SUCCESSFULLY DELIVERING DEEPWATER DEVELOPMENTS David Jordan

1. SUCCESSFULLY DELIVERINGDEEPWATER DEVELOPMENTSDavid Jordan Subsea Deepwater Developments Asia 2008 25th/26th November 2008

2. Typical Development Architecture

3. Feedback Loops Political Economic Financial Technical Stakeholder Needs Contract Strategy Stakeholder Management Change Management Execution Planning Roles & Responsibilities Package Preparation Project Delivery Scoping & Planning Decommissioning Value Realisation Cost and Value Analysis Project Realisation Broad Scoping Option (s) Selected Option Creation Discovery Regulatory Permits, Consents & Approvals Local Community Legal Safety & Environmental Project Organisation & Infrastructure System Technical Integrity System Interface Management Engineering & Procurement Logistics Management Construction & Pre-commissioning Base management HUC Operations & Maintenance Brownfield Modifications Contract Strategy Project Execution Planning Resourcing Long Lead Items HSE Risk Analysis Partner Buy In CONCEPT CONCEPT EXECUTE MAINTAIN FEED Project Delivery – The Development Cycle To Success

4. Option 1 Single Contract Entity (Integrated Contractor) Typical Organisation Client System Engineering System Integrity System Availability / Deliverability Interface Management EPMS Contractor Subsea Management Drilling ReceptionFacilities Subsea Hardware Risers Pipelines

5. Option 2 Segmented Project Organisation Typical Organisation System Engineering System Integrity System Availability / Deliverability Interface Management Operator Drilling EPMS Contractor Facilities EPMS Contractor Subsea Procured Items URF SPS

6. Project Key Performance Indicators “Set Goals for Performance” • What are the KPI’s • Agree at outset – cost, schedule, HSSE, working relationship etc. • Develop in conjunction with the contractor(s) • Change to suit Project Phase • Articulate and make visible to all stakeholders (internal & external) • Link to incentives • Customer objectives not always visible to contractors • KPI’s defined late • KPI’s are an after thought Develop Specific Project Delivery Objectives – Common to Contractor & Customer

7. Project Execution Plan - Commencement “Project mobilisation is critical to overall success” • Plan for mobilisation:- • Early advice of award critical to project “ramp up” • Must have been included in the respective bids in detail • Updated after award within start up period • Office location/layout • Key people for key functions on day one • Management systems in place quickly • Key procedures/work processes available to all personnel early Trouble Free Start-Up sets the Project Tone

8. Engineering – Conceptual / Front End • Provides real value • Ensure all conceptual screening options and sensitivities are closed out before FEED • The devil is in the detail • Construction, Installation, HUC, O&M and Vendors input essential during conceptual and FEED • Be realistic about project estimates and schedules! “Front End Loading – Make Decisions Early” DON’T delay decisions to later phases

9. Engineering – Execute Phase • Detailed design will normally be undertaken by URF & SPS contractors • EPMS contractor or Operator will manage system integrity & Interfaces • Use “fit for purpose” • Management systems • “State-of-the-art” document management • Reduce documentation turn-around time • Plan delivery in accordance with required dates • Apply design freeze(s) • Implement effective change management process • More input – Construction/Installation/HUC/O&M (OIM) before design freeze • Allow flexibility to separate subsea development from facilities - if required Engineer to Operate

10. Key Project Internal/External Interfaces Topsides Internal I/F Hull External I/F Drilling & Wells Subsea Shore Reservoir

11. Drilling Contractor Operator & Stakeholders Onshore Contractor Wellheads & Drilling BoD/O&M Reservoir Government, Public, Community, Media Terminal Interface Facilities Contractor Offshore Facilities Contractor Subsea EPMS Contractor Interface Management Subsea Hardware SPS Other Contractors & Consultants Environmental, Permitting etc Infield Flowlines & Risers Export Pipelines URF Contractor EPC orInstallation Contractor Interfaces Multiple Interfaces Need Dedicated Management

12. Technical Systems Integrity Best Techno-EconomicSystems Approach • Process and Flow Assurance • Materials • Controls • Commissioning • Operations Individuals to have Systems Integrity Accountability

13. Procurement And Materials Management - Subsea “Maintain ownership accountabilities” • Use package engineers/managers • Procure as little as possible – Undertaken by URF or SPS contractors • Long leads – Identify and action • Keep risk where risk belongs • Maintain total system responsibility • Set up a common materials management system for all sub-projects/contractors • Keep Facilities & Subsea bases management separate • Tracking material movements is as important as placing the order • Subsea EPMS company to manage Subsea base? • Set up supply agreements/call offs with local service companies On time delivery facilitates Project success

14. Logistics “Single point of contact for delivery” • Global procurement and deliveries introduce global and local problems • Ex works/FOB • Import/customs/documentation • Shipping • Material/equipment movement • Storage • Risk • Predictability of receipt on site • Adherence to delivery plan Single Freight Forwarder for Entire Project

15. Mechanical Completion / Pre-Commissioning “Drive a one team culture” • Early definition/planning of HUC and Pre-Commissioning activities • Team understanding • Resources – office to offshore • Additional materials, equipment, consumables, storage • Document control and “as builts” – plan early • Early Punch Listing • Remedial work for completion onshore – Don’t take it offshore • Review planned offshore scope for completion onshore • Understand criticality of various systems. You will need to prioritize offshore • Subsea is as important as Facilities Scope Deferred to Offshore adds Risk to Completion –Why let it Happen?

