Six of the Best from Siemens to Rio

V E N T U R E _ J A N U A R Y 2 0 0 5 _ F O C U S _ 0 7 WEDNESDAY SEPTEMBER 29TH _ WINDY, SLIGHT OVERCAST, 24ºC. MEETING AT SIEMENS OFFICES AT MAUA-JURONG SHIPYARD, NITEROI. SAFETY BRIEFING FROM KBR. ISSUED WITH HELMET, SAFETY GLASSES, OVERALLS, BOOTS. FIRST VISIT TO P43. THURSDAY SEPTEMBER 30TH _ LOW CLOUD, MIST, INTERMITTENT LIGHT RAIN, OCCASIONAL HEAVY SHOWERS, 18ºC. AT SHIPYARD CHANGE INTO FULL SAFETY GEAR, CLIMB 20 METER ACCESS GANTRY WITH ALL PHOTOGRAPHIC EQUIPMENT TO MAIN DECK OF P43. FRIDAY OCTOBER 1ST _ LOW CLOUD, MIST, INTERMITTENT LIGHT RAIN IN PM, 22ºC. MEETINGS WITH SIEMENS STAFF ON-SITE; INTERVIEWS WITH SERGIO DELLA LIBERA, TURBOMACHINERY ENGINEER, PETROBRAS. AND ALAN OGUNMUYIWA, KBR MATERIALS & PROCUREMENT MANAGER. Six of the Best from Siemens to Rio Making it big in Brazil, a total of six gas compressor-trains, the largest, most powerful and most complex of their kind, have been installed on two giant FPSO Floating Production, Storage and Offloading vessels in Rio de Janeiro. Designed and built at Siemens Duisburg plant and due shortly to enter service in Brazil s newest offshore deepwater oilfields, the compressor modules are a vital component of the huge and technically-challenging US$2.6 billion project for state-owned oil major Petrobras. As traditional global reserves of oil and gas become increasingly exploited, the offshore industry has begun to move more and more to the development of less accessible fields. These include deepwater and even ultra-deepwater reservoirs where water depths can be in excess of 1,500 meters. Where mature technologies for drilling and production have hitherto provided cost-effective and economically viable solutions, a relatively select band of specialist companies is now at the forefront of technological development. Innovative systems are now being employed which allow a new generation of equipment suppliers and oilfield operators to exploit recent and frequently far smaller discoveries at greater subsea depths, the final frontier for offshore hydrocarbon exploration and development. MEETING THE CHALLENGE Since the late 1990s, nearly 12 billion barrels of oil equivalent have been brought into production from some 79 deepwater fields by Petrobras and other major international companies specializing in deepwater operations. The principal areas of activity are located in offshore West Africa, the Niger Delta, Asia Pacific, the Gulf of Mexico and offshore Brazil. As interests first began to be focused on smaller and less accessible reserves, only the largest and most experienced oil majors, such as BP, Exxon, Shell and Petrobras had the innovative technical, managerial and financial resources to recover oil and gas from deep and ultra-deepwater reservoirs. The part-privatized company Petrobras is Brazil s largest oil and natural gas producer, ranking among the heavy-hitters capable of pioneering exploration and production technologies allowing commercial operation in such challenging conditions as those encountered in the newest fields on the Brazilian continental shelf. These new technologies not only include innovative systems for drilling and well completion, subsea flowlines and risers, but also for complex floating structures and anchoring systems. FLOATING SOLUTION Among the many spectacular engineering solutions developed by the industry, giant floating ship-shaped vessels have become the system of choice for the development of an increasing number of smaller, deepwater oil and gas fields. These Floating Production, Storage, and Offloading vessels or FPSOs replace the fixed production platforms and pipeline

0 8 _ F O C U S V E N T U R E _ J A N U A R Y 2 0 0 5 _ F O C U S _ 0 9 systems which are used to produce and export oil and gas from shallower fields and which are not technically or commercially viable for smaller, deepwater applications. FPSOs on the other hand, either in the form of ship-conversions using existing hulls, or increasingly as new-build vessels, can be towed out and anchored at the location of the offshore reservoir to form a hub for the producing wells in the field. Oil and gas is piped from the wells to the vessel through subsea flowlines connected to the FPSO through flexible risers, allowing the vessel to separate the gas, process the recovered crude oil and act as a central storage facility. Oil is subsequently exported to overseas markets or domestic onshore refineries by shuttle tankers, providing a highly flexible system which can be moved to a new field when production finally becomes uneconomic and which is able to meet the needs of a changing market. The gas can either be re-injected to enhance oil recovery or exported to local markets onshore. OIL BRAZIL S BURNING ISSUE Brazil is the tenth largest energy consumer in the world and the third largest in the western hemisphere, behind the United States and Canada. The country s total energy consumption has increased significantly in recent years, growing at an annual rate of 3% between 1992 and 2002. As a consequence, the Brazilian government has sought to boost domestic oil production as part of its longterm energy strategy. Although production levels are increasing, imported oil is still needed to meet domestic demand, in spite of the fact that the country has the second largest oil reserves in South America, with 8.5 billion barrels as of January 2004. Recent