Best Practices for the FPSO Industry Joint Industry Project [JIP] Proposal

Transcription

1 Best Practices for the FPSO Industry Joint Industry Project [JIP] Proposal Submitted by Endeavor Management August 15, 2016 Endeavor Management 2700 Post Oak Blvd. P Suite 1400 F Houston, Texas

2 Proprietary and Confidential Material The ideas, pricing, and terms of this proposal are the property of Endeavor Management. We respectfully request that the information not be disclosed or distributed to anyone outside the requesting companies or their parent companies, without the express written permission of Endeavor Management. Background In the late 1980s, the offshore oilfield industry was moving rapidly into deep water. Large fields had been discovered in several areas of the world in waters that presented big engineering challenges to the industry. Over the course of the next decade, these challenges were met and overcome. As the decade of the 1990s matured, the industry steadily came up with innovative ideas that transformed fundamental challenges into proven solutions. FPSOs were originally considered an economical solution for the production of marginal fields that otherwise might not be produced. Later, FPSOs became an essential component in developing remote offshore fields as Early Production Systems (EPS) with increasing production capacity, numbers of risers, and ever increasing water depths, which now allow their utilization as full field production facilities. In the past 10 years, over 150 floating production systems have been deployed worldwide. Of the choices available to Operators, FPSOs have been selected almost 80% of the time as the system of choice for developing offshore fields. Semisubmersibles come in at roughly 10% with TLPs and Spars make up the remaining 10%. Even in the US Gulf of Mexico with its established oil and gas pipeline infrastructure, two FPSOs have been introduced in recent years. This trend of FPSOs as the preferred solution is likely to continue. Page 2

3 In today s current price environment, understanding the best practices for managing, designing and executing projects is essential. On FPSOs this need is even more critical due to the numerous interfaces, contractual boundaries, and challenging regulatory, flag state and class requirements. Individual companies have performed significant work in this area and the industry in general has come a long way. However, there are still major differences in capital project execution and operations. Some of this is due to the different geographic areas where FPSOs are being deployed and subsurface differences drive many of the needs of the Topsides facilities. Having said that, there are numerous considerations that are common to many of the cases and understanding the best practices in these areas should lead to streamlined projects with a stronger chance of achieving success. It s not uncommon for projects to perform best practice / lessons learned assessments at the conclusion of a project. What s different about this JIP? Endeavor proposes to conduct this effort on a representative cross section of the stakeholder segments typically involved in delivering an FPSO: Oil and Gas Operators, leased FPSO providers, Shipyards / Fabricators, Engineering Companies and Class Organizations over a time span of multiple projects. Ideally at least 2 to 3 players from each of these groups would become member companies and collaboration across this cross section on best practices should yield significant improvements in alignment and the opportunity to reduce costs: Alignment: Understanding the drivers, concerns and needs in a collaborative way across the stakeholders should improve alignment on any given project, minimize misconceptions and Page 3

4 drive down risk thereby cutting costs and improving times to project approval and subsequent delivery times. Execution Costs: Costs should be reduced through identification of fit for purpose bare minimum solutions, where they have worked before, and why and where they can be used again. This includes consideration of higher reliance on industry standards and specifications. Operational Safety: FPSO operational personnel can benefit from common operational procedures and sharing of best safety practices. This will benefit the industry as personnel move between vessels with common procedures and methodologies. Situation There is no better time than the present to understand what the best practices are in executing FPSO projects. This JIP (Joint Industry Project) proposes to utilize Endeavor s Expert Advisory Group to gather this information from each of the participants, evaluate that information for consistency and robustness, develop and propose metrics for assessing this information, hold lessons- learned sessions with participants to rate practices and achieve alignment on what truly are the best practices across the issues being evaluated, and then to document this effort for distribution to all participants. The Issues: Each of these receives further discussion within this proposal: A Strategic Decisions B Project Delivery C Mooring and Offloading D Hull Design E Process Module Design F Vapor Recovery, Gas and Water Treating G Startup and End of Project H Operational Considerations Page 4

5 JIP Project Objectives and Methodology Endeavor Management proposes to provide leadership in identifying and developing the best practices to address these Issues. We will serve as a focal point in obtaining the best practices on each of the Issues listed herein from the participants, generate proposed metrics for evaluating the data (where appropriate), facilitate a series of workshops with the participants to achieve alignment, ranking and selection of best practices, and then generate documentation for distribution. Specific details of each Issue s scope are shown in that section of the proposal. In general, the methodology for each Issue of the JIP is as follows: Stage 1 Data Gathering Proceed with Issue definition as follows: The Member Companies will be asked to nominate Subject Matter Experts (SMEs) to assist in the technical definition and provide comments and guidance as each Issue Team moves forward. These SMEs will serve as technical reps for the Member Companies. It is not mandatory for a Member Company to have SMEs but it would be beneficial. From this point forward in this Proposal, when Member Companies are mentioned it is presumed that the Member Companies may include their own SMEs in the transactions of the Project or not include - as they see fit. Endeavor will generate a proposed list of what documentation is needed for each issue to be evaluated and what metrics could be used to assess best practices. This summary will then be sent to the JIP Member Companies in draft form for review. Endeavor will review this information with the Member Companies in a (Technical) Kickoff Meeting for each Issue, solicit final comments, achieve alignment on evaluation drivers and agree on timing and data to be submitted by participants. Member companies will then provide the data for each of the Issues, so that this data can be assembled and initially evaluated for preparation of Stage 2 Evaluation Results and Lesson Learned for each of the Issues. Stage 2 Compiled Data Review / Evaluation Results and Selection of Best Practices Page 5

