PRESENTATION BY KEPPEL FELS LIMITED S EXECUTIVE DIRECTOR MR MICHAEL CHIA

Transcription

1 PRESENTATION BY KEPPEL FELS LIMITED S EXECUTIVE DIRECTOR MR MICHAEL CHIA AT THE 2003 SECOND QUARTER RESULTS PRESENTATION TO PRESS AND ANALYSTS THURSDAY, 31 JULY 2003 KEPPEL OFFSHORE & MARINE TECHNOLOGY STRATEGY <Slide 1> In this presentation, I will be providing you with an insight into the technology strategy that contributes to the success of Keppel Offshore & Marine and sets us apart from our competitors. Keppel Offshore & Marine is not just a shipyard group what makes it different is the technology element that elevates the Group to be a Solution Provider, and at the same time positions Keppel O&M as a Centre of Excellence for Offshore and Marine Technology. <Slide 2> The technology strategy adopted by Keppel O&M can be represented by the chart shown in this slide. It comprises four inter-related aspects that together provide a balanced approach to attain technological leadership that can sustain us in the long run. These four aspects are Commercial Viability, Customer Needs, Knowledge Building and Process. I shall now go into detail for each of these aspects. <Slide 3> COMMERCIAL VIABILITY Our technology focus is to provide our shipyards with the competitive advantage, by offering our own designs of ships and rigs that have been identified to have commercial potential. This competitive advantage is further enhanced by the ability to provide the critical equipment that goes into these ships and rigs. For example, in the case of jackup rigs, the jacking system and the fixation system are critical equipment that influence the performance of a jackup rig; thus the

2 integration of the design of these critical components allows us to derive the best performance from our jackup designs. In a boom market situation (where there can be a shortage), control of these critical equipment also means control of costs and availability, thereby protecting margins. Within Keppel O&M, there are three technology groups that are responsible for design development: DTG the Deepwater Technology Group for deepwater rig designs (such as semi-submersibles) OTD Offshore Technology Development for jackup designs and also critical equipment, and MTD Marine Technology Development which is responsible for ship designs. <Slide 4> CUSTOMER NEEDS Meeting customer needs is the next cornerstone of our strategy. This involves adapting our designs to meet the specific requirements and operational demands of each of our customers. Areas where such adaptations might be needed are (for example) the drilling technology employed by a particular drilling contractor, or the level of automation onboard the rigs or ships. This can vary from customer to customer. It is important to be able to customise as well as optimise our designs to meet these requirements. To carry out this detail design function we have the Keppel O&M Engineering group which has over 250 engineers many of them with over 15 years of experience. <Slide 5> KNOWLEDGE BUILDING The next part of our technology strategy has to do with the guided development and acquisition of knowledge and intellectual capability, so that we can always be in tune with technology development, to be able to provide market relevant designs and products. Knowledge building is contributed by the intellect gained through the various R&D activities undertaken by OTD, MTD and DTG as well as the learning opportunity afforded by the Keppel Professorship. The Keppel Professorship, as you know, is hosted at the National University of Singapore and has been set up to further promote Singapore as a centre of excellence for Ocean, Marine and Offshore technology. The first public lecture by the Keppel Professor, Torgeir Moan, was officiated by Mr. Yeo Cheow Tong, the Minister for Transport, two weeks ago. Market relevance is provided via a technology foresight process based on feedback from our various business units worldwide and the Keppel O&M Houston Centre. The Houston Centre is the Group s vanguard in the world s oil