16. What Is Risk Management: It is a systematic and proactive approach to assess and control risks, performed according to an established risk management policy It is part of Project and General Management, as a continuous and integrated process Implemented through all phases of the project What it is NOT: An activity to carry out when problems occur (that is crisis management) A policing system (it’s a management tool) It has never, and will never, eradicate all risks Risk & Opportunity Management Risk Management is not an afterthought

17. NPV OPEX CAPEX EPC Services $ • Technology Selection • Process Definition • Standardisation • Expandability • Constructability Review - (High Level) Influence Curve 100% Traditional Focus forContractor Selection • Standards & Specifications • Design for Operating • Reliability Modeling • Predictive Maintenance Traditional Focus for Construction Management • Value Engineering • Life Cycle Engineering/Information Mgmt • Energy Optimization • Constructability Review Opportunity to Influence Value • Life Cycle Engineering/Info Mgmt • Constructability Review Phase 1 Phase 2 Phase 3 Phase 4 Project Progress 0% Value Driven Engineering Value Driven Focus, with… • Safe Operations • Cycle Time • Minimum Cost • Fit For Purpose …Front End Loading and PM Best Practice Tools • Use of Value Improving Practices • Classes of Quality • Technology Selection • Value Engineering • Customised Standards • Constructability Reviews • Predictive Maintenance • Design to Capacity (forward) Experienced People & Companies bring Added Value

18. Safety in Design • Working to a project-wide ‘umbrella’ management system. • Adherence to project management and ISO standards. • Use of HAZID and Risk Assessment sessions to identify key risks that need to be accounted for in the design. • Use of HAZOPs to ensure that all facilities can be safely operated. • Experience of key members of the technical review committee who will attend these sessions. • Controlled management of change – e.g. changes to the design to be re-HAZOPed. • Adherence to our integrity assurance process. “Safety in design must be embedded in a Project Organisation” Design Safety is not an “Add-on”

19. Subsea Reliability “Essential to Project Success” • Use Competent Personnel to Perform the Work • Work to Industry Standards • Use an Active Program of Design Reviews • Work with Installation & Hardware Contractors to Identify & Investigate Technical Risks • Use an Active System of Knowledge Sharing - Operator and Contractors Lessons Learnt • Prepare a Detailed Project Reliability Plan Including: • Categorisation Sheets for Equipment Scope of Supply • Identification of Equipment Requiring a Qualification Program • Qualitative & Quantitative In-House Reliability Assessments Including: FMECA’s, Risk Reviews, HAZOP, HAZID and RAM Analysis • API 17N - Subsea Reliability and Technical Risk Management Competent People and Process are Required to Guarantee Deliverability

20. Subsea Operability “Operability must be owned by the operators” • Experience in Similar Designs • Application of the Operators Philosophies and Specifications • Include the Operators O&M Personnel in the Design Team from Day One • Performing Design and 3D CAD Model Reviews with Operational Personnel • Ensuring O&M Issues are Addressed in Vendor Packages • Careful Management of All Interfaces • Asset Integrity Assurance • Human Factors Review • HAZOP • Facilities Availability Modeling • Operability Workshops Draw Upon All Available Operating Experience

21. Subsea Deliverability “Subsea Deliverability is Essential to Project Success” • Reliability and Availability • Integrity Assurance • Standardisation • Contracting Strategy and Vendor Early Involvement • Sparing • Develop philosophy and implement • Quality Assurance • Risk Identification • Risk Mitigation Reliability and Operability Ensure Deliverability

22. Determined from bottom up estimate sufficient detail for all aspects of the project market rates not historical data EPCM management costs Contingency & allowances to be determined using risk assessment. Benchmarking of the cost estimate General Approaches – Cost Estimation “’Drill Down’ for Cost Estimation Accuracy” Realistic Project Cost & Schedule is beneficial to all Stakeholders

23. Change Management • All changes to go through a challenge process • Major Changes approved at the highest level • Impact of change calculated prior to work commencing • Client approves all changes prior to implementation • Change/Variation Order Register is maintained • All changes are coded in accordance with the project Code of Accounts, • Budget and Forecast at Completion figures are updated to incorporate approved changes/variations. Review from ‘what is best for the project’ standpoint A Managed Change Process Will Avoid Surprises

24. Action Register • Action item unique identification number • Name of person requesting the action • Date the request was made • Date by which the requester needs the information • Description of the action being requested • Name of the person responsible for the resolution • Actual date of resolution • Summary of resolution “Major Projects Need Punch Listing” Brings Focus to Outstanding Issues

25. Four Worlds for Success Adapted from a model by Ken Wilber & JMJ Associates SUBJECTIVE OBJECTIVE COMPETENCE BEHAVIOUR Plans Actions Decisions Performance Accuracy Experience Values Attitude Commitment Responsibility Risk Taking INDIVIDUAL INDIVIDUAL CULTURE SYSTEMS Shared Value Team Work Ethics Morale Myths and Legends Fairness Organisational Structures Work Process Policy and Procedure Shared Measures Infrastructure Contracts GROUP GROUP SUBJECTIVE OBJECTIVE

26. Key Team Success Factors “Projects are to be Enjoyed” • Leadership • Team spirit • Quality of personnel • Openness to new ideas and challenge • Innovation vs. Standardisation • Use of global networks for support and lessons learnt • Continuity of personnel • Awareness of constructability • Awareness of operability • System approach High Performing Teams Make the Difference