operating models in the fpso business - polito.it · operating models in the fpso business san...

eni s.p.a.upstream & technical services

2013-2014 Master in Petroleum Engineering and Operations

Operating models in the FPSO business

Author: Ismael Guerrero

San Donato Milanese 13-14-15 October 2014

eni s.p.a. upstream & technical

services2

Stage SubjectOperating models in the FPSO business


Author

Ismael Guerrero

Division eni S.p.A.

Upstream & Technical Services

Dept. FIROP/Floaters Spa

Company Tutors

Maurizio Lanzo

Domenico D’Acernio

University Tutor

Prof. Francesca Verga

Master in Petr.Engineering & Operations 2013-2014


services3

� Project Scope

� FPSO’s market overview

� Reference Scenario Floaters in ENI

� Feasibility case study (Owned vs. Leased)

� How majors oil companies approach FPSO business.

� ENI’s operational model

� Conclusions

List of Content



services4

Project Scope

• Introduction to the floating production units with a special focus on

floating production storage offloading (fpso).

• Preliminary Study of the fpso market and related operating models

(leased/operated) put in place by major oil companies.

• Synthetic research of main criteria and pros/cons of applicable operating

model.


services5

� Project Scope






� Conclusions

List of Content



services6

FPSO’s market overview

Stable demand, good forecast

Increasing complexity

Suppliers

Overruns and delays

Market forecast for the FPSO segmentMain operators for leased fpso

The FPSO market has a stable demand with a good forecast, characterized by high complexity and risk, as well as cost overruns and delays in the delivery time.


services7

Major Leasers Disciplined biddingAfter reporting big losses in 2008–12 and undergoing a change of senior management, major leasers are also becoming more risk averse and are accepting fewer new orders.

BW Offshore, a major leaser, has not signed a new order since 2010 and has been more focused on renewing its existing contracts. SBM and MODEC are also more selective about getting new orders. SBM intends to secure its leadership position in Brazil and Angola and is open to securing projects in other regions. MODEC intends to grow its FPSO business by focusing on Brazil and the “emerging Africa market”.


services8

The FPSO’s market demand• The market is characterized by fast evolution, stable demand and growing

complexity.

• The current trend is based on owned solutions for high complexity, in whichthe importance of the top side is fundamental. The leased option trend isbased on low/medium complexity.

• The delays in the delivery time impact negatively on the cost.

• The strategy of Oil major companies focus on ensuring a major control of the investments, Operational costs, and transference of the higher risk to contractors

4

3

4

3

2

1 1

BP Chevron Eni Shell ExxonMobil Total ConocoPhillips

Future Projects 2014-2021 by Major company

Future Projects


services9

The FPSO’s market supply• The supply is limited to a closed number of qualified contractors, with new

operators entering strongly in the market but with competences and strategies in the mid term to verify. As well as the low profitability and the high risk could put out them.

• The leaders have adapted commercial selective polices for clients/countriesminimizing risk, forced by the negative results of the last years and concerns of investors about the sustainability of the market in mid/long term.

• The supply chain has critical elements due to the increasing demand for complex projects, lack of competences and qualified personnel, costoverruns, difficulties to control delays, due to lack of project management and engineering, and increasing relevance on national content


services10

� Project Scope






� Conclusions

List of Content



services

ENI Field

Operator/

Non-

Operator

Owned/

Leased

Project

Country

Project

Capex

(M$)

Production

KBOPD

Floating Unit

Operatedby

Eni

First

Oil

Operator

Owned

Liverpool Bay –

OSI

UK 870 KBO (100%) Y 2013

Goliath – FPSO Norway 4.281 55,7 (100%)

36,2 (65%)

Y 2015

Jangkrik – FPU Indonesia 2.323 450

MMSCFD (100%)

247,5

MMSCFD (55%)

Y 2017

Mozambique – 1

x FLNG

Coral

Mozambi

que

17.069 12,8 MSCMD (100%) Y 2019

Non-

Operator

Gendalo and

Gehem 2 x FPU

(IDD) – Kutei

Basin

Indonesia 1,828 38 (100%)

