Newbuild FPSOs - don't let them frighten you!

There is now a broad fear in the industry that anybody promoting or embarking on a field development that will involve the utilization of a newbuild floating production, storage, and offloading (FPSO) vessel will probably get their fingers burned.

There is now a broad fear in the industry that anybody promoting or embarking on a field development that will involve the utilization of a newbuild floating production, storage, and offloading (FPSO) vessel will probably get their fingers burned.

This fear is based on the industry perception that has been created by literally only a handful of cost, schedule, and quality disasters. However, these were all new purpose-built vessels. They shared a number of features and were built mostly in the same facility. There must be more than a thread of coincidence in those facts that needs more understanding.

The strange thing is that about six years ago, when all these projects were lifting off, everybody expected the conversions to be fraught with risk and the newbuilds to be far more likely to be successful. The converse has happened, and with a few exceptions, the newbuild FPSOs have had most of the problems, some of them of horrendous proportions.

Ingredients for success

"Fast-tracking," that clever expression used so much nowadays in this industry, has no real place in the scheme of things when conducting a highly complex engineering undertaking such as a new purpose-built FPSO. "Fast-tracking" usually means engineering being carried out "on the run" and in phase with the procurement and construction activities. If not sufficiently thought out, engineering is not carried out at the front-end of the project to define the exact performance requirements. Therein is the first principal missing ingredient for success.

The definition of the scope of work should be maximized to create a tight and clear footprint of the project and reduce the risks of ambiguity and commercial stress during the contract period.

As little as possible of the engineering definition should be changed after contract award. There should be nothing that needs re-engineering, and changes are usually negative to project schedules and costs. To be able to cope with a change that really has to happen, due to, for example, reservoir, metocean, or geophysical re-interpretation, is one thing. Changes created by the fact that the engineering wasn't carried out in sufficient depth, length, or just ruined by incompetence are unacceptable reasons and become another detriment to success.

The engineering and construction schedule should be "believable" and "right" to suit the pre-existing engineering levels, procurement long-lead items, and contain a real understanding of the construction activity sequences and linked interfaces. The planning system within the shipyard should be effective at the outset and take into account the concurrent workloads for other parallel projects that are likely to impact the schedule.

The classification society should be brought into the project as early as possible to avoid any technical and commercial "shocks" in the shipyard regarding the design of the FPSO and its development. Quality systems should reflect class requirements and these systems should be in-place, ready, working, and be monitored constantly throughout the design and construction life of the project.

One of the most under-estimated and misunderstood control aspects of any shipyard project is cultural differences, and particularly language and logic barriers. Most shipyards have an indigenous culture that can be quite different from that of conventional offshore fabricators, as most FPSO owners soon find out, often at their cost.

A beneficial strategic approach to streamlining overall project costs, and also the schedule itself, is by maximizing the use of standard equipment and materials that are "fit for purpose" only. This does not necessarily mean that the local manufacture of equipment and materials is always the best solution though. There have been quite a few real problems brought about by the use of unsafe and unreliable valves and instruments from such sources. These risks should be minimized.

Regardless of the contracting strategy negotiated with the shipyard, the terms of compensation should be as mutually favorable and rewarding as it is possible to achieve in order to reduce inherent hostilities and maintain pre-contract goodwill throughout the project.

The bottom line

A newbuild FPSO project is like a loose bull. If you don't grab hold of it up front, it will chase you around and around forever. Every single aspect of the project should be monitored in order to provide an early warning system against poor engineering, quality, cost, or schedule impacts. This generally means a first class, strong, balanced and enthusiastic owner's monitoring team from day one to first oil. If you provide that, then there is no reason to be frightened.

The next series of FPSOs will probably be built in the same places as they have been before, and by the same people. It is up to the next generation of prospective owners to "get-it-right" beforehand.

Graham Parker
INTEC Engineering
Houston, Texas

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