A Renewed Life Cycle Approach to FPSO by DNV

A Renewed Life Cycle Approach to FPSO by DNV 2011 FPSO JIP Forum Kenneth Vareide, Director of Operations

Life Cycle Approach to FPSO: Some Key Success Criteria Newbuilding Project vs. Operation Integrated Approach Operation and Compliance From Calendar Condition Risk Based Mastering the Balance Act Cost vs. Performance 2

Frequently underestimated challenge: Conflicting Need of New building and Operation New building Timing Project Execution Operation Industrialization Cost & Performance Timing and execution is always key in newbuilding, but - There is also a balance to strike between NB and Operation - The right additional investments in NB phase can save cost during operation or create the needed advantages in the market Operation is about industrialization - This requires fine tuning the cost/performance balance - Reality of the condition on the ground 4

Alignment between Operation and IT Infrastructure is essential to achieve the best outcome Information Management - organization of, and control over the structure, processing and delivery of information - the right information to the right person at the right time and the right place. Operations Business Processes People, Activities Maintenance Procurement Document mngmt Operations Quality & Safety mngmt Accounting Risk Manager Self Assessment Report. Alignment Operation & IT Infrastructure Ensure that business needs are continuously well supported by good ICT infrastructure Information Management ICT Architecture Logistics mgmt systems Crew mgmt ICT Architecture - the fundamental organization of a system, embodied in its components, their relationships to each other and to the environment, and the principles guiding its design and evolution. - understand, plan future, realize Maintenance systems Field mgmt Procurement syst. Accounting syst. Planning Data mgmt Hull Maintenance + + + Applications, Information IT Infrastructure

Frequently underestimated challenge: Conflicting Need of New building and Operation Key to Success New building Timing Project Execution Operation Industrialization Cost & Performance Timing and execution is always key in newbuilding, but - There is also a balance to strike between NB and Operation - The right additional investments in NB phase can save cost during operation or create the needed advantages in the market Operation is about industrialization - This requires fine tuning the cost/performance balance The winner is the one who strikes the right balance between NB and Operation and manage the transition 10

The Balancing act between Compliance and Business Needs Compliance Business Safety Maximize Business Quality Maximize Output Environment Cost Control 12

Is there an inherent conflict between Compliance, Operation and Business Needs 13

or is there an common Goal? 14

the answer to that question is that the Asset Integrity Management Strategy should encompasses everything Compliance Business Owner s Asset Integrity Management Strategy should encompasses all Safety Quality Environment Maximize Business Maximize Output Cost Control 15

But how does this related to traditional Surveys & Inspections schemes? FPSO OWNER Inspections during operation Owner Values Quality assurance? Training/ qualification? Knowledgesharing? CLASS Surveyor on board Fixed intervals Standardised survey extent 16

A new approach is needed to align the strategy and to establish common objective for a safe and reliable operation Systematic Inspection & Maintenance Planned Maintenance System Knowledge sharing & flexible survey system 17

A new approach is needed to align the strategy and to establish common objective for a safe and reliable operation Owners Tasks: Systematic Inspection & Maintenance - Implement a Planned Inspection and Maintenance System - Use competent officers to carry out inspections and report DNV s Task: Planned Maintenance System - Give guidance and assistance in setting up a Planned Inspection and Maintenance System - Provide training to owners staff - Employ a more flexible survey system. Knowledge sharing & flexible survey system - Use owners inspections (partly) to validate class standard 18

Upside using Hull Planned Maintenance System Systematic approach including knowledge sharing Increase the crew competence Common understanding of acceptance criterias Increased flexibility Increased awareness higher quality 19

Document condition by photos Photos for monitoring of coating condition Same place and view every year monitor development 1. (1) 2. (2) 3. (3) (4) 4. (5) (6) 20

DNV launched Hull Integrity Management System (HIM) Background / Industry drivers - Degraded hulls have caused cost overruns on renewal survey - The owners have increased focus on the condition of their assets - The owner want to spot maintenance trends across their fleet - Authorities have increased their attention on hull integrity A shared tool between the owner & DNV - Gives shared information to owners and DNV - Access through DNV Exchange - Prepared for the new Hull PMS system 21

Quick overview over status of the entire fleet 22

Easy overview of condition for each specific rig 23

Detailed overview of cracks 24

Status summary results on 3D model 25

Upside using Hull Integrity Management Shared system for hull integrity management Facilitates fleet management and benchmarking Full traceability and history Tool for planning and training Facilitates knowledge sharing between owner and DNV Facilitates hull integrity management across the fleet 26

