In the late 1990s, natural gas was discovered in the Gulf of Guinea. For a long time, only the liquid gas underwent processing – the dry gas was simply flared as an unwanted by product.. “You would go into the town of Malabo on Bioko Island in Equatorial Guinea, Africa, and see the local artists painting the coastline with a bright orange sky,” says Mark Grone, IT Consulting Specialist at Marathon Oil Company. Grone is responsible for the implementation of SAP software at the company’s equity subsidiary, Atlantic Methanol Production Company (AMPCO).
In 2001, Atlantic Methanol Production Company, held by Marathon Oil Company, Noble Energy, and Sonagas , began to monetize the dry gas through the development of a methanol production plant. AMPCO uses it for methanol production, which can then serve as a precursor for methyl tertiary butyl-ether (MTBE) or formaldehyde for resins and other chemicals. None of the partners has a controlling interest, which makes AMPCO an equity affiliate of the parent entities.
Do gas fields and methanol production conjure up images of hard physical work? Yes, indeed, according to Grone. The methanol is produced in Equatorial Guinea, where about 200 to 250 people run the plant 24 hours a day, seven days a week. “They are mostly contract employees. We have quite a diverse workforce of South Africans, British, Filipinos and Equatoguineans to name a few. The majority of the workforce, works on a rotating schedule – some people do 28 days on the island and 28 days off. Other rotations can be as hard as 14 weeks on and three weeks off,” says Grone.
Hard tasks: physical and in IT
But more than physical work is required to produce, sell, and ship the methanol. It’s also a serious IT challenge that AMPCO must deal with because of the company’s geographical setup and structure. AMPCO Production is based in Equatorial Guinea. The other two divisions, AMPCO Services and AMPCO Marketing, are located in Houston, with a staff of 10 to 15 employees.
In 2004, AMPCO Production realized that it had a problem with its computerized maintenance management software (CMMS), so it kicked off a replacement project. It originally ran PEMAC, but later implemented Maximo. Marathon Oil Company, one of the parent companies that also runs a production site in Equatorial Guinea, runs on SAP R/3 4.6C – and hopes to upgrade to SAP ERP this year. Marathon Oil also uses plant maintenance functionality from SAP. Because Maximo is a world-class CMMS system, AMPCO didn’t want to go backward, getting rid of everything it already had just to implement the plant maintenance functionality. “AMPCO Production uses Maximo for plant maintenance, work orders, inventory control, and procurement functions,” says Grone. “But AMPCO Production was still not satisfied with the financial processes package called Cedar G/L,” he adds.
Three Companies, three parent companies, and multiple software solutions
With the old process, Maximo would run a batch job that took over 16 hours to handle all the activity that took place in one month – every material movement, every goods receipt, would be interfaced into the Cedar G/L system in a single batch. “Hopefully, the transactions got hooked to the right project or cost center, but we couldn’t exactly tell,” says Grone. In addition, much of the maintenance, repair, and operations (MRO) materials for the site are procured in the United States or the United Kingdom. When AMPCO takes title of the goods with delivery to the freight forwarder, the company is responsible for payment. Yet it still takes about six weeks before the goods are put into a container, loaded into a ship, and shipped to Equatorial Guinea. “In the past, AMPCO didn’t have a very good idea of exactly what was coming and when it was coming. Some of the goods were actually being received once, twice, or multiple times and AMPCO didn’t have visibility to see that.”
To compound the problem, the Houston-based companies (AMPCO Services and AMPCO Marketing) didn’t have their own financial systems. They were piggy-backed on the home-grown A/S 400 legacy financial system of Noble Energy, another of AMPCO’s parent companies. The interplay of all the systems and processes made it very difficult for the managers to get a balance out of all the data collected at the end of the month. That’s when AMPCO decided to correct some of the sins of the past.
SAP All-in-One as the best fit for 300 to 400 functional requirements
“I work for Marathon Oil, which implemented SAP on January, 1, 2003 at its site in Punta Europa,” says Grone. “That’s what has been dragging me back and forth and has helped me build relationships among the other companies that are collocated on the site,” he adds. So it was almost natural that he was involved in vendor selection and implementation with Marathon Oil’s equity subsidiary, AMPCO.
AMPCO first looked at each of the functional areas and created a list of its functional requirements. “Finally, we had a list of 300 to 400 functional requirements,” he says. AMPCO also decided that it would not have an enterprise-type platform because it’s a true midmarket company. From that starting point, AMPCO took a closer look at several software vendors, including Microsoft and JD Edwards. Some discussion focused on Marathon Oil’s instance of SAP software, but it did not have a configuration of the sales and distribution functionality that AMPCO needed for its marketing operations. That’s when “we got in contact with IDS Scheer, and they came in and presented SAP All-in-One,” recalls Grone. “After going through the exploration and vendor demos again and comparing them to our wish list, we thought that SAP All-in-one was the right solution for AMPCO.”
The completion of the project included over two years of analysis, documentation of functional requirements, and reviews of software vendor selection. The implementation began on June 12, 2006. It required collaboration with IDS Scheer as the SAP system implementer, Peacock Engineering for Maximo development, SAIC as the design consultant for the Maximo interface solution, and TK & Associates for SAP security. SAP Hosting takes care of hardware hosting and basis support. AMPCO went live with its separate SAP solution on October 1, 2006.
Compliant data, full visibility
“The processes are running great,” concludes Grone. “Take the interaction of Maximo and the financial system. I originally wanted to keep it low-tech and just do a batch process once a day from Maximo into SAP software. But the SAIC consultant came up with a different idea. Maximo generates XML files to collect the transactions that have taken place and places them on an FTP server. The SAP software uses a business-to-business connector to pick up the data, turn it into IDocs, and then processes it with the SAP All-in-One application. So management in Houston or Equatorial Guinea is immediately able to say, ‘Yes, I used two six-inch flanges in the plant,’ or ‘I put a new pump in this area,’” says Grone.
AMPCO just interfaced Maximo to the SAP software to obtain all the financial data it needs, for payment processing, compliance with the Sarbanes-Oxley Act, Foreign Corrupt Policies Act, and the Patriot Act. “Now AMPCO has a decent security matrix with roles that people can work with,” says Grone. AMPCO also facilited the departments working together a lot more now that accounting has to rely on marketing to generate sales orders and invoices. There is more segregation of duties, but each of the departments is less of a silo than it had been. The solution gives AMPCO the ability to control its IT strategy and makes the company independent of the shareholder’s IT infrastructure.
“Of course we’ve had some minor hiccups, but really nothing that could be significant. What counts is that AMPCO has a solution to provide business visibility across all three companies, with business process documentation for financial, marketing, and materials management functions,” says Grone. “The robust interplay of SAP’s financial functionality and the Maximo CMMS provides employees with more timely and useful detail,” summarizes Grone.
One of most fascinating things Grone learned during the implementation project is related to culture. “When Marathon Oil Company rolled out SAP software, you had a user base that had to go to training. All too often, you would hear ‘I don’t have time for this,’ or ‘Why don’t we keep using the old process?’ The Equatorial Guineans and expatriate workforce understood that AMPCO was teaching them a skill that is marketable anywhere in the world. It’s a truly professional task and they were absolutely wonderful to work with in that regard,” concludes Grone.