7,6 (20%)

N, Chevron 2017

Bouri Slough

Replacement

FSO

Libya 567 (50%) N, MOG 2015

Heidelberg

SPAR

USA 475 80 (100%)

10 (12,5%)

N, Anadarko 2016

Johan Castberg

SEMISUB

Norway 3.735 211 (100%)

63,3 (30%)

N, Statoil 2018

Sea Eagle FPSO Nigeria 200 (100%)

10 (5%)

N, Shell 2003

Lucapa FPSO Angola 20% N, Chevron 2018

Vega – FSO

Leonis

Italy NA 40% N, Edison 2010

Alba Marina

FSO

Italy N/A 38% N, Edison 2012

Kizomba A

FPSO

Angola 3.200 250 (100%)

50 (20%)

Y, Exxonmobil 2004

Kizomba B

FPSO

Angola 3.000 250 (100 %)

50 (20%)

Y, Exxonmobil 2005

11

Floating units as critical assetsThe floating units are critical elements for the success of an increasing number of projects upstream & technical services.

ENI

Field

Operator

/

Non-

Operator

Owned

/

Leased

Project

Country

Project

Capex

(M$)

Production

KBOPD

Floating Unit

Operatedby Eni

First

Oil

Operator Leased

ABO FPSO

OML 125

Nigeria NA 44 (oil) N, BW Offshore 2003

OCTP –

Sankofa

FPSO

Ghana 2.986

(oil

only)

58 (100%)

27,4

(47,22%)

N, Tendering 2016

West Hub

N’Goma –

FPSO

Block 15/06

Angola 4.615 100 (100%)

35 (35%)

N, SBM 2014

East Hub –

FPSO

Angola 2.431 80 (100%)

28 (35%)

N, Bumi

Armada

2017

OPL 245 –

Etan FPSO

Nigeria 4.400 60 (100%)

30 (50%)

Tendering 2017

OPL 245 –

Zabazaba

FPSO

Nigeria 9.661 150 (100%)

75 (50%)

Tendering 2019

Glas Dowr

FPSO Kitan

Australia 40 (100%) N, Bluewater 2011

Aquila –

FPSO Firenze

Italy NA 4,6 Y 2011

Non-

Operator

North Sea

Producer

FPSO

UK 76 (100%)

30,4 (40%)

N, Maersk +

Odebrecht

2001

Kizomba C

FPSO

Angola N/A 100 (100%)

20 (20%)

N, SBM 2008


services12

Floating units as critical assetsThe floating units are critical elements for the success of an increasing number of projects upstream & technical services.


services13

ENI – executed/ongoing activities

Q4 2014

Dec. 2016

Feb.2014

Dec.2013

Oct2011

AR1Oct ‘11

PTROct ‘13

AR2Nov ‘13

AR3Dec ‘14

June2011

Operations (5+3 years contract-Bluewater)

2011

FPU Jangkrik

FPSO Kitan (GLAS DOWR)

FPSO N’Goma

FLNG Mozambique

BLOCK 15/06:East Hub

Nigeria OPL-245: Ethan FPSO

Q1 2017

03/042014

Sept.2012

Oct2011

AR1Apr ‘11

AR2Jun‘12

AR3

June2011

Jul 2013 Feb.2014

Apr.2017

Dec.2015

2019

2019


services14

Floaters – executed/ongoing activities

FPSO ABO – Life Extension

FPSO Ghana (OCTP)

Firenze FPSO

Goliat

FPSO Zaba Zaba

June 2019

Mar2015

Dec2013

Oct2011

AR1Oct ‘11

PTROct ‘13

AR2Nov ‘13

AR3Dec ‘14

Dec2016

June2014

Dec2013

April2013

AR1 / AR2

PTR AR3

June2015

Operations

20122023

Life extension

20132023


services15

� Project Scope






� Conclusions

List of Content



services16

Feasibility Owned vs. Leased FPSO

• The key parameters to decide whether lease or own an FPSO are NPV, Maximum financial exposure and Pay-out time.

