Video: Cost Effective Solutions: Less is More
- L. Agussol (SBM Offshore) | Ph. Lavagna (SBM Offshore)
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- Offshore Technology Conference
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- 2017. Copyright is retained by the author. This presentation is distributed with the permission of the author. Contact the author for permission to use material from this video.
- 7.4.3 Market analysis /supply and demand forecasting/pricing, 7 Management and Information, 6.3 Safety, 7.1.9 Project Economic Analysis, 7.4 Energy Economics, 4 Facilities Design, Construction and Operation, 4.5.4 Mooring Systems, 7.1 Asset and Portfolio Management, 4.5 Offshore Facilities and Subsea Systems, 7.1.10 Field Economic Analysis
- relocation, cost reduction, integrated approach, standardization, mooring system
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In a >100 USD/bbl market, the project economics are optimized by different parameters than in a market below 50 USD/bbl. In high oil price context, the focus is on maximizing the revenue (i.e. production), whereas in low oil price context, the focus on costs is more important.
In today low oil price era, a new paradigm to optimize the project economics is << Less is More>>:
Less equipment/complexity can also be More safety and more Reliability – as less equipment lowers the probability of equipment failure, also reducing both CAPEX and maintenance costs–
Less CAPEX/OPEX should enable More projects to become economically viable.
Going to the essence of simple and robust systems enables solutions for the low oil price era. Indeed, while the HSSE commitment is not negotiable, the extra costs related to systems required for maximizing the production uptime are to be challenged to adapt the projects to the new market conditions. Using the example of mooring systems, a functionality review is performed so that the functional specification can be optimized for today's new set of project constraints. This applies along the EPCI chain:–
Engineering: where relevant experience (industry standards and field proven solutions) can be used to avoid re-calculating everything to the highest degree.–
Procurement where functional specification in place of – often over demanding - client specifications enables more standardization and thereby significant savings on price, schedule and sparing philosophy.–
Construction where the clients can focus on ensuring/monitoring the HSSE and QA/QC performance of the project by choosing an ‘hands off’ approach on the execution part which enables the full benefit of using a seasoned contractor.–
Installation – especially for Turret & Mooring systems – the installation aspects needs to be integrated from the beginning (Engineering). The most cost efficient way for a safe installation is to have the installation scope integrated in the mooring system contract (i.e. EPCI instead of EPC).
All these simple principles (simplification, standardization, streamlining of the work, lean management) have to be implemented to enable project economic viability in today's market. This Less is More approach has been used on recent tenders and has allowed significant cost savings and schedule reduction leading to further cost reduction.