cost reduction through industrialization, standardization ... 2015... · cost reduction through...

Ptil temadag12 November

2015

Cost reduction through industrialization,

standardization and simplification.

– how to get there.

Petroleumstilsynets Temadag, 12 November 2015

Tom Eddy Johansen, Forsys Subsea, JV between FMC Technologies and Technip

Tarjei Haugen, FMC Technologies

Increased Oil Recovery14 October 2015 1

A reminder…

"We can't solve problems

by using the same kind of

thinking we used when

we created them."

Albert Einstein


We are facing a very different challenge Operators declining returns – Cost increase per subsea Well Unit – Oil price

Offshore Development

CAPEX distr.

14%

9-15%

30-50%12%

30%

5%

Installation

Subsea

Drilling &

CompletionRiser &

Flowlines

Topside

Facility

(FPSO/

Platform)

Other

Oil price

0

5

10

15

20

25

0

20

40

60

80

100

120

MUSD/wellBrent, USD/bbl

Brent - USD/bbl Subsea Equipment MUSD/well

Source: Quest and FMC Sales Support

*

*Running prices

*


Main Cost Reduction Drivers

VolumeTechnology

Collaboration

Volume

- Common standard/requirements for

the industry (material, valves etc.)

- Enable stocking programs based on

standard requirements and ITPs

Technology

- Innovation through simplification of

technical solutions

Collaboration

- Working differently together

- Simplification of project execution


Standardization

Configuration

Standard components

Manufacturing


The subsea business legacy

Dual world

However experience

shows that not all type of

equipment fits into a

manufacturing model

Some products are still

truly construction

• E.g. manifolds

Need to be able to work

within both worlds

simultaneously

Infancy

Our industry has its legacy

from building platforms

Typical construction

activities:

• Site team

• Site instructions

• Site….etc.

Few large projects with

dedicated resources

Industrialization

Approx. 5-8 years ago,

moved to cross project

Product Line teams

• Serving several projects

Maturation

Mature technology require

industrialization

• Manufacturing solutions

Multiple projects require

matrix organization

• Shared resources

Ma

nu

fac

turi

ng C

on

stru

ctio

n


Adopting both modelsTwo ways of quality assurance

Construction• Buildings

• Bridges

• Platforms

Quality

Assurance• Inspection

• Testing

Tailored Products • Project Specific

Manufacturing• Cars

• Electronics

• Household Appliances

Quality

Assurance

• Standardization

• Refining of processes for

“built in Quality” (still incl.

inspection and testing)

Configured

products• Standardized

Project Supply

• Manifolds

• Well jumpers

• Flowbases

• Subsea Distr. Unit’s

Product Delivery

• SCM’s

• Instruments

• Connectors

• Valves

• Tubing

Hangers

• X-mas Trees

• Well Heads

• etc.


Requirement Rose

0

5

10

15

20

25

30

35

QA requirement 1QA requirement 2


QA requirement 5

QA requirement 6

QA requirement 7

QA requirement 8

QA requirement 9

QA requirement 10

Tech requrement 1

Tech requrement 2

Tech requrement 3

Tech requrement 4

Tech requrement 5

Tech requrement 6

Tech requrement 7

Tech requrement 8Tech requrement 9

Tech requrement 10Dok. Requirement 1

Dok. Requirement 2Dok. Requirement 3

Dok. Requirement 4

Dok. Requirement 5

Dok. Requirement 6

Dok. Requirement 7

Dok. Requirement 8

Dok. Requirement 9

Dok. Requirement 10

Matr. Requirement 1

Matr. Requirement 2

Matr. Requirement 3

Matr. Requirement 4

Matr. Requirement 5

Matr. Requirement 6

Matr. Requirement 7

Matr. Requirement 8Matr. Requirement 9

Matr. Requirement 10

Operator 1

Operator 2

Operator 3

Operator 4

Codes and Std


Requirement Rose

0

5

10

15

20

25

30

35



QA requirement 5

QA requirement 6

QA requirement 7

QA requirement 8

QA requirement 9

QA requirement 10

Tech requrement 1

Tech requrement 2

Tech requrement 3

Tech requrement 4

Tech requrement 5

Tech requrement 6

Tech requrement 7




Dok. Requirement 4

Dok. Requirement 5

Dok. Requirement 6

Dok. Requirement 7

Dok. Requirement 8

Dok. Requirement 9

Dok. Requirement 10

Matr. Requirement 1

Matr. Requirement 2

Matr. Requirement 3

Matr. Requirement 4

Matr. Requirement 5

Matr. Requirement 6

Matr. Requirement 7


Matr. Requirement 10

Operator 1

Operator 2

Operator 3

Operator 4

Codes and Std


Requirement Rose

0

5

10

15

20

25

30

35



QA requirement 5

QA requirement 6

QA requirement 7

QA requirement 8

QA requirement 9

QA requirement 10

Tech requrement 1

Tech requrement 2

Tech requrement 3

Tech requrement 4

Tech requrement 5

Tech requrement 6

Tech requrement 7




Dok. Requirement 4

Dok. Requirement 5

Dok. Requirement 6

Dok. Requirement 7

Dok. Requirement 8

Dok. Requirement 9

Dok. Requirement 10

Matr. Requirement 1

Matr. Requirement 2

Matr. Requirement 3

Matr. Requirement 4

Matr. Requirement 5

Matr. Requirement 6

Matr. Requirement 7


Matr. Requirement…


Collaboration and lean executionExample: Transfer of Customer Requirements


What does this mean in practical terms?

…and are we ready for it?

Challenge ourselves and adjust the requirements to a “good enough” level.

Seek co-operation across the company boundary through the established

international standards, codes and JIPs.

Build trust to the EPC/EPCI contractors and focus on reviewing and auditing the

processes and system to ensure good build in quality.

Enable and encourage stoking program based on standard requirements and ITPs.

Leave the idea of “you get what you inspect”.

When need for inspection, consider use of an independent party inspector.

Qualification of products, manufacturing processes and acceptance criteria should

be valid across the industry.

The barrier for changing the requirements should be high.

Reduce the requirements for insight and review of engineering documentation.

Let the contractors establish a base of approved standard documents.

Reduce requirements for documentation and accept retained Q-documents

(MRBs etc.)


Standardization – Real example

0

20

40

60

80

100

10 12 14 16 18 20 22 24 26 28 30 32 34 36 38

Standard

w/Stocking Plan

Repeated

Customer Standard

New customer

specification

Lead Time (months)

Price (

%)


Closing remarks

• We are entering a new phase within Subsea Developments

– All about cost

• Major changes have to take place in the Supply Industry’s ability to

simplify and drive out cost

– Creating volume in processes and supply chain

– Fully take onboard the consequence of “modular standard” – “configure at

the assembly line”

– Technology innovation to simplify and drive out cost

• Major changes have to take place in Customers Specification and

buying practice

– Accept Vendor based component Specifications

– Allow tendering on functional specs

– Allow tendering at pre-FEED stage


Reward

Adopting manufacturing solutions creates

a win-win-win situation.

• Improved and uniform quality

• Predicable OTD

• Lower cost and subsequent

lower price


Let’s do it !

cost reduction through industrialization, standardization ... 2015... · cost reduction through...

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