• The financial situation of the oil major company affects the selection of a leased or owned FPSO development.

• For instance a company with a low portfolio of business willing to achieve a desired position in the market would try to accept projects with a higher financial exposure, more risky (political uncertainty related to the specific country but out of the scope of this report), at cost of making the profit forecasted in the NPV.

• Other that economical and financial aspects has to be taken into account the technical/operational capabilities of the oil company


services17

Production Sharing Agreement (PSA)The Key Terms for Block Polito are:• Located in West Africa.• First 20 million barrels of oil are tax free

• Royalty is based on sliding scale

P=PRODUCTION (KBOPD)

Cost recovery (Cost oil)• 20% of production after royalty

Taxation• 50% Tax oil• 50% of tangible capital costs allowable as Investment allowance

KBOPD Royalty rate

0-20 0%

20-70 5%*(1-(70-P)/(70-20))

>70 5%


services18

Production Sharing Agreement (PSA)Profit split• Typical PSC R factor calculation

Government Participation• There is no Government participation of State rights to take a working

interest.

R Factor Contractor Share

0-1,2 80%

1,2-2,5 25%+((2,5-R)/(2,5-1,2)*(80%-25%))

>2,5 25%


services19

Feasibility Owned vs. Leased FPSO• The NPV for the Owned FPSO results 1,725 $mm (IRR 45%) at a cost of

money of 7,8% and maximum financial exposure of 969 $mm, which lead to get the pay-out time in late-2020.

• The NPV for the leased FPSO results 906 $mm (IRR 39%) at a cost of money of 7,8% and maximum financial exposure of 553 $mm, which lead to get the pay-out time at the beginning-2021. Both cases evaluated in 13 years period.


services20

� Project Scope






� Conclusions

List of Content



services21

The strategy of the Majors

FPSO-Oil Processing Capacity (bbls/d)

Oil Major Companies have deloped internal competences to manage the entire life cycle of the asset with adoption of flexible strategies as function of the project/country, always giving priority to the ownership and direct management for high complexity assets and revelant for the business.

FPSO Leased/Owned

1 12

32 2

3

4

10

5

5

45

2

5

11

78

67

5

BP Total Chevron Exxonmobil ConocoPhillips Shell ENI

Leased Owned Total


services22

Majors strategy – Owned FPSOsThe major oil companies keep the ownership and operations of most of the high complexity FPSOs, with significant exceptions regarding local regulations (Angola, China)

Field Operator FPSO Operator FPSO Owne r FPSO Name Field CountryCurrent Status

Visible first oil

Oil Processing Capacity (bbls/d)

Gas Processing Capacity (mmscf/d)

Oil Storage Capacity (bbls)

Water Depth (ft) Mooring Type

Converted?

Eni Eni Eni Firenze FPSO Aquila Italy Working 2011 12.000 0 700.000 2723 External Turret Mooring Yes

Eni Eni Eni Goliat FPSO Goliat Norway Construction 2014 100.000 140 1.000.000 1125 Permanent Spread MooringNo

Shell Shell Shell Bonga Bonga Nigeria Working 2005 225.000 150 2.042.140 3379 Permanent Spread MooringNo

Shell Shell Shell/Exxon (50/50) CURLEW Curlew, Kyle United Kingdom Working 2002 45.000 116 560.000 301 Internal Turret Mooring -Spread MooringNo

Shell Shell Shell Sea Eagle EA (OML 79) Nigeria Working 2003 200.000 600 920.000 1230 Jacket Soft Yoke Yes

Shell Shell Shell Anasuria Teal, Teal South, Guillemot A, CookUnited Kingdom Working 1996 225.000 65 2.000.000 291 Internal Turret Mooring Yes

Shell MODEC Shell Fluminense Bijupira Brazil Working 2003 81.000 75 1.300.000 2952 External Turret Mooring Yes

ExxonMobil SBM ExxonMobil Serpentina Zafiro Southern ExpansionEquatorial GuineaWorking 2003 110.000 50 1.900.000 2799 External Turret Mooring Yes