discoveries reported by Petrobras, including an estimated 2.95 billion barrels of heavy oil, are also certain to increase proved reserves over the next few years. Now, under the presidency of Luiz Inacio Lula da Silva, elected in October 2002, the government has set a target for self-sufficiency in oil production by 2006 and has its future sights set on joining other oil exporting countries, with output eventually reaching 2.3 million barrels per day by 2010. The government s plans to become self-sufficient are being led by Petrobras, which has demonstrated its commitment by issuing a revised strategic plan for 2004 2010, in which the company pledges to spend US$7.7 billion per year, most of the funding aimed at boosting domestic oil output. Two of Brazil s offshore oil and gas fields, the Barracuda and the Caratinga, due shortly to enter full production, are located in the Campos Basin some 180 km northeast of Rio de Janeiro. Discovered in 1989 and 1994 respectively and named after two common species of South American fish, the two fields cover a combined area of 230 square kilometers and will boost the current pilot output of one million barrels per day by around 30%, providing around 20% of the country s total production. Recoverable reserves for Barracuda are estimated at 867 million barrels of oil and 10.7 billion cubic meters of gas, while the more southerly Caratinga field has estimated reserves of 362 million barrels of oil and 4 billion cubic meters of natural gas. EPIC UNDERTAKING To enable the Barracuda and Caratinga fields to achieve full production, Petrobras entered into an agreement with USbased Halliburton Co s KBR formerly Kellogg Brown & Root and Halliburton Energy Services (HES) business units to develop the two fields. Under the US$2.6 billion EPIC (Engineering, Procurement, Installation and Construction) contract, the largest ever awarded for an offshore project, Halliburton, the largest oilfield services company in the world, constructed a total of 55 wells, fabricated and installed flowlines and risers and undertook the construction and installation of the two FPSOs, which form the hubs on which the entire gas and oilfield development is based. As well as receiving oil from the 22 producing wells, large volumes of natural gas also flow from the subsea reservoirs. Specialist process equipment based on three very large compressor-trains designed, engineered, supplied and installed by Siemens, is employed on each FPSO to cool the gas, remove all traces of seawater and oil and increase gas pressure. Around 80% of the compressed and dried gas is re-injected back into the oilfield reservoirs as gas-lift to push more gas and the viscous, heavy crude oil about API 21 out of the producing wells. The remaining 20% is fed from the Siemens process modules through gas export risers and an undersea pipeline to a remote fixed platform, PNA-1, where it joins the main gas transportation pipeline and is piped onshore to join the Brazilian gas network. FROM CRUDE CARRIER TO SOPHISTICATED SYSTEM The Barracuda field will use the Petrobras P43, an ex-supertanker or VLCC (Very Large Crude Carrier) formerly owned by the Stena shipping line and originally named the Stena Continent. Her sistership, the Petrobras P48, an almost identical vessel previously operating as the Stena Concordia, will form a similar hub for the Caratinga field. Converted at the Jurong shipyard in Singapore, the two enormous vessels, minus all their original machinery including engines, rudders, steering gear and topsides, were reduced to a series of huge oil storage tanks with a capacity of 2 million barrels within a modern double-hull construction. In an epic 4-week voyage, the gutted vessels were towed from Singapore 10,000 nautical miles to the outskirts of Rio de Janeiro. Work on the P43 was carried out at the Maua Jurong yard at Niteroi, and the P48 was constructed at the BrasFels yard at Angra dos Reis. The mainly locally-recruited KBR workforce, together with a large number of specialist sub-contractors and suppliers, totaling around 4,700 people, subsequently undertook the massive construction and conversion program, fitting out the two vessels. Complex prefabricated modules creating the on-board production facility on each vessel were lifted into position and integrated with the hundreds of kilometers of piping, pressure-vessels, pumps, valves and the mass of vital supporting structural steelwork, ancillary systems and controls to form the completed topsides. TOWERING ACHIEVEMENT This massive, 18,000 tonne, multistory, deck-mounted construction is in effect a large factory with its own independent power plant providing a generating capacity of nearly 90 megawatt (MW), enough for a small city, together with accommodation and recreation facilities for 150 people. And it towers at least as high again as the 22-meter height of the deck from the waterline. The flare stack at the stern of each FPSO soars 100 meters above the deck and in the far distance, 337 meters away at the bow, a helideck provides a view encompassing the 55-meter width across the deck. The American Bureau of Shipping-certified double hulls of the vessels themselves, each the size of an entire city block and housing the cavernous oil storage tanks, plunge another 21 meters below water, but even before a drop of oil is pumped aboard, these leviathans each tip the scales at more than 70,000 tonnes.

