Managing Execution Risks for Lng Projects - PDF

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					Ask DNV about …
the LNG value chain
2



       Managing risk




     The LNG value chain

                                                                                            End users




                                                                        Import facilities




                                                         LNG carriers




                                 Liquefaction facility




                Gas production
                facilities




Reservoir




DNV is a global provider of services for managing risk. Established in 1864, DNV is an
independent foundation with the objective of safeguarding life, property and the
environment. DNV comprises 300 offices in 100 countries, with 7,000 employees.
                                                                                         3


Ask DNV about...
DNV is a competent and trustworthy partner assisting the LNG industry in managing
risks. DNV has services, competencies and experiences from all parts of the LNG chain.




We have been involved in the LNG industry since
the 1960s, and we are today deeply involved in new
project developments. Today we are involved in
more than one third of ongoing LNG projects, and
classifying more than one fifth of the LNG carrier
fleet on order.

We have a highly qualified workforce with expert
knowledge in different disciplines for the LNG
industry. Our resources include:
I Risk management experts covering safety, environ-

  ment and business for early phase advisory services
I Experts in all engineering disciplines to ascertain

  classification and verification of design and fabrica-
  tion of LNG facilities
I State-of-the-art inhouse lab facilities

I Full range of computational tools

I Offices in key locations in all parts of the world.




We are looking forward to work with
you to ensure a safe and successful
LNG business.




                                                           … managing risk
4



        History




Large-scale model
testing of liquid
sloshing forces inside
the spherical tanks
was an important
basis for the tank
design (1972).




DNV has a long track record and knows the LNG Industry.
                                                                                                                                            5


Ask DNV ...
DNV has a long tradition of applying research and development to provide a basis for
the safe application of technology.




Extract from DNV’s Diary of Innovation         1972 Basic design criteria for type B tanks   1989 Structural analysis and strength
(Natural Gas Carriers)                         were formulated in Rules.                     assessment of IHI SPB LNG carrier.
1959 LNG research team established.            1970–76 Model testing of sloshing, crack      2001 First classification society to publish
1962 Membrane cargo containment                propagation, fatigue and buckling to          rules for Gas Fuelled Engine installations.
system (predecessor to GT Mk III)              confirm compliance with the design for        2003 First classification society to publish
developed and successfully tested by DNV’s     LNG tank type B.                              rules for Compressed Natural Gas (CNG)
research engineers.                            1970–76 DNV was prime contributor to          carriers.
1962 First classification society to publish   the development of the IMO gas carrier        2004 Technical guidance for offshore LNG
rules for gas carriers.                        code.                                         terminals.
1969–72 Development of Moss spherical          1977 Established rules and design criteria    2006 Publication of Classification Note:
cargo tank (type B) system extensively         for floating LNG FPSOs.                       Sloshing Analysis of LNG Membrane Tanks.
supported by a number DNV engineers            1988 Conceptual design of floating LNG        2007 Lead role in JIP to assess
covering a wide range of specialities.         production facility.                          consequences from LNG releases.
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     Ship classification




DNV offers classification and associated services to the maritime LNG industry.
                                                                                                                   7


Ask DNV about...
Primo 2007, there are around 130 LNG carriers on order, and the total fleet in
operation is likely to double within the next few years. The maximum size of the
vessels is increasing from the common 145,000 m3 cargo carrying capacity range
to more than 260,000 m3.


