Select Methodology: Adding Value in the Front-end for the Long-term

1. Select Methodology: Adding Value in the Front-end for the Long-term Delivering Value through Experience Vince Vetter, INTECSEA Offshore Technology Conference, Houston │ 6-9 May 2013

2. Project Phase Diagram

3. What is Select? Select is a specialist division of WorleyParsons focused on project viability assessment and selection. We recognize that decisions made during the early stages of an investment have the greatest impact on the ultimate business outcome.

4. What is Select? The Select phase: • Adds technical definition, thus reducing technical risk • Optimizes opportunity and maximizes the inherent value • Creates the business case • Assesses the probable costs • Secures the necessary approvals • Prepares for the Deliver phase

5. Maximizing Value to our Customers • Phases 1 and 2 (Identify and Evaluate) are the value adding phases. It is these phases that provide the opportunity to find the up-side of the development case • The objective is simple – to maximize NPV at acceptable risk

6. Decisions • Every project needs to make BIG decisions • Is the project viable? • What is the optimum development concept? • Selectfocuses on making good decisions • By breaking the big decisions into small, discrete decisions • By focussing on what is important to make these decisions • By identifying and understanding the key project risks

7. What is needed to make good concept decisions?

8. Concept Decisions • Standard toolkit for concept phase work • Standard Select methodology • Broad portfolio of representative projects • Experienced personnel • Facilitators • Study managers • Engineers • Dedicated part of the organization • Specializing in concept phase work • Current market knowledge for the full project life cycle • Costs • Capabilities • Capacities

9. The Select Toolkit • Framing Workshop • SelectDraw • SeleXpress • SeleGo • Selector • SelectPronto • Select NES • SelEconomics • Select Risk

10. Select Process

11. The Select Toolkit • Framing Workshop • SelectDraw • SeleXpress • SeleGo • Selector • SelectPronto • Select NES • SelEconomics • Select Risk

12. Framing the Study • Framing needs to identify: • Project Opportunity • Key Success Factors/ Desired Outcomes - "We will know we have been successful if …" • Frame for opportunity – what will be considered, what won’t be considered • Key constraints • Major stakeholders • What decisions are being answered now, what will be answered later

13. “Suddenly, a heated exchange took place between the king and the moat contractor…” Gary Larson, The Farside

14. The Select Toolkit • Framing Workshop • SelectDraw • SeleXpress • SeleGo • Selector • SelectPronto • Select NES • SelEconomics • Select Risk

15. SeleXpress • SeleXpressis an SQL based tool for process engineers to use to quickly size equipment required for a Select style project • SeleXpressis linked to HYSYS and therefore requires a HYSYS model to be produced prior to running the program SeleXpress • EQUIPMENT SIZING • EQUIPMENT LIST • EQUIPMENT WEIGHTS • LOAD LIST • GHG EMISSIONS HYSYS MODEL

16. Select Data Flow

17. The Select Toolkit • Framing Workshop • SelectDraw • SeleXpress • SeleGo • Selector • SelectPronto • Select NES • SelEconomics • Select Risk

18. Selector? • Case evaluation is best performed with Building Blocks • Provide consistency in the estimate • Provide efficiency in generating multiple case estimates • Provide clarity in the basis and cost for each building block • Provide flexibility for evaluating alternatives and what-ifs • Selectoris a cost compilation tool for compiling the estimates from a series of estimate Building Blocks • It is not an estimating package – but produces cost estimates • Quite often have a large number of Cases that need to be compared to evaluate the development alternatives – so want a tool that speeds up cost compilation, and enables evaluation of cases

19. What Makes a Case? • Facilities that are to be installed • Production capacity • Layout, wells, export location etc • Sizes of items (eg flowlines, topsides, jackets etc) • Materials • How are they installed • Where are they built • When they are to be installed (ie campaigns) • Contracting strategy • % of Customer ownership • Different production profiles

20. Example Case Diagrams

21. Selector Methodology Indirect, Allowances and Contingency As agreed with Customer Direct cost building blocks Master File Imports BB’s Adds Indirects, Allowances and Contingency By BB Reports Compare cases Design to input to NPV or clients financial tool Case Generation Add as many of each BB as required in each campaign to create cases

22. The Select Toolkit • Framing Workshop • SelectDraw • SeleXpress • SeleGo • Selector • SelectPronto • Select NES • SelEconomics • Select Risk

23. SelectNES • The non-economic Screening Workshop is carried out to focus on differentiators between options • Differentiators • Items that identify a risk or issue to be resolved for a particular option • A differentiator should be a risk or issue that the project team can address and affect an outcome, or an item that requires further work to be able to address

24. SelectNES Normalised overall comparison chart – scores inverted to show positives Maximum score achievable in any category is 1

25. The Select Toolkit • Framing Workshop • SelectDraw • SeleXpress • SeleGo • Selector • SelectPronto • Select NES • SelEconomics • Select Risk

26. EcoNomics™ • Maximize project outcomes across the asset lifecycle • Quantify and monetize relevant environmental, social and economic project factors • Embed tools and expertise to turn sustainability objectives into reality

27. Project Experience • Good concept screening relies on experience with real world solutions and facilities

28. Minimum Facilities Platforms

29. Mega-Decks

30. Different Environments • Harsh • Benign • Arctic

31. Project Examples • A customer was struggling to identify a viable development concept for an oil discovery • Proven oil development province • Numerous analogue developments in the vicinity • Concepts were based on look-alike development scenarios • Negative project value • The customer’s management couldn’t understand why the project wasn’t attractive • Project would be cancelled if a positive project value could be established • Strategic rethink required • Brainstorming workshop • Focused on value opportunities that could fundamentally change project value

32. Reference Development Concept • FPSO/subsea development concept • Multiple drill centres • Paired oil producers/water injectors

33. New Decision Tree

34. Outcomes • Specific development cases were identified, to conclude: • Some oil producer/water injector well pairs were sub-economic and removed from scope • Single drill center cost savings offset reduced oil recovery • Gas export to domestic market was viable and added considerable value • Project is viable and proceeding to next gate

35. Summary • Proven systems • Backed-up by world class experience • World-wide • From minimum to maximum scales • Portfolio of proven facilities