V E N T U R E _ J A N U A R Y 2 0 0 5 _ F O C U S _ 1 1 SIEMENS MAGNIFICENT MINIS The US$60 million contract awarded in January 2001 to Demag Delaval, immediately prior to its incorporation into Siemens, for a total of six gas process modules was the highest value ever won by the company, exceeding previous typical awards by a factor of six. In engineering terms the very large custom-designed systems were by far the largest, highestpowered and most complex of their kind ever built by the company. Powered by variable speed electric drives, the multistage turbo-compressor trains were fabricated and tested at Siemens Duisburg plant in Germany, shipped to the Niteroi shipyard in Rio and integrated with piping, coolers, gasscrubbers, associated equipment and control systems as skidmounted mini-modules. They were lifted by one of the world s biggest floating cranes and mounted one on top of another on bearing-pads within a massive steel framework, each the size of a large commercial building, standing 25 meters high, 26 meters long and 9 meters wide and weighing in at a massive 450 tonnes apiece. It was rather exciting, seeing the finished product being swung out over the harbor and into its final position on the deck. One slip and 60 million dollars and more than three years work could have ended up in the sea! said project manager Hans-Ulrich Keil. I needn t have worried, he continued, it all went perfectly first time exactly as planned. TYING IT DOWN Slated to be in full production by the end of 2004, the FPSOs will be moored some 12.7 kilometers apart in the Barracuda and Caratinga fields, each vessel using state-of-the-art DICAS (Differentiated Compliance Anchoring System) taut leg spread mooring technology developed by KBR's specialist mooring team. Believed to be the strongest of its kind in the world, it consists of no fewer than eighteen individual anchor-lines, five lines radiating either side of the bow and two groups of four at the stern, comprising 210 mm diameter polyester ropes and chains up to 1,800 meters long with a total weight of 1,200 tonnes. These are secured to computer-controlled winches, which enable the vessels to remain on station, without undue strain on either the vessels or the anchor lines, no matter what sea-states are encountered. WE WERE ABLE TO MANAGE THE PROJECT, INCLUDING ALL LOCAL CONTENT, WITH VIRTUALLY NO DELAYS AT ALL. ALTHOUGH IT HAS BEEN BY FAR THE BIGGEST CONTRACT WE HAVE EVER HANDLED, OUR WORKFORCE ON BOTH SIDES OF THE ATLANTIC HAS BEEN TOTALLY MOTIVATED, NOT LEAST THROUGH THE EFFORTS OF OUR MANAGEMENT TEAM HERE IN BRAZIL, ALLOWING US TO DELIVER THE COMPLETE PACKAGE WITHIN THE SHORTEST POSSIBLE PERIOD OF TIME AND WITHIN BUDGET. As project manager for the largest single engineering undertaking ever handled by Siemens Duisburg-based business unit, Hans-Ulrich Keil has had an awesome responsibility for the Barracuda/Caratinga project. This has included leading a small team of engineering managers and senior staff, based 6,000 miles from their production center in Germany, who Keeping the Faith Delivering the Goods have had to supervise a locally-recruited workforce of up to 600 people during construction of the mini-modules. First visiting the Niteroi site in March 2001, Keil has so far made more than 20 separate week-long trips, clocking-up a distance in the air equivalent to the distance between the earth and the moon! In addition to creating a specialist team of Siemens engineering managers to oversee the project to completion, there has also been the special need to form a close working relationship with local Brazilian partners in order to complete vital elements of the total system-build, such as the main steel fabrication and integration of the coolers and scrubbers on each gas process mini-module. Yet despite the vast size, scope and complexity of this technically-groundbreaking project, Hans-Ulrich Keil and his team, including Site Manager Michael Jungnitz, Carlos Schneider, Compressors Director, Oil & Gas and Service Manager Stephan Rosenast, have steered their part of the giant Petrobras project to a highly successful conclusion for their customer, Halliburton s KBR division.

