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Section Heading
Section text goes here
Santos GLNG – a lean supply chain
Scope
• Overview of Santos Gladstone Liquefied Natural Gas (GLNG)
Project
• Overview of the GLNG Supply Chain – first principles
• Centres of Gravity
• GLNG Supply Chain – optimised
• Benefits
2 |
GLNG Overview
• Partners: Santos (operator, 30% shareholder), PETRONAS
(27.5%), Total (27.5%), KOGAS (15%).
• US$18.5 billion gross capex estimate from FID to end 2015.
• Project revenue underpinned by binding long-term LNG sales
contracts with PETRONAS and KOGAS covering more than 90% of
LNG plant capacity.
• Existing and sanctioned upstream gas processing capacity of 725
TJ/d.
• 420-kilometre gas transmission pipeline.
• LNG plant capacity of 7.8 mtpa.
• When fully operational, GLNG will average two LNG cargoes per
week, or just over 100 per annum.
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4
5
24/7 drilling operations
6
Major gas processing facilities
7
420km pipeline
4.3km under-sea tunnel
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Two-train, 7.8 mtpa LNG facility
9
Utilising world-class technology
Overview of GLNG Supply Chain – 1st Principles
BRISBANE
Compression
Hub
Well Sites
ROMA / FAIRVIEW
GLADSTONE
CIS
650km /
1 day
550km /
1 day
Overview of GLNG Supply Chain – Requirements
• In-scale ~ $100M / 35k line items of inventory to support operations.
• Execute: ~ 250 goods & services contracts
• Dependencies include:
• Drilling operations
• Gas treatment and compression facilities
• Gas transmission pipeline
• LNG production facilities
• Demand profile is variable or uncertain
11 |
SANTOS 2014 12 |
Effect of Actual Demand
Working
Stock
Safety
Stock
Time
Expected or
Average Inventory
Basics of Inventory Management
16297490
Demand deductions
• Demand profile is variable or uncertain and largely can’t be used for
initial planning
• Cost of “stock out” in lost production and revenue far exceeds cost
of supply
• Long term plan is 80:20 PM to CM. Initial commissioning and operations is
the opposite.
• Overstock and then optimise
• Establish call off contracts and then procure when work packages become
firm. Operator to carry the risk
13 |
Centres of Gravity
• “One must keep the dominant characteristics of both
belligerents in mind. Out of these characteristics a
certain centre of gravity develops, the hub of all power
and movement, on which everything depends. That is
the point against which all our energies should be
directed.” On War, Carl von Clausewitz, 1832
• “Any important sources of strength” Warfighting, Marine
Corps Doctrinal Publication 1, 1997
14 |
Centres of Gravity – GLNG Supply Centres of
Gravity
Gas treatment &
compression
Drilling &
completions
LNG Production
Stakeholder RAM of
compression
modules
Rig availability and
operations
RAM of key
production modules
Supply Chain Simple and
integrated supply
chain for key
material
Simple and
integrated supply
chain for key
material
Reliability &
availability of critical
spares
Deductions Simple supply
chain for
stakeholder with
access to tech
material. Potentially
overstock until
usage confirmed.
Simple supply chain
for stakeholder with
ready access to
material. Min N+1
Redundancy
Technical inventory
with technical QA/QC
requirement. Locate
with tech capability
and minimise moves.
Potentially overstock
until usage
confirmed.
15 |
Overview of GLNG Supply Chain – Optimised
Roma Logistics
Hub
BRISBANE
Compression
Hub
Well Sites
ROMA
GLADSTONE
CIS
500km /
1 day
550km /
1 day
Storage
17 31/05/2016
Supply Chain Optimisation
• Drilling Operations
– Leap frog containerised
support
– Containerised high
usage material located
at Rig site.
– Container replenished
and delivered to ne
location every 3-4 days
– MTA with main
contractors with short
term engagement
• Inventory Optimisation
– 35k items catalogued
– Lead time and price
confirmed on use
– Supplier performance
management
– Automated min/max
review on top 30% usage
– Maximise use of
rebuildables
– Only manage items that
need to be managed
18
Supplier dashboard
Benefits
• Contracts
MTAs with releases against firm scopes keep balance of
risk with the Operator
Contracting approach suits current market conditions
• Material
Technical inventory located in suitable storage mediums
adjacent to technical support. Minimise technical labour
Common use and critical items located adjacent to Rig
operations. Minimise Rig downtime
Reduce transport requirements / cost & safety exposure
Non-critical items can be provided with minimal control
19 |
Key observations
• Design your supply chain to suit your industry, your
dependency and the market conditions
• Waste and a lean supply chain are relative concepts
• Measure waste across total line of operation or value
chain, not just supply chain inputs.
• Value Stream Mapping is a valuable (essential) tool.
• Link cost and waste to EBITDA for lasting improvement.
20 |