EXTRAORDINARY INNOVATION PROJECT. Going remote. Rethinking offshore operations SAFER, SMARTER, GREENER

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1 Going remote EXTRAORDINARY INNOVATION PROJECT Rethinking offshore operations SAFER, SMARTER, GREENER

2 2 The situation today Extraordinary Innovation Project Extraordinary innovation project The situation today 3 Our way of thinking out loud Innovation starts with understanding the current situation, being open-minded, learning from others and playing with ideas. In DNV GL s Extraordinary Innovation Projects, we use this approach to take a fresh look at the industries we work with and the challenges they face. Our aim is to inspire our stakeholders to think differently and support the development of safer, smarter and greener solutions to their problems. Here at DNV GL, we reinvest 5% of our revenue in Research and Innovation to service customers, industry and society at large while supporting our objective of safeguarding life, property and the environment. We provide technology leadership across a range of industries and are therefore uniquely placed to look at achievements in other sectors as a way of identifying building blocks that, put together differently, can meet new challenges. On the following pages, we present Solitude, an offshore concept based on an unmanned floating LNG installation. While Solitude is a holistic concept, many of its solutions can be implemented independently and some are already available today. We believe this concept can promote an increased focus on future operational opportunities and how they can impact design decisions that ensure greater efficiencies post commissioning. These projects are our way of thinking out loud. Our aim is to present high-level concepts that can form a basis for discussion and be further developed in collaboration with the industry. We see Solitude as a new opportunity for the future and look forward to being part of the coming developments. In this Extraordinary Innovation Project, we have examined the future of offshore operations in remote areas. We looked to subsea innovations such as unmanned operations and modular design for inspiration and explored expected technology developments towards How can offshore installations adapt to and benefit from technology developments in order to meet the criteria for future success? Elisabeth Tørstad CEO Oil & Gas

3 4 Contents Extraordinary Innovation project Extraordinary innovation project Contents 5 ContentS 06 THE SITUATION TODAY 10 FLNG: SIGNIFICANT CHALLENGES AHEAD 12 SUCCESS CRITERIA FOR FUTURE OFFSHORE INSTALLATIONS 14 CASE: FLNG FOR THE FUTURE 18 EVALUATING THE CASE 20 GOING REMOTE HOW TO GET THERE About Extraordinary Innovation projects in DNV GL These projects allow international project teams to explore a specific field of technology or draft a new concept to be tested in the market. The ambition is to sketch out new ideas which might lead to new business opportunities within a two-year horizon. Today s offshore oil and gas industry faces a number of challenges, including rising costs and reduced tolerance for safety or environmental lapses. Increasingly the market is turning to natural gas, however this often requires commercialisation of discoveries in remote areas. These new remote areas bring their own complex challenges around infrastructure, logistics, safety and commercial attractiveness. Floating liquefied natural gas (FLNG) provides a potential solution to many of these challenges. In this study, DNV GL examines the future of offshore operations in remote areas, focusing on natural gas. Using FLNG as a case study, we present an exciting vision of what future offshore operations could look like. We hope this vision helps to inspire the industry to think differently about how it can become safer, smarter and greener.

4 6 The situation today Extraordinary Innovation Project Extraordinary innovation project The situation today 7 THE SITUATION TODAY A series of systemic challenges Globally the offshore oil and gas industry faces a series of challenges: Production replacement: Oil and gas companies are struggling to replace production as existing fields decline. A large number of resources remain stranded, particularly in remote areas. Higher costs: Oil and gas companies have been hit by doubledigit growth in both capital and operational expenditure in the last decade, hurting profitability and free cash flows. There is also increased competition to access large development projects. Natural gas the fastest growing fossil fuel Natural gas is relatively abundant, flexible as a fuel and produces lower emissions to air than other fossil fuels and global demand is set to grow 50% over the next twenty years. 1 To meet this demand a variety of gas reserves need to be developed, both conventional onshore and offshore as well as unconventional resources such as shale, tight and coal-bed gas. The strategic importance of energy security for many countries is fuelling interest in gas resources which would otherwise be considered only marginally profitable. Safety: Attention to safety has steadily increased over the past decades, and this trend is expected to continue. There is now zero tolerance for major accidents, regardless of where they occur. Environment: Damage to the environment continues to be increasingly unacceptable in wider society. Oil and gas companies face increasing scrutiny and stricter regulations regarding their environmental impact. Thus there is both an opportunity and a need for the industry to develop safer, smarter and greener solutions. Moving into remote waters This study focuses on the offshore gas sector, which is now entering a challenging period. Many mature near-shore fields with infrastructure already in place are reaching the end of their production life. Companies are seeking to develop new reserves that are increasingly complex and remote, such as in East Africa. Many of the undeveloped gas resources are located in remote areas, far from shore and/or without any infrastructure in place to enable the gas to be processed or exported. Pipeline infrastructure in these remote areas is rarely feasible due to the large distance between the field and the end user. Therefore a large fraction of the new gas reserves has to rely on liquefied natural gas (LNG) for transport to the market if it is to be commercially attractive. Remote gas discoveries including some in the Arctic, in the South Atlantic and near Australia often end up as stranded gas, as the level of investment required to develop and to operate them renders projects commercially unattractive. 1 International Energy Agency (2014). World Energy Outlook International Energy Agency, Paris, France.