1 2 _ F A C E S V E N T U R E _ J A N U A R Y 2 0 0 5 _ F A C E S _ 1 3 Sergio Della Libera, Petrobras Turbomachinery Engineer for the Barracuda and Caratinga Project Alan Ogunmuyiwa, Senior Procurement and Materials Manager for Halliburton s KBR Dependable solutions As the ultimate customer and enduser, the requirements of Petrobras are of course paramount. We have been working with Siemens for very many years and have developed a high degree of trust, says Sergio Della Libera, Petrobras Turbomachinery Engineer for the Barracuda and Caratinga Project. For a critical project like this, it is vital that the equipment has the highest possible levels of both reliability and availability. It is simply not possible to shut the operation down for unscheduled maintenance. Equipment and systems supplied by Siemens over many years, including plant in operation on many of our older offshore platforms, has given excellent performance and is still performing well, so we have every confidence that the latest process units will be a complete success. Which has to be a fairly resounding vote of confidence, in anyone s terms. Perfect interfacing Despite their size, the compressor trains and equipment have not sprung any unpleasant surprises during extensive shore-based functional testing of the complex plant and systems, or its installation on board the FPSOs. Alan Ogunmuyiwa, Senior Procurement and Materials Manager for Siemens customer, Halliburton s KBR is not slow to comment that We have had absolutely no internal problems interfacing with the company. Back at the start of the project Demag Delaval already had a great reputation and we have of course had dealings with Siemens for more than 25 years. He continued: We regard their products as having really good quality. Our only complaint is that when it comes to the nitty-gritty of negotiations, they are among the toughest people that we have to deal with, although after all, that s exactly how it should be! I also have to say that, yes, we ve had some significant problems with both quality and delivery, particularly from some locally-based suppliers, but Siemens have been one of the very few companies who have delivered compressors on time and to our full specifications.

1 4 _ M O N I T O R V E N T U R E _ J A N U A R Y 2 0 0 5 M O N I T O R _ 1 5 The ESSENTials of CHP With energy prices rising, there is growing interest in fuel-efficient solutions like CHP. But what s in it for the customer? A field in the middle of a petrochemical facility near Antwerp, Belgium, is the footprint for one of Siemens latest power projects, involving the construction of a combined heat and power (CHP) plant powered by two SGT-800 gas turbines. Project customer is the Dutch-based utility, Essent, market leader in the supply of sustainable energy in the Netherlands. For environmental and business reasons, it is company policy to utilize high-efficiency energy technologies wherever possible, says Mr. Aad Atteveld, General Manager, Projects, at Essent Energie. CHP, which currently accounts for around a quarter of Essent s electrical generating capacity, was the obvious choice for this plant also. SELECTING THE SITE Co-generation of heat and power achieves a number of economic and ecological goals. Since heat, unlike power, cannot be transported economically over long distances, an essential factor for Essent developing a CHP project was to find a local, long-term customer for the heat. This heat customer would be INEOS Oxide, a subsidiary of INEOS, a global manufacturer of specialty and intermediate chemicals. Located in the world s second largest petrochemical zone, on the left bank of the River Scheldt, just across the river from Antwerp s historic city center, the INEOS Oxide plant is claimed to be the largest and most cost-efficient ethylene oxide plant in Europe. The site also hosts eight third-party chemical manufacturers, around half of which are supplied with steam by INEOS. FOUR ESSENTIAL FACTORS When selecting their CHP plant, Essent based their decision on four essential success factors. Firstly, the plant s life-cycle costs (capital cost, fuel cost and maintenance cost) must be low to ensure the economic viability of the project. Secondly, since the CHP plant was to supply all the heat required by INEOS, a high level of plant availability was critical. Thirdly, the plant must be sufficiently operationally flexible to respond to Essent s changing needs for steam and, more particularly, power. Finally, it must have low atmospheric emissions. An industrial plant from Siemens was the solution. COMBINED CYCLE GIVES RELIABILITY The chosen plant is powered by two natural-gas fired 43.6 megawatt (MW) SGT-800 gas turbines, the