Russia Petroleum Technology Forum
Moscow, March 9-11, 2005
Experience of Providing a Healthcare Contract for Gas Turbines on
Sakhalin Energy’s Molipak Platform
by
Graham McKirdy
Siemens Industrial Turbomachinery Ltd
PO Box 1, Waterside South, Lincoln LN5 7FD,
United Kingdom
1
© Siemens AG 2005.
All rights reserved.
Introduction
•
When we were invited to present a paper at this year’s conference, we wanted to
illustrate the creation of a Long Term Support Agreement (LTSA) for gas
turbines. This particular contract was formulated in partnership with our
customer to meet his requirements, namely fixed OPEX over a 10-year period,
better than industry availability, low risk, scope covering planned and unplanned
events and operation in severe weather conditions. In conjunction with these
criteria, we were also very much aware that we would be operating within the
Russian Federation on the only offshore oil production platform. Therefore our
technical and legal structure would have to comply with the terms of Production
Sharing Agreement (PSA) with the Russian Federation on the development of the
Sakhalin II project, taxation, local content, environmental standards and GOST.
We also must not forget that any contract is essentially a live document and will
inevitably through its life be amended to match an ever-changing operational and
commercial environment.
•
We consider that this harmonious approach working with Sakhalin Energy has
matched the requirements of our customer.
•
We therefore would like to attempt to share with you our experiences in the hope
that it is clear that to support turbomachinery in this environment more than just
manpower and materials are required. Hopefully we may provoke further
consideration of our approach and perhaps generate some questions.
2
© Siemens AG 2005.
All rights reserved.
Facts
•
Location
o Sakhalin Island, and in particular the Molikpaq Platform, is one of the
most remote offshore oil and gas production locations in the world and
reaching the platform takes a 60 hour transit time from either London or
Amsterdam. From Western Europe two routes, via Moscow or via Korea
/Japan can be taken to Sakhalin Island. Once in Sakhalin a train journey
of 17.5 hours takes you to the onshore supply base in Nogliki in the north
east of the island. There you will wait for possibly 24 hours for helicopter
transport to the platform. Overall, 31 hours travelling and 30 hours
waiting. The route via Korea and Japan is of a similar timescale but the
flights are less regular.
o The same timescales are true for the shipment of materials, with additional
time required for customs clearance.
•
Weather
o The prevailing weather around the Molikpaq Platform in the Sea of
Othosk is truly arctic. From the middle of December through to the
beginning of the following June the seas are frozen over. During the
production season production is affected by waves being whipped up by
hurricane force winds. This has safety implications and affects the
offloading of crude oil from the Floating Storage and Offload Facility
(FSO) to visiting tankers. With the wind chill, the temperature may fall
down to – 70 degrees C.
•
Operating Window
o Currently there are no crude oil or gas pipelines to shore; these are
planned to be in operation in 2006, therefore the FSO and offloading buoy
for crude tankers can only operate when the seas surrounding the
Molikpaq Platform are free from ice. Therefore the encroaching ice
between December and June interrupts oil production and shuts down the
turbomachinery. The operating window lasts between six and seven
3
© Siemens AG 2005.
All rights reserved.
months. Since 2004, however, a water injection module has been added to
the platform allowing water injection into the reservoir throughout the
winter shutdown season to pressurise the well in preparation for the
beginning of June. This is achieved with two SGT 100 (formerly
Typhoon) twin-shaft turbines driving water injection pumps. As there is
no gas available, diesel fuel is used.
•
Known Hydrocarbon Reserves
o It is said that Sakhalin Island is mentioned in the prophecies of
Nostradamus: he predicted the island shaped like the fish would become
the richest place on earth. Currently conservative estimates on known oil
and gas reserves are as follows:
•
Gas 2.7 trillion cubic meters (tcm) 91.0 trillion cubic feet 9 (tcf)now currently after mainland Russia, Iran has the largest proven
reserves of gas with 24.0 tcm. In comparison the combined current
known reserves of Norway and the United Kingdom stand at 2.4
tcm.