6 Endeavor will compile the data received from the member companies and perform an initial evaluation against the metrics previously agreed to in Stage 1. Endeavor will hold a workshop for each issue where the compiled data will be reviewed, the results of the assessment metrics discussed and various best practices and lessons ranked. Endeavor will facilitate a discussion between workshop participants about each practice to ensure a common understanding and alignment between member companies. When all Issues have been documented, Endeavor will meet with the JIP Member Companies collectively for open discussion regarding these Issues. It is planned that these meetings will be handled on an Issue- by- Issue basis, similar to the Kickoff Meetings. Stage 3 Results Review/Final Review: Report, with Deliverables The results of Stages 1 and 2 will be revised to reflect the comments and discussion obtained via the review meetings. The findings will be documented to the JIP Member Companies. Each Issue summary will include recommendations for follow- on evaluation after this JIP, as appropriate. Publish the report to all JIP Member Companies, along with a summary presentation. In order to stimulate industry involvement in collaboration toward FPSO Best Practices, Endeavor will present a summary of the findings at appropriate conferences and industry gatherings and publish in industry publications. Assumptions and Constraints Endeavor Management will provide professionals with appropriate backgrounds to facilitate and participate in the reporting and review process and to share their knowledge and experience. The JIP Member Companies will share sufficient information about their technical requirements, operational experience to date, future needs, service company offerings and related information, so that the Endeavor Advisors can develop informed assessments of the current status of the industry and the most attractive best practices for each Issue. Endeavor will establish guidelines with the Member Companies to outline when and how the information within the scope of this study will be discussed or disclosed (a) between JIP Member Companies, and (b) to any party outside the JIP Member Companies. Page 6

7 Professional Fees and Expenses This work will be performed on a lump sum basis. Endeavor has allocated a fixed number of man- hours for each Issue and will adjust the hours between Issues; if one area needs less work and another needs more work during this JIP effort. It is presumed that each of the Member Companies will nominate a single- point of contact to monitor progress and to coordinate with its SMEs. Each JIP Member Company will be billed half of their total amount at project kick- off and the other half after the draft Final Report is issued. All invoices are due in 30 days. The price per Member Company is $65,000 based on 10 Member Companies. This includes expenses such as travel to Houston for meetings for Endeavor personnel who live out of the Houston area. The Member Companies will be notified in advance if the project requires additional hours due to significant changes in project scope. Additional work would only occur if approved by unanimous approval of the JIP Member Companies. If more than 10 companies join this JIP, the additional funds will be used for additional study on the existing JIP Issues or for new related Issues. The above proposed price of $65,000 per Member Company includes: Stage 1 summary defining each of the identified Issues and proposed metrics for evaluating the data to be received, in draft form for review by the Member Companies. Participation in a Kickoff Meeting where the issues and proposed metrics are discussed. Compilation and initial evaluation of the data received from member companies. Stage 2 Participation in each of the Issue workshops including review of the initial evaluation results and a facilitated discussion on the best practices to achieve a ranked selection. Completion of the overall report documenting the results of Stages 1 and 2. Preparation of a report summary in PowerPoint format for use as follows: One electronic copy to each Member Company for internal use. Presentation of the report summary at appropriate shows, conventions, conferences, and industry publications by Endeavor and/or the JIP Member Companies. Page 7

8 Time Frame Endeavor proposes to start the work as soon as JIP Member Company participation is confirmed. Stage 1 will be ready for review in approximately 8 weeks after the award date, subject to completing the meetings with partners. Stage 2 will be ready for review approximately 8 weeks after the last Stage 1 review meeting is completed. The Stage 3 final report will be delivered 4 weeks after final comments are received from Stage 2. Contact Should you have any questions or need additional information regarding this proposal, please contact either: Tracy Harris at or at tharris@endeavormgmt.com Bruce Crager at or at bcrager@endeavormgmt.com We hope your company will choose to work with Endeavor on this challenging project. Please contact Tracy Harris or Bruce Crager to confirm interest in joining the JIP and to request the Member Company Agreement. Sincerely, Endeavor Management Page 8