5 8 The situation today Extraordinary Innovation project Extraordinary innovation project The situation today 9 SHARE SHAREOF OFTOTAL TOTALGAS GASDEMAND DEMANDIN IN (%) (%) OECD OECD North NorthAmerica America Asia AsiaOceania Oceania Europe Europe Non-OECD Non-OECD E.Europe/Eurasia E.Europe/Eurasia Asia Asia Africa Africa Middle MiddleEast East Latin LatinAmerica America EUROPE EUROPE 39% 39% E.E.EUROPE EUROPE EURASIA EURASIA JAPAN JAPAN MIDDLE MIDDLEEAST EAST 2 2 GAS GASDEMAND DEMANDINCREASE INCREASEIN IN (%) (%) OECD OECD20% 20% Non-OECD Non-OECD68% 68% 61% 61% INDIA INDIA Connecting the dots AFRICA AFRICA 43% 48%: Expected rise in LNG s share of inter-regional gas trade from 2012 to STRANDED STRANDEDGAS GASRESOURCES RESOURCES BRAZIL BRAZIL All numbers given in percent USA USA CHINA CHINA International Energy Agency (2014). World Energy Outlook International Energy Agency, Paris, France. Douglas-Westwood (2014) LNG already meets the entire gas demand in countries such as Japan and South Korea and is increasingly used to plug supply gaps elsewhere. Asia imported nearly 75% of global LNG in 2013, and is expected to continue to dominate the LNG market in the coming decades. North American shale gas is moving to supply the international market with the export of LNG, a seemingly unthinkable scenario ten years ago. The shipping and storage infrastructure for LNG is growing rapidly, as is the end-use market.

6 10 FLNG Extraordinary Innovation project Extraordinary innovation project FLNG 11 FLNG SIGNIFICANT CHALLENGES AHEAD A potential solution for developing offshore gas resources in remote areas is floating LNG, usually called FLNG. While conventional LNG production from offshore gas fields requires pipelines to onshore liquefaction facilities, FLNG simplifies the LNG supply chain by combining several steps offshore. The gas is processed, liquefied, and stored on board the FLNG unit. LNG is then transferred to LNG carriers that transport it directly to the market. Unlike onshore liquefaction facilities, FLNG units can be built in existing centralised yards, eliminating the difficulties of developing remote onshore facilities and greatly reducing planning and construction time. The mobile nature of FLNG units also allows them to be repositioned and theoretically reused during their lifetime, including potentially being deployed for the liquefaction of shale gas for export. The FLNG industry is developing rapidly. However, though a number of FLNG concepts have been discussed over the past twenty years, there are only a few units currently under construction and the first unit is not anticipated to be on stream until late In order for FLNG to develop into a large-scale mainstream solution it must address the following challenges: Safety: FLNG operators will need to prove their ability to safeguard both personnel and assets. Risks such as explosion, fire and cryogenic leaks all need to be meticulously managed, and robust strategies for search and rescue operations in remote areas must be developed. High cost: Currently FLNG units involve large initial investments compared to other offshore developments in the oil and gas industry. FLNG operators need to provide cost-effective solutions to the complex, logistical issues of establishing and maintaining the necessary support infrastructure in remote areas. The competitive position of FLNG has been helped by the increasing costs of onshore LNG developments in some areas, however it faces price competition from North American shale gas, which is likely to bring LNG to the global market at lower prices than those currently anticipated from FLNG projects. Large investments and uncertain profitability means FLNG needs new solutions in order to compete for capital. Environmental footprint: FLNG operators benefit from having no physical impact onshore but may need to improve the high levels of energy used in their processes in order to reduce CO2 emissions.

