FPSO Hulls: Conversion & New Builds By Tom Koster First presented at Emerging FPSO Forum September 26, 2012 Revised for October 16, 2013 FPSO Forum 1
Acknowledgements & Disclaimers Acknowledgements MODEC / Lawnie Sturdevant, Boyd Howell, and Puneet Sharma for comments & input Cobalt/ Gene Hall for time and resources to prepare the presentation Clarksons for tanker market info Offshore Magazine annual FPSO posters for FPSO statistics Disclaimer These are my personal views based on limited experience and not those of present or former employers 2
FPSO Hulls: Conversions and New Builds-Outline Situations favoring Conversion or New Build Background Historical Composition of FPSO Fleet Evolution of FPSOs : Marginal to Full Field Developments New Challenges for FPSOs Tanker vs. Offshore Specs/ Functional vs. Prescriptive Specs Comparison: Conversion contrasted with Newbuild New Build options Custom New Build New Build Conversion Schedule Cost There is no single solution that fits all 3
Historical Composition of the FPSO Fleet Year 2002 2005 2013 Future Number of Operating FPSO s 90 99 147 More unless some new technology Conversions 62% 62% 70% Fewer? Newbuilds 38% 38% 30% More? Contractor-Operated - 53% 52% No Change? Contractor-Owned - 53% 52% Fewer because of IFRS Field Operator Owned / Operated Field Operator Owned/ Contractor Operated - 47% 48% More because of IFRS - - Very Few May increase Note: IFRS: International Financial Reporting Standards adopted by 127 countries require long term operating leases to be on book 4
Historical Factors Favoring Conversion or Newbuild Consideration/ Driver Conversion Newbuild Process Capacity Up to 120M bopd Up to 250M bopd Schedule Cost Commercial Flexibility Quality/Reliability/ Maintainability HSSE (During Fabrication and Operations) Life on-site Shorter (10-15 years) 20-25 years Finance Operating Lease attractive to smaller Operators Major Oil Company Financial Resources Tanker market, shipyard backlog and equipment delivery schedule changes are frequent and radical, and can alter these factors. There is no single solution that fits all cases, all of the time. 5
Recent Changes Favoring Newbuilds Tanker-based Newbuild Hulls The shipbuilding boom is over; conventional shipyards are hungry for work. Shipyard engineering is no longer a limiting resource. Dry dock slots are no longer a schedule driver; contract-to-hull delivery times are back to 24 months. Marine material and equipment delivery times have returned to normal. Availability of national financing (Export Credit Agencies/subsidies to shipyards) Custom-designed Newbuild Hulls All of the above. Increased production facilities capacity and complexity are pushing the limit of deck space on standard double-hull VLCC designs, typically 320m LBPx 58-60m Beam. There are only two ULCC s left in the tanker fleet. 6
Changes& Challenges in the FPSO Business During past 26 years Marginal to Full Field Development (1 of 3) FPSO Application 1985-1996 1996-2006 2007-2012 Marginal Reservoirs, Early Production Testing Moderate size reservoirs Larger & Major reservoirs BOPD 20-40,000 50-75,000 100-250,000 Storage Capacity / Dwt 0.5 mm bbls / 80,000 dwt 1 mm bbls / 150,000 dwt 2 mmbbls / 320,000 dwt* Design life on site 1-5 years 5-10 years 15-25 years Water depth Offloading Frequency Accommodations POB Shallow, Less than 100 m * Present limit for the double hull VLCC tanker fleet Less than 300m Up to 2500 m 40-60 days 15-30 days 5-10 days 30-50 50-75 100 to 140 or more 7