9 ISSUE A STRATEGIC DECISIONS Summary The selection of the FPSO as a development solution has become more prevalent in recent years and is more established today than it was years ago. But strategic decisions made soon after FPSO concept selection can impact a range of performance parameters during both project execution and the life of the field. While many strategically important decisions are covered in subsequent sections of this JIP, two (2) are dealt with in this section. The first relates to the manner and means of defining the technical requirements, i.e. the TECHNICAL SPECIFICATION. The second relates to the asset ownership, i.e. LEASE vs. OWN. Background and Overall Methodology Over the years, over 200 FPSOs have been installed and commissioned generating a large body of data backed experience. This experience should serve to aid in both planning and executing any new FPSO development. But not all of these experiences have been good. Few would argue that those held up as models of excellence could not be improved upon. For years operators have tirelessly cataloged lessons learned for use by project planners as a means of achieving better future results. But cataloging is difficult because of the enormous array of issues involved and the even larger number of causative factors. In fact, the effort is so difficult that the utility of the end result is often questioned. The purpose of our efforts on these two key decisions is to capture at a high level and summarize lessons learned across a range of good and bad experiences for the benefit of each Member Company. Discussion: TECHNICAL SPECIFICATION Specifications for an FPSO project have been an area of concern and debate in the industry for a number of years. The selection of a suitable, achievable specification that is right for a given project can have strong benefits in terms of cost and schedule, as well as certainty of delivery for these key metrics. Furthermore, good quality metrics can be more straightforward to achieve with a practical, tested specification, and future expansion or modification may also be more easily implemented. From an oil company (client) perspective, two important distinctions can be highlighted for FPSO specifications, in contrast with other upstream projects. Firstly, it should be noted that there are several experienced suppliers of FPSOs, who have their own specifications, as well as direct operating experience. Secondly, for an FPSO development it is necessary to blend marine and oilfield specifications to a greater extent than any other type of offshore development. It Page 9

10 can be the case that client teams with topsides experience are less familiar with the marine side of the equation and marine personnel have limited experience with production systems. Like any upstream project, FPSO cost and schedule can be adversely affected by high- end or unconventional, company- driven requirements (e.g. metallurgical composition, area/height/access requirements, equipment redundancy, accommodation standard, etc.). FPSOs do have additional exposure to these factors in way of the turret/swivel system (if required) and utilities/accommodation (especially if converted from marine service). Discussion: LEASE v. OWN There are several different ways of paying for the assets comprising the FPSO development. At one extreme is the capital purchase or build to own option. At the other extreme, we find the long term lease with assorted contract options. In between are many alternatives, each having its own advantages and disadvantages. But which way is best? Few will dispute that what is good for one operator may not work at all for another. In some cases, the selection will be based on the operator s preference or past experience. In other cases, the selection will be heavily influenced by taxes, expected service life or the financial condition of the operator and its partners in the venture. For many of the early developments the lease plus contract operate option appealed to operators with offshore developments billed as marginal or fast track. As the industry matured, the benefits of owning the floating assets became more appealing, especially where reservoir characteristics predicted large recoverable volumes over longer periods. In certain cases, major oil companies have self- performed the EPCI scope and owned the asset from the outset. In other cases, the EPCI contractor became the asset owner contractually, where the developer held an option to acquire the asset for a certain period of time after the start of operations. The point here is that the developer of a new field has so many well developed choices and contracting variations that the process of making a decision would seem easy. Only the shared experiences of JIP participants can confirm whether any of the considered alternatives entail potentially significant project risk. Detailed Methodology: For each of the two key decisions given above the JIP Issue Lead will establish and communicate to participants a set of base case Issue A deliverables. A kickoff meeting with JIP participants will be held to review and modify the deliverables list as necessary. The Issue Lead will communicate to all Member Companies the modified list of deliverables together with a request for information based on each one s experience. Page 10

11 The Issue Lead will receive all information submitted, capture data relevant to the agreed deliverables and collate it into a form that will allow the group to consider the quality and veracity of the conclusions implied by each draft deliverable. The Endeavor Issue Lead and Advisors as well as the SMEs will meet to review and discuss the draft. Where there is a consensus on each conclusion, the deliverable will be considered accepted. Conclusions which are not accepted will either be changed in a way to be accepted or left as indeterminate. Deliverables The deliverables for this section of the JIP will be a final report that includes: Key lessons learned as a result of the study. Recommendations as to best practices. Page 11