7 12 Future success criteria Extraordinary Innovation project Extraordinary innovation project Case study introduction 13 SUCCESS CRITERIA FOR FUTURE OFFSHORE INSTALLATIONS INTRODUCING FLNG FOR THE FUTURE How can offshore installations adapt to and benefit from technology developments to meet the criteria for future success? In this case we consider the expected developments towards 2030 and what the implications might be for FLNG design and operation. Given the challenges in the oil and gas industry today and those anticipated in the future, it is possible to list a number of points critical to measuring the success of offshore installations in the future: Low personnel risk: Personnel risk at the same level or lower compared to today s offshore installations. Low asset risk: Asset risk at the same level or lower compared to today s offshore installations. Reduced life-cycle cost: A significantly lower-life cycle cost compared to today s offshore installations. Reliable, robust and resilient systems: The asset s systems should be able to adjust their functioning prior to, during and after changes and disturbances, so that the asset can sustain required operations under both expected and unexpected conditions. 4 Efficient supply and maintenance logistics: Significantly lower total costs for supply and maintenance compared to today s offshore installations. Small environmental footprint: Reduced emissions to air and discharges to sea throughout the lifetime of the installation. Advances within IT Developments in IT will continue to have a profound effect on the offshore industry. Anticipated developments over the next decades include: Better sensor technologies; improved offshoreonshore connectivity; on-going advancement in software tools; and increased computing power. IT has also enabled more far-reaching concepts, such as big data, which provide the offshore industry with new ways to collect, store and process data to better inform decisions. These developments will have a big impact on fault detection, maintenance and repair planning, automation, and remote operations. Removing people Given the on-going advances within autonomous systems and remote operations, unmanned offshore installations are a natural development over the next decades. Unmanned operations are not new in oil and gas; operators are already controlling subsea installations and simple, fixed offshore installations from shore. Deploying an unmanned floating installation with complex processes in a remote location, however, is new. While this is clearly challenging, removing people from FLNG operations allows for a different design approach and addresses the main challenges identified for FLNG, namely the need to reduce cost, improve safety and lessen environmental impact. On the next page, we present the concept Solitude, a platform to inspire the offshore industry to think differently and broadly about how it can become safer, smarter and greener. 4 Center for Integrated Operations in the Petroleum Industry (2010). Resilience Engineering and Integrated Operations in the Petroleum Industry. IO-center (SINTEF) report no: SINTEF A ISBN

8 14 Case study Extraordinary Innovation project Extraordinary innovation project Case study 15 SOLITUDE rethinking offshore design and operation Next generation wireless micro/nano-sensor network Provides the on-board eyes and ears, feeding a model-based condition monitoring system enabling efficient fault detection, proactive maintenance, and repair planning. This concept is not an attempt to present a mature FLNG design. Rather, this is a high-level concept and description of what future offshore operations could look like, exploring the opportunities enabled through the application of new technologies and approaches. An unmanned, autonomous unit Monitored and controlled from shore with no permanent crew onboard. Fuel cells Replacing high-maintenance gas turbines. On-site support vessel With a crew, provides emergency response, security and back-up control system functions. Offloading To LNG carriers with dynamic positioning capability using cryogenic flexible hoses in tandem configuration. simplified process plant With robust components and built-in redundancy, designed to run without human intervention during normal operations. Autonomous inspection and maintenance units Enables safe and efficient inspection, maintenance and repair. Dock-in solution for special purpose vessel Supports safe, efficient transfer of personnel and equipment. Modular design Enables easy replacement of components and efficient logistics.

