-- FROM THE FULL PICTURE MAGAZINE --
The Aker Floating Production executive team (from left: Mikkel Martens, Executive Vice President and Commercial and Operation Director; Svein Olsen, President &CEO; and Arne Hygen Tørnqvist, Executive Vice President, Technical Director and Deputy CEO.
Strictly speaking a new kid on the FPSO block, Aker Floating Production boasts
some of the most experienced players in the business. These veterans are applying
all of their collected wisdom in their SMART FPSOs, and demonstrating what can be
Arne Tørnkvist, one of the triumvirate that started up Aker Floating Production,
likes to cite the adjective Reliance Industries, which has contracted the first
SMART FPSO, uses to describe the speed of the project: Supersonic. A quick look
at the company's, and this project's, timeline would be appropriately followed by
- 1st quarter 2006: Aker Floating Production (Aker FP) established; Svein Olsen is CEO
- April 2006: Aker FP raises USD 150 million in a private placement, and purchases three tankers for conversion
- June 2006: Aker FP signs contract with Jurong to convert FPSO Aker Smart 1
- July 2006: Aker FP orders the process separation module.
Aker FP also places orders for long-lead items (such as generators)
- January 2007: Aker FP signs a LOI with Reliance with order to proceed
- February 2007: Conversion of Aker Smart 1 begins at Jurong Shipyard
- May 2007: Reliance Industries contracts first FPSO Aker Smart 1 for operations in India
2nd Quarter 2008: First oil (projected)
Fast? Actually, it's astonishing. Supersonic. Smart 1 will be pulling up oil
at a time when most builders would still be languishing in engineering. This speed
is itself a value for the customer. If Smart 1 is quicker to first-oil by one year,
and it pulls 60,000 barrels a day at a conservative value of USD 60 per barrel,
well, anyone can do the math.
Aker Smart 1 FPSO.
Aker FP has made the schedule possible by turning conventional FPSO thinking
on its head. While many builders start with an eye on a specific oil field, Aker
FP started with an eye on the market. They started their engineering based on specifications
that would match the needs of a broad number of customers and fields. Smart 1 began
life as a generic middle-tier FPSO suited for benign waters. Check out Aker FP's
Olsen, Tørnkvist and the third member of the triumvirate, Mikkel Martens, made
their reputations developing the concept of the generic FPSO. With Aker Smart 1
(and Smart 2 & 3, which will immediately follow it), the trio have arguably perfected
it. Along with the generic specifications, the smart concept is fully modular. Skids
for Smart 1 are coming from fabrication yards from Norway to the Middle East, Malaysia,
Thailand, Batam and Singapore (see map).
A contracting strategy based on tight partnerships is the final link to the smart
concept. From day one, Aker FP was determined to exploit the engineering capacities
of key suppliers around each individual module. Rather than dictating to suppliers,
Aker FP has asked them to do what they do best, and engineer the solution that fits.
On top of this all-star team of suppliers, Aker FP's role is as manager of risks
Reliance's demands for Smart 1 were on the high side. Aker FP simply added additional
process units to the modular design – problem solved. It's the kind of plug and
play thinking they're keen to show off. Another key to winning the Reliance contract
was Aker FP's ability to deliver the entire subsea infrastructure as part of one
package. Through sister company Aker Kvaerner Subsea, they're providing the subsea,
and, through Aker Borgestad, the operations – all from one supplier.
So many aspects of the Smart concept are brand new, and they're best explained
by the men behind it themselves. Here are their comments on the Smart philosophy,
the FPSO market, contracting, the oil market, technology and partnerships.
Tørnkvist: "We don't sit around by ourselves deciding how everything will look
like. We go to main suppliers and we see where the centre of gravity of their main
portfolio is, so to speak. Then we make a concept based on what is already standard
in the business. We are quite flexible about what we really want to have. We see
what the customer wants, build a spec, talk to suppliers and find a good match."