12 ISSUE B PROJECT DELIVERY Summary Project Delivery addresses three major issues associated with successful delivery of FPSO projects including: project organization, interface management, and change management. FPSO projects have distinctive characteristics (e.g. storage and offloading with strong marine industry links) that require significantly different, compared to other floating production systems, resources and organization to properly manage and deliver successful projects. In addition, FPSOs have unique mooring, motion, and marine challenges to be overcome. The integration of these resources into the overall project team is critical for success in terms of schedule, budget, and risk control. Effective management of interfaces is a critical success factor for delivering any project. The effort required to do this increases exponentially with complexity. FPSOs are on the high end of the complexity spectrum due to the multiple functional requirements spread across several contractors and multiple equipment suppliers. Change during capital projects is a given. Failure to accept, recognize, plan for, and respond to change can be attributed as one of the four greatest contributors to adverse megaproject performance. The impact of change on the business goals related to large oil and gas capital projects is significant - - and appears to be an industry given. The impacts can be very visible and predictable or hidden and show up indirectly. Most of these have a negative effect on the project cost, outcome and stakeholder relationships. This JIP will develop best practice measures to assure project organization, interface management, and change management are in place within owner and contractor groups that come together to build an FPSO. FPSO project teams need to be organized to address the key technical and complex integration needs of an FPSO. Generally, small teams with broad knowledge sets are adequate to select between a Spar, a TLP, or a Semi, but the added complexity of the FPSO requires expertise in the earliest stages of project selection, when other floating production system concepts are vying for consideration. Examples of this include: overlooking details around required storage, under appreciation of being able to construct/pre- commission at the quayside, under emphasizing issues surrounding offloading options, or over simplifying mooring selection. The Operator and / or the FPSO Owner is responsible for setting the right framework in place for effective interface management. The Basis of Design is used to capture this information and it s very useful to have an associated timeline of when decisions need to be made to lock in that design basis information in accordance with the overall project schedule. On FPSOs, the Page 12

13 functional requirements and associated interfaces are impacted by contractor and vendor selection. An interface management system can be populated that includes: a description of the interface item, who owns the interface, what information is needed to define the interface by whom and when, the due date of the interface and any references to applicable drawings, specifications, etc. The interface management system with associated responsibilities should then be reflected in the contracts and should include the need for providing adequate resources to participate actively in the interface management system and associated meetings. FPSOs are comprised of 5 major components (Topsides, Hull, Mooring, Risers and Subsea) that are significant projects in their own right. As a field development, these components comprise a system and are therefore highly integrated, yet primarily engineered and constructed separately. Given these complexities, project execution strategies are less than optimal with regard to minimizing potential change. On top of the decisions made, the project leaders have been conditioned to expect and live with constant changes and get rewarded for pulling it out of the fire certainly not conducive to drive sustainable improvements. Stage One High level survey of the Member Companies will be done to: Define the current state of the art for project organization. Each Member Company will collect or develop organizational components for FPSO projects based on key technical, operational, and contractual factors possibly including those that differ from other floating production systems. Host an SME review of shared factors and staffing options, including key lessons learned (both to avoid and to implement). Define the current state of FPSO interface management. Each Member Company will provide the interface management system framework used previously. Host a participant review of interface management options, including key lessons learned (both to avoid and to implement) Define the current state of factors impacting significant changes on FPSOs. Each Member Company will collect or develop FPSO project case studies that focus on significant changes that occurred. These may be compiled from lessons learned, formal project change instructions, outcomes of formal reviews (peer, process safety, regulator, and business gates), contractor variation logs, risk analyses, and other living documents compiled during the course of the project. Host an SME review of change management case studies and categorize significant common changes. Page 13

14 Stage Two Based on the results from Stage One, identify the key divers and/or unique operating conditions the operators consider as a basis for developing the project organization, interface management, and change management. Project Organization will focus on Organizational Structures for various Contractual Options. Interface Management will focus on Basis of Design Outline, Interface Management System Description, and Contractor Matrix Description. Change Management will focus on developing a process to find ways to identify common sources and minimize impacts of changes using a bowtie diagram method, commonly used in hazard and safety management analyses. Stage Three Collate the results of Stage Two to capture key lessons learned from the Member Companies. Make recommendations as to best practices identified during the study and factors to be considered for project delivery. Deliverables The deliverables for this section of the JIP will be a final report that includes: Key lessons learned as a result of the study. Recommendations as to best practices: Organization Chart templates for small, medium, and large FPSO projects Interface Management Matrix template for typical project Change Management flow chart template Generalized data provided by the Member Companies as a result of the survey undertaken in Stage One. Page 14

15 Summary ISSUE C MOORING AND OFFLOADING Once an FPSO is selected as the field development option, a key decision will be related to the selection of mooring and associated oil export offloading system. Important considerations associated with this decision will include the (1) type of site- specific metocean conditions at the FPSO location, (2) need to disconnect the FPSO from the mooring system to avoid icebergs, or when hurricane conditions are anticipated, (3) field architecture requirements related to the size, number and pressure ratings for the risers and associated turret / fluid swivel system, and (4) type of export tankers to be deployed (i.e., Dynamically Positioned (DP) shuttle tankers, or standard trading tankers with supplemental tug support). In addition, the selection of the FPSO mooring / offloading system is impacted by the associated capital / operational costs, as well as the owner s / operator s perception of operational risks. Discussion A review of past FPSO installations indicates a wide range of mooring / offloading system options, even for FPSOs located in the same operating region. For example, while "passive" (i.e., naturally "weather- vanning") turret- based FPSOs with DP export shuttle tankers are dominate in the North Sea, there have been several circular FPSOs based on a spread mooring with oil offloading directly to DP shuttle tankers. In this region, there are also a number of FPSOs with active turret systems that require thrusters to maintain heading / position control. Another example is offshore West Africa, where there is a mix of turret- moored and spread- moored FPSOs employing either direct oil offloading to an export tanker, or using Catenary Anchor Leg Mooring (CALM) offloading systems located some distance away from the FPSO. The proposed scope for this Issue has been developed to capture the various decision elements and logic associated with the owner s / operator s selection of the FPSO mooring / oil offloading system, with an overall goal to develop systematic guidelines for the evaluation and selection of the mooring / offloading system for FPSOs, based on past industry experience. Stage One Define a representative set (6-10) of existing industry FPSO applications with the following characteristics: Spread- Moored system Turret- Moored system (including permanent and disconnectable systems, "passive" or "active" turret moorings) Page 15

