TechnipFMC, Lundin collabos in new deal
Oil company Lundin Norway and oilfield services provider TechnipFMC will collaborate in an effort aimed at making more development projects on the Norwegian shelf profitable.
The plan calls for better utilization of the expertise in both companies to identify the smartest solutions, Lundin explained in a statement on Thursday.
Namely, the companies are planning a new contract format where TechnipFMC will carry out both the early phase work and the actual development project for subsea tie-in projects, working based on their own specifications.
Lundin will give the supplier access to its organization to identify any technical challenges at the earliest possible stage, at the same time allowing the project team in Lundin to stay small and focused.
“One of our most important contributions to this work is to place our trust in the suppliers,” says Kristin Færøvik, Managing Director of Lundin Norway.
“We must trust that they can deliver high quality work without having to build up a parallel organization to keep checking over TechnipFMC’s shoulder. It is certainly more interesting for the suppliers to get on and do their jobs, rather than being questioned all the time, although of course monitoring will take place,” says Færøvik.
By allowing the contractor to contribute in designing the delivery specifications, the supplier will be able to propose optimized solutions at an early stage. This reduces the risk of costly changes at a late stage in the project, Lundin stated.
According to Lundin, many technical challenges in previous projects could have been avoided or solved more quickly if the correct expertise had been involved at an earlier stage, or if different disciplines had communicated better.
“It was therefore a requirement when we chose a contractor that they had expertise in their own organization within both subsea production systems, and all cables and pipelines that link the field to a platform,” says Kristin Færøvik. “This should eliminate the possibility that the two companies will blame each other for problems,” she says.
As the operator and customer, Lundin will grant access to all its relevant knowledge and expertise and the supplier company will be given far greater access to both technical and commercial information that the operator has about the project than has ever been the case before.
“The actual contract is designed so that both parties will benefit from the field becoming profitable. It is therefore also important that both companies understand the commercial consequences of both the technical and general designs,” says Færøvik.
In practice, Lundin said that this means that TechnipFMC will be involved before the FEED phase, which will ensure that the optimal technical solutions are found.
“We will choose solutions that safeguard performance and safety, while at the same time avoiding over-engineering. We will achieve this by having an improved dialogue,” says Kristin Færøvik.
This cooperation agreement takes Lundin Norway one step further in its approach of working with suppliers. This is a continuation of the model that was successfully used in the development of the Edvard Grieg field.
“Over time we would hope that Edvard Grieg, as a field center, will have multiple tie-in projects but there is still more work to do to take this forward. At present we are looking at both Rolvsnes and Luno II as potential development candidates depending on the results of their appraisal wells,” Lundin concluded.