ExxonMobil/GE ExxonMobil ExxonMobil ZAFIRO PRODUCER Zafiro Block B Equatorial GuineaWorking 1996 80.000 60 1.900.000 590 Spread Mooring Yes

ExxonMobil ExxonMobil ExxonMobil Kizomba A Hungo Angola Working 2004 250.000 400 2.200.000 3942 Permanent Spread MooringNo

ExxonMobil ExxonMobil ExxonMobil Kizomba B Kissanje Angola Working 2005 250.000 400 2.200.000 3609 Permanent Spread MooringNo

ExxonMobil ExxonMobil ExxonMobil Erha FPSO Erha Nigeria Working 2006 200.000 - 2.300.000 3998 Spread Mooring No

NNPC Chevron Chevron Agbami FPSO Agbami Nigeria Working 2008 250.000 450 2.300.000 4797 Permanent Spread MooringNo

Chevron Chevron Chevron CAPTAIN Captain A, B, C United Kingdom Working 1996 37.000 - 849.000 341 External Turret Mooring Yes

Chevron Chevron Chevron TANTAWAN EXPLORER Tantawan Thailand Working 1997 50.000 150 1.000.000 242 External Turret Mooring No

Chevron SBM Chevron Frade FPSO Frade Brazil Working 2009 100.000 150 1.500.000 4920 Internal Turret Mooring Yes

Chevron Chevron Chevron Rosebank FPSO Rosebank Lochnagar United Kingdom Construction 2017 100.000 190 1.000.000 3609 Internal Turret Mooring No

Total Total Total Dalia FPSO Dalia Angola Working 2006 240.000 282 2.000.000 4920 Spread Mooring No

Total Total Total Akpo FPSO Akpo Nigeria Working 2009 185.000 530 2.000.000 4593 Permanent Spread MooringNo

Total Total Total Pazflor FPSO Acacia Angola Working 2011 220.000 150 1.900.000 3378 Permanent Spread MooringNo

Total Total Total Usan FPSO Usan Nigeria Working 2012 180.000 177 2.000.000 2625 Permanent Spread MooringNo

Total Total Total CLOV FPSO Cravo Angola Construction 2014 160.000 230 1.800.000 4449 Permanent Spread MooringNo

Total Saipem Total Kaombo Ph 1 Gengibre Angola Tendering 2017 100.000 90 1.500.000 5584 - -

Total Saipem Total Kaombo Ph 2 Mostarda Angola Tendering 2018 100.000 90 1.500.000 5764 - -

Total Exmar Total Farwah FPSO Al Jurf Libya Working 2003 40.000 55 900.000 295 External Turret Mooring No

Total Total Total Egina FPSO Egina Nigeria Construction 2017 220.000 160 2.300.000 5085 Permanent Spread MooringNo

Total Total Total Girassol Girassol, Jasmim Block 17, Rosa (Future)Angola Working 2001 60.000 90 2,000,000 4593 Spread Mooring Yes

ConocoPhillips ConocoPhillips ConocoPhillips Belanak Natuna Belanak Indonesia Working 2004 100.000 350 1.000.000 295 Permanent Spread MooringNo

ConocoPhillips ConocoPhillips CNOOC Hai Jang 117 Penglai Block 19-3 (Phase 2)China Working 2009 190.000 2.000.000 82 Internal Turret Mooring No

ConocoPhillips ConocoPhillips/CNOOC CNOOC BOHAI MING ZHU Penglai 19-3 Block 11/05China Working 2002 80.000 6 1.000.000 101 Jacket Soft Yoke No

ConocoPhillips ConocoPhillips/CNOOC CNOOC Bohai Peng Bo Penglai (PL) 19-3 China Working 2009 190.000 200 2.000.000 92 Soft Yoke Mooring System No

BP BP BP Greater Plutonio Plutonio Angola Working 2007 220.000 400 2.000.000 4467 Permanent Spread MooringNo

BP BP BP Skarv FPSO Skarv Norway Working 2012 85.000 671 875.000 1148 Internal Turret Mooring No

BP BP BP PSVM FPSO Marte Angola Working 2013 157.000 245 1.800.000 6558 External Turret Mooring Yes

BP BP BP Quad 204 FPSO Schiehallion United Kingdom Construction 2016 130.000 220 1.000.000 1230 No


services23

Majors strategy – Leased FPSOsThe leased FPSOs are spread out mostly for the segment of low/medium complexity, with oil processing capacity lower than 100.000 bbls/d.