16 Direct (Tandem) Tanker Offloading System or offloading via a CALM Buoy system (or equivalent) Various operating locations including: North Sea / West of Shetlands Brazil (Campos / Santos Basins) West Africa (Nigeria / Angola) South Asia / Australia Eastern Canada Gulf of Mexico For each representative FPSO application, capture the logic / decision analysis leading to the selection of the mooring / offloading system via direct discussions with the Owner / Operator (or Contractor) of each application. Each Member Company will be asked to provide information on their respective FPSO project related to the selection of the mooring and oil offloading system. Stage Two Based on the results from Stage One, identify the key drivers and / or unique (environmental or other) conditions leading to the Owner s / Operator s selection of the mooring / offloading system. It is anticipated that the types of drivers / conditions to be identified include: Site- specific environmental (metocean) conditions, including the severity and directionality of wind, wave, and current Ability to disconnect from the mooring / riser systems to avoid icebergs / ice flows, or when extreme (e.g., hurricane) conditions are anticipated Complexity of the field architecture, including number, sizes, and pressure ratings of the various risers to be supported by the FPSO and / or the associated turret / fluid swivel system Type of export tankers employed, including dedicated shuttle tankers (with or without DP systems), or standard tankers with tug assist Relative Capital and Operational Costs Perceived Operational Risks, and Design Life (early, phased or full- field development). Page 16

17 Stage Three Based on the drivers / conditions identified in Stage Two, develop a set of guidance notes defining a clear path to the selection of the type of FPSO mooring and the associated offloading system, based on key elements associated with the proposed application. Included in the guidance notes will be a detailed decision matrix that captures the key elements (i.e., drivers, conditions) identified in the study. Deliverables The deliverable for this portion of the JIP will be a final report that will include: Guidance notes and detailed decision matrix for the evaluation and selection of the FPSO mooring and offloading systems. Key drivers identified through review of representative industry FPSO applications. Data captured from discussions with the owners / operators of the Member Company s SMEs for their respective FPSO applications. Page 17

18 ISSUE D HULL DESIGN Summary Hull Design has an important influence on a successful FPSO project. A structured decision- making and design process is important to ensure timely readiness of a suitable hull and marine systems, ready for topside facility integration and hookup. A major early decision will address whether to convert or newbuild the hull. The typical basis for a conversion would be a trading tanker of sufficient size to meet storage requirements. However, other vessel types have occasionally been utilized, depending on market situation and availability of suitable hulls. Newbuilds may be customized for the application or adapt a standard yard design, typically a trading tanker, with selected modifications for the FPSO application. Existing hulls must be evaluated for fatigue and the remaining service life after conversion to an FPSO. Whether newbuild or conversion, a suitable hull must be configured or obtained with due consideration of required storage volume, topsides weight, weather at location, regulatory constraints, and tank / skin protective configuration. The latter issue encompasses the concerns of double- hull, double- side, or single- skin configuration, and/or the possible option of local protection (e.g. provision of outboard structure, cofferdams or sponsons in waterplane area). The industry typically utilizes marine Classification Societies to provide assurance for FPSO hull and marine systems. The scope for Class will likely include moorings and may also include process facilities. Class can play an important role in conformance with regulatory and Flag State requirements for an FPSO. A strategy for Class or alternative means of marine assurance and marine regulatory approval must be in place as part of hull selection and design. Key Tasks to be addressed in this section include: (1) Important considerations in selection of newbuild or converted hull for an FPSO, (2) Optionality available for FPSO tank configuration and protective features for spill risk mitigation, and (3) Strategies available and key considerations for 3 rd party assurance and marine regulatory compliance. These tasks will be addressed by summarizing industry and expert views, conducting a workshop session to obtain Member Company input and consensus, compiling and reviewing consensus views with SMEs, and reporting the results. Stage One Provide a summary of current FPSO / Trading Tanker fleet hull / tank configuration, by region / age. Page 18