3 centre serving as front line interface with our customers and networking with major oil and gas players, vendors and technology providers to keep abreast with and updated on what is going on in the industry. <Slide 6> PROCESS The last piece of the strategy concerns the use of innovative construction processes, and optimised use of materials, in the building of our rigs and ships. Tied to the other three aspects, the technology applied here is aimed at improving the cost competitiveness and effective performance of our yards. As an example, a high level of computer-aided design, computer-aided engineering and computer-aided manufacturing are employed. Also, increasingly more key vendor partnerships are developed as part of the VRM process to obtain the most competitive product overall. <Slide 7> Put all together, we believe that our technology strategy is wholesome and congruent to our mission of being a global leader in offshore and marine. I shall now touch on each of the technology groups in detail. <Slide 8> Keppel O&M is today a world leading jackup rig designer, having built the world s first harsh environment jackup for the North Sea in This was the rig Monarch, and was followed by the Monitor in 1989 and the Magellan in Progressing from being just a builder, Keppel FELS embarked in 1996 on its rig design programme using OTD as the springboard. Drawing from the experience gained in constructing the earlier rigs and also working with our customers, the KFELS Mod V A and Mod V B designs were conceived and introduced in To date, one Mod V A and three Mod V B s have been delivered, with two more Mod V B s under construction. All completed rigs are gainfully employed with the Chiles Discovery (now known as Ensco 104) setting a new benchmark in dayrates for its class of rigs when it left the yard and went directly to work for Philips Conoco in the Timor Seas. <Slide 9> As mentioned earlier, our jackup designs are complemented by our control of key equipment such as jacking system and fixation system, both integral parts of a rig. OTD was originally set up in 1993 supported by a NSTB grant to develop these critical equipment. You see some of OTD s products on this slide. Both

4 the jacking and fixation systems have been widely accepted in the industry and the numbers (on the slide) indicate the number of units in service. The fixation system has also allowed Keppel O&M to undertake the turnkey upgrading of four existing jackup rigs. Incidentally, two of these rigs were built by Keppel FELS some 20 years ago. One newly developed product is the RPD (or rack phase differential) monitoring device which assists jackup rigs going on location and jacking safely out of water. These devices are aimed at satisfying new regulations coming on stream and are used on new rigs as well as retrofitted to existing rigs. Technology therefore allows us to provide continual service to our rigs well after they have been delivered. <Slide 10> This slide shows development work currently being carried out on traction winches to be used on offshore supply vessels as well as semi-submersible rigs. Latest design and analysis softwares are used in the development work. Here you see the thermal stress plot of the main chassis of the winch. <Slide 11> Besides design and analysis work, our R&D activities also involve full scale testing. Such full scale tests form part of the design assurance that is invested in our products. You can see here a structural joint of a jackup leg undergoing full load test as well as our OTD jacking system undergoing a full life cycle load test. <Slide 12> On the marine front, our Marine Technology Development group (MTD) very much mirrors OTD s role in that it supports the Group s shipbuilding activities through the development of proprietary designs for support vessels and marine tugs. Keppel O&M currently builds the largest number of harbour tugs in Singapore. In addition, MTD is also capable of providing turnkey solutions by packaging designs with critical vessel equipment so that we can derive better margins across the value chain. <Slide 13> Next is our Deepwater Technology Group (DTG) which focuses on semisubmersible and floater solutions for deepwater exploitation. It has a suite of notable proprietary designs for semi-submersibles like the SSDT series you see here. Three units have been built for operation in the tender assist mode to support production drilling. Our latest unit, the West Alliance, is currently being deployed to work alongside Unocal s West Seno tension leg platform (TLP) in deepwater Indonesia, and this application opens up a whole new deployment