DNV was a key contributor to the development of         tanks. Now, the vessels are growing bigger, new
both the Moss and membrane design LNG carriers,         trades are being established, crossing seas with
and continues to be in the forefront of technical       rougher weather conditions, spot trading is increas-
development to support the LNG industry.                ing, and offshore discharge and ship to ship transfer
                                                        are becoming realistic options. With the prospects of
DNV was actively involved in the pioneering work to     partially filled cargo tanks, understanding sloshing
develop both membrane and spherical cargo con-          effects and competence on sloshing loads are more
tainment systems more than 40 years ago, and all        important than ever.
current cargo containment systems have been
approved by DNV. This also includes verification of      DNV has strong and well-recognised in-house
the original SPB (IHI) cargo containment system         resources to handle this subject, and the practical
more than 15 years ago, and approval in principle of    cases coming up.
the recent developments of this design.
                                                        Harsh weather LNG vessels
The unique accumulated experience we have gained        The four Snøhvit LNG carriers are built to carry cargo
over the years – combined with our highly qualified      from Northern Norway across the North Atlantic to
experts within a wide range of disciplines as well as   the US and Southern Europe. These are the first LNG
state-of-the-art software for structural and hydro-     carriers for Arctic trade. They have very high specifica-
dynamic analysis – are more needed than ever to sup-    tions, including a design fatigue life of 25 years North
port the industry’s challenges in the future. During    Atlantic trade. They also have DNV’s additional class
the recent years, DNV has as the first class society     notation Comfort. The latter is in recognition of the
published Rules for Gas Fuelled Engine Installations    fact that harsh climatic conditions may cause stress to
(2001) and a Classification Note for Sloshing Analysis   the crew. Precautions are therefore taken to ease that
of LNG Membrane Tanks (2006). We continue our           situation for the sake of safety. These vessels are win-
extensive R&D activities to further strengthen our      terized for operation in the Arctic.
basis for support to the LNG industry.
                                                        DNV supports the LNG industry to develop cold-cli-
Liquid motions – sloshing                               mate LNG trades.
Liquid motions and sloshing inside LNG membrane
tanks are subjects high on the agenda of the mar-
itime LNG industry. Yards, owners and charterers are
careful to avoid problems. Historically LNG trades
have mostly been in relative calm waters with full




                                                    … ship classification
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     Offshore classification




Offshore classification – the structured and documented route to reach quality, safety
and functionality targets. Building on experience, we assist our clients employing
forefront technology.
                                                                                   9


Ask DNV about...
The aim of our classification services is to assure owners, authorities and other
stakeholders that the facility comply with rules and requirements.




DNV has developed a new set of standards and a
new, flexible regime for classification. The classifica-
tion process fits in well with whatever shelf-state veri-
fication regime a customer’s company operates
under.

DNV offers classification for design, construction
and operation of FSRUs (Floating Storage and
Regasification Units) and other LNG facilities.

We are currently involved with the classification of
several floating receiving and regas terminals for
LNG. For the first time in history, a liquefied natural
gas (LNG) carrier is to be converted into an LNG
storage and re-gasification unit (FSRU). The conver-
sion project will be carried out to DNV class rules for
offshore gas terminals and international standards.

DNV is also engaged in several projects to assess the
feasibility of various floating LNG terminal concepts,
both for import and for export.




                                       … offshore classification
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     Risk based verification




Risk based verification is a tailored and streamlined verification scheme to secure that
project targets are met.
                                                                                            11


Ask DNV about...
Risk based verification is tailored and adapted to project needs, and has been applied
successfully for a variety of facilities and operations (pipelines, subsea installations,
platforms, hook up and installation operations).



DNV has developed a risk based methodology for
verification activities that is both cost effective and
transparent. The DNV Offshore Service Specifica-
tion OSS-309 addresses verification, certification and
classification of Gas Export and Receiving Terminals.

The process facilities for the LNG plant at Snøhvit
were assembled fabricated and assembled on a barge
in Spain. Successful transportation of the barge and
indocking at the Melkøya facility in Northern Nor-
way were critical for the project schedule.

DNV worked with Statoil, the contractor and all ven-
dors and reviewed and verified design for transporta-     Photo: Statoil

tion and all operations in order to secure a success-
ful installation within a very limited time window.

The scope of work comprised the verification and
approval of marine operations, such as load-out and
load-in operations; barge, vessel and HLV transports;
site moves and the final installation of modules/
units on Melkøya. The work also includes the dock-
ing and grounding of the LNG process barge at
Melkøya.

All verification work is carried out using DNV’s
“Rules for Planning and Execution of Marine Opera-
tions” and “DNV OS-F101 Rules for Submarine
Pipeline Systems” as standard references.
The complex operation was successful and the
process barge were towed into the dock at high tide
on July 13 2005 exactly as planned.




                                     … risk based verification
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     Technology qualification




We assist our clients in safely unlocking the potential of new technology and new ways
of using existing technology.
                                                                                     13


Ask DNV about...
The LNG industry is continuously searching for better solutions to improve the LNG
chain. And technological progress opens new windows of opportunities.




But the industry is conservative and reluctant to
employ novel technology without a proven track
records. The business risk involved with failure in
one element in the LNG chain is too big.

DNV has a long tradition in assisting the industry to
move ahead by qualifying novel technology.

Within the LNG segment we have been involved in
numerous areas such as:
I Development of spherical containment systems

I Sloshing resistance in membrane tanks

I Cargo transfer systems for offshore offloading

I Pipe in Pipe systems for LNG transfer.



