Lumina House

FPSO Redeployment

By Mark Evans

Lumina House

Agenda

Overview

Example (success)

Current market opportunity

Economic advantage

Risks and lessons learned specific to redeployments

Example (risks)

Summary of Success factors

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Opening statement

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Overview

FPSO relocation statistics 6% multiple relocations (11) 14% one relocation (27)

Example FPSO’s redeployments Teekay Petrojarl 1 (9 times) BW Crystal Sea (3 times) SBM FPSO II (3 times) Bluewater Munin (1 time) Armada Claire (1 time)

6%

14%

80%

Relocated once

Relocated multipletimes

First deployment

192 FPSOs worldwide

An redeployment strategy has the potential to deliver significant cost and schedule savings

Although there are significant risks attached to a redeployment strategy, they are identifiable, manageable and tolerable.

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Specification Value

Delivery 1986

Storage 180,000 bbls

Oil production 30,000 bopd

Gas handling 8-9 mmscfd

Riser slots 9

Fields

10 deployments

Norway: Oseberg, Troll, Blenheim, GlitneUK: Lyell, Fulmar, Balder, Fife/Fergus/Flora and Angus, Kyle, HudsonBrazil: Altana (Santos Basin) (Due Q1 2017)

Success Operated under different regulatory regimes and for different operatorsVariety of different field conditionsAverage production regularly between 96 to 99%

Reason Facility flexibility – testing/early production/permanent productionOwned by Teekay for most of lifeExperienced FPSO operators

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Example (success) – Teekay Petrojarl 1

Courtesy of Teekay

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Current market opportunity

Current market conditions are putting downwards pressure on prices in the industry.

Residual values not much more than scrap

Highly competitive redeployment market

51 out of a global fleet of 278 FPS are available

25 are FPSOs (record number)

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Economic advantage

Example FPSO Conversion• Suezmax (290m)

• 1million bbls storage

• Internal turret (8 slots)

• 100,000 bopd

• 50,000 bwpd

• 200 mmscfd

• Harsh environment

• Safety case regime

• 20 years field life

Outcome

• RFSU 22 months (post FID)

• US$1billion

Example Redeployment• Dependant fit of candidate FPSO & execution

• 10 to 25 years old and well maintained

• Residual value: US$50million – US$250million

Overall schedule

• RFSU 12 to 18 months (post FID)

CAPEX saving range per area

• Varied level of reuse / refurbishment / upgrade

• Hull: US$15million - US$100million

• Turret: US$100million - US$150million

• Topsides: US$50million - US$300million

• Total: US$15million - US$550million

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Minimise rework and investment

The FPSO has to fit the field and the field fit the FPSO

Easiest (best fit) = Same region, contractors and client specifications

Hardest = Different region, new contractors and new very prescriptive client requirements

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Risks and lessons learned specific to redeployments

Technical

Topsides rarely match field Gas compression, gas treatment, water injection, power, pressure, temperature, CO2, H2S

A multi-discipline integrated topsides review

Simulation to determine compatibility and debottlenecking opportunities

Address metallurgy issues and resistance to CO2 and H2S

Turret compatibility (subsea interface) Slot size/number, service, flow assurance, flowrate, pressure, temperature, CO2, H2S

Integrate with topsides review and include vendor support

Metocean / environment changes Assess gaps and economic impact in FPSO screening phase

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Risks and lessons learned specific to redeployments

Technical

Understanding true condition & legacy issues Accurately determine condition before selection - full condition assessment

Review of preservation regime, operating and maintenance records

Work with a contractor who has operated/worked on the unit before

Allowance for surprises

Regulatory regime differences Confirm gaps can be cost effectively managed before selection

Specification too prescriptive or not robust Prescriptive specification drives up cost, basis not robust leads to changes

Gather information early from contractors/seller to see what will work

Flexibility for contractor (non-prescriptive requirements / consider operator light touch)

Allowance for compromise

Minimising change (focus on front end engineering)

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Risks and lessons learned specific to redeployments

Commercial

Procurement strategy FPSO availability and competition from others to buy

Consider how candidates fit into your execution strategy and timeline

Firm up a reasonable ‘option to purchase’ price with one or more of the candidates

Contracting strategy Knowledge of asset and non-incentivised contractors

Previous owner risk profiles (contractor / oil company)

Lease with purchase option redeployment risk is managed by most suited stakeholder

Consider risk sharing contracts

Schedule

Layup and decommissioning costs

Maintenance cost of old equipment

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Example (risks) – EnQuest Producer

Specification Value

FPSO Enquest Producer (EnQuest)used to be Uisge Gorm

Redeployment Alma and Galia (Enquest)

Year 2015

Schedule impact >18 months

Cost impact >US$200million

Reason Scope of upgrade and specification of the FPSO changed by Enquest during the refit period, to extend life of field, optimise operating costs & enable additional development

Courtesy of EnQuest

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Example (risks) – BW Athena

Specification Value

FPSO BW Athena (BW Offshore)used to be BW Carmen

Redeployment Athena, UK (Ithaca Energy)

Year 2012

Schedule impact Approx. 6 months

Cost impact Not known

Reason Change in regulatory requirements during upgrade resulting in scope growth

Courtesy of BW Offshore

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Success factors

Successful FPSO redeployment

Feasible cost and schedule savings

How you get there

Record number of idle FPSO’s

Find the best match FPSO

Fully understand the condition

Be flexible / open to compromise

Adequate front end design

Robust functional specifications that are not too prescriptive

Minimise change (cultural)

Consider maintenance and layup requirements

Set realistic schedules

Risk sharing

Independent reviews

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Questions?

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