Field Operator FPSO OperatorFPSO Owner FPSO Name Field Country Current Status

Visible first oil

Duration (years)

Oil Processing Capacity (bbls/d)

Gas Processing Capacity (mmscf/d)

Oil Storage Capacity (bbls)

Water Depth (ft) Mooring Type

Converted?

BP Teekay Petrojarl Teekay Petrojarl PetroJarl Foinaven Foinaven, Foinaven EastUnited Kingdom Working 1997 - 140.000 260.000 1706 Internal Turret Mooring No

Chevron SBM SBM LPG FPSO Sanha Sanha Angola Working 15/01/2005 1Y, 9M 125 362.000 223 Turret Mooring No

Chevron SBM SBM KUITO Kuito Angola Working 1999 - 100.000 90 1.636.000 1223 Spread Mooring Yes

CNOOC Chevron CNOOC Hai Jang 113 Bozhong 25-1 China Working 2004 - 190.000 1.800.000 72 SAL Yoke No

ConocoPhillips Maersk+Odebrecht Maersk+Odebrecht North Sea Producer MacCulloch United Kingdom Working 2001 - 76.000 30 560.000 492 Internal Turret Mooring / Spread MooringYes

ConocoPhillips ConocoPhillips MODEC KAKAP NATUNA Kakap KH Indonesia Working 1986 - 25.000 25 760.000 269 CRY Yes

Eni BW Offshore BW Offshore ABO FPSO Abo Nigeria Working 15/03/2003 2Y 30.000 44 880.000 1804 Permanent Spread MooringYes

Eni Bluewater Bluewater Glas Dowr FPSO Kitan Australia Working 10/10/2011 1Y, 1M 40.000 0 650.000 1148 Internal Turret Mooring Yes

Eni SBM SBM N'Goma (ex-Xikomba) Sangos Angola Commissioning 12/12/2014 0Y, 11M 100.000 115 1.700.000 4426 External Turret Mooring Yes

ExxonMobil SBM SBM Mondo FPSO Mondo Angola Working 09/01/2008 2Y 100.000 95 1.600.000 2427 External Turret Mooring Yes

ExxonMobil SBM SBM Saxi-Batuque (KIZOMBA C) Saxi Angola Working 13/08/2008 2Y, 7M 100.000 150 1.600.000 2230 External Turret Mooring Yes

ExxonMobil Exxonmobil Bluewater Jotun A Jotun Norway Working 1999 - 123.000 30 595.000 419 Internal Turret Mooring Yes

Shell SBM SBM Espirito Santo Ostra Brazil Working 13/07/2009 2Y, 8M 100.000 150 1.400.000 7871 Internal Turret Mooring Yes

Shell SBM SBM Stones Stones USA, Gulf of MexicoConstruction 01/03/2016 2Y, 8M 60.000 15 800.000 9576 Disconnectable External Turret MooringYes

Total Maersk Maersk N'Kossa Haute Mer - N'KossaCongo Working 1996 - 65.000 20 1.000.000 393 External Turret Mooring Yes


services24

Corporate organization for FPSOsThe strategy developed by most of major oil companies to face the market has been developing internal competences to operate them, as well as acquiring the required flexibility to shift strategy according to the specific country and project

Upstream International

Upstream International

Operated

Vicepresident Area

General Production Manager Country

General Manager Offshore

Operations Manager

Subsurface elements

Well servicing

Reservoir Engineering

Asset Integrity

Business Support

Finance

Control and Procurement

Technical Support

(Engineering)

Operations Surveillance

Special Projects

Marine Superintend

ent

Class Management

Inspections

Maintenance Manager

Maintenance service

management

HQ organization

JV organization

HQ detailed organization


services25

� Project Scope






� Conclusions

List of Content



services26

The management of critical processesThe HQ must ensure the management of the critical processes for the development and operations of Floating units, from the feasibility stage, giving support support in specific to the development regarding operability and maintainability, contributing to their development and operations.

