Capital Markets Day 10 January 2013 - Kvaerner · Lars Eide, EVP North Sea 11.15 Arctic...
Transcript of Capital Markets Day 10 January 2013 - Kvaerner · Lars Eide, EVP North Sea 11.15 Arctic...
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10.01.2013
Capital Markets Day – 10 January 2013
Time Topic Speaker
09.00 Introduction Jan Arve Haugan, President & CEO
09.20 Concept / Front End,
Engineering and
Procurement
Janne H. Rasten, EVP Project Support
Tony Allen, EVP International
09.55 Construction Sverre Myklebust, EVP Jackets
Tony Allen, EVP International
Jim Miller, EVP E&C Americas
10.35 Q&A part I
10.45 Break
11.00 Completion and
Decommissioning
Lars Eide, EVP North Sea
11.15 Arctic opportunities Bjørn Gundersen, EVP Concrete Solutions
11.35 Financial update Eiliv Gjesdal, CFO
11.55 Summary and Q&A part II
Lunch
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Copyright
Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate.
Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable
acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.
Disclaimer
This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to
differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the
regions and industries that are major markets for Kværner ASA and Kværner ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and
projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual
results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets
for Kvaerner’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange
rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based
upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is
making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors,
officers or employees will have any liability to you or any other persons resulting from your use.
Copyright and disclaimer
Copyright
Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate.
Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable
acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.
Disclaimer
This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to
differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the
regions and industries that are major markets for Kværner ASA and Kværner ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and
projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual
results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets
for Kvaerner’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange
rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based
upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is
making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors,
officers or employees will have any liability to you or any other persons resulting from your use.
Copyright and disclaimer
2
Concept / Front End, Engineering
and Procurement Janne H. Rasten, EVP Project Support
Tony Allen, EVP International
Capital Markets Day
10 January 2013
C F E P C C D
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NOK
~10 - 20 million
NOK
~30 - 60 million
NOK
~6 000 – 8 000
million
Project timing and estimated value1
The project journey
4
Concept FEED Engineering Procurement Construction Completion
Analysis
Concept
selection
Concept
development
Definition
Cost estimate
Requirements
Design
elements
Detailed
engineering
Materials
Labour
Sub-contractors
Construction
management
Construction
Installation
Hook-up
Pre-start up
Onshore disposal
2-3 months 6-8 months 36 months 6-8 months
Decommissioning
122 months
NOK
~1502
million
NOK
~400 - 500 million
C F E P C C D
(1) Approximate values for a generic topside of ~20 000 tonnes
(2) Typical time requirement for Kvaerner’s target scope; e.g., onshore deconstruction and disposal
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Concept selection is subject to evaluations in
the concept phase
5
Drivers1
Functional
requirements
› Oil/gas/water quantity and quality
› Pressure
› Temperature
› Production rate
› Injection requirements
› Drilling requirements
› Safety
Location › Remoteness
› Environmental conditions
› Water depth
› Soil
› Proximity to existing infrastructure
(1) Illustrative, not exhaustive
Export solution
Topside
Substructure
C F E P C C D
Edvard Grieg
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The front end process within Kvaerner
6
Concepts
most likely to
succeed
Most cost
efficient
concepts
Opportunity
Appraisal
Feasibility
studies
Concept
Selection
EPC FRONT END (Pre FEED)
Concept screening & selection
~2-3 years
FEED
Concept Definition
~0.5-1 year
System and
discipline level
Selected
concept
Improved
execution
C F E P C C D
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EPC project experience is embedded in our
front end work
7
Concept FEED Engineering Procurement Construction Completion Decommissioning
Extensive experience data base with as
built data (e.g., technical solutions, weight,
cost, schedule)
Strong knowledge of clients’ design basis
Construction resources involved
throughout the process
Understanding of full lifecycle of a field
