Yme – Project Evaluation and Self-assessmentbergsymp.b.uib.no/files/2014/03/Nedrebø-Yme-Lessons-Learned-Sol... · Yme – Project Evaluation and Self-assessment Solstrand, 11 December

Yme – Project Evaluation and Self-assessment

Yme – Project Evaluation and Self-assessment

Solstrand, 11 December 2013

Vidar Nedrebø, Legal Manager - Talisman Energy Norge AS

2NYSE : TLM | TSX : TLM www.talisman-energy.com

Press Release 12 March 2013:

“Talisman Energy Norge AS (Talisman), (TSX:TLM) (NYSE:TLM) on behalf of its joint venture partners, has reached an agreement with SBM Offshore to terminate the YME MOPUstor™ project, including scrapping the existing above-surface structure, and ending all joint activity for an agreed cost.

[…]

Following an extended period of operational and execution delays, the decision has been taken to have Talisman remove the MOPU (Mobile Offshore Production Unit), which will subsequently be scrapped by SBM Offshore, the unit's owner. Ownership of the in situ subsea structure will be transferred from SBM Offshore to the Yme license holders, as they assess alternative development concepts for the field.

Subject to an upfront settlement payment of US$470 million made by SBM Offshore, Talisman will complete the work necessary to ensure safe re-manning and will then remove the MOPU from the Ymefield. SBM Offshore will manage the transportation and ultimate scrapping of the facility.

All parties will terminate the existing agreements and arbitration procedures with respect to the Ymeproject.”


VG Helg, 26 October 2013


Talisman Energy Norge AS

Yme – history

Talisman acquires Pertra and Paladin and becomes operator

20052004 2007

Yme discovered

Yme first oil, operated by Statoil

1996 20011987

Statoil closing Yme

Yme fieldStatoil ceased production in 2001, re-development considered economical in 2007

PL 316 -Yme awarded to Paladin, Pertra and Revus

Plan for Development and Operation (PDO) approved. Fabrication started in Abu Dhabi

First oil according to PDO

2009

Production facility arrives from Abu Dhabi(2 yrs delayed)

2010

Production facility installed offshore

Settlement AgreementRemoval and alternative development projects commences

2013

Production facility de-manned for safety reasons

2012

Yme Re-developmentA significant challenge

2011

Activity

Year

Beta 4-Slot Template

Gamma MOPUstor

Jack-Up/Drill rig

Submerged Loading System

Tanker


Yme Re-development Project

• The Yme Re-development Project would consist of three main elements:– i) drilling and completion of production and injection wells; – ii) the engineering, procurement, construction and installation (“EPCI”) of

subsea production facilities, pipelines and umbilical; and – iii) the EPCIC of a mobile offshore production unit with storage

(“MOPUstor” or “MOPU”).

• Part i) - completed on schedule but slightly above budget;

• Part ii) - completed on schedule and on budget;

• Part iii) - never completed.

6NYSE : TLM | TSX : TLM www.talisman-energy.com6

Yme field layout


Yme MOPUstor Project – the plan

• Subject to approval of the PDO, the Yme licence contracted Single Buoy Moorings Inc. (“SBM”) to undertake the EPCIC of the MOPUstoron a turn-key basis, for lease to the Yme partners. Furthermore, subject to delivery and first oil, the Yme owners would make lease payments to SBM under a Bareboat Charter Agreement;

• The MOPUstor was a Gusto MSC design (The Netherlands);

• The Yme topsides («MOPU») was going to be built in Abu Dhabi, thetank («stor») was going to be built in Malaysia, the legs were to be fabricated in Germany, and the MOPU and legs were to be assembled at Rosenberg, Stavanger, prior to installation and offshore commissioning at Yme (Blocks 9/2 and 9/5).