9 16 Case study Extraordinary Innovation project Extraordinary innovation project Case study 17 MAIN FEATURES OF SOLITUDE Unmanned operations Some of the main benefits of unmanned operation include the following: Reducing asset risk The blow down rate is usually restricted by radiation exposure limits to the crew; but with no people onboard the flaring rate could be increased. A gas fire can be stopped within tens of seconds rather than minutes as for conventional systems. This could be the difference between total asset loss and a short-term production interruption. Reducing risk to personnel As there will be no one living onboard or working on the topside during normal operation, the associated safety risks are eliminated and personnel safety greatly enhanced. Designing for maintainability A simplified process plant Highly efficient process plants with a large throughput normally require continuous monitoring and maintenance from personnel on board. By changing the focus from maximum efficiency to maximum reliability, and selecting a robust process with built-in redundancy, required production levels can be achieved. Reliable system The topside equipment is simple and robust with limited moving parts. There will be pre-installed spares for more complex equipment. Given the timeframe of this case, high-maintenance gas turbines could be replaced by reliable, easily modularised fuel cells that will require minimal maintenance and are fuelled by methane. Modularisation and automated maintenance Modular design The majority of topside failures and repairs do not involve large items but smaller sub-units that can be easily replaced. The exceptions are larger items such as the compressor strings, and these will be designed to be broken-down into smaller submodules and mounted on their own skid for ease of removal and maintenance. Robotics for inspection and maintenance Autonomous inspection units (AIUs), together with fixed sensors, will be the on-board eyes, ears, noses and vibration detectors of the operating staff. If there is an issue, an autonomous maintenance unit (AMU) can be deployed. The AMUs will replace smaller modules in case of failure, and cranes on the FLNG will support the replacement of heavier modules. For more specialised tasks AMUs can be remotely controlled by a human operator. Safe transfer solution A support vessel delivers spare modules and other supplies to the FLNG unit on a quarterly basis, and returns failed modules to shore. The vessel will have an on-board workshop allowing for module repairs out in the field and will provide a platform for campaign maintenance. Transfer of people and goods offshore is a risky operation. By docking the support vessel into the FLNG unit, and fixing it by de-ballasting, the vessel supports safe and efficient transfer of personnel and supplies.

10 18 Case study Benefits and challenges Extraordinary Innovation project Extraordinary innovation project Case study Benefits and challenges 19 EVALUATING THE Concept Solitude offers the potential for developing a significantly safer, smarter and greener offshore industry. If its potential is to be fulfilled however, there are several remaining challenges to overcome. SAFER SMARTER GREENER SUCCESS CRITERIA Low personnel risk Low asset risk Reduced life-cycle cost A reliable, robust and resilient system Efficient supply and maintenance logistics Small environmental footprint Business case Below is a comparative analysis between a conventional manned FLNG and an unmanned FLNG unit. 5 5% increase in CAPEX 18% reduction in OPEX per year BENEFITS No permanent personnel living onboard. Reduced exposure to personnel by using autonomous units for normal inspection and maintenance tasks. Shut down when operators enter the process plant. Faster blow down in emergency situations. Improved ventilation, providing lower risk of explosion and fires. Nitrogen expander liquefaction process reducing hydrocarbons on topside. Fewer leaks, fewer flanged connections and fewer valves due to simpler system and better monitoring and control. Reduced costs due to having no personnel permanently on-board and therefore no superstructure/ living quarters or related facilities. Simplified safety systems that focus on better protection of topside equipment. Less personnel and life support requirements. Increased reliability due to simpler, more resilient design. Simplified process plant requiring less maintenance. Sophisticated monitoring system to better predict component failure and enable improved maintenance and repair planning. Reduced downtime due to easily replaceable modules. Reduced transportation of personnel and life-support goods. Standardised components reduce number of required spare parts. Docking for delivery of modules enables safer transfer operations. Reduced impact due to no living quarters or life support systems for personnel. Less transport of personnel and supplies CHALLENGES Likely scepticism from operators and the public. Need to design autonomous equipment and control systems. Need to design systems to replace humans for the full spectrum of operation and maintenance tasks. Perception of increased risk due to sensors and autonomous units replacing real eyes and ears. Risk of dropped modules damaging equipment and tanks on the topside. Longer response time in case of unforeseen events requiring human operators. Increased costs to develop robotic inspection and maintenance units, smart sensors and purpose-built support vessel. Offloading from an unmanned unit requires more CAPEX than a manned unit Efficiency sacrificed for robustness. Need to create modular FLNG topside. Risk of loss of communication during operation and offloading. Need to design simplified, resilient systems. Obtaining Shelf State and Class approval for remotely operated and autonomous systems. Need to create connections to FLNG for transfer of topside consumables. Need to develop optimal supply chain strategies. Relatively low efficiency from nitrogen expander liquefaction process. 0 Conventional FLNG Unmanned FLNG OPEX (mill. USD/year) Logistics Operating personnel costs Maintenance costs Other 5 The numbers are based on a comparative analysis of a project of similar size. In addition to the quantified changes for capital expenditure, other elements that are more difficult to quantify will impact cost. For example, robotics for maintenance will drive cost up, while a simplified topside will reduce cost.