Class survey schedule the traditional way follows the calendar 1st Annual 2nd Annual 3rd Annual 4th Annual Renewal survey Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Intermediate Renewal Commencement Completion Commencement Completion Survey window of +/- 3 months from due date Minimum frequency of inspection is set by IACS unified requirements 28

Arrangements facilitating Renewal survey on location - Boroscopi inspection of sea valves and sea chests - ROV inspection of the hull - Thrusters CM - Tailshaft monitoring Approved Service Suppliers (NDE, chain-in-water) Continuous Hull Optimized In-service Inspection Program (IIP) Condition monitoring (CM) Guideline for ventilation and inert gas system for tanker conversions Partnership with the owners in developing new inspection methods Emergency Response Service (ERS) for FPSOs Hull PMS PMS RCM Planning 29

Renewal survey on location Butterfly valve baffle valve 30

Sea chest inspection using boroscope 31

Condition monitoring of thrusters 32

From calendar based to condition based maintenance Current trends are often driven by increased asset complexity and increased cost of down time. Equipment manufacturers standard procedures are replaced by criticality based maintenance programs that are adapted to the operating context of the asset. Condition monitoring techniques are replacing calendar based overhauls. DNV has an intention to contribute in the development of more modern approach to maintenance. 1st Annual 2nd Annual Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Intermediate Renewal Commencement Survey window of +/- 3 months from due date 3rd Annual Completion 4th Annual Commencement Renewal survey Completion 33

New survey arrangement - PMS RCM 5 different choices for Managers, depending on maturity of maintenance 5 PMS RCM (Reliability Centered Maintenance) 4 Machinery CM (Condition Monitoring) 3 Machinery PMS (Planned Maintenance System) 2 Machinery Continuous 1 Machinery Renewal 34

Implementation process for PMS RCM Step 1 Management Review Step 2 Verification of RCM analysis Step 3 Verification of correct implementation in maintenance system Step 4 Verification of correct use Step 1: Operational procedures, resources and org. Culture. Step 2: Methods and logics, knowledge in the RCM team Step 3: Implementation according to RCM analysis Step 4: Review of examples of continous improvement and maintenance history. 35

Upside using PMS RCM from an RCM maintenance program in operation 1. Preventive Maintenance costs reduced 15 45% (based on experience from 6 different cases) through optimisation. 2. Increased availability up to 30%. 3. Decreased costly failures up to 60%. from an PMS RCM survey arrangement 1. Traditional 5 yearly PMS class renewal substituted by the yearly PMS RCM survey focusing on asset condition and the organisations ability to adopt to a condition based continuous improvement process. The result from the yearly survey will be the basis for the renewal of class. 2. Maintenance tasks and interval set based on RCM analyses results 36

Life Cycle Management (LCM) JIP of Hull Structures LCM Framework Summary of state of practice Education and experience sharing workshops Corrosion Characterization of corroded plates for remaining strength assessment Corrosion prediction updating model validated to measurement and test Crack Management Damage tolerance assessment methodology Crack mitigation and repair methods Repair Technology Identification and qualification of repair technologies for application offshore (no hot-work)

Optimizing maintenance is a balancing act between current and future competitiveness and operational expenses Frequently maintenance is managed as a cost centre, but that is not the full truth High quality maintenance contributes with: - Increased competitiveness for new contracts - Increased reliability, and earning capacity Effective and efficient maintenance strategies and processes contributes with: - Reduced cost and improved operational result But it is not only about maintenance, it is also managing the total value chain of maintenance, including: procurement, supply chain and inventory management DNV supports owners in benchmarking performance, and finding the right balance, including implementing and realizing business results. 39

Lets illustrate the challenge, simplified Corporate P&L Commercial Operation Maintenance Revenue and contracts Cost Reliable asset Trust and capable asset 41

Rethinking maintenance approach is about benchmarking, challenging current practices and applying modern maintenance principles Organization Goals & Requirements Maintenance program Planning Execution Materials Documentation Resource needs Management And Verification Technical condition Risk Level Performance IT-systems Improvement s Analysis Reporting Improving requires an appraisal of the complete maintenance process, including detailed tuning of the details in the maintenance program and technical hierarchy Detailed tuning of maintenance should be done by applying a criticality framework, to provide a holistic and documented approach By knowing and understanding the performance drivers there is usually a significant potential in improving business performance The winner is the one who strikes the right balance between Cost vs. Performance 42

The winner is the one who: - Manager the transition from NB to Operation - Integrate Compliance with the Asset Integrity Strategy - Optimize PMS to the operation - Strikes the right balance between Cost vs. Performance 44

Safeguarding life, property and the environment www.dnv.com 45