API Sub-Committee 18 TG3 Report

1. API Sub-Committee 18 TG3 Report June 14, 2012 Westin WestminsterHotel Westminster, Colorado, Texas Ed Durante, Chairman

2. The First TG3 meeting held November 15 & 16 in Houston • The second TG3 meeting held January 24 in Fort Worth, during the Winter Standards Conference • The Third TG3 meeting held May 3 in Houston TG3 Report to SC18

3. The 3rdTG3 meeting held May 3,2012 Attending TG Members: Ed Durante (TIEC), Chair Larry Thomas (Weatherford) Kendall Keene (Stream-Flow) Garrett Schopper (NOV)) Rick Faircloth (Cameron) Celine McCulloch (GE Oil & Gas) RaoufNaguib (Woodco) Austin Freeman (Halliburton) Bart Bartholomew (FMC) David Zollo (FMC) Amos Ware (NOV) Don Whittaker (API) Carlo Iasella (US Steel) via Telecon TG3 Report to SC18

4. Previous meetings identified several options for identifying requirements for licensees under the monogram program. These options include: • Self-Disclosure of  capabilities. The licensee would identify their capabilities during the application process and whenever changes to those capabilities occur. These would then be verified during on site audits. The TG found that this option is viable when combined with the establishment of minimum activities required to be performed by licensees. • Percentage of materials and/or Labor. Identifying minimum activities by quantifying content, labor or other measureable characteristics in the manufacturing of the products. The TG found that this option would be impractical in quantifying percentages of measurable characteristics for the various products and processes involved in the monogram program. • Established Minimum Activities for Licensees: Identifying the key manufacturing and/or production activities that must be performed by the licensee, and which Can Be Outsourced/Performed Offsite. TG3 Report to SC18

5. Categories of Manufacturers under the Monogram Program Product Fabricator - An organization that transforms material into finished product through forming, welding, blending, etc. (Fabricators shall have in-house equipment, and personnel and shall perform the required processes needed to produce the products under the scope of the license) Processor - An organization that changes the chemical/metallurgical/mechanical properties or characteristics of material and/or product through Heat treating, Casting, Forging, etc. (Processors shall have in-house equipment and personnel and shall perform the required processes needed to process products under the scope of the license) Assembler – An organization that assembles components (NOT Re-Assemble) into finished products through welding, bolting, joining, etc. (Assemblers shall have in-house equipment, personnel and shall perform the required processes needed to produce the products under the scope of the license) TG3 Report to SC18

6. Categories of Manufacturers under the Monogram Program Tester – A Third party organization that verifies the capabilities of finished products to meet specified requirements of API Spec 6AV1 and/or 14A. (Testers shall have in-house equipment, personnel and shall perform the required tests needed to certify conformance to the product specification under the scope of the license) Machiner – An organization that changes the physical dimensions of material and/or product through mechanical processing (cutting, grinding, honing, drilling, milling, turning, etc.) (Machiner shall have in-house equipment, personnel and shall perform the machining operations needed to produce the products under the scope of the license) TG3 Report to SC18

7. The TG also identified various types of organizations that should not be considered for Monogram licensing. • Non-Licensable Organizations include: • Distributor– An organization that buys and sells finished products and materials. • Designer – An organization that performs engineering design activities. • Remanufacturer/Repairer– An organization that repairs and/or remanufactures an existing product through machining, welding, replacement of parts to bring product back to original capability. • Plating/Coating Provider– An organization that applies surface finishes through chemical processing or through the application of protective coating. TG3 Report to SC18

8. During the May 3 meeting, the Task Group applied the categories to: •API 6 Series Specifications, •API 5 Series Specifications, •API Specification 4F and •API 11 Series Specifications, Identifying processes that must be performed at the licensed facility (noted as “YES”) and those processes that may be outsourced or performed offsite. TG3 Report to SC18

9. Spec 6A, 6D, 600 Series: Assembled Equipment: Examples of Assembled Products: Valves, Fluid Sampling Devices, Casing/Tubing Hangers, Chokes, SSV/USV, SSV/USV Actuators, Back Pressure Valves, Actuators. Category:AssemblerActivities to be performed at licensed facility Product Design – (Outsourced/Performed Offsite) Procurement (Yes) Receiving Verification (Yes) Machining (Outsourced/Performed Offsite) In-process Inspection (Yes) Assembly (Yes) Welding (Outsourced/Performed Offsite) Verification Testing (Yes) Special Testing (Outsourced/Performed Offsite) [Gas/NDE] Monogram Marking (Yes) Final Inspection (Yes) Painting/Coating (Outsourced/Performed Offsite) Storage/Preservation (Yes) TG3 Report to SC18