11 20 How to get there Extraordinary Innovation project Extraordinary innovation project How to get there 21 Going remote How to get there How can we use new technology and new ways of operating to improve the offshore industry? The FLNG case study shows that significant benefits can be achieved by: Removing people from normal operation; designing for maintainability; modularisation; using robotics for maintenance; and implementing a safe transfer solution from vessels to installations. Developing the next generation of offshore installations will not happen overnight. Some key elements are commercially available today in state-of-the art facilities, some are in the pipeline or need further development, and other elements remain on the drawing board requiring significant further work. Industry collaboration Industry collaboration is a prerequisite for a holistic system concept like Solitude to be realised. Currently, offshore projects are subject to and complicated by a wide range of differing industry standards and regulatory regimes. Managing the interfaces between companies, technologies and regulatory regimes will require close collaboration between all stakeholders. State of the art today In the pipeline On the drawing board n Sensors to monitor equipment n Automated inspection units for some tasks n Prognostics for maintenance scheduling and to assess the remaining life of components n Modular systems for ease of replacement n Smart wireless nano/micro-sensor network n Dock-in solution for support vessel n More sophisticated autonomous inspection units n Autonomous maintenance units for some tasks n Tandem offloading n Unmanned connection to hoses/pipes on-board the installation n Tandem offloading from an unmanned unit n Autonomous units to perform all daily maintenance and repair tasks Inspiration from subsea The subsea industry has pioneered many of the elements envisioned in this report: Unmanned operations, robust components, module-based design and remotely operated n Systems engineering n Smaller day-to-day crew, supported with regular n High capacity fuel cells running on methane vehicles for inspection and maintenance work. At DNV GL n Designs to improve maintainability campaign-based maintenance n Unmanned operations for LNG we believe that many of valuable lessons from subsea can be n Remote monitoring and integrated operations n Collaboration in the supply-chain n Standardisation of components and interfaces positively transferred to other parts of the offshore industry.

12 22 EXTRAORDINARY INNOVATION PROJECT DNV GL services DNV GL services Going remote: Re-thinking offshore operations 23 DNV GL SERVICES IN OIL & GAS AND MARITIME STRATEGIC RESEARCH AND INNOVATION Oil & Gas DNV GL partners with our customers and the oil and gas industry to promote progress. From creating gas distribution networks for growing cities to extending the lives of oil platforms in mature oil fields and assuring the performance of new pipelines, DNV GL s 5,500 exceptional industry experts have tackled complex challenges at every stage of the asset lifecycle. Through world-class marine and onshore technical assurance, advisory and risk management services, we help customers to perform on time, on budget and to high quality standards, often in the most demanding environments. Technical assurance: Certification and verification Technical assurance: Inspection services Noble Denton marine assurance and advisory Risk management advisory Technical advisory Offshore classification Software solutions for the oil and gas industry Maritime By providing world-class methodology and expertise in technology, operations, management, risk identification, assessment and control, we help customers improve their business performance in a safe and responsible way. Our service portfolio to the maritime industry is based on our global services: Classification Verification Technology and innovation Operational performance Environmental performance Safety and risk control The objective of our strategic research activities is to enable long-term innovation and business growth in support of the overall strategy of DNV GL. The activities focus on technology and risk management trends, building new competence and foundation for new services in DNV GL and on ensuring early market positioning and branding of DNV GL as a recognised technology and risk management leader. Our efforts are aligned with DNV GL s vision of a global impact for a safe and sustainable future. Oil & Gas Objective: Contribute to safer, smarter and greener oil and gas exploration and production while preparing DNV GL for a future change in the energy mix. Themes: Offshore Safety Safety and Reliability of the Subsea factory Energy Efficiency and Foresight Maritime Objective: Contribute to safe and sustainable shipping through intelligent solutions. Themes: Ship Environment Ship Condition and Safety Ship Performance and Emissions Contact For more information on how the insights from the Solitude concept can assist in remote offshore operations, please contact Richard.Whitehead@dnvgl.com

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