•
Oil - at the moment this is less plentiful in the seas off Sakhalin
Island. Current known reserves are estimated at 13.9 billio n
barrels oil (bbl): in comparison, Qatar’s known reserves are 14.5
bbl and United Kingdom and Norway stand at 14.5 bbl.
•
Sakhalin II project combined reserves are about 1 billion bbl of oil
and 0.5 tcm (18 trillion tcf) of gas.
•
I trust this short introduc tory summary of the prevailing conditions and potential
hydrocarbon reserves provide accurate and graphic picture to you of Sakhalin
Island.
4
© Siemens AG 2005.
All rights reserved.
Project History
•
Milestones
o Oil was discovered in the Piltun Ashtokeskoye (PA) field in 1984. After
winning a tender for development of PA and Lunskoye field in the early
1990’s a consortium of companies formed Sakhalin Energy Investment
Company Ltd to operate the project. Sakhalin Energy developed the field
utilising a converted ‘Arctic Class’ drilling rig, the Molikpaq, as the
production platform. First oil was delivered in 1999. Two years later
Marathon sold its share in the project to Shell. Today Sakhalin Energy
Shareholders are Shell (55%), Mitsui (25%) and Mitsubishi (20%).
o For Siemens, the equipment supplied initially comprised of one SGT-100
and two SGT-200 (formerly Tornado) industrial gas turbines and two
Siemens injection centrifugal compressors which were installed on the
platform in 1998. In 2001 discussions commenced with Sakhalin Energy
with respect to expanding our product support through the vehicle of an
LTSA for the existing equipment and future additions to the platform. In
the middle of the following year we reached agreement.
o In 2003 additional Siemens turbomachinery was installed on the Molikpaq
Platform within the water injection module comprising three SGT-100
industrial gas turbines.
o This year we are in the process of 'novating' the LTSA to OOO Siemens
SP in Moscow.
•
Production Volumes
o 2000
12.4 million bbl
o 2001
15.1 million bbl
o 2002
10.8 million bbl
o 2003
10.3 million bbl
o 2004
11.7 million bbl
5
© Siemens AG 2005.
All rights reserved.
Customer Requirements
•
At the commencement of our discussions with this customer, the criteria for
moving away from ‘traditional methods’ of product support in the form of
‘planned or unplanned event, issue of purchase order, completion of task and then
issue of invoice’ were quite clear.
•
Availability
o This was to be equal to, or above industry accepted norms of 97%.
o Minimum downtimes – the price of oil at $45.00 per barrel at a production
rate of 70,000 barrels per day easily equates to a loss of $3,150,000 per
day, over $22.0 million per week. Also, the RF have imposed strict limits
on SEIC with respect to flaring of gas therefore it’s essential to avoid any
unplanned shutdowns as this results in flaring of gas.
o Risk coverage for unplanned shutdowns in the form of turbines and
strategic spares held in Sakhalin.
o Dedicated Contract Manager – due to the time difference between
Sakhalin and Lincoln (10 hours), the time required to manage the logistics
of supporting such a demanding operation, a full time contract manager
was appointed. .
o Fulltime technician ‘babysitter’ on Molikpaq.
o Guaranteed response times, contained with the contract.
o Emergency call-out service.
•
Benchmarking in comparison to other Shell OPCOs
o SEIC are a part of Shell. It is well known that Shell operate many oil and
gas assets throughout the world. These assets also operate turbomachinery
- turbines, compressors and pumps. All assets are required to ‘benchmark’
their annual OPEX. The various OPCOs have differing operating
environment and turbo-machinery, however the OPEX of the Molikpaq
would be subject to this scrutiny.
6
© Siemens AG 2005.
All rights reserved.
•
Pricing Structure
o The requirement here was simple, ‘single monthly payments’ for the
LTSA to cover the full contract scope. This value would remain
unchanged for the contract term. This principle allowed SEIC to
accurately plan OPEX with ‘no surprises’ over an extended period of time.