19 Summarize existing International / Flag State regulations for FPSO and Trading Tanker hull / tank configurations. Summarize available concepts and tradeoffs of the various hull / tank configurations in the context of regulatory framework, Classification Society requirements, risk mitigation, fabrication / renewal, inspection / maintenance, and operational tradeoffs. Stage Two Outline the critical content of a typical FPSO hull SOR and discuss the needed level of definition and early- stage interface management. Summarize best practices in conversion candidate condition assessment, use of Class information, and important considerations in care and delivery of the candidate hull to the yard in a suitable condition. Develop a Checklist to guide the hull conversion from the delivery voyage, cleaning, assessment, and through planning and initiation of steel replacement, systems, and plans for coating renewal or replacement, with special focus on double- hull conversions. Summarize best practices for newbuild hull design including extent of early shipyard involvement and use of marine standards and specifications. Develop a Checklist to guide a newbuild hull project into shipyard contract award and early- stage project execution. Stage Three Survey SMEs to prepare a summary description of Classification and marine regulatory / Flag State governance of FPSO vessels, and 3 rd party assurances, so that the overall roles are distinguishable. Survey SMEs to summarize typical Classification strategies adopted for FPSOs. Compare/contrast new build and conversion considerations and outline advantages/ disadvantages. Work with SMEs to identify key Classification interfaces with the Hull, including mooring/turret, risers, and process facilities (if classed). Outline options regarding classification of the hull / mooring or the entire unit. Deliverables The deliverable for this portion of the JIP will be a final report that will include: Page 19

20 Tanker and FPSO fleet databases summarizing hull / tank configuration data (spreadsheets). Summary of existing hull / tank configuration regulations for Tankers and FPSOs. Discussion of viable hull / tank configurations for FPSOs (including tradeoffs and constraints). FPSO SOR Requirements and checklist with discussion of best practices. Hull design checklist of important selection factors, including summary of best practices. Hull conversion selection and Early- execute stage Best Practices checklist. Newbuild hull design and early- execute stage Best Practices checklist. Discussion of Class, Flag, and marine regulatory roles / governance Overview of typical Class strategies adopted for FPSO hulls, with tradeoffs. Discussion of class scope and associated interfaces, with tradeoffs. Page 20

21 ISSUE E PROCESS MODULE DESIGN Summary This scope on Process Module Design addresses three major areas associated with the design, installation, and placement of the process system modules on the FPSO. These are: FPSO Operability Crew Safety Installation and interfaces considerations between the hull and the process modules, which need to be addressed during the design of the FPSO. Stage One High level survey of the SMEs to: Define the current state of the art for module design and placement. Placement of the process modules to reduce risk to the crew on board. Operability issues associated with the location of various pieces of equipment within the modules. Define the current state of the art for module installation. Build the modules piece by piece on the hull or install the modules as larger packages placed on the hull? Define interface issues between the process modules and the ship s hull. Differences in design methodologies between marine and process engineers. For example, using different FEA models makes it difficult to determine the effects of the process modules on the ship and the effects of the ship on the process modules. Structural and piping interface issues because process modules tend to be more rigid and ship hulls tend to be more flexible. Location of the structural elements required to attach the process modules to the ship s deck. Piping and electrical interfaces between the topside process system, accommodations and other systems in the hull. Page 21

22 Stage Two Based on the results from Stage One, identify the key divers and / or unique operating conditions the Member Companies consider as a basis for developing the process module design, including placement on the deck of the ship. Define the installation issues encountered during design and identify best practices for handling these installation issues. During design of the topsides, what other factors need to be considered? Health, Safety and Environment Preliminary commissioning and startup Scale up to meet future requirements Accommodations interfaces with the process system. Inerting system interfaces between the process system, power generation system, and the storage tanks in the hull. Stage Three Collate the results of Stage Two to capture key lessons learned from the operators. Make recommendations as to best practices identified during the study and factors to be considered in design of the topsides. Deliverables The deliverables for this section of the JIP will be a final report that includes: Key lessons learned as a result of the study. Recommendations as to best practices. Data provided by the Member Companies as a result of the survey undertaken in Stage One. Page 22

23 Summary ISSUE F VAPOR RECOVERY, GAS, AND WATER TREATING This Issue addresses three major areas associated with the design of the process system on the FPSO: vapor recovery, gas handling and disposal, and water treatment and water injection. Since the industry seems to have settled on a design for the separation of the oil, water, and gas with only a few modifications in the basic design to handle unique reservoir conditions, separation of the oil, water, and gas will not be considered here. The global trend toward reducing greenhouse gas emissions has created the need for operators to develop and install methods to minimize emissions from offshore production units such as FPSOs. This Issue will focus on the three aspects of gas handling that can effect emissions from an FPSO: 1) type of vapor recovery used, 2) type of tank inerting used, and 3) disposition of the gas once it has been recovered. In addition, Country regulations are becoming more stringent regarding the disposal of process water overboard and reducing the acceptable levels of oil in water as well as regulating other constituents in the produced water discharged to sea. In the current low oil price environment, operators are looking for low cost methods to increase oil recovery; one of those methods is waterflooding. The issues associated with waterflooding will be considered as part of this Issue. Stage One High level survey of the MCs to: Define the current state of the art for vapor recovery available to FPSO operators. Venting/flaring using existing tanker systems Gathering and compressing the gas using Vapor Recovery Units (VRU) New Technology currently in development (if any) Define the current methods being used for cargo tank inerting and gas freeing. Tanker based inert gas generators using flue gas from the boilers Dedicated inert gas generators Using produced gas from the process plant Define the method currently being used for disposal of the gas once it has been collected. Page 23