Changes & Challenges in the FPSO Business During past 26 years Vessel Availability (2 of 3) Newbuild Tanker Yard Hull Capacity Repair yard Capacity Used tanker availability Local Content Requirements 1985-1996 1996-2006 2007-2012 Hull Delivery 24 months after contract, standard VLCC Available and low cost Plentiful 10 year old SH 1970 s robust mild steel or minimal HTS hulls Not an issue Hull Delivery 24 months after contract, standard VLCC Available Mostly ship repairs. Diminishing supply of aging 1970 s designs. Plentiful 1980 s / 90 s optimized HTS-rich SH available through end of 2010 Not a major issue (Brazil 6%-7%) Hull Delivery 4 years after order 2007/ 2010 but now 24 months Limited until recentlyrepair facilities took on rig & small ship building Plentiful supply of double hull motor tankers tanker market currently depressed Requirements are increasing (Brazil 70%) 8
Changes and Challenges for FPSOs 3 of 3 Changing Market Demand Conditions Impact on Material and Equipment Deliveries 16 months 2008/2009 for large rotating equipment Turbines went from 40 week delivery to 52+ weeks at peak Titanium Exchangers from 22 weeks to 40 weeks during peak Turrets: 18 months (bearings, swivels, valves, fabrication) On-Vessel spread-moored equipment: 14 months peak More Complex Topsides Equipment on FPSOs (= More Engineering & Equipment) Expanded production capacity Sulfate Removal for SW injection Strict and high volume produced water treatment H2S removal High CO2 Acid Gas Treatment LPG or condensate recovery Gas Compression for injection and / or export Turret Swivel materials and pressures Export booster pumps for spread moor-remote calm configuration Flow assurance for deep water ( diesel displacement, hot oil heating, Methanol) Application of prescriptive and offshore specifications to hull Shrinking sources of financing post 2008 / higher equity requirements by lenders 9
Functional vs. Prescriptive Marine vs. Offshore Specification With Functional Spec, FPSO Contractors are free to Offer Standardized In-House Design With Modifications Design Based on Industry Standards ASME /ANSI, API, IEC, IMO, NACE, NFPA, Class, etc Equipment suppliers with which FPSO Contractor has long term relationships and established specs, T s and C s Marine Specs for Hull based on Flag, Solas, Marpol, Class, IACS, & OCIMF : Minimum impact on shipbuilder Equipment, piping systems tailored to marine applications Class FPSO rules are well developed for hull structure Impact of Specs on Schedule 27-32 months for a functional/marine spec compared to 36-39 months best case with a Prescriptive & Offshore oriented hull spec (durations are contract to ready-for-first-oil) because: - Impact on engineering - Impact on equipment supply time - Impact on construction time - Change=Stress 10
Newbuild Hull Options 2010 Study Study initiated because: Conventional newbuild shipyards not interested in one-off custom hulls too busy with conventional ships. Newbuild Conversion Concept was to minimize impact changes to yard standard practice Utilize standard tanker hull design Minimize impact on shipyard engineering Minimize impact on shipyard supply chain Minimize impact on highly automated fabrication 11
Newbuild Option Hull Type Experienced Contractors Newbuild Hull Options-2010 Study Custom Design (2004) Custom design, double-side barge, single-bottom Few who can do both hull & topsides Tanker Newbuild Conversion (Intercept or New Contract) Shipyard standard, double-hull VLCC Many Japan, Korea, China Tanker only Accommodations (pob) 140 or more 30 Tanker/140 FPSO Propulsion None Yes, possibly reduced horsepower Hull Piping Standards Offshore/ANSI Marine standard (JIS/KIS) Hull Delivery after contract 24 months 24 months FPSO Delivery (Contract-to-Sail away from topsides integration yard) 36 months 30-32 months FPSO Hull Cost Twice Standard VLCC + 20% (estimate) Newbuild Conversion Hull Cost estimated based on 2010 Market Price of standard VLCC plus 2010 bid conversion costs. 12