•
PSA Requirements
o It is widely known within the industry that SEIC have a ‘Production
Sharing Agreement’ (PSA) with the Russian Federation for their Sakhalin
assets. Along with ExxonMobil / ExxonNeftGas and Total Kharyaga
there are only three in existence within the RF.
o The details of the SEIC PSA are confidential but several aspects have an
impact on supplier and sub-vendors to SEIC. For example, Russian
Content, submission of tax returns for the contract and personnel engaged
in maintaining the turbines, registering locally with the Sakhalin Oblast
for taxation purposes. After review of several companies who had already
established a presence on the island, we engaged the services of Price
Waterhouse Coopers Moscow (PWC).
•
Remote Diagnostic Capability
o Again the remote location of the platform and turbomachinery
necessitated the inclusion of this facility. Basically this provides the
following:
•
Daily download of operating data from all six turbines to a
Siemens server. The data is retrieved automatically by a daily
phone call from the Siemens server. The format of the data
replicates exactly the ‘Control Screens’ and ‘Tags’ of each turbine
package.
•
In the case of ‘trending’ and ‘diagnostic activity’ of particular
faults, the historical data in question can be accessed by the
customer through their own ‘account’. This provides unlimited
7
© Siemens AG 2005.
All rights reserved.
access to the data stored on the Siemens server. Each individual
tag can (if required) be analysed over large or miniscule time
frame.
•
Another facility required and provided with the ‘Remote
Diagnostic Capability’ is ‘real time’ analysis. If a fault indicated
by a ‘trip’ or ‘alarm’ occurs which requires immediate analysis by
specialist disciplines located at the Siemens facility in Lincoln,
SEIC can authorise (through a telephone line) Siemens to dial into
the control panel of the particular turbine package in question. The
specialist in Lincoln can then carry out starts and shutdowns,
adjust parameters, and observe the turbine in each of the above
sequences.
Scope
•
Contract
o The LTSA actually consists of two contracts, Materials and Manpower.
The manpower contract values make up 20% of the total value.
•
Manpower
o Permanent presence on Molikpaq ‘babysitter’.
•
This was viewed as essential by the customer. The skills required
were diagnostic capability, software reprogramming of the controls
logic, electrical and mechanical. Two technicians rotate on a backto-back basis. The duration of each stay on the platform is four
weeks.
o Additional technicians for planned and unplanned inspections.
•
In addition to the permanent presence of the ‘babysitter’ a pool of
technicians was created with skills specific to the SEIC turbine
fleet and with Russian visas.
o Full time Contract Manager based in Lincoln.
•
This was also viewed as essential by the customer.
8
© Siemens AG 2005.
All rights reserved.
o Provide training on platform for SEIC personnel.
o Technical support, 24 hours per day from Siemens in Lincoln.
•
Siemens in Lincoln operates a 24-hour helpdesk for the Siemens
turbine fleet. The ‘helpdesk’ consists of specialists in each
discipline who will analyse faults and shutdowns on- line utilising
the resources of the Siemens infrastructure and the Remote
Electronic Link
•
Materials
o To meet the customer’s requirements of minimum downtime and
minimum risk, we were required to support the existing fleet of six gas
turbine packages. Now due to the varying timescales of installation and
location of manufacture, each of the packages has differing configurations.
o Gas Turbine
•
The gas turbines in operation are two SGT-100 power generation
sets; two SGT-100 mechanical drive pump sets which are coupled
to two Sulzer high pressure water injection pumps; and two SGT 200 mechanical drive compressor sets coupled to two Siemens
STC-SV (formerly MV) gas injection centrifugal compressors.
o Power Turbine
•
The mechanical drive units have different power turbines.
o Main Gearbox for Generator Set.
o Combustion and Fuel Systems
•
They are of varying configuration. For example three gas turbines
incorporate Dry Low Emissions (DLE) combustion systems whilst
the remaining three incorporate ‘conventional’ combustion
systems. The SGT-200 units are gas fuel only; the four SGT100’s
are dual fuel. This allows operating on diesel during the winter
production shutdown.
o Oil System
•
Conventional.
9
© Siemens AG 2005.