largest model in the Siemens industrial gas turbine range. Exhaust heat from the gas turbines will be fed into heat recovery steam generators to produce steam to satisfy INEOS requirement, the surplus passing through a steam turbine to generate additional power, if required. This combined cycle arrangement gives the benefit of additional plant flexibility and a higher powerto-heat ratio. The solution is ingenious. The SGT-800 has been optimized for CHP and combined-cycle duty and can be started up in only a few minutes. It is designed for high reliability, with a focus on simplicity and robustness. Choosing two mid-range gas turbines instead of one larger turbine automatically heightens availability, since it reduces the likelihood of the whole plant being rendered unavailable. To secure steam availability, Essent has also taken over two of INEOS existing boilers at the site for emergency back-up. MINIMIZING ENVIRONMENTAL IMPACT Two heat recovery steam generators (HRSG s) retrieve heat from the exhaust gases to produce steam for the single-casing axial SST-400 50 MW steam turbine, also of Siemens manufacture. The main heat input comes from the gas turbine exhaust, but each HRSG is also equipped with a 40 MW supplementary firing system to increase steam production and plant flexibility. The fuel burned will be a mixture of natural gas and waste gases from the petrochemical site, thus enabling INEOS to minimize its environmental impact. For combustion air, exhaust gas from the gas turbine will be used. Since the exhaust gas is very hot, combustion efficiency is improved and the risk of material stresses in the HRSG is reduced. The SGT-800 gas turbine in itself is equipped with a 3rd generation DLE (Dry Low Emissions) combustion system, which, by eliminating the need for water injection, reduces emissions without reducing efficiency. MAXIMIZING FLEXIBILITY When the CHP plant is taken into service, Essent will supply steam to INEOS, along with demineralized water. All the power will be sold by Essent into the grid. The maximum net electrical output will be 132 MW, at least twice the level of demand expected from the petrochemical site. The possibility of making power sales into the Belgian grid was a major factor in our decision to develop this project, says Mr. Atteveld. The possibility of exporting power to the grid opens up another income stream for the plant operator, and strengthens the economics of the project. It also means that the electrical output of the CHP plant need not be restricted to local site needs. With its two gas turbines, steam turbine with full condensing or steam extraction capability and supplementary firing of the HRSG s, plus a rapid start-up/shutdown capability, the Essent CHP plant has maximum operational flexibility. Steam and power output will be controlled separately. Steam output will be set locally according to site demand. Power output will be determined from Essent s offices in s-hertogenbosch, the Netherlands, enabling Essent to adjust the electrical output as prices change on the Belgian power market. This flexible plant will be able to run at near full electrical output with very little process steam production i.e., as a combined-cycle power plant, should this operation mode be required. EMPHASIZING SAFETY Since the plant is being built in the middle of a petrochemical site, the construction project has to be carried out to the most rigorous standards of safety. The high level of integration of the CHP plant with the chemical production process, as well as the location of the power plant in the center of an established petrochemical site, mean that there are a number of stringent requirements to be met with regard to safety in this construction project, says Mr. Atteveld. The large number of production facilities on site also has an impact on project management, since it is imperative, that certain works be carried out at particular times to prevent unplanned shutdowns of the manufacturing processes on site. WIN-WIN The engineers are not letting the grass grow under their feet. Civil works began on site in August 2004, and the completed plant is scheduled for handover at the end of 2005. Essent will then be the proud owner of a highly efficient CHP plant capable of meeting its requirements for low-cost energy production, high availability, operational flexibility and low emissions and have a long-term customer for the plant s heat output. INEOS in turn will have a reliable, on-site source of heat and power without major capital investment, as well as a productive outlet for some of its waste gases. It s a win-win situation from the word go. What more could Siemens want for its customers and its customers customers?