5 concept for such tender rigs. Based on this encouraging situation, the DTG group has gone ahead to further enhance the design for similar types of application in the harsher and deeper waters of West Africa, Australia and Gulf of Mexico. <Slide 14> The other area of DTG s development work is drilling semis. Similar to our jackup strategy, the objective is to offer our own designs that are tailored to suit our fabrication capabilities and processes. These designs are rigorously tested to ensure correct seakeeping and motions behaviour, as you see here using a model in a test basin. One of our designs, the DSS 20 (which was jointly designed with Marine Structure Consultants of Holland), has been successfully commercialised and the rig will soon be completed in our Caspian Sea Yard. Other semi designs include variations of the hull form that can be used in the production mode as floating production units. <Slide 15> The importance of offering solutions through one s design is demonstrated by the example of the construction of the DSS 20. With design carried out in Europe and Singapore,and verification of the design by the Classification Society in Houston (that s why we say designed across three continents), the semi was designed to suit the fabrication strategy of building part in Singapore s Keppel FELS and part in our Caspian Sea Shipyard (CSC) and finally integrated and completed in CSC. This is where we demonstrated our skills and competencies. Through our design and engineering capability, we were able to specially design and build the parts for transport and transit across the inland canal waterways into the Caspian Sea. They were transported on a heavy lift ship from Singapore to the Black Sea, offloaded, some parts put onto special canal barges, and some floated on their own capability, through the very narrow and restrictive Volga Don canals into the Caspian Sea. The upper parts of the rig were built in Baku and integrated with the lower components from Singapore. This rig, now known as the Maersk Lider, after its naming ceremony held just last Thursday will be delivered to Maersk Contractors in the middle of next month and will begin drilling for ExxonMobil. <Slide 16> Besides having the ability to influence our products at the design stage, one other important area is to carry out the detail engineering work to incorporate what the customer wants into the design. The Keppel O&M engineering group

6 with its 250 strong staff is geared to do this customising our designs to meet our customers requirements. Also, as part of being a Total Solution Provider, the Engineering Group gets in at a very early stage to assist our customers to conceptualise solutions that are technically feasible and cost efficient to build. This also allows us to jointly establish with the customer a reliable project budget and time schedule, in order to avoid any surprises during actual execution. One such example is the Ocean Baroness upgrade where we were invited by Diamond Offshore during the basic design stage. We provided our input and jointly worked with Diamond Offshore to finalise the upgrading design and then establish a cost budget and time duration for the upgrading programme. The end result was a very successful project, completed on time and on budget for both Diamond Offshore and ourselves. In this way, we are able to make ourselves a true partner to our customers. <Slide 17> The world is our market as well as our operating theatre. Besides our Centre of Excellence in Singapore, which houses both technology development and design engineering, the Group has two other major design offices one in Shenzhen China that specialises in detail design work and 3-D modeling, and the other in Varna, Bulgaria that specialises in design analysis work. Together with our Houston Centre, the four locations are globally positioned and inter-connected through internet FTPs. Due to the different time zones that they are in, the locations are able to work round-the-clock providing quick turnarounds for engineering solutions. <Slide 18> As you recall, the last quadrant of our technology strategy relates to how we employ technology to improve our construction process. With the use of Tribon, a 3-D CADCAM modeling software system, we are now building our rigs and ships on computer, before we start physical construction. A complete virtual model of the product is created in the computer that enables visualisation of the final product towards achieving a better design. This also has the advantage of weeding out any potential construction mistake. The result of this process is error-free and cost effective construction. <Slide 19> This slide shows some of our products modeled in the computer. (This is the Ensco BigFoot model - looking through the hull and showing some of the equipment and piping systems inside).

7 <Slide 20> In summary, the technology element within Keppel O&M allows the Group to build on its core competencies and focus products and services for global leadership. With technology, we are able to differentiate ourselves from our competitors by becoming a total solution provider, offering increasing technological content and value-added products. The technology element also gives us a competitive edge to derive advantages from our global presence (like the example of the DSS 20), and complements our near market near customer strategy by facilitating partnerships with customers (be it drilling contractors, vessel owners, national oil companies or the oil majors) throughout the life cycle of our products. At the end of the day, our technology strategy enables us to have a sustainable and enduring business, providing better margins, allowing us to ride out cycles and distancing ourselves from new entrants. As our contribution to the Industry, the technology element in Keppel O&M helps put Singapore on the world stage as a Centre of Excellence for Offshore and Marine Research and Technology. Thank you, Ladies and Gentlemen. - end -