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

12 November Ptil temadag

 A reminder…

"We can't solve problems

by using the same kind of
thinking we used when
we created them."

Albert Einstein

14 October 2015 Increased Oil Recovery 1

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

Brent, USD/bbl Oil price

MUSD/well
Other
Installation
120 25
Topside
Facility
(FPSO/
5%
14% 100
Platform) 20
Subsea
80
30% 9-15% 15

60

10
40

30-50% 5
20
12%
Drilling &
Riser & Completion 0 0
Flowlines

Offshore Development Brent - USD/bbl* Subsea Equipment MUSD/well *

CAPEX distr.

*Running prices Source: Quest and FMC Sales Support

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 Main Cost Reduction Drivers

Volume
- Common standard/requirements for
the industry (material, valves etc.)
- Enable stocking programs based on
standard requirements and ITPs
Volume
Technology
Technology
- Innovation through simplification of
technical solutions
Collaboration
Collaboration
- Working differently together
- Simplification of project execution

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 Standardization

Configuration

Standard components

Manufacturing

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 The subsea business legacy

Infancy Maturation Industrialization Dual world

Our industry has its legacy Mature technology require Approx. 5-8 years ago, However experience
from building platforms industrialization moved to cross project shows that not all type of
• Manufacturing solutions Product Line teams equipment fits into a
Typical construction • Serving several projects manufacturing model
activities: Multiple projects require
• Site team matrix organization Some products are still
• Site instructions • Shared resources truly construction
• Site….etc. • E.g. manifolds

Few large projects with Need to be able to work

dedicated resources within both worlds
simultaneously

Manufacturing

Construction
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 Adopting both models
Two ways of quality assurance

• Buildings • Cars
Construction • Bridges Manufacturing • Electronics
• Platforms • Household Appliances

Configured
Tailored Products • Project Specific • Standardized
products

• Standardization
Quality • Inspection Quality • Refining of processes for
Assurance • Testing Assurance “built in Quality” (still incl.
inspection and testing)

Project Supply Product Delivery

• Manifolds • Subsea Distr. Unit’s • SCM’s • Valves • X-mas Trees

• Well jumpers • Instruments • Tubing • Well Heads
• Flowbases • Connectors Hangers • etc.

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 Requirement Rose
QA requirement 1
Matr. Requirement 10 QA requirement 2
Matr. Requirement 9 35
QA requirement 3
Matr. Requirement 8 QA requirement 4
30
Matr. Requirement 7 QA requirement 5
Matr. Requirement 6 25 QA requirement 6

Matr. Requirement 5 QA requirement 7

20

Matr. Requirement 4 QA requirement 8

15

Matr. Requirement 3 QA requirement 9

10
Operator 1
Matr. Requirement 2 5 QA requirement 10 Operator 2
Operator 3
Matr. Requirement 1 0 Tech requrement 1 Operator 4
Codes and Std
Dok. Requirement 10 Tech requrement 2

Dok. Requirement 9 Tech requrement 3

Dok. Requirement 8 Tech requrement 4

Dok. Requirement 7 Tech requrement 5

Dok. Requirement 6 Tech requrement 6

Dok. Requirement 5 Tech requrement 7
Dok. Requirement 4 Tech requrement 8
Dok. Requirement 3 Tech requrement 9
Dok. Requirement 2 Tech requrement 10
Dok. Requirement 1

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 Requirement Rose
QA requirement 1
Matr. Requirement 10 QA requirement 2
Matr. Requirement 9 35
QA requirement 3
Matr. Requirement 8 QA requirement 4
30
Matr. Requirement 7 QA requirement 5
Matr. Requirement 6 25 QA requirement 6

Matr. Requirement 5 QA requirement 7

20

Matr. Requirement 4 QA requirement 8

15

Matr. Requirement 3 QA requirement 9

10
Operator 1
Matr. Requirement 2 5 QA requirement 10 Operator 2
Operator 3
Matr. Requirement 1 0 Tech requrement 1 Operator 4
Codes and Std
Dok. Requirement 10 Tech requrement 2

Dok. Requirement 9 Tech requrement 3

Dok. Requirement 8 Tech requrement 4

Dok. Requirement 7 Tech requrement 5

Dok. Requirement 6 Tech requrement 6

Dok. Requirement 5 Tech requrement 7
Dok. Requirement 4 Tech requrement 8
Dok. Requirement 3 Tech requrement 9
Dok. Requirement 2 Tech requrement 10
Dok. Requirement 1

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 Requirement Rose
QA requirement 1
Matr. Requirement… 35 QA requirement 2
Matr. Requirement 9 QA requirement 3
Matr. Requirement 8 QA requirement 4
30
Matr. Requirement 7 QA requirement 5
Matr. Requirement 6 25 QA requirement 6

Matr. Requirement 5 QA requirement 7

20

Matr. Requirement 4 QA requirement 8

15

Matr. Requirement 3 QA requirement 9

10

Matr. Requirement 2 5 QA requirement 10

Matr. Requirement 1 0 Tech requrement 1

Dok. Requirement 10 Tech requrement 2

Dok. Requirement 9 Tech requrement 3

Dok. Requirement 8 Tech requrement 4

Dok. Requirement 7 Tech requrement 5

Dok. Requirement 6 Tech requrement 6

Dok. Requirement 5 Tech requrement 7
Dok. Requirement 4 Tech requrement 8
Dok. Requirement 3 Tech requrement 9
Dok. Requirement 2 Tech requrement 10
Dok. Requirement 1

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 Collaboration and lean execution
Example: Transfer of Customer Requirements

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 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.)

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 Standardization – Real example

100
New customer
specification

Repeated
80 Customer Standard
Price (%)

60
Standard
w/Stocking Plan

40

20

0
10 12 14 16 18 20 22 24 26 28 30 32 34 36 38

Lead Time (months)

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 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

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 Reward

Adopting manufacturing solutions creates

a win-win-win situation.
• Improved and uniform quality
• Predicable OTD
• Lower cost and subsequent
lower price

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 Let’s do it !

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