Hull Relative Cost Comparison, Conversion & New Build (2010 study) Basis: Costs below are relative to base case. Case Source of cost data VLCC Hull Type Custom New Build (Korea 2004) Actual contract Custom Double Side/ Single Bottom New Build Conversion (Korea 2010) Detailed estimate based on 2010 conversion yard bids Double Hull New Tanker Double Side Hull Conversion (China) Actual project Conversion Yard bids Double Side 1990 s Tanker Single Hull Conversion (China) (Base) Actual project Conversion Yard bids Single Side 1990 s Tanker Comments Hull Size (meters) 319 x 58 x 31 333 x 60 x 30.4 330 x 58 x 29.7 330 x 59 x29.7 LOA x Beam x Depth Repair / Life Extension Conversion (Tanker to FPSO) N/A 0 7.5 9 N/A 24.5 41.5 43 Single hull includes side protection For NB, costs are those not part of a standard tanker Topsides Integration Owner Furnished marine equipment Tanker or hull base cost Offshore module fabricator 8.5 Included in Conversion Included in Conversion Not available 28 33.5 36 For NB, costs are those not part of a standard tanker Equipment not normally purchased by a shipyard for a tanker Included 56 25.5 12 Current hull cost 45 Total (Hull only) 200 117 108 100 13
Recent Projects - Schedule Major Parameters Custom Newbuild Conversion Conversion Conversion Contractor Major Oil+KBR+HHI FPSO Contractor FPSO Contractor FPSO Contractor FPSO Owner Major Oil Major Oil Field Operator Field Operator Operator Major Oil Major Oil FPSO Contractor FPSO Contractor Country Angola Angola Ghana Brazil Vessel Type /Size DS SB DH VLCC SH VLCC SH VLCC with SPS Storage Capacity 1.8 mmbbl 1.8 mmbbl 1.8 mmbbl 1.6 mmbbl Water Depth (meters) 1,200 2,000 1,100 2,500 Mooring Type Spread Ext Turret Ext Turret Spread Purchase or Lease Purchase Purchase Lease->Purchase Lease Key Dates Field Discovery Before 2000 2004 Jul-07 Oct-06 Pre-Qual 1Q02 Jan-06 Mar-08 N.A. ITT 1Q03 Jun-06 May-08 Apr-08 Contract Award Date 4Q03 Jul-08 Jul-08 Aug-08 Vessel Arrival in Shipyard Steel cut Oct-04 Jul-08 Nov-08 Feb-09 Topsides Lifts 1Q06 May - Oct 10 Aug - Dec 09 Nov-09 - Mar-10 Turret Integration N/A Nov-10 Feb-10 N/A Sailaway from Shipyard Nov-06 Dec-11 May-10 Jul-10 Arrival On-Site Jan-07 Feb-12 Jun-10 Sep-10 Completion of Moorings Mar-07 Mar-12 Jul-10 Oct-10 Ready for 1st Oil Date Mar-12 Oct-10 Oct-10 First Oil Oct-07 Dec-12 Dec-10 Nov-10 Contract Approval or Award to First-Oil 47 months not including 2 yrs Prefeed and FEED 54 months not including 18 mos Proposal and FEED 30 months not including 4 months proposal 29 months not including 4 months proposal
Recent Projects Execution Strategy Custom Newbuild PSVM Jubilee (1) Tupi (Lula) Execution Engineering KBR Leatherhead Toyo Alliance /LTV CBI Conversion Shipyard Hull HHI Shipyard JSPL JSPL COSCO Dalian Topsides Fabrication Dynamac, Nippon AKPS, Dynamac, Yards HHI Offshore Steel GSI, VME, Wasco Bomesc, COOEC Topsides Dry Weight (metric tonnes) 23,000 21,900 17,500 21,000 Turret Fabrication Yard Spread Moor MMHE @ 2600 mt MMHE @ 2300 mt Spread moor- Aibel (Riser Porch) In Country Fabrication Riser Tower, CALM Buoy 2000 tonnes N /A Moorings
Looking Ahead (Leased FPSOs) Standardize even more 3D Cad, Construction Details, E&I Sub-Suppliers, Utility systems Enhanced Material Handling Develop stronger relationships with key suppliers Generators, Compressors, SW Package, Fabrication Yards, Shipyards Benefits of increasing feed-back and commonality across fleet Moorings Topsides Equipment