Evaluation

•Estimation of O&M costs•Market analysis

Development

OperationReadiness

•Operability and maintainability•Support to the Flag/Class management regarding O&M•Support to tendering for O&M and performance

•Aplication of methodologies of operations readiness to floaters•Organizational set-up Support, staffing, training, local content

Operations

•Manning floaters•Technical/Operational Support•Management/Coordination of O&M and contract mgmt support•Shut-down optimization and troubleshooting


services27

Critical processes for O&MThe operative model is based on filling the gaps between the specific processes for the floating unit and the support to the process owner OPS for customizing the standard ones for their integration with the naval/process ones.

OPS/Prod

Operational Review

Operability/Maintainability

Production

Top side modulesmaintenance

Asset Integrity

Maintenance Eng/CMMS

O&M know-how development

Floaters

Operational reviewOperability/Maintainability

Production

Ship/turret maintenance

Asset Integrity

Maintenance Eng/CMMS

Floaters know-how development

Top side maintenance

ISM/ISPS – Flag mgmt

Class maintenance

Process Owner

Apply to Floaters projects

Ship coduction


services28

Operational model– Owned/OperateFor the operated units is needed to support the Joint Venture with the management of the naval processes

Strategy O&M (leased vs owned)

Floaters


JV/Ops

Ownership

JV/dev

Feasibility

Feed

Overseing construction

Overseing

commissioning

Operation Readiness

Hand over management

Production management

COMPANY (ISM/ISPS)

O&M

Start-up until PAC

Contractor

EPCIMaterial supply

Staffing and training

Coord. O&M/Technical services/ Asset mgmt


services29

Operational model- LeasedThe operational model is based on the support to the Joint Venture from the development, with the goal of guarantee the availability of resources with the competences for the management of the floating unit.

Owner - Company

Manning/Crew Mgmt

O&M

Technical servicesStrategy & support to O&M feasibility analysis

Floaters

Support to tendering for O&M

JV/Ops

Operation Readiness

Third partyJV/Dev

Feasibility

Strategy

Feed and support for tendering

Overseing EPCI and

Start-up

Local Content

Production management

Management of Leasing contract

Staffing and training

Coord. O&M/Technical services/ Asset mgmt


EPCI

Start-up


services30

HQ Proposed organizationHQ’s organizational structure must ensure the control of critical processes for the development and management of the floating production units from the feasibility studies, supporting in particular the phase of development regarding the operability and maintainability, as well as contributing to the development.


services31

� Project Scope






� Conclusions

List of Content



services32

Conclusions• The FPSOs are key assets for deepwater offshore

• The FPSO supply chain has critical elements such as: project complexity, few qualified suppliers, and delays/overruns

• The main operative models are Leased/Owned; oil major companies tend to own the high complexity assets keeping the O&M management

• Floating production units are key assets for ENI, and in specific FPSOs.

• ENI develops offshore competences for well-established processes/organization that can add value regarless the operating model.

• The selection of owned/leased FPSO solution must be evaluated case by case based on financial/economic reasons, with particular considerations for the country/project.The technical/operative competences are critical for managing an FPSO.

• Regardless the selection of leased/owned unit, establishment of a proper operating model to monitor/challenge directly production, which is core business of any major oil company is much important. The operating model demand to be efficient and flexible.


services33

Acknowledgements

I would thank Eni s.p.a. upstream & technical services

Division Management for permission to present this

work and related results and

FLOATERS/FIROP/INFLO/SPRE/LOGIS colleagues

for the technical support and needed assistance.


operating models in the fpso business - polito.it · operating models in the fpso business san...

Documents