16 November 2016 SUPPLY CHAIN EXCELLENCE MAKING A DIFFERENCE IN DECOM Sam Long Business Acquisition Manager, Decommissioning, Petrofac 1
Agenda: 1. Context and purpose 2. Petrofac: an introduction 3. Where are we a time for change 4. Role of the individual 5. The role of a company 6. The role of industry 7. Closing remarks Disclaimer: as a Contractor, Petrofac cannot comment in regards to supply chain needs to the same degree as an Operator. Opinions expressed herein reflect Petrofac interpretation of market requirements and do not necessarily reflect the expectations or opinions of our clients or partners 2
Context and Purpose: supply chain excellence Era of MER and on the cusp of decommissioning Work to be done to make both effective and affordable Buy side and sell side behaviours and processes must be FFP Avoid boom and bust models Align Supply Chain to be effective and reflective Me All Us There are activities to be taken at individual, company and industry level to bring this about: On-going efforts to envisage the right means of doing business Awareness raising, both internal and external Building for the future, internal and external Making a difference 3
PETROFAC: AN INTRODUCTION 4
Petrofac in general Petrofac is a major oilfield contractor, providing Engineering and Construction (E&C), Operations and Maintenance (O&M), Well Engineering, training and other specialist services to Operators around the world We employee 18,200 personnel, with a turnover of $6.84BN (2015) We have major operations in the North Sea, Middle East and Asia Pacific 5
Petrofac in decommissioning Petrofac has the capability and the experience to help existing and new clients on their journey; whether that s at project start-up, through ongoing and late life operations, onto decommissioning We are building a Centre of Excellence for late life and decommissioning in the North Sea 6
Late Life Asset Management and decommissioning services LATE LIFE ASSET MANAGEMENT DECOMMISSIONING STUDIES ENGINEERING DECONSTRUCTION WELL ENGINEERING PLUG AND ABANDONMENT HLV MANAGEMENT DUTY HOLDER OPTIMISATION VERIFICATION & REGULATION DISPOSAL MANAGEMENT OPERATIONS AND MAINTENANCE PROJECT MANAGEMENT SUPPLY CHAIN MANAGEMENT 7
Buying and selling models in decom Individual service lines examples: Well Engineering (P&A) Decommissioning studies and estimates Joined up service lines, common customer interface example: P&A and cleaning/flushing Integrated service lines, with shared Project Management, Project Services and single focal point examples: Duty Holder in Decommissioning Total decommissioning solutions provided by Petrofac and selected partners P&A and decommissioning Project Management DISCRETE SERVICES BUNDLED SERVICES INTEGRATED SERVICES TOTAL PACKAGE SOLUTIONS 8
Petrofac decommissioning services and projects CURRENTLY PROVIDING: Well Plug and Abandon campaign, Tullow Horne and Wren (UKCS) Duty Holder in Decommissioning, BP Miller (UKCS) Asset management review, Repsol Sinopec (UKCS) Duty Holder oversight, decommissioning, Tullow Horne and Wren (UKCS) Duty Holder Late Life Asset Management (LLAM), ENI Hewett (UKCS) PREVIOUS PROJECTS: Hutton TLP topsides separation project, Conoco (UKCS) AH001FPU strip down and rebuild, Ithaca/Petrofac (UKCS) Bacton Gas Terminal decommissioning, ENI (Onshore, UK) Decommissioning Cost Estimates, multiple, confidential (Europe and Africa) Studies various (confidential) 9
WHERE ARE WE? A TIME FOR CHANGE 10
Where are we? Time for MER in the North Sea is now Time for decommissioning is coming G Newcombe, OGA Oct 2016: ~19 CoPs vs 15 FDPs A number of issues prevent truly effective Decom from happening in the current market Short term issues: affordability Medium term issues: cost control and estimation Long term issues: ill-suited frameworks, models and approaches Nurture 1. verb. care for and protect (someone or something) while they are growing Innovation will happen, but may need nurturing The industry can overcome significant hurdles once focussed, e.g. Safety Case regulations Requires a different culture and mind-set in the industry, across the supply chain and within individuals 11
ROLE OF THE INDIVIDUAL 12
