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API SPEC Q2 FOR AUDITING
STANDARDIZATION OF INDUSTRY
EXPECTATIONS FOR OIL AND GAS
Stacey W. Hagen
ExxonMobil Development Company
Drilling Services & Systems Team Lead
API Sub-Committee 18 Chairman - Quality
Bo Creek
Orion Drilling Company
Quality Assurance / Quality Control Manager

AGENDA
Objective
– Provide History and Industry Expectations on API Q2
Outline
– Brief History of API
– Business Drivers for New Industry Standard – API Q2
– API Q2 Overview
– Benefits

BRIEF HISTORY
API SPEC Q1

History of API and Spec Q1
• July 28, 1914 – November 11, 1918
• National Petroleum War Services Committee
• Pooling Program
• 1919 – American Petroleum Institute
• Program was transitioned into a third party audit
program in the mid 1980’s under the Specification
of Quality Programs, API Spec Q1 that is now in its
9th Edition
• Just as there were drivers for the Monogram
Program, one now exists for the certification of
services

BUSINESS DRIVERS
FOR API SPEC Q2

Absence of a Corporate Management System
Inconsistency in Risk Mitigation
Lack of Implementation
Lack of Oversight
BUSINESS DRIVERS

BUSINESS DRIVERS
Increasing complexity of wells
• Need for improved service technology and
equipment / tool reliability
Increasing spread rates on rigs
• Need for systems to ensure uninterrupted
operations

BUSINESS DRIVERS
Service centers have more than one
customer
• Additional requirements typically
specified by one or two customers
• A customer may only be 10% of total
business
• Implementation / compliance of
requirements only 10% of the time is
next to impossible

BUSINESS DRIVERS - PerceptionThe incident killed 11 workers and
spewed more than 200 million gallons
of crude in what is touted as the
country’s worst oil spill ever.
Subsequently, a moratorium was
imposed on offshore drilling.

ROOT CAUSES OF NPT
LACK OF:
Service execution
planning
Personnel
Competency
Lack of or not
Following
procedures
Lack of using history
logs
Contingency
planning
Quality Checks,
Inspection and Test
Preventive Maintenance, Inspection, Test
Programs (PMITP)

INDUSTRY
RESPONSE

INDUSTRY RESPONSE
• Realization that ISO 9001 , ISO TS29001 and API
Spec Q1 apply to manufacturing
• API Task Group (TG) 5 developed under API
SC18
• Specification for QMS Requirements for Service
Supply Organizations
• Identify the expectations for execution of
upstream services including well construction,
intervention, production and abandonment
• Published December 15, 2011

API SUBCOMMITTEE 18
Life Cycle
Management
API
Spec Q2
API
Spec Q1
Auditor
Effectiveness
Min. Mfg.
Requirements
WeldingMonogram
Program
TG2TG1 TG3 TG4 TG5 TG6 TG7
SC18
CSOEM

API TG5 MEMBERS

API SPEC Q2
HOW IS IT DIFFERENT?

PROCESS-BASED QMS (ISO 9001, 29001 & API Q1)

CUSTOMER
REQUIREMENTS
CUSTOMER
SATISFACTION
INPUT OUTPUT
CONTINUAL
IMPROVEMENT
PROCESS- AND RISK-BASED QMS (API Q2)

OVERLAP - API SPEC Q1 VS. API SPEC Q2
General Requirements
Quality Manual
Control of Documents &
Records
Quality Policy
Quality Objectives
Planning
Management Review
Control of Monitoring and
Measurement Equipment
Measurement, Analysis
and Improvement
Training
Corrective and Preventive
Action

SERVICE-SPECIFIC Additions - API SPEC Q2
No Claims to Exclusions
Competency of Personnel
Risk Management
Detection Equipment
Service Design
Contingency Planning
Control over Critical Suppliers
Service Quality Plan
Preventive Maintenance, Inspection and
Test
Service Performance Validation
Management of Change
Corrective and Preventive Action
resulting in a change of controls
Customer Notification
Traceability of Critical Services and SRP

