DNV Launches JIP with South Korean Yards to Reduce Project Cost by 15%
Norway's DNV GL revealed Wednesday that variations in owner, operator and regulatory requirements during engineering and construction phases at South Korean shipyards present a huge challenge for operators and drive up costs. DNV GL has kicked off a joint industry project (JIP) with Hyundai Heavy Industries (HHI), Daewoo Shipbuilding and Marine Engineering Company (DSME) and Samsung Heavy Industries (SHI) that will establish a new international standard for offshore oil and gas projects. The results could potentially cut project costs by 15 percent, or approximately $500 million for a typical TLP (tension leg platform) project, for example.
The JIP aims to develop common and global best practices for components and equipment to reduce the number of, and variations in, requirements to the minimum necessary. The JIP is also supported by Korea Offshore and Shipbuilding Association (KOSHIPA) and the Korea Marine Equipment Research Institute (KOMERI) to address this issue. Other oil companies and engineering firms are still welcome to join the project.
“Unfamiliar specifications and processes are today resulting in re-work, delays and misunderstandings and add thousands of engineering hours to projects,” says Arthur Stoddart, DNV GL’s new regional manager for Korea and Japan. “The implementation of a standardized approach will be an opportunity to significantly reduce the general cost level of offshore projects without compromising on quality or safety.”
According to the JIP partners, standardizing even the simplest components at this early stage will deliver huge cost savings. “The full cost of a typical TLP project, for example, is typically around $3.5 billion. Although the project partners have not yet published estimates, we at DNV GL expect to see savings in the region of $150 to $250 million for this type of project, which is up to 7 percent of the total project cost. The full standardization potential is more than 15 percent of the project cost.”
The JIP will initially focus on simple components and equipment, such as tertiary structures and bulk materials for construction, piping and E&I (electrical and instrumentation) engineering. Next year, the scope will be extended to complete modules and equipment packages. The project will consider industry standards, company standards as well as maritime rules and approaches for standardization, as all methodologies will be reviewed to ensure the most effective and efficient means are applied.
“We hope this will lead to standardization that helps to reduce design periods and minimize design changes,” said JongBong Park, senior executive vice president (SEVP) and chief operating officer of HHI’s offshore and engineering division. “Other potential benefits include reduced material costs resulting from lower material purchase, manufacturing and testing expenses. A shortening of the material purchasing lead-time would be expected as more materials could be held in stock. Surplus materials could be used in other construction projects.”
Elisabeth Torstad, CEO of DNV GL - Oil & Gas, says: “Using international standards more widely in offshore oil and gas projects has the potential to significantly reduce cost levels. This will also lower the risk of project overruns without compromising on quality or safety.”
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- McDermott Settles Reficar Dispute
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea