Drillsafe - Industry Trends & Opportunities: Working Together For A Safer World

DrillSafe Industry Trends & Opportunities
Lloyds Register Energy - Drilling
Working together
for a safer world
Agenda
Introduction Lloyds Register Energy
Energy Market Global view
Drilling Market trends
Industry wide Challenges
Example of Key Solutions
Future proofing our Organization
How we started
Our heritage is genuinely historic
formed in 1760 in Edward Lloyds coffee house
to examine and classify merchant ships according to their

condition
We have 250 years of global marine history
the worlds first ship classification society and this remains our
core activity today
and over 100 years serving other industries across society
from energy, rail, food safety to power and manufacturing

Heritage an important part of our culture
and forward-thinking approach to our business
Lloyds Register today
1 billion turnover
Over 9,000 employees worldwide
Four business divisions:
Marine
Energy
Rail
Management Systems (LRQA)
Three regions: Asia, EMEA (Europe, Middle

East and Africa) and Americas
Our governance
Organisation has new structure from July 2012
New parent, Lloyds Register Foundation, a

registered charity concerned with safety of life
and promoting education and research
Lloyds Register Group Limited (Lloyds Register)

now heads operating group,
100% shares owned by the Foundation
No external shareholders / non-profit distributing
Lloyds Register Foundation compliant with UK

Charities Act
Expanding the Energy Business

Acquisition growth and partnerships are an important strategic factor for us
extending our service platforms:
2005
2008
Noise and vibration analysis
Drilling expertise
2009
2012
Human factors expertise
Subsea domain expertise
Capstone RBMI
Plant integrity and reliability

Risk management consultancy
Process engineering
and safety
Joint venture:
2013
Energy Services
Agenda

Primary energy production
Multi-Year E&P Spending Forecast
IEA crude oil price forecast
BIllion toe
Rest of World
Canada
United States
World Energy Outlook: BP 2014
Barclays 2013
International Energy Agency July 2014
The long term energy supply grows by >1/3 growth through 2035 to meet demand (1.5% CAGR)
80% of Energy still to be from fossil fuels by 2035, with natural gas growing the fastest of the fossils
All fuels show growth (Renewables 6.4%; Nuclear 1.9%; Gas 1.9%; Oil 0.8% CAGR 2035)*
Record E&P spending expected in 2014, but at a slower trajectory
Greater uncertainty over oil price than last year
Potential margin squeeze and exploration/development implications
*World Energy Outlook: BP 2014
Drilling Market Trends
2014-2018: Large number of rigs coming into the market with 230 additional units in 2018
Seismic activity down (predictor for rig demand)
Strong decrease in floater day rates - Jack ups still strong, but decline expected, as supply increases
Rates trend towards operating cost level
Margin operators and drilling contractors down

100
90
New-build activity
80
70
60
50
2012 Forecast
40
Aug-14 forecast
30
20
10
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
Drilling Market Trends
A. Cold stacked rigs coming into market.

B. Lifetime extension & New Build start
D. Rates Falling/ Sublets increasing
E. Cold Stacking Starts
Rig demand
C. Oversupply
C
B
A
Time
D
E
Agenda
Future Technology, Innovation & R&D
Spending on research and development by the oil and gas

industry will increase by at least 10 per cent in 2015.
Top 4 drivers as indicated by 250+ professionals and
executives from the international oil & gas sector:
Improving operational efficiency
Improving safety
Reducing costs.
Attracting competent resources
Full findings are expected to be published later this month
(September). It is anticipated that the survey will become
an annual event.
Industry wide challenges

Industry issue
Impacts
Foreseen solutions
Shortage of skilled professionals
Barrier to growth across industry
Concerns about rising operating
Competence assessments and