Elements Requiring Procedures
• Personnel Competency / Training
• Document Control
• Control of Records
• Risk Assessment
• Service Design
• Contingency Planning
• Purchasing
• Verification of Purchased Services &Service
Related Product
• Execution of Service
• Identification & Traceability
• Service Related Product Status
• Customer Property
• Preservation of Service Related Product
• PMIT
• TMMDE
• Service Performance Validation
• Nonconformities
• Management of Change
• Monitoring, Measuring & Improvement
• Internal Audit
• Analysis of Data
• Improvement
• Corrective Action
• Preventative Action

1.2 EXCLUSIONS
“When an organization performs activities addressed by this document,
including the provision of service-related product, all requirements shall
be performed and no claims to exclusion of those requirements shall be
permitted.”
Service-related products (SRP): Materials, equipment, and software
used in the execution of a service.

COMPETENT
4.3.2 PERSONNEL COMPETENCE
NEW
• Risk Based
• Problem Solving
Competency =
• Education
• Training
• Skills (OJT)
• Experience

4.3.2 PERSONNEL COMPETENCE
THE FOUR LEVELS OF LEARNING
Novice
Not
expected
to be able
to perform
Competent
Expected to
perform to
basic
standards
Expert
Creates
knowledge
and teaches
others
Experienced
Beyond
understanding
of what must
be done

5.3 RISKS Management
Immediately
1 years
5 years
10 years

5.3 RISK MANAGEMENT
Maintain Procedures to controls Risk
throughout Service Execution
• Identify service related risk
• Implement controls
• Notify customer of remaining risk

5.4 Design & Development
Every Service includes Design and Development
Planning Inputs Outputs Review Verification Changes
API Q1
Products
Validation
Planning Inputs Outputs Verification Changes
API Q2
Services
Final
Review
Failing to understand what is and is not critical will impact the service design
which will result in increased risks, lack of controls and potential for loss.

5.5 CONTINGENCY PLAN
Contingency planning shall be
integrated into services and
supporting processes between
the organization, its suppliers
and the customer”.

5.5 CONTINGENCY PLAN
• Actions required
for significant risk
• Assignment of
responsibility &
authority
• Internal and
external
communications
Outputs
Integration
Disruption
Prevention
Mitigation
Measures
Spares
History Risk
Reliability
Contingency
Planning

5.6 PURCHASING & CONTROL OF SUPPLIERS
• Determine criticality of the
services and SRP
• Evaluation & Onsite audits
for critical suppliers.
Critical – That deemed by the organization or customer as indispensable or essential,
needed for a stated purpose or task, and requiring specific action

5.7.2 SERVICE QUALITY PLAN
Customer Specific for the
Service being performed
Takes into account
Environmental &
Operational Conditions Design and
Development
Personnel
Competence
Contract
Requirements Identification of
Equipment
Risk
Assessment
Contingency
Planning

5.7.3 IDENTIFICATION AND TRACEABILITY
• Identification controls must be
put into place to clearly identify
all stages of delivery,
installation, repair
(maintenance), and redress
• Service-related product shall be
identified.
• Critical service-related product
shall be identified and
traceable.

5.7.8 PMITP
Is applicable to Service Related Product (SRP)
Equipment Maintenance is handled under Work Environment.
Corrective
Preventive
Predictive• Expensive
• Results in NPT
• Minimizes Corrective
Maintenance
• Focus of API Spec Q2
• SRP Integrity and
Reliability

5.7.8 PMITP
Corrective
Preventive
Predictive• Expensive
• Results in NPT
• Minimizes Corrective
Maintenance
• Focus of API Spec Q2
• SRO Integrity and
Reliability
• Reports that document history use, repairs,
modifications, remanufacturing, inspection and test
activities that all direct verification for reuse of
product;
• List of critical spare parts requirements by the
customer and/or technical requirements including
those by the OEM
• Controls that ensure equipment integrity to original
performance requirements and design acceptance
criteria are maintained
• Original performance requirements that cannot be
met shall undergo the MOC process

