Case Study

Measuring the Performance of Harsh-Environment FPSO Projects

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The final in a series of three case studies reviewing how IPA helps companies improve floating production storage and offloading (FPSO) capital project outcomes, this case study reviews how IPA delivered information and metrics for a company seeking to better understand how harsh environments affect an FPSO project’s design, complexity, topside weight, and cost. The other two case studies discuss Market Insights for FPSO Projects and How a Company New to FPSO Projects Builds Robust Risk Profiles.

The Problem: Inadequate FPSO Project Data

IPA was approached by a client with a large portfolio of upcoming FPSO projects, many of which were in harsh environments (with high waves, ice, etc.). The client had little experience executing FPSO projects. The client also had limited analogue or benchmarking data to compare its FPSO designs or calibrate its cost estimates. It contacted IPA to provide information and metrics that would assist it in better understanding how harsh environments affect an FPSO project’s design, complexity, and topside weight. The client sought to feed this knowledge back to its technical and estimating functions for these projects to identify areas of opportunity to reduce cost. IPA had primarily conducted project benchmarking evaluations for the client, but in this case, the client needed a deep-dive analysis of FPSO projects to improve its capital efficiency.

Harsh vs. Benign Environment Analyses

IPA’s EMEA regional office, working with our Project Research Division, employed the Upstream Project Evaluation System (PES®[1]) methodology to examine FPSOs in harsh environments. The Upstream PES is a set of models (including asset development cost and schedule metrics, individual facility and well metrics, and subsurface evaluation) based on the statistical analysis of historical industry data. The operational environments of FPSOs are already contained within IPA’s robust database, categorized along a spectrum of benign to harsh environments. This categorization was used to assess how harsh environments influence an FPSO design, complexity, topside weight, and outcome metrics (cost, schedule, operability, and production attainment).

The evaluation approach comprised several analyses that compared FPSOs in harsh environments to those in benign environments, a handful of which are described below:

Design and Complexity

  • Whether topsides in harsh-environment FPSOs require more bulk materials
  • Whether topside weight in harsh-environment FPSOs is different based on functionality
  • Whether topside weight in harsh-environment FPSOs is different based on throughput
  • Whether topsides power requirements in harsh environment FPSOs are different

Cost

  • Whether total cost per topside weight is different in harsh environment FPSOs
  • Whether topsides fabrication cost per ton is different in harsh environment FPSOs
  • Whether office costs are different in harsh-environment FPSOs
  • Whether transportation & installation costs are different in harsh-environment FPSOs

Schedule

  • Whether execution, engineering, installation, and hook-up and commissioning durations are different in harsh-environment FPSOs

Operability

  • Whether harsh-environment FPSOs experience more operability issues
  • Whether harsh-environment FPSOs suffer poorer production attainment

Unexpected Cost Competitiveness Findings

The study provided the client with data-based insights into industry performance in a suite of detailed metrics and provided several findings the client thought were surprising based on its limited database of comparable projects, highlighting the benefits of benchmarking. The analysis revealed the client’s portfolio of harsh-environment FPSOs was less cost effective compared to industry harsh-environment FPSOs. Building on the findings of this research, the client has asked IPA to further investigate several themes, including FPSO design requirements and specifications (sparing philosophy, production, injection, and processing capacities, HSE requirements, etc.), technical complexity, and execution strategies (contracting, procurement, supply chain, use of new technology, etc.). We will investigate each theme to identify opportunities for cost reduction and evaluate the interdependencies of each theme to isolate the individual contributions on weight and cost. The final objective is to provide recommendations to improve project outcomes.

 

Case study by Matthew Ingham, IPA Project Analyst


[1] PES is a registered trademark of IPA.

 

 

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