Management, training, technical
advice, contracted in technical
services
Pressure to extend asset life, reduced

investment
Asset management, Reliability

Engineering, EOR Technology
Reliance on bigger supply chain

partners to serve global needs
Global Vendor inspection, Smart

inspection
(attracting competent resources)
costs and squeezed margins

(reducing costs)
More global, complex supply

chains
(improving operational efficiency)
Tougher regulation and rising costs

More standardisation
Industry safety culture becoming

more deeply embedded
(improving safety)
Senior leadership increasingly

involved
Risk based, rather than tick box
Safety consultancy, holistic risk

management approach, PeopleSystems-Equipment approach
The Energy Challenge
Traditional forms of energy are harder

to find - deeper, more hostile,
unconventional.
As we push the boundaries, new
technology present both opportunities,
challenges and risks.
15
Agenda
DrillSafe Perth 8 September 2011
Example of Key Solutions; BOP Risk Model

Industry challenge: Objectively assess risk and determine whether to continue with, or suspend
drilling operations. Particularly crucial, given high cost of pulling BOP (~ $1million per day)
Industry needs:
Transparent and consistent decision making acceptable to all stakeholders
Quick and accurate determination whether to pull or not to pull
Safety of personnel, environment, and equipment
Challenges further compounded because the BOP is:
one of a few systems that combine multiple, critical functions
highly regulated
not visible when in operation
A simple component failure in the BOP may

result
in non-compliance and have severe consequences
18
Risk model rapidly assesses risk in an unbiased fashion using host nations
regulations, as well as company specifications and procedures
Helps operators manage risk to personnel, environment and assets
Enables operators to make objective decisions based on sound

engineering principals and provides a traceable record
Can reduce days of non-productive time into hours
All possible equipment failures and their affects are considered,

eliminating the need for last minute analysis when component fails
Risk Model does not take away or replace human decision making
LR has met extensively with oil and gas regulators around the world.
All have stated they will accept the Risk Model output
as an acceptable means of assessing risk.
19
20
DrillSafe Perth 8 September 2011
Example of key Solutions; Holistic Risk assessments

Balanced approach to operational integrity
Continuous
Improvement
PEOPLE
PEOPLE
EQUIPMENT
interaction of people
with one another, with
equipment and with
systems
(Human)
EQUIPMENT
SYSTEMS
hardware integrity and

performance
(Technology)
SYSTEMS
working methods and

data collection,
access and availability
at point of use
(Organizational)
Consequence
No damage
No effect
PEOPLE
No impact
No effect
Slight health
effect / injury
Slight
damage
Slight effect
Slight impact
Slight effect
Minor health
effect / injury
Minor
damage
Minor effect
Limited
impact
Minor effect
Major health
effect / injury
Localized
damage
Localized
effect
Considerable impact
Local effect
Permanent
disability / up
to 3 fatalities
Major
damage
Major effect
National
impact
Major effect
More than 3
fatalities
Extensive
damage
Massive
effect
Internation-al
impact
Massive
effect
Security
No health
effect / injury
SYSTEMS
Reputation
Environment
People
Assets
Severity Rating
0
EQUIPMENT
Increasing Probability
A
B
10 -6 to 10 -4
occurrence / year
10 -4 to 10 -3
occurrence / year
10 -3 to 10 -1
occurrence / year
10 -1 to 1
/ year
Rare occurrence
Unlikely occurrence
Credible occurrence
Probable occurrence
Likely occurrence
Never heard of in E&P

industry
Heard of in E&P
industry
Incident has occurred

in our company
Happens several times

per year in our
company
Happens several times

per year in a location
Manage for continuous improvement
E
occurrence
>1
/ year
Business Risk
Incorporate risk reduction
measures
Intolerable
occurrence

Structure & Responsibility
Equipment Life Cycle
Equipment History
Equipment Performance
100
90
80
70
60
50
40
30
20
10
0
Training
Competence
General Management
Equipment Condition
AIM Management
HR Management & Communication
Quality Management
HSE Management
How Balanced is your Act?
People - Human
Inefficient Operations
Systems - Organizational
Non Compliance
Accidents / Incidents
Equipment - Technology
Non Productive Time
Breakdown Maintenance
Agenda
LR Foundation and LR Group invests in R&D from early science to applied

research
LR Foundation
LR Group
Structural
integrity and
systems
performance
Smart
Supply Chain
Risk
Exposure
Resilience
engineering
Life
Extension
Emergent
technologie
s
Uptime and
Efficiency
Human &
social
factors
Next
Resources
Commercial-in-Confidence
LRF Research Centres and Scholarship Programmes
Lloyds Register Global Technology Centres are set up to respond to Offshore

