3rd generation modularization by flour

COMPANY CONFIDENTIAL | © Copyright 2013. Fluor 1

3RD GENERATION MODULARIZATION AND ITS APPLICATION TO LNG DISTRIBUTION

Barcelona LNG summit – October 2013

COMPANY CONFIDENTIAL | © Copyright 2013. Fluor

Presentation Outline

FLUOR INTRODUCTION

THE CURRENT STATUS OF CONSTRUCTION IN LNG PROJECTS

3RD GEN MODULAR EXECUTIONSM DESIGN AND EXECUTION

INTEGRATED EPFC SOLUTION

STANDARDIZATION AND REPLICATION

QUESTIONS

2



FLUOR INTRODUCTION





QUESTIONS

3

COMPANY CONFIDENTIAL | © Copyright 2013. Fluor 4 COMPANY CONFIDENTIAL | © Copyright 2013. Fluor

Fluor Overview

• Fluor is the largest publicly traded engineering, procurement, construction, maintenance, and project management companies in North America

• Over 1,000 projects annually, serving more than 600 clients in 66 different countries

• Workforce of over 42,000 men and women executing projects globally

• Celebrated 100 years in 2012

Fluor Spain Office

• Revenue: $27.6 billion

• New awards: $27.1 billion

• Backlog: $38.2 billion


Worldwide Office Locations

under development

Years of Experience in Region North

America South

America Europe Africa

Middle East

Asia Australia

101 76 63 53 66 62 63

Tarragona

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FLUOR INTRODUCTION





QUESTIONS

6


Investment Risks in LNG Projects

“The liquefied natural gas industry says that up to $150 billion in projects could be lost to Australia unless the industrial relations system is overhauled and construction costs are slashed within 18 months”

“Shane Wright Economics Editor, The West Australian Updated May 27, 2013, 2:50” “For the coming decade, Alberta could experience a labour shortage of approximately 114,000 workers.” Ref: Employment Alberta 2010; Demand and supply outlook

“Canada is facing a shortage of construction workers over the next decade—the industry will need to recruit in the order of 320,000 workers from 2011 to 2019”

Ref: HEAVY INDUSTRIAL CONSTRUCTION AND MAINTENANCE, WORKFORCE CHALLENGES IN ALBERTA, MAY, 2011

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Asia Pacific

Latam

Europe

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Australia - Cost of Labour

Canada - Need to replace US consumer - Insfrastructure Costs - Remote / Labour Costs

Mozambique - Labour

Gulf of Mexico - Shale Gas Bonanza providing feedstock to: - LNG Projects - Gas To Liquids - Petrochemicals - Power - Issues with finding Qualified Construction Labour

Recent Gas Discoveries


Case for the Construction Industry to Act

Fact: Historical step-change productivity gains by manufacturing & ship-building

Source: database of EU KLEMS Growth and Productivity Accounts: November 2009 Release, updated March 2011

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50.00

100.00

150.00

200.00

250.00

300.00

350.00

1977 1982 1987 1992 1997 2002 2007

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Construction, Manufacturing & Total Industries Labor Productivity (1977-2007) volume indices, 1977 = 100

Manufacturing

Total Industry

Construction


Why Has Manufacturing Improved?

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Modular Designs

Standard Designs

Replicated Designs



FLUOR INTRODUCTION





QUESTIONS

11


Need to Provide More Innovative Solutions

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To address client drivers of reduced capital cost for Oil, Gas and LNG developments

To improve predictability of project execution, cost and schedule results for Oil, Gas and LNG developments

Current project development and execution approaches are “traditional” with still a significant level of site construction required. This adds cost to projects and puts more risk on predictability of results


The Current Status of Modular Design and Execution

• 1st Generation Modular Execution

– Piperacks or PARs

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The Current Status of Modular Design and Execution

• 2nd Generation Modular Construction Execution

– 1st Generation plus: – Equipment or PAUs (Preassembled Units)

• Equipment on module • Modules around equipment

– Pre-Dressed Vessels – 40% of Equivalent Stick Built

Hours Relocated to Shop for Steel / Pipe / E&I Work

COST ACCOUNT Hours Moved Offsite

STRUCTURAL STEEL 65%

EQUIPMENT 21%

PIPING 53%

ELECTRICAL 25%

INSTRUMENTATION 15%

INSULATION 50%

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Where Do We Need to Go?

• Modular Designs Which Maximize Movement of Hours Offsite

• “Modularization Drives Layout” not “Layout Drives Modularization”

• “Standardized” not “Customized” Designs

• Maximum Collaboration Between Owner, Engineer, Procurement, Construction, Project Management and Fabricator

• Fluor developed Modularization Improvement Initiative

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• Fluor has developed a 3rd Gen Modular ExecutionSM Methodology

– Past modular projects evaluated

– Offshore design methods evaluated

– Facility interconnections evaluated

– Power and control distribution evaluated

– All available technologies evaluated

• Patent Pending to protect intellectual property

Module Design Evolution - 3rd Generation


Work Process Introduction Process Block Concept

• The work process starts with process engineering, who conceptually divides the project into various process blocks (systems within a distinct geographical boundary).

• The process blocks will vary by plant type. We have developed standard blocks for typical in situ projects, for example: oil treating, water treatment, steam generation, etc

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Work Process Introduction Process Block Concept

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Typical 3rd Gen Modular Execution SM Process Facility Using Process Blocks

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©2010 Fluor Corporation. All rights reserved.