24 Fuel for the FPSO Flaring Venting Compression and reinjection into a reservoir Compression and recycling through the process plant Define the current state of the art for water treating and disposal overboard. Regulatory requirements now and in the future Best practices being used or developed Define the current state of the art for water treating equipment and practices. Stage Two Water quality specifications Best practices being used. Based on the results from Stage One, identify the key divers and / or unique operating conditions the Member Companies used considered as a basis for developing the process design. The results of Stage One will also be used to identify the challenges faced by the industry as a result of their choice of technology for gas handling and water treatment. Any interactions between the vapor recovery, tank inerting, and gas disposition methods selected will be identified. Does the selection of type of gas disposal have any influence on the type of tank inerting used? For example, typical flue gas inerting systems may have too high in oxygen content to allow mixing of the gases recovered from the tanks with the process system fluids. What factors need to be considered when selecting the method for vapor recovery given the type of gas inerting and gas disposition? What flexibility, if any, should be designed into the water treatment facilities to handle future regulatory changes? During design of the vapor recovery, gas handling, and water handling systems, what other factors need to be considered? Page 24

25 Stage Three Health, Safety and Environment Preliminary commissioning and startup Gas freeing of tanks while in operation for hull inspections Turndown and/or scale up to meet future requirements Emergency shut downs. Collate the results of Stage Two to capture key lessons learned from the Member Companies and other industry contacts. Make recommendations as to best practices identified during the study and factors to be considered in the design of the vapor recovery. gas handling, and water handling systems. Deliverables The deliverables for this section of the JIP will be a final report that includes: Key lessons learned as a result of the study. Recommendations as to best practices. Data provided by the Member Companies as a result of the survey undertaken in Stage One. Page 25

26 Summary ISSUE G STARTUP AND END OF PROJECT The final delivery stages of an FPSO project (commissioning and startup) are critical for success in terms of schedule, budget, and a smooth production ramp- up. These stages focus on risk control and delivery, with few opportunities for breakthrough savings in cost or time. New safety considerations arise as systems are energized and SIMOPS must consider more than just physical interference. Because they are ship- based, FPSOs are easier to remove/relocate than most other production system alternatives. As examples, the industry s second FPSO (FPSO II, SBM) is now on its 4 th location after an initial 11- year deployment and Petrojarl I (Teekay) is now being modified for its 12 th redeployment. Partly because of this mobility, FPSOs are often selected for new or marginal field developments where field life may be short or where produced fluid characteristics are less certain due to limited data. Shutdown / removal / relocation of an FPSO has many project delivery challenges and success factors in common with commissioning and startup. The overall goal of a successful commissioning and delivery is to enable a safe, successful, and timely startup. Similarly, the overall goal of a removal / relocation is to enable a safe, successful, and on- time shut- down and disconnection of the FPSO facility. This work area will highlight best practices, organizational approaches, and key success factors to succeed in either commissioning / startup, or shutdown / removal / relocation. Key Tasks to be addressed in this scope include: (1) Best Practices for startup and commissioning of FPSO Projects, (2) Best Practices for removal/relocation of FPSOs, and (3) Marine Readiness and Sail- away operations for FPSOs. These tasks will be addressed by summarizing industry and expert views, conducting a workshop session to obtain Member Company input and consensus, compiling and reviewing consensus views with SMEs, and reporting. Stage One Meet with SMEs to summarize key technical, operational, and contractual factors for commissioning and startup success. Include timeline consideration from detail design through construction and address the transition from mechanical completion to system readiness. Address differences in Commissioning of new build vs. conversion FPSOs. Page 26

27 Prepare a system- by- system outline checklist to be detailed by project teams. Page 27

28 Stage Two Work with SMEs to identify a representative set of industry FPSO / FSO projects, where relocation or repurposing has taken place, and then identify key drivers and issues impacting the decision. For each representative FPSO / FSO application, capture the logic / decision analysis leading to the relocation or repurposing decision via direct discussions with the Owner / Operator (or Contractor) of each application. Describe key technical, operational, and organizational success factors and lessons learned for decommissioning / relocation. Prepare a system- by- system outline checklist to be detailed by project teams. Stage Three Discuss success factors to achieve marine systems readiness, including risk mitigation, Class interface, crew training, and topside interfaces / coordination. Describe marine stability assessment (inclining), tank integrity testing, and sea trials. Outline best practices and key lessons learned for successful marine delivery or relocation, including sail- away readiness and risk mitigation. Develop a set of guidance notes to achieve marine readiness and support a successful sail- away. Deliverables The deliverable for this portion of the JIP will be a final report that will include: Best Practices and outline checklist for commissioning and startup based on FPSO experience. Identification of repurposing / relocation projects and discussion of logic and drivers behind the decision. Best Practices and outline checklist for decommissioning, repurposing, and relocation of FPSOs Best Practices and guidance notes for marine system testing, readiness, sail- away preparation, and related decision- making. Page 28