Looking Ahead (Purchased FPSOs) Improve Alignment with client Change-Order Process Better integration of contracts (hull, topsides, mooring, risers, installation) Alternates Primary use of FPSO Contractor specs New-build Hull (primarily marine specs) Avoid Hybrid specs One-off Hulls Hybrid suppliers Novation Suspension language LQ conversion
Backup Slides Follow If time permits 18
Typical Cidade de Converted FPSO Spread-Moored, DP Shuttle Tankers 19
Suez Max Newbuild Conversion FPSO Sea trials at Newbuild Yard Korea 20
Suez Max Newbuild Conversion FPSO After turret & topsides integration in Singapore 21
Major Oil Company Newbuild FPSO Angola Spread-Moored with CALM 250 mbopd 22
Scope of Work & Contract Strategy (1) Activity Conversion Newbuild Newbuild Conversion Hull type / specs Existing Tanker New hull design to offshore specs Shipyard s standard tanker hull design modified for FPSO site specific service Engineering FPSO Contractor Feed Engineering Contractor plus Shipyard FPSO Contractor plus Tanker Shipyard Shop Fabrication Drawings Procurement- Equipment Repair Shipyard Shipyard Tanker Shipyard FPSO Contractor Shipyard Tanker Shipyard with advice / specs from FPSO Contractor Procurement-Bulks Repair Shipyard Shipyard Tanker Shipyard Hull Fabrication Repair Shipyard (Repairs, Life Extension, FPSO Mods) Shipyard Tanker Shipyard Topsides Fabrication Several Specialist fabricators not necessarily close to Syd Shipyard s Offshore Group or specialist fabricators Several Specialist fabricators not necessarily close to Syd Topsides Integration Repair Shipyard Shipyard s Offshore Group Tanker Shipyard or move hull to Repair Shipyard 23
Scope of Work & Contract Strategy (2) Activity Conversion Newbuild Newbuild Conversion Integration Lifting Local Shear Leg Crane Shear Leg or Special Lifting Device Hull Commissioning FPSO Contractor with Trade Shipyard Labor assist from Repair Yard Local Shear Leg Crane Tanker Shipyard Topsides Commissioning Potential Schedule Impact FPSO Contractor with Trade Labor assist from Repair Yard and equipment suppliers Shipyard s Offshore Group FPSO Contractor with Trade Labor assist from Repair Yard and equipment suppliers Base Base + 9 months Base + 6 months Benefits Maximum Commercial Flexibility and Shortest Schedule One stop shopping, Custom product, prescriptive and offshore specs Good commercial Flexibility, Impacts Most Usual Application Examples Maximum input by FPSO Contractor FPSO Contractor owns and operates Petrobras Cidade de FPSOs Minimum commercial flexibility- Few Shipyards are associated with experienced topsides fabricator Major Oil Company owns and operates Girassol, Kizomba A/B, Greater Plutonio Somewhat longer scheduled than conventional conversion FPSO Contractor owns and operates MODEC Stybarrow,Pyrenees 24
Tanker or Newbuild Hull Selection Criteria Action Conversion New Build Builder / Age / Project Life Project Life Desired Storage Capacity Frequency of Offloads, parcel size, export tanker size Deck Space-Topsides Process & Utilities space requirements Environmental or Client Constraints Single vs. Double Hull Displacement and Hull Dimensions-impact on mooring design, especially if harsh environment and/or deep water Tanker Trading History Fatigue during trading life Accommodations-Expansion for larger FPSO crew, CCR Type of Propulsion Plant-Steam vs Diesel, boilers, generatorspreferences driven by process plant and crude type Physical Inspection Determine Repair & Refurbishment Reqt Preliminary Site-Specific Structural Analysis- ABS Phase A analysis (now called ISE Initial Scantling Evaluation) Review of class records for cracking history Barge or selfpropelled? 25