3rd Generation MCCs -

part of the Process Blocks 2nd Generation MCCs in

Substations

Connected with U/G Power Feeders One feeder cable per MCC

Smaller Main Substation

3rd Generation Execution Power Distribution

Power cables for each load run back to Substations along Piperacks

2nd Generation: 20% Electrical Equipment

and Wiring on Modules

3rd Generation: All Electrical Equipment

and Wiring on Modules Terminated

(Excluding UG HV Distribution)

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Material Handling Strategy

CA20110438001 21

Copyright © 2011 Fluor Corporation. All Rights Reserved. 21


Typical 2nd Generation Modularized Plot Plan Upstream Heavy Oil (In Situ) Facility

Approximate Plot Area = 200,000 Square Meters


Typical 3rd Gen Modular ExecutionSM Plot Plan-Upstream Heavy Oil (Insitu) Facility

Approximate Plot Area = 84,000 Square Meters


Taking the Modularization to the Next Level.

3rd Gen Modular

ExecutionSM

moves 60 to

80% of the

labour offsite

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Impact of 3rd Generation Execution Methods

• Cost Competitive Solution Providing a Competitive Advantage – Lowers Over TIC of Project by Optimizing Plot and Reducing Quantities (up to 20% TIC

Reduction) – Lowers Over TIC of Project by Moving Work Offsite to a More Productive and Cost Competitive

Location – Lowers Over TIC of Project by Reducing Field Indirect Costs

• Provides Execution Methods which Provide for Cost and Schedule Certainty – Places Emphasis on Early E&I Design Mitigating E&I Rollout at Site – Forces Engineering to Work as a Team for More Cost effective Design – Can Provide Schedule Reduction opportunity Particularly for Revamps

• Can Provide Environmental Advantage by Reducing Facility Footprint

• Reduces Safety Risks by Reducing Site Labour – Value Added Design Method for Brownfields/Revamp Work

• Can be Repeated and is Portable

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Modular Execution Risk Management

• Key Risks with a highly modular execution

–Modularization strategy and plan developed too late. –Modules incomplete at shipment. – Late engineering deliverables or late revisions.

– Steel and piping deliveries too late.

– Instrument, electrical and EHT materials late.

–Modules delivered late and/or in wrong sequence.

– Shop workload exceeds capacity.

• Mitigation Strategies In Place to overcome these:

–Application of Fluor Global experience in implementation of modular execution projects has been critical to development of such strategies

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Integrated EPFC Solution Required

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3RD GENERATION MODULARIZATION ALLOWS STANDARDIZATION

• Lay Out Organized following Process Units

• Modules are “Plug and Play” and Associated to Process Units

• A Standard LNG facility can be created for a Range of LNG FEED conditions adding or deleting “Process Units” and therefore modules

• An Envelope of Civil and Seismic Conditions needs to be assumed if the design will go into several locations.

• 3rd Generation allows customization to Specific Site conditions adding or removing Standard Modules

Standard Designs (Standardization)


ADVANTAGES

• Lowers cost of equipment and bulks

• Reduces Procurement cycle time

• Reduces overall EPFC schedule

• Provides Consistent Results

• Reduces Operator Training Time and Costs

• Reduces Maintenance Costs



RISKS

• Culture to Customize and Optimize

• Process FEED Change Beyond Standard Range

• Technology Improvements



3rd Gen Modular ExecutionSM Current Projects

• Shell Quest Project – CO2 Capture Project - Currently in Construction

• Shell Muskeg River Debottlenecking Project - Implementing 3rd Gen Modular ExecutionSM Where Practical – End of FEED transitioning into Execution

• Nexen’s Kinosis K1B SAGD – In FEL 2

• Suncor MacKay River 2 SAGD – in FEED

• Suncor Fort Hills U&O – End of FEED

• Devon Pike SAGD – in EDS

• Conoco Phillips 3rd Gen Modular ExecutionSM Study for Future In Situ Projects (Templating) Including Surmont 3 – Study complete

• Multiple Confidential SAGD Clients – FEL 2

• NWR Hydroprocessing, C&V and LC finer silo’s – Finalizing FEED

• Williams PDH – in FEED

• LNG Projects:

– Liquefaction

– Small Scale Regasification – FEL 2

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What is the Impact?

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It Will Look Different!

Be Prepared for Change!

Be Prepared to Collaborate!

Executing Using the Same (Traditional) Methods Will Produce the Same Results!


Questions and Answers

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Contact Information

– Jorge Villeta

• Fluor S.A.

• [email protected]

• +34915366407

– Enrique Alonso

• Fluor S.A.

• Enrique.Alonso.Sanchez @Fluor.com

• +34915365968

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Acknowledgements

Fluor´s team presenting would like to thank to Fred Haney, Subject Matter

Specialist of Modularization, promoter and inventor of the 3rd Generation

Modularization within Fluor for the presentation materials provide to make

This presentation feasible

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COMPANY CONFIDENTIAL | © Copyright 2013. Fluor 36

This presentation has been prepared by and remains the sole property of Fluor S.A., a wholly owned subsidiary of Fluor Corporation. Client agrees, by its acceptance or use of this document, to return it upon Fluor’s request, and not to reproduce, copy, lend, or otherwise disclose or dispose of the contents, directly or indirectly, and not to use them for any purpose other than that for which it was specifically furnished.

3rd generation modularization by flour

Engineering

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