What can I do to make a difference? This is a different era in the basin and in the industry Unlikely to be involved in a major greenfield development Likely to be involved in a decommissioning project Guaranteed to be involved in MER A different mind-set is required to make both effective Be passionate Advocate change Be conscious that Decom is end of life Innovate in your own space Participate Innovate Am I likely to personally see a new jacket and platform installed in the NS in my career? Me 13
THE ROLE OF A COMPANY 14
Role of a Company Develop people who are fit for decom New roles for graduates in 2017 Building a team, Decom recognised alongside E&C and O&M Emphasis on right size, with right culture and right approach Develop awareness Explain what is required and why Enable decision making (investment, effort) Prepare people for the future E&C Us O&M Develop the Supply Chain Change in behaviours, strategies and models (buy/sell side) Build (new and old) relationships that suit requirements Work to the new norm, not the old way Decom 15
Role of a Company continued Develop the right services, in the right time frame Short term needs Only a small number of projects are currently in execute mode Affordability and cash flow impact: BAU for now Logistics, catering, FM, (de)construction However bring service to a Project, not an Operation Requires innovation in T&Cs and agility in deployment Long term needs Avoid bespoke, over engineered and costly solutions Think Good is good enough, Fit-For-Purpose Focus should be on cost effective, repeat services. e.g. NUI conversion, Park and Defer, Walk2Work Steps taken by Petrofac optimise crew, optimise maintenance, optimise rotas, share logistics, share facilities, innovative P&A OGUK Share Fair Sept 16 Current emphasis should be on LLAM, not decom 16
MER comes before Decom: Petrofac model 17
THE ROLE OF INDUSTRY 18
Making it work, as an industry $ Decommissioning impacts society, environment, people, How do we make it more sustainable/affordable / sensible? How do we nurture it to be more effective, quicker? All How do we get here? Time Buy time here CoP? What happens if we don t nurture it? Maximise an opportunity, not the cost Identify ways forward, time to change MER and LLAM are the keys to successful decom Must strive to buy time through MER MER/LLAM Decom? Which priority, when? 19
Role of Industry: OGA Decom Board OGA Decommissioning Strategy Strategy published Q3 16 Calls for new ways of working in decommissioning Drivers are to be cost effective, environmentally sound and safe Tripartite working enable a different approach for Regulator, Operator, Contractor, Supply Chain and tax payer Minimise the cost of decommissioning in an appropriate manner OGA Decom board, Delivery Programme and themes Agreed priorities for 2017 # 1Cost certainty and reduction #2 Delivery capability #3 Regulatory guidance WIP, but working together 20
Delivery capability Team effort. Two elements under development: #1 Supply Chain capability/capacity Objective: develop transparency in supply chain capability which, supported by a robust demand profile, would allow creation of a predictable decommissioning market. Sponsored by Nigel Lees (Wood Group) Progress Methodology currently under review Decom North Sea and OGA MER Supply Chain board involvement Work will draw upon the 2014 Arup report 21
Delivery capability Two elements under development: #2 Optimised execution and contractual models Objective: develop, review, challenge and assess new and existing models for decommissioning project execution and contracting. Sponsored by Jonathan Brown (RSR), Sam Long, (Petrofac) Progress Agreement to combine two elements into one, due to overlap between execution and contracts Initial focus on Framing Workshop and suitable methodology for workshop Agreement to seek facilitation Intent is to map pros and cons of a number of models, identify barriers that prevent some from being realised and create a roadmap for possible new forms to become effective Barriers can be both perceived and real 22
CONCLUSIONS 23
Concluding remarks Can we make a difference? Can we afford not to? Disseminate, improve awareness of drivers, and of blockers Think, act and behave in a different way for MER and decommissioning Participate in dialogue, bring about change in thinking Innovation isn t just about technology 24
THANKS Sam long Business Acquisition Manager, Decommissioning sam.long@petrofac.com +44 1224 247112 25