong global technical resource.

Correct performance at recognised boundaries may not be as critical if these products were being used in less demanding applications but in the offshore oil and gas industry, there is zero margin for error when it comes to process integrity.

The main considerations when specifying fittings and valves for critical applications, where safety is a priority, include a detailed review of competency with respect to the selected vendor. Do they have, for example;

  • A long-term, proven track record in supplying this type of product safely and effectively?  

  • Financial strength and technical capacity sufficient to be able to sustain the contract or support the customer post-sale and into the future through any eventuality? 

  • In-house engineering departments, R&D/technical support, and their own metallurgists, all of whom have carried out the relevant research, analysis, and test to confidently ensure that the product will offer long-term performance? 

Finally, can these companies offer accredited end-user training and support covering, for example, such activities as; 

  • How to design the system safely

  • How to install the fitting or valve safely and how to maintain it correctly.  

The Parker Instrumentation training and support program is highly valued by customers who appreciate that it ensures they are best equipped to ensure a safe and secure installation that will give many years of reliable and long service.

True cost? 

Low cost at specification stage may often result in unexpected and high costs later in the project or after project completion. This is not only disruptive to business and a potential environmental issue but can cost companies dearly in terms of damage to a brand and its reputation. This can result in corporate litigation or corporate manslaughter charges where operators are injured. There are also the replacement costs of failed systems and components to consider. The true lifetime asset cost of poor specification with inferior products can, therefore, be extremely high. 

Involving Technical Managers/Engineering Managers in the decision-making process is essential to ensure that safety is not compromised.

Oil and gas companies should also ensure that instrumentation, tubing, and valves are correctly installed by competent and fully trained installers, in order to minimise risks. Buyers need to be supported in their bid to achieve the best value and that means not compromising on quality.  In these safety-critical applications, it is essential that the selection of suppliers and products is based on quality and whole life costings.  

Find out about Parker's instrumentation products here.



Counting the Cost of Cutting Corners - Spencer Nicholson - Parker Hannifin, Instrumentation Products DivisionSpencer Nicholson is innovation & technology manager, Instrumentation Products Division Europe







Related content:

10 Steps to Cost Effective & Safe Installation of Instrumentation Tube and Fittings Systems - White Paper

Fittings, Materials and Tubing Guide

Why Standardisation Matters in the Oil and Gas Industry

Mixing Materials in Corrosive Environments



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