All rights reserved.
o Controls
•
In most turbomachinery installations it is an accepted fact that the
majority of alarms and shutdowns are associated with spurious
trips and alarms from within the control systems, therefore the
provision of replacement, screens, cards and probes became an
integral part of the front line stockholding.
o Package frame and systems
•
The first three units installed were packaged at Siemens gas turbine
packaging facility in Houston, USA, the remaining three were
packaged in Lincoln, England.
o Spare gas turbines and power turbines located in Sakhalin.
o Operational strategic spares held on Molikpaq.
•
Inspection Schedule
o Within Siemens we use the industry nomenclature of describing
inspections as A, B and C.
o An “A” inspection represents an annual visual inspection of gas turbine,
power turbine and package frame and systems. Generally carried out at
8,000 hours.
o A “B” inspection represents an inspection carried out at 24,000 hours and
is generally an overhaul of the turbine hot gas path components. This is in
addition to the “A” class inspection.
o A “C” inspection is carried out at 48,000 hours and is generally an
overhaul of the power turbine, turbine hot gas path components.
o Therefore the general sequence / overhaul cycle is A, A, B, A, A, C.
•
Taxation
o As stated above, for a company to operate within a PSA they are required
to become tax compliant. Prior to the creation of our company OOO
Siemens SP, we registered with the Sakahalin Oblast. Then on a yearly
basis we must submit tax returns for the company and manpower. This is
a key element of the contract and operating in Sakhalin. Otherwise failure
10
© Siemens AG 2005
All rights reserved.
to do so would result in heavy fines and possible restrictions from working
within the Russian Federation.
•
Logistics
o This is a crucial element in the support of the Molikpaq turbines. Within
the contract scope Siemens are responsible for shipment of all material
and customs clearance. In addition to this all associated paperwork must
comply with RF Import/Export regulations. All materials must be
supported with proforma invoices, GOST certification and reference
numbers. Again failure to do so results in severe delays. Here again we
worked closely with SEIC and selected their logistics partner. In addition
to a shipping partner we had to select a ‘customs clearance agent’. Due to
the volume of materials passing through the airport and port of Sakhalin
Island there are many agents to choose from.
o SAP- Both SEIC and Siemens operate SAP, it is a requirement that all
materials shipped to SEIC in support of the contract are immediately
entered into the SEIC SAP system with unique location numbers. The
Siemens technicians as ‘babysitters’ on the Molikpaq are fully trained and
proficient on the SEIC SAP material control system.
Results
•
Reduced OPEX
o It is accepted by both parties, that in the first three years of the LTSA the
cumulative monthly cost of goods and services provided when compared
to the cost of ad hoc contracting and traditional methods equate to a
genuine reduction in OPEX. Due to the nature of the contract, all
unplanned incidents, where the defect is the responsibility of Siemens, the
costs are covered at no extra charge to SEIC.
11
© Siemens AG 2005.
All rights reserved.
•
Support Times
o To support the fleet and maintain up time it was decided to retain two core
engines on the island, SGT-100 and SGT-200. This has contributed
greatly to our response time in the event of unplanned shutdowns.
•
Availability
o In the first two years of the contract, our availability was below
expectations; now in 2004 we have achieved 97%.
The Future
•
Incorporation of Compressors
o The two SGT-200-2S mechanical drive packages are coupled to two
Siemens STC-SV gas injection compressors. Currently they are supported
by the conventional ‘planned or unplanned event, issue of purchase order,
completion of task and then issue of invoice’ contract. Discussions are
under way to develop this contract along similar lines to the LTSA. At the
Siemens turbocompressor plant in Duisburg, Germany, one LNG ‘Boil
Off’ compressor, STC-SH10-6-A and one LNG ‘Flash Gas’ compressor
STC-SV10-6-A are being assembled. These will be located onshore in the
SEIC LNG plant currently under construction in the south of the island. It
is also an idea to incorporate these two Siemens units into the scope of the
LTSA.
•
Novation of Contract to Siemens Moscow
o On signature of the contract a commitment was made by the senior
management o f ALSTOM (the previous owners of the gas turbine
business in Lincoln) that the contract would be novated to our Moscow
legal entity. This has been re-confirmed by Siemens senior management.
Questions
12
© Siemens AG 2005.
All rights reserved.