Olsen: "The specification isn't designed to be perfect, but 80 to 90 per cent
fit for purpose. Good enough. We build in flexibility. We prepare certain standards,
and then the customer can add on."
On managing suppliers
Olsen: "We trust our suppliers. And they provide performance guarantees. If they
don't deliver, they'll be out next time. Many buyers don't work this way. Say they
want a crane. They make a crane committee. They bring in 10 guys making specifications.
By the time they're done, the supplier can no longer take the operating risk. The
documentation requirements have tripled. Costs and delivery times triple."
Martens: "Take the helideck for Smart 1. We're having it fabricated in Malaysia.
Another company called us saying they have a better solution: lightweight, high-tech
aluminium. Now, why do we need a lightweight helideck on an FPSO? We have all we
need to hold up the weight. And we got a heli-deck for one-third the price."
On Aker FP's expanded role
Olsen: "[For Reliance] We're supplying all these components, christmas trees,
controls, risers, infield flow lines, subsea manifold, delivery and installation
along with installation of the FPSO. Previously oil companies took that risk. Now
we're taking that risk. We're making a one-stop-shop."
Olsen: "We take the risk of not being paid before first oil almost. If [the FPSO]
is there and subsea is delayed, it's our risk. Buy by having sufficient control,
Aker Kvaerner Subsea as part of our system, we have more control. With this spirit
of co-operation, one-stop shopping will make us attractive. It's a competitive edge."
On the oil majors
Olsen: "We're not going for the big oil majors. We leave that to our competitors.
We say no to many oil majors. We stick to large independents. There is so much demand
coming up in this area."
Olsen: "Increasingly, we're going to be pushing the oil companies. They will
need to come to the contracting industry to find solutions, new conceptual ideas,
rather than inventing things themselves, as they've done up to now. Contractors
will get more important. As the lack of resources worsens, oil companies will focus
on finding oil and building reserves. They'll leave it to contractors to own and
operate. This will lead to new commercial structures."
Martens: "It's important to work with people you know. You will always run into
problems, and then it's good to know who's good at what. You work with people you
Olsen: "And contractors can trust us. We're not undermining them with countless
benchmarkings. We bring them in as part of the bidding team. If we win, they'll
get the contract. It creates loyalty."
Tørnkvist: "We've been around a long time and we haven't exploited the market
when it was tough for yards and suppliers. We've worked with Jurong for many years.
Let me tell you, not many companies could have gotten two slots with them last year.
We did. We have behaved over the years. That's created strong ties."
On Kongsberg Maritime
Olsen: "I've always liked Kongsberg, even way back when I was with Tentech. You
have so much in Kongsberg. I've always been impressed. When we were working on Petrojarl,
we were the first to put the production turret inside the ship. In that starting
phase, Kongsberg took part in the design of the turret."
Martens: "It's important with an international network. We've ordered many man-hours
from Kongsberg during commissioning and start-up in Singapore. It's great that there
is a strong local presence to cover this."
On the FPSO market
Olsen: "We believe benign areas will make the biggest contribution to new oil.
And if you look at all the drilling programmes going on, it's here [middle tier
projects of large independents on large fields] you're going to need new FPSOs.
These guys are putting out 400 or 500,000 dollars a day to drill. They want their
money back. The only way to do that is produce oil, and fast. We're just entering
a long cycle of strong opportunities for FPSOs, as a result of drilling activities."
Olsen: "I don't think [the statistics for new FPSOs coming online next year]
is feasible. It's a constraint in the market. We're doing well in this market. Some
owners might have thought they'd want something else, but this is available. And
they'll get it one year earlier, so they'll think twice."
Martens: "This is our offer. We have the FPSO, we have the slot at the yard,
we have fabrication capacity, we have suppliers in place, so we can deliver with
the shortest possible delivery time."
Aker FP collected data on FPSO specifications from 30-40 oil companies, compared
it with the kinds of field characteristics where Aker FP see the greatest contribution
to future oil and developed its generic "smart" specifications. Aker FP calls it
flexibility by design.