C F E P C C D
EPC execution phase Front end work
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Engineering influences all EPC project phases
8
C F E P C C D
35 000 engineering design documents
Engineering in different phases
Engineering numbers for an EPC contract
Proxy figures for 20 000 tons topside
350 engineers at peak manning
150 purchase orders
15 000 supplier documents
C F E P C C D
System and area
engineering
Engineering for
procurement
Engineering for
fabrication
Engineering for
completion, testing
and operation
2 500 GB data stored
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Procurement is complex and require close focus
throughout the project
9
11 500 tonnes
structure steel
4 900 tonnes
mechanical
equipment
2 500 tonnes pipes
6 800 valves
340 000 metres of cable
installed
25+ nationalities 250 companies
involved
~3 900 000 working hours on site
Total of 3 500 people involved in the
project
Ormen Lange example
C F E P C C D
Note: Picture and figures from the Gjøa project delivered by Kvaerner in 2010
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Kvaerner has engineering and procurement presence
around the world
10
Kvaerner engineering and procurement locations
Norway,
Oslo
Stord
Verdal
Trondheim
US,
Canonsburg
Houston
UK,
London
Finland,
Ulvila
Russia,
Arkhangelsk
Australia,
Perth
China,
Beijing
C F E P C C D
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A flexible delivery model
11
CONCEPT FEED ENGINEERING PROCUREMENT CONSTRUCTION COMPLETION
ELDFISK (Topside)
CLAIR RIDGE(Jacket)
SAKHALIN (GBS)
HEBRON (GBS)
BROWSE (TLP)
Aker Solutions as subcontractor
+ +
Aker Solutions as subcontractor
COOEC
Peter Kiewit Peter Kiewit
Aker Solutions
Aker Solutions
Firm contract
Potential agreement; for illustrative purposes
CALPINE GARRISON (Gas fired power plant)
+ Parsons Brinckerhoff WorleyParsons and Calpine Corp.
C F E P C C D
+
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Controlling engineering
Full control
Flexibility
Efficient risk mitigation
High quality at lower
price
12
Kvaerner’s highly experienced engineers have the expertise to
efficiently manage the engineering phase
Project management
Engineering management
Engineering disciplines
Controlled by Kvaerner
Flexibility wrt. in-house vs. subcontracting
C F E P C C D
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Proven project execution model (“PEM”)
13
Feasibility &
Concept
System
Definition
Detailing &
Fabrication
Assembly &
Erection
System
completion
Contract
Completion
M1A M1B M1C M1D M2A M2B M2C M3A M3B M3C M3D M4A M4B M4C M5A M5B M5C M5D M6A M6B M6C
Execution
Control
Strategic
Tools
Tender & Kick-
off
TA TB TC TD TE
C F E P C C D
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System definition Detailing and fabrication Assembly and
erection
System
completion
Risk mitigation during project execution
14
Note: For illustrative purposes
C F E P C C D
Phase timing in months
9-12 12-24 6-12 3-9
Feasibility
&
Concept
System Definition Detailing & Fabrication Assembly &
Erection
System
completion
Contract
Completion
Project progress
Project risk
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A standardised procurement process yields good
returns over time
15
Sourcing
Need Require-
ments
Sourcing
- Audits
- Approvals
Procurement
Inquiry
process
Purchasing
process
Material
Control Logistics
Ware-
housing
Quality
surveillance
expediting
Standardised proven processes ensure risk
control and hence guaranteed delivery
Close out
Performance
evaluation
Supplier Relationship Management activities
C F E P C C D
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Strategic segmentation of suppliers to optimise
procurement activities
16
Simplified
selection (19 %)
Selective
partnerships (12 % of total
number of packages
sourced1)
Strategic
partners (4 %)
Standard
procurement
process (65 %)
Impact on project profitability
So
urc
ing
co
mp
lexity
Sourcing complexity
defined by: Criticality to project
progress
Lead time
Technology ownership
Supplier power
Impact on project profitability defined by: Category spend (MNOK)
Category value-add (impact)
(1) Total number of sourced packages on a typical topside project is 150-160
C F E P C C D
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Equipment constitutes 60-70% of procurement value,
the remainder being bulk
17
Procurement per category for sample topside project
Percentage of total procurement value
6%
9%
7%
7%
6%
21%
Structural
Electrical – bulk
Piping
24%
Pumps
14%
5%
Vessels
Generators and compressors
Other bulk
Other Equipment
Valves
Equipment
Bulk items
Typical procurement
value of NOK 3-4 billion
C F E P C C D
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EPC execution is a close interaction between the
various disciplines
18
Engineering
Contract
completion
Close-out
documentation
Project management
Critical
line
Drawings
for
fabrication
Inquiry
Final info
Prelim info
De
live
ry o
f bu
lk
De
live
ry o
f e
qu
ipm
en
t
Procurement (vendors)
Construction
Purchase order
Bid
C F E P C C D