• Contract’s first oil date – 3 February 2009


MOPU near sail away from Abu Dhabi


The MOPU from Abu Dhabi to Rosenberg

Outside Stavanger

At the Abu Dhabi yard – April 2010 Float over operationSkidding to the barges

End of journey – at Rosenberg


MOPU arrival at Rosenberg 20 September 2010 First oil = April 1, 2011

Remaining project challenges:

• Weather window (winter installation)

• Contractor performance (SBM)– Meeting deadlines– Quality of workmanship– Documenting the work– Commercial issues– Pre-commissioning still outstanding

• “Troublefree”-start-up– Complex systems– Managing late changes

• Regulatory approvals

The Yme MOPU at the Rosenberg yard in Stavanger, NorwaySeptember 20, 2010


Tank being installed at the Yme Field


Yme MOPU Installation – July 2011


MOPU at the Yme field


Yme MOPUstor Project – the result

• In late summer 2008, the storage tank was installed;

• The MOPU, however, was installed offshore nearly 3 years late in the summer of 2011, having spent 10 months at Rosenberg following which the classing of the barge expired;

• Subsequent to offshore installation, significant defects continued to delay project completion and reworks/rectification works still surfaced;

• In July 2012, Talisman took the decision to de-man the MOPU following the discovery of significant structural design deficiencies as well as cracks and gaps in the grouting that fixed the MOPU legs to the storage tank on the seabed.

• The MOPU was declared as scrap by the owner, SBM, in December 2012, prior to achieving first oil.



Yme Costs 2006-2012

• Invested around 11 BNOK– Wells, pipelines, platform equipment (CPIs) and project management costs– 75-80% of Yme Owners’ investments have gone to Norwegian suppliers– Does not include costs of MOPU

• Built and owned by SBM– Extended Project Management Costs have proved expensive

• Most of the investments may be used in an alternative development scenario, however, the production facility needs replacing following the settlement and project management costs are not recoverable

• SBM built MOPUstor at own cost/expense– Lease under Bareboat Charter never commenced– Project management costs/expense

• Project written off

Yme Owners

Vendor


Upstream 15 March 2013:



Yme Lessons Learned

Operator

▪ Select your contract model carefully:▪ Build to Own vs. Build to Lease▪ Turn-key delivery (NTK) vs. further breakdown of deliveries (NF)▪ Project Financing or Sale-Leaseback vs. Build to Lease

▪ Critically assess tenderer’s understanding of NORSOK and Norwegian regulatory requirements and consider carefully mitigating actions;

▪ Allow sufficient time and resources to mature SoW, maintain competition and negotiate a comprehensive contract;

▪ Establish clear SoW, instruction rights and change order regime and corresponding obligation for Contractor to act (hoppeplikt) and apply these provisions rigorously;

▪ Strong and competent Project Management with close interaction with functional disciplines; ▪ Always consider quality of delivery prior to taking the project to the next phase (execute

project audits, and allow for it in the project schedule):▪ Pre-engineering▪ FEED▪ Detailed Engineering▪ Procurement▪ Construction▪ Installation/Commissioning

▪ Stick to the contract – avoid «senior management involvements» or «high level settlements»▪ Retain an exit clause (your wildest dreams may not be wild enough!)

▪ The «see to duty» applies to all Norwegian E&P activities – including development projects;▪ Thoroughly review the contract strategy and the individual contracts with an aim of ensuring

that the project can be executed without detailed involvement by partners;▪ Pre-agree project audits at regular intervals and the mechanics for how to implement findings

so as not to unreasonably impede upon Operator’s progress of the project;• Allow the operator to execute with minimum intervention (the JOA contains provisions which

protects the operator, but not necessarily partners)

Partners



Yme – Now and in the future

• Settlement Agreement 11 March 2013:1. Licensees took responsibility for physical removal2. Platform to be delivered to owner outside the 500m safety zone for

onwards transportation to yard for scrapping3. Title to tank and caisson to be transferred to licensees upon removal

of platform• Decommissioning plan to be delivered in accordance with

Petroleum Act Section 5-1

• Progressing towards updated PDO:1. Identify alternative production solutions;2. Re-assessment of reserves3. Production strategy for optimum exploitation4. Economical evaluation

• Based upon existing installations remaining in place following platform removal

• Updated PDO to be expected sometime 2015, dependent upon the time required to prepare for a robust project going forward.

Removal of existing production facility

Alternative development of Yme field

Documents

Yme – Project Evaluation and Self-assessmentbergsymp.b.uib.no/files/2014/03/Nedrebø-Yme-Lessons-Learned-Sol... · Yme – Project Evaluation and Self-assessment Solstrand, 11 December