Here are some of the results:
- Oil production capacity: 60,000 barrels/day up to 120,000
- Water production: 50,000 barrels/day up to 100,000
- Gas production: up to 6 million m3/day
- Crude temp.: 20 to 90º C
- Mooring: Spread, with option for turret mooring
- Riser balcony capacity: 12 risers/umbilicals (extends to 30)
The War Room
It's all well and good talking about supersonic project speeds in the board room;
it's another for the project manager on-site at the yard. The man assigned with
the task of keeping the Smart 1 project up to speed is Håvard Garseth, Aker Floating
Production's project manager. We met him at the Jurong Shipyard in December.
"We use the metaphor of being an army and attacking all critical activities,"
says Garseth. The army metaphor meets reality in the concrete, or – to be more precise
- steel form of the "war room". The war room is a couple containers shackled together
quayside at Jurong. Inside leaders from Jurong, Aker FP, Reliance and other key
players hammer out critical issues at a lightning meeting every morning.
"Supersonic project management is about creativity and stamina. You can't delay
solutions. We focus on outstanding issues, bring these to everyone's attention,
concentrate on them, and move forward. Move to the next issue," says Garseth.
Garseth has combined responsibility for modules arriving from Dubai, Thailand,
Batam, Malaysia, Norway and close by in Singapore, as well as the mooring and installation
work going on at the same time at the field offshore India.
"Kongsberg has participated strongly in the engineering side of control and electro
work. It's been a good and close relationship," concludes Garseth.
If anyone in Aker FP understands the challenges of supplying a supersonic project,
Arild Hellem is the guy. He has responsibility for the interfaces on Smart 1.
"This goes so fast. We hop over the normal FEED phase and go straight from drawings
to fabrication. For Kongsberg Maritime to do its job, they need to get into each
organisation producing modules and get the input they need to complete their work
and hand off this information to people in fabrication, operation and commissioning,"
Hellem recognizes that he is asking all of his suppliers to go further, faster,
than they might usually go on a project. Similar projects are often completed with
five or six times as many purchasers and package engineers on a schedule two to
three times longer.
"In Kongsberg Maritime, we've gotten attention from the right people. That's
been a critical question for many suppliers – getting enough people with the right
skills. Our partners in Kongsberg Maritime are listening and picking up the slack
where they need to. And all of our suppliers are gaining vital experience, which
may play off into work on Smart 2," says Hellem.
Hellem recognizes that what they are doing is a kind of extreme sport version
of FPSO production: "We're a young company with tremendous experience. We can dare
to do things differently. And we can move at great speed."
All at the same time
Smart 1 will be turret-moored to the seabed, so it needs no DP nor navigation
systems. Aside from these two, Kongsberg Maritime's delivery to Smart 1 is a "full
picture" delivery. It includes:
- A process control system
- A fire and gas system
- Emergency shutdown
- Process shutdown
- Power management system
- Vessel control system (ballast, cargo, ventilation and utility)
- Information management system
For Kongsberg Maritime's Project Manager Halvard Sagdahl, the Smart 1 project
has been a unique professional challenge. "What's special on this project is that
we're doing engineering, production and installation all at the same time." Imagine
assembling a bicycle while you're riding it.
To cut time between production and commissioning, Sagdahl's team has finalised
as much as possible off-site in Singapore, so that the final product can be dropped
"This isn't your usual customer-vendor relationship. We work as a team across
the board. Everybody is pro-active on a project like this," says Sagdahl. Kongsberg
Maritime is involved in process module construction worldwide, putting special stress
on logistics, coordination and project finance.
"We're putting up extra manpower, either our own or through sub-suppliers, wherever
it's needed. We're dedicated to Aker FP's project goals, and we will, as a part
of the team, ensure that we meet the targets and make it a success," concludes Sagdahl.