Our practice have been refined over many years, and
has now been distilled into a recommended practice
for Technology Qualification. This approach is sys-
tematic, comprehensive and ensures a transparent
and proper documentation.




                             … technology qualification
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     Enterprise risk management




Enterprise Risk Management is a cross disciplinary approach to identify and manage
opportunities and threats and thereby to create value for stakeholders.
                                                                                                                   15


Ask DNV about...
Through the service line Enterprise Risk Management, DNV can assist in increasing the
value of projects throughout the LNG value chain by supporting decision-making,
reducing surprises and increasing the ability to meet project objectives.



Integrated Risk Management                                 Due Diligence
Investments are characterised by large uncertainties       Due Diligence is an investigation prior to an invest-
from a wide range of sources, which appear at differ-      ment transaction, for example a bank’s decision to
ent points in time, and may be of a complete differ-       lend or an investor’s decision to provide equity,
ent nature, e.g. technically, economically, market,        which aims to improve the understanding of risks
credit, and performance. DNV assists clients assess-       and risk mitigations and thereby improve the deci-
ing the total risk of the investment.                      sion basis.
                                                           DNV regularly acts as independent adviser covering
DNV models the uncertainties into the cash flow ele-        I technical;

ments, e.g. costs, availability, and schedule, as          I commercial;

opposed to the traditional discounted cash flow             I contractual;

approach which integrates all risks into the discount      I safety, health, and environment

rate. This improves the understanding of the impact        issues in projects throughout the entire LNG value
of risk drivers, and lead to a better starting point for   chain and the energy industry.
risk management of the investment project that typi-
cally follows the investment.

The cash flow model on the right illustrates how
uncertainties about revenue and investment and
operational costs impact the total economic per-
formance of the project.

Through this service DNV delivers a ranking of the
most important risks in a project, associated mitigat-
ing actions, and the resulting probability distribu-
tions for economic indicators and schedule.




               … enterprise risk management
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        Public safety




     Photo: BP




Stakeholders face new challenges related to management of safety, health and the
environment. Public scrutiny and expectations go beyond Authority requirements.
DNV can assist.
                                                                                           17


Ask DNV about...
DNV works with clients to develop, implement, maintain and continually improve best
practices in safety, health and environment risk management. DNV applies risk-based
methods and advanced software tools to ensure that hazards are identified and
understood, consequences are assessed, and risks are managed in a cost-effective manner.


Management systems
Every company has a management system. The chal-
lenge is to develop, implement, review, and improve
systems to enhance business performance. DNV has
over 25 years experience in helping organisations
realise the benefits of an effective management
system.

The root causes of most major accidents are found
in organisational failings. Effective safety and envi-
ronmental management therefore needs to be
implemented through all project stages from con-
cept studies, through design and operation, to aban-
donment and recycling.

Risk assessments
Companies are facing a fundamentally new and
more challenging operating environment – “zero tol-
erance” for consequential damage. Stakeholders
demand companies demonstrate that they fully
understand the impact of accidents and that they are
working to reduce the risks and associated costs.

DNV maintains a strong modelling capability to help
clients understand the technical risks and potential
consequences of operations and thereby make better
decisions.




                                                               … public safety
18



     Environmental risk management




Pressure is growing on all organisations to effectively manage the environmental and
social impact of their operations. Being seen as environmentally responsible is now
recognised as an essential part of good business. DNV can assist.
                                                                                       19


Ask DNV about...
DNV provides an integrated risk management service to all environmental stakeholders
whether they be businesses, governmental bodies or the public.




By understanding the issues from all perspectives
and relying on considerable industry experience,
DNV helps develop effective solutions. DNV’s inde-
pendent position assures that guidance and recom-
mendations provided accurately reflect the true sta-
tus of an activity or operation.

Environmental impact assessment
DNV helps clients assess environmental impacts
from projects in all corners of the world. The typical
tasks in this type of work include:
I Dispersion and fate modelling

I Mapping of resources and sensitivities

I Spill preparedness and response planning

I Sediment and soil remediation



Corporate solutions
DNV provides decision support to at all levels in
client organisations and in all phases of a project.