5.7.8 PMITP
• OEM
• Application, use, environments
• PMIT = OEM Recommendations + Owner
of the equipment

5.9 SERVICE PERFORMANCE VALIDATION
Validation must be:
• Differs from Validation for
manufactured product
• Validations occur during and
after execution of service(s)
• Carried out in accordance with
Design (5.4), SQP (5.7.2) and
acceptance criteria

5.10.4 CUSTOMER NOTIFICATION
• Customers shall be notified:
– When service execution,
does not conform to
requirements
– When SRP does not
conform which has been
delivered or used in the
execution of a service

Management
of Change
Process
Execution
Changes
Management
System
Changes
SRP & Design
Changes
Risk
Assessment
Customer
Notification
No
Yes
No
Customer
Accepts?
Higher
Risk?
End of Process
End of Process
Change in
Personnel &
Suppliers
Yes
5.11 Management of Change

Impact on Drilling Operations
Resources
-90+ 0 4010 20 160+80
Risk
Assessment
Drilling Operations
Design of
Service
PM
Programs
Contingency
Planning
Maintenance
& Critical Spares
• Assembly
Insp / Test
QA/QC
• Service
Performance
Validation
•BHA Inspections
•MOC
Critical
Suppliers
Time ( rig days)(AFE) Spud
Operations Support
• Well Integrity
Reduction of NPT
Contractor Influence
APISpecQ2
• Tool Insp
@ delivery
Competency
Service
Quality Plans

SUMMARY & BENEFITS

INDUSTRY IMPACT
Operators
Service
Providers
Suppliers
Regulators
and other
Interested
Parties

It is not a template that
you fill in and claim
compliance.
It is not a cross
reference between your
management system
and your customer’s.
It is not a manual with
new buzz words that
you present to your
customers.
WHAT API SPEC Q2 IS NOT

It is about service quality and risk mitigation supported by
validation and actual service provider performance.
WHAT API SPEC Q2 IS

Benefits of Standardization
• Improves service related product reliability
• Minimizes risk through identification, planning & controls
• Identifies critical tasks that impact quality, safety and the
environment
• Minimizes service related risk and improves efficiencies
• Improves communication between service providers and their
suppliers and operators.

INDUSTRY
COLLABORATION

Industry Collaboration
Beta Test Site Assessments:
• Gaps, hurdles and milestones for auditing to Q2
• Identify competencies / training for API Staff / Auditors
• Identify needed resources
• Types of certifications needed to meet industry needs
• Baker - Completed
• Schlumberger – Completed
• Weatherford – Completed
• Halliburton – Completed
• Orion Drilling – Completed

API Spec Q2 Mock Audit:
• Halliburton – Bakersfield, CA
• July 29th – August 2nd 2013
PSL Covered
• Drilling Fluids & Solids
• Cementing
• Completion Tools
• Production Enhancement
• Directional Drilling / MWD / LWD
• Wireline and Perforating

API Spec Q2 Reviews:
•Orion Drilling
•Maersk Drilling
•Akita Drilling
•Parker Drilling
•Transocean
•MI Swaco

EVOLUTION OF API SPEC Q2
DEVELOPED PUBLISHED BETA TESTING COMPLIANCE CERTIFICATION
API Spec Q2 was
developed in 2010
through 2011.
API Spec Q2 was
published in
December 2011.
A combination of
operators and service
providers participated
in the beta test.
Service providers
start getting their
QMSs in compliance
with API Spec Q2.
Service providers
become certified in
API Spec Q2.
EXPECTATION
Service providers shall
be in compliance in
order to bid on jobs
requiring API Spec Q2.

QUESTIONS ?

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