10. Spec 6A, 6D, 600 Series: Component Equipment: Examples of Machined Products: Casing Tubing Heads, Crossover Connectors, Tubing Head Adapters, Top Connectors, Tees/Crosses, Adapter/Spacer Spools, Casing and Tubing Hanger Components, Flange Connectors, Threaded Connectors, Other End Connectors, Bull Plugs, Valve removal Plugs, Ring Gaskets. Category: MachinerActivities to be performed at licensed facility Product Design (Outsourced/Performed Offsite or Excluded per API Advisory 6) Material Procurement (Yes) Receiving Verification (Yes) Machining (Yes) In-process Inspection (Yes) Welding (Outsourced/Performed Offsite) NDE Testing (Outsourced/Performed Offsite) Monogram Marking (Yes) Final Inspection (Yes) Painting/Coating (Outsourced/Performed Offsite) Storage/Preservation (Yes) TG3 Report to SC18

11. 5 Series Specifications: Tubular Goods : Examples of Fabricated Products: Casing, Tubing, Line Pipe, Drill Pipe, Pup Joints Pipe mill: Category:Fabricator Activities to be performed at licensed facility Material Procurement (Yes) Receiving Verification (Yes) Forming (Yes) Welding (Yes) Testing (Outsourced/Performed Offsite) End finishing (Outsourced/Performed Offsite) Final Inspection (Outsourced/Performed Offsite) Coating (Outsourced/Performed Offsite) Monogram Marking (Yes) AMA Allowed Storage/Preservation (Outsourced/Performed Offsite) TG3 Report to SC18

12. 5 Series Specifications: Tubular Goods :Processing Category:ProcessorActivities to be performed at licensed facility Material Procurement (Yes) Receiving Verification (Yes) Upsetting (Yes) Heat Treating (Yes) Mechanical Testing (Outsourced/Performed Offsite) Inspection (Yes) Monogram Marking (Yes) AMA Allowed Storage/Preservation (Outsourced/Performed Offsite) TG3 Report to SC18

13. 5 Series Specifications: Tubular Goods :Couplings Category:MachinerActivities to be performed at licensed facility Material Procurement (Yes) Receiving Verification (Yes) Threading (Yes) Inspection (Yes) Monogram Marking (Yes) AMA Allowed Plating/Coating (Yes) Storage/Preservation (Outsourced/Performed Offsite) TG3 Report to SC18

14. 5 Series Specifications: Tubular Goods :Threader Category:MachinerActivities to be performed at licensed facility Material Procurement (Yes) Receiving Verification (Yes) Threading (Yes) Inspection (Yes) Monogram Marking (Yes) AMA Allowed Storage/Preservation (Outsourced/Performed Offsite) TG3 Report to SC18

15. 5 Series Specifications: Tubular Goods :Accessories Category:MachinerActivities to be performed at licensed facility Material Procurement (Yes) Receiving Verification (Yes) Upsetting (Outsourced/Performed Offsite) Heat Treating (Outsourced/Performed Offsite) Mechanical Testing (Outsourced/Performed Offsite) Testing (Yes) Inspection (Yes) Monogram Marking (Yes) AMA Allowed Coating (Yes) Storage/Preservation (Outsourced/Performed Offsite) TG3 Report to SC18

16. API Specification 4F:Structures Examples of structures: Masts, Derricks, Crown Block Assemblies, Substructures. Category: AssemblerActivities to be performed at licensed facility Product Design (Outsourced/Performed Offsite) Material Procurement (Yes) Receiving Verification (Yes) Machining(Outsourced/Performed Offsite) Welding (Yes) NDE Testing (Yes) Load Testing (Outsourced/Performed Offsite) Inspection (Yes) Painting/Coating(Outsourced/Performed Offsite) Monogram Marking (Yes) TG3 Report to SC18

17. API 11Series: Assembled Products Examples of Assembled Products: Subsurface Sucker Rod Pumps, Pumping Units, Packers, Bridge Plugs Category: Assembler Activities to be performed at licensed facility Product Design (Can Be Outsourced Performed Offsite) Material Procurement (Yes) Receiving Verification (Yes) Machining(Outsourced/Performed Offsite) Heat Treating (Outsourced/Performed Offsite) Vacuum Testing (Outsourced/Performed Offsite) Final Inspection (Yes) Final FAT Testing (Yes) Plating/Coating(Outsourced/Performed Offsite) Monogram Marking (Yes) Storage/Preservation(Outsourced/Performed Offsite) TG3 Report to SC18

18. API 11Series: Component/Machined Products Examples of Component/Machined Products: Sucker Rods, Balls, Seats Category:MachinerActivities to be performed at licensed facility Product Design (Outsourced/Performed Offsite) Material Procurement (Yes) Receiving Verification (Yes) Machining (Yes) Upsetting (Yes) Heat Treating (Outsourced/Performed Offsite) Final Inspection (Yes) Plating/Coating(Outsourced/Performed Offsite) Monogram Marking (Yes) Storage/Preservation(Outsourced/Performed Offsite) TG3 Report to SC18

19. Thank You TG3 Report to SC18