Typical tasks include:
I Development and implementation of environmen-

  tal management systems
I Establishment of corporate reporting routines

I Public consultation and communication of risks

I Verification and reporting of greenhouse gas emis-

  sions




                                                 … environmental risk
                                                         management
20



     Asset risk management




An efficient operation with low costs and high regularity is a goal for all types of assets.
DNV assists clients in achieving this objective through the entire lifecycle of an asset.
                                                                                    21


Ask DNV about...
DNV assists clients obtaining maximum value from their facilities, equipment, and
people without compromising safety or the environment.




Operations Excellence
In a difficult business environment, your assets must
earn an ever higher return on capital employed.
DNV applies a risk based approach to focusing
resources where they are most effective.

DNV’s systematic approach starts with appraisal
work; you want to know your asset’s strengths and
weaknesses.

The next step is to develop and implement optimal
inspection and maintenance programmes.

Reduced operational expenses, increased regulari-
ties and prolonged lifetimes are consistently
achieved through DNV’s systemised approach.

Performance Forecasting and Lifecycle Economics
All existing and future asset developments are under
pressure to increase performance and reduce costs.

DNV can assess the viability and lifecycle profitability
of systems or projects in the concept stage or at any
other decision point through the lifetime of a
project.

For this type of work DNV utilises a risk based
approach that systematically identifies the key tech-
nology risks for a specific concept and sets priorities
for further technology development, qualification
and testing to reduce and manage these key risks.




                                      … operations excellence
22



     Technical analysis




DNV assists clients with theoretical and experimental analyses to select optimal
solutions.
                                                                                                                   23


Ask DNV about...
DNV has a long tradition in supporting clients with know how, experience and the
right tools by provison of advanced analysis.




The combination of staff expertise and a wide collec-    DNV is highly recognised for failure investigations.
tion of analysis tools, makes DNV able to perform        The investigations cover a wide area ranging from
highly levelled technical services for all disiplins     major breakdowns to failures or cracking of small
included in the LNG chain. The services can typical-     individual components. The main goal for a failure
ly involve:                                              investigation is to prevent new failures and increase
I Fluid and flow analysis                                 safety and/or optimize operation. Furthermore,
I Structural response and strength                       establishing the root cause of failure enables:
I Inspection and maintenance                             I Relevant modifications of design, operational

I Risk and reliability, environment                        parameters or inspection methodology/intervals
I Fitness for service assessments                        I Development/improvement of procedures, rules

I Sloshing                                                 and routines
I Laboratory assessments                                 I Determination of responsibility



One recent example includes a comprehensive study        DNV’s fully equipped laboratories have a long track
of sloshing effects in LNG tanks. The results have       record in performing full scale component and
been presented in a sloshing Class Note for mem-         functionality testing for the LNG industry. The labo-
brane tank systems. One of its main purposes is to       ratories can also perform all kind of static and
provide guidelines for assessing sloshing in the new     dynamic material testing at cryogenic tempera-
large size LNG carriers in order to ensure safe trans-   tures.The services cover testing of metallic materials,
portation.                                               thermoplastic materials, elastomers and fibre rein-
                                                         forced plastics. The laboratories play an important
DNV’s new class note has been developed in               role in qualification of new technical solutions and
response to the new challenges facing the LNG            development of rules and standards.
industry; increased size of LNG carriers, offshore
loading/unloading and partially filled LNG tanks in
connection with part cargoes. The guideline “Slosh-
ing Analysis of LNG membrane tanks” emphasises
sloshing loads and tank system strengths for normal
tank fillings as well as reduced tank filling operations
of membrane-type LNG carriers.




                                                     … technical analysis
Det Norske Veritas             Other main offices are located in:
NO-1322 Høvik, Norway          Aberdeen, tel: +44 (0)1224 335000    Moscow, tel: +7 095 739 4833
Tel: +47 67 57 99 00           Abu Dhabi, tel: +971 2 645 7580      New Jersey, tel: +1 201 512 8900
Fax: +47 67 57 99 11           Houston, tel: +1 (281) 721 6700      Rio de Janeiro, tel: +55 21 2517 7232
                               Kobe, tel: +81 78 291 1303           Seoul, tel: +82 2 734 7326/7
                               Kuala Lumpur, tel: +60 3 2050 2888   Shanghai, tel: +86 21 6278 8090
                               London, tel: +44 (0)20 7357 6080     Singapore, tel: +65 6779 2475
                                                                                                                                     Print: GAN Grafisk




www.dnv.com
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                                                                                                            2,000/ 3-2007




For further information please contact your local or main DNV office

				
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Description: Managing Execution Risks for Lng Projects document sample