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30 Summary ISSUE H OPERATIONAL CONSIDERATIONS Operators and Contractors alike spend millions of man hours developing their own specific Operating Procedures. Such Operating Procedures are prepared by Operators and Contractors independently, and give rise to much duplication of effort. As a result, many operating procedure interfaces are necessary between the Operator and Contractor, which can be inefficient and unwieldy in practice. Most if not all of these Operating Procedures are very similar in content and can generally be applied to the operation of FPSOs in different locations and under different jurisdictions. Since the mission of all FPSOs is the same or very similar, efficiency in operations could be obtained in the industry by developing and implementing generally acceptable standard Operating Procedures. It is suggested that considerable cost savings could be achieved by doing so. Having industry accepted operating procedures would result in greater efficiency in operations and a reduction in uncertainty, as well as saving time, effort and man hours. As crew members transfer from one FPSO to another, they would follow the same basic procedures. Greater ease of transfer of crewmembers from one FPSO to another would occur. This would result in a reduction of operating risks i.e. improved risk management. This scope of work will focus on developing guidelines and checklists for the development of Operating Procedures; the work will not prepare the actual procedures. Stage One Research the contents of actual Operating Procedures currently in general use on FPSO units operated by the Member Companies. This would include discussions with the SMEs. Stage Two Establish the common content of the sample of Operating Procedures obtained in Stage One and assess the major differences between them. Meet with SMEs and agree the general structure and content of Standard Routine Operating Procedures. Stage Three Based on the comparative analysis of the received procedures and best practice discussions, participants will write guidelines and content checklists for creating Standard Routine Operating Procedures for FPSO units. Page 30

31 Stage Four Identify those operational issues that cannot be considered as standard to all locations, fields, and FPSO units. Develop guidelines to address those non- standard Operating Procedures for any FPSO. Deliverables The deliverable for this portion of the JIP will be a final report that will include: A checklist and set of guidelines for creating Operating Procedures that could be used on any FPSO. Guidelines addressing operational procedures that are not considered standard at all locations. Page 31

32 APPENDIX A BIOGRAPHIES ENDEAVOR PROJECT STAFF PROJECT SPONSOR: Bruce Crager Executive Vice President, Expert Advisory Group Bruce Crager is Executive Vice President of Endeavor Management and leads the firm s group of Expert Advisors, which have a focus on Offshore, Subsea, and Marine activities. He has over 41 years experience in offshore drilling and production, primarily in management positions. This has included significant experience evaluating and providing all types of field development solutions, particularly those based on floating production systems and subsea production equipment. This included founding Oceaneering Production Systems and managing it for 13 years. Bruce joined Endeavor in 2010 and is responsible for the development of an experienced team to support clients in the areas of strategy development, organizational change/development, decision analysis, and in technical areas such as field development planning and operational improvement. Since joining Endeavor, Bruce has consulted for many clients, including Addax Petroleum, Afren, Audubon Engineering, Barra Energia, Cal Dive, Cameron, ENI, Maersk Oil and Gas, Petrobras, Pemex, Ridgewood Energy, Shell, and VAALCO Energy. Bruce holds a BS in Ocean Engineering from Texas A&M University and was selected as a Distinguished Graduate of TAMU s Zachary Department of Civil Engineering in He also holds a MBA from the University of Houston, has co- authored 4 patents, has written numerous technical and management articles, and is a registered Professional Engineer in Texas. JIP PROJECT MANAGER: Tracy Harris Senior Consultant Tracy has over 32 years of experience in the offshore industry and is a registered professional engineer in California, Louisiana, and Florida. He joined Shell Offshore in 1983 and worked as a project engineer in New Orleans on a variety of projects including the Boxer platform as site fabrication engineer and as the Bourbon platform remediation lead. He transferred to Alaska in 1989 to lead the oil spill response program in support of exploration efforts in the Chukchi Sea, which received the first CARE award from the MMS. Tracy transferred to Shell s deepwater design group in 1991 and worked on a variety of deepwater projects including Auger Topsides re- analysis, Mars Topsides Structural and Integration design lead, Salsa platform design lead, Spar to Catalog readiness team leader, single concept selection team leader for Bonga, and Nakika Construction team leader. In 2002, he became the Engineering Manager Construction EP Projects and managed project construction teams on a variety of deepwater developments including Bonga, BC- 10, Perdido, and Gumusut- Kakap in Malaysia. Tracy rejoined the Alaska effort in 2013, as the Engineering & Construction Manager for Arctic projects. He supported a number of efforts enabling Shell s return to the Chukchi Sea in the summer of 2015, and safe demobilization following the 2015 drilling season. He holds a Master of Engineering in Ocean Engineering from University of California, Berkeley and a Bachelor of Science in Mechanical Engineering from the University of New Hampshire. Page 32