SBM FOCUSES ON KEEPING COSTS AND SCHEDULES ON TRACK FOR FPSOS

Two key issues that are guaranteed to shatter any hope of ensuring a satisfied client are delayed first oil and cost overruns. Time is money to clients and meeting scheduled delivery dates is a key objective of all clients. In addition, in the current market climate, clients are paying even closer attention to costs than ever before. SBM Offshore works hard to achieve its high standard of performance and over the years has demonstrated that it delivers projects on time and within budget.

The results of an internal review that SBM Offshore conducted of its FPSO projects delivered on a Lease & Operate basis or Sale & Operate basis from 2008 to 2014 (1) demonstrates our performance record for on-target delivery within budget. The projects were evaluated using the same criteria that Independent Project Analysis, Inc. (IPA) used in its formal study of FPSO performance, entitled ‘Great Expectations, a story about FPSO project performance’.

As illustrated in graph A, the performance record of the SBM projects evaluated shows that in terms of cost, schedule and operability these projects were by and large well above the industry average.

INDUSTRY OUTLOOK

The experience of the industry is not always so positive. The above referenced research by IPA, published in 2012, reveals that many oil and gas companies have been facing consistent problems for FPSO projects. Based on 78 projects for which performance data were provided by operators and evaluated by IPA, the conclusion was that FPSO project performance has been poor as seen in Graph B.

According to IPA’s study, on average the schedule slips by over 20% for FPSO conversions and 10% for new builds. The data also reveals that, on average, cost growth is at over 10% for new builds and around 25% for conversion projects. And in terms of project start up, IPA concludes that the industry average for FPSO projects with operability problems is 43%.


Figure A

 

Figure B

According to IPA one of the reasons of low FPSO project performance is ‘poor definition’. SBM’s standard approach is to take the time and effort at the Front-End Definition (FED) stage to understand client needs and outline a well-defined design basis and execution plan. There is no need for additional specifications to be added at a later stage, thereby, minimising the likelihood of variation orders and cost increases.

STAYING ON SCHEDULE

An excellent example of one of SBM’s FPSOs being executed within budget and even delivered ahead of schedule is the Aseng FPSO, which was built for Noble Energy. The FPSO was delivered in a record 26 months (arrival on site) and came online in November 2011, 53 days ahead of the contractual schedule. The FPSO Aseng is currently operating on the Aseng Field offshore Equatorial Guinea on a 15-year lease and operate contract with Noble Energy, achieving an oil uptime of over 99%.

Aseng – a large size leased FPSO with relatively complex process facilities and crude properties – faced a set of challenges that is typical for these types of projects. However, SBM’s focus on planning and the flexible cooperation of SBM’s experienced

project management team with Noble’s project team allowed these issues to be successfully managed without compromise on cost or schedule. Its conversion was executed successfully due to a number of critical success factors. These included the fact that SBM was able to roll over the preparatory work carried out in the proposal phase for critical long lead items into the earliest stage of project execution. The team established a suppliers’ base in Asia, where proximity to contractor’s offices in Kuala Lumpur facilitated the interaction and the management of the vendors.

CONTRACTUAL STRUCTURE OF ASENG

The contract set up for Aseng was a so-called ‘financial lease’. The FPSO is owned by the contractor (SBM Offshore), the EPC phase is financed by the contractor and the client pays a day-rate after final acceptance of the unit. The day- rate is called the Bare Boat Charter (BBC) and is amongst other items, based on the Capital Expenditure to build the unit. The production operations are contracted on a reimbursable basis with performance incentives.


CRITICAL FACTORS FOR SBM SCHEDULE SUCCESS

  • Focus on critical deliverable processes during the engineering phase
  • Application of SBM’s ten-year old Group Technical Standards ensuring past FPSO experience is taken into account
  • Development of critical process deliverables pre-award allowing the design activities to hit the ground running
  • A well-resourced and experienced contractor Project Management Team with delegated responsibilities
  • Involvement of construction, commissioning and offshore operations personnel early in the design phase
  • Open communication between client and contractor
  • A procurement strategy focused on meeting schedule PO dates and local sourcing
  • A proven construction strategy with long time ‘construction partners’