and Marine Challenges
100 million in two global technology centres
For Energy - 5 core Technology programmes:
Risk exposure
Next resources
Life extension
Uptime & Energy Efficiency
Smart supply chain
Research collaboration with internal and external

stakeholders
Commercial-in-confidence
Southampton Global Technology Centre working with the University of Southampton at the
heart of world-class marine engineering and naval architecture
Disciplines specialised in to meet current and future maritime challenges:
ship design and naval architecture,
fluid dynamics and acoustics,
oceanography, and
humanities and social sciences
Singapore Global Technology Centre working with global research network to

advance technical innovation and support economic growth in the region
Research themes of Joint Industry Projects:
Subsea drilling and well control equipment
Risk (including asset performance management and life extension)
Deep-water / floating offshore installations
Enabling / emerging technologies (including renewables)
Next Generation Risk Management Tools
Oil and Gas industry is continuously looking

to reduce risk
Complexity of statistical models and physical
phenomena models has increased
Amount of data is overwhelming to anyone
other than risk analysis experts
EXPLORE translates information to a usable
format that safety engineers and managers
can understand and use to reduce risks
EXPLORE Next generation technology for risk assessment

Time dependent model
Continuous 3D risk picture
Enhanced prost processing
ALARP analysis
Detailed accidental loads
Offshore and onshore
Condition Based Monitoring

A New and Safe Way to Detect Forces on Riser Tensioners
Problems with the marine riser tensioners (MRT) on drilling rig lead to
downtime
Early Warning
Lloyds Register collaborated with client to solve the problem of how to

measure the forces on the MRT
Transocean is using the system to establish

accurate, empirical baselines for normal
tension variation, and this gives them the
means for detecting problems in the making
or simply knowing when service or
exchange needed.
We identified fiber optic sensor system that met these criteria:

Free of any ignition source
Lifespan of 20 yrs without needing calibration
This new way monitoring forces can reduce

risk of downtime by providing an early
warning of problems, which cause
unplanned stresses on the tensioners.
Would not violate the OEM

Client calculated the mechanics for optimal sensor placement
Now they can monitor the stresses and anticipate when equipment
needs repair or replacement
View of the Riser Tensioners over the moon pool
Wave-in-deck loading
Making waves to save lives
Wave in Deck is a collaborative project between Lloyds Register Global Centre (GTC) and
the Institute for High Performance Computing in Singapore.
Why Wave-In Deck

research is crucial.
The project uses technology to simulate the devastating waves formed in extreme oceanic
storms and measure their impact on offshore fixed platforms. The aim is to determine how
high above sea level a fixed platform should be to avoid being structurally damaged by
these extreme waves. This crucial distance is known as air gap.
Seabed subsidence and rising sea
If the air gap is not high enough a platform can be engulfed and collapse if it is hit by a large
wave.
and to reassess the impact on existing
levels due to global warming mean that

new research is necessary to predict
wave-in-deck loadings for new designs
fixed platforms. The knowledge gained
from the research and studies will be
Wave in Deck researchers are using computer simulations to measure the impact of these
waves of on the deck of a virtual platform. This will help to determine the optimum air gap
for fixed platforms and assist design engineers in the design of fixed platform structural
shapes and interfaces.
used to help design a state-of-the-art

wave basin in Singapore.
Smart Asset Management

RFID as an enabler
RFID application in supply chain and operation could have a dramatic impact on
reducing downtime, enable asset optimisation, risk based inspection,
assurance and compliance.
Smart Asset Management

through
Benefits include :
Secure tracking
Instant identification
Not lost through illegible stamping, mechanical damage or corrosion
Electronic upload. Can be used to link to: Manufacturing and repair

records, Maintenance history and database
Usage, service history and loading
Installation records and Well file, What was run into well, Who ran it and
when
Real-time ID of genuine parts

History and maintenance record
End-to-end life cycle tracking
Context specific recommendations
Rich data for analysis
Enhanced Oil Recover

OPTION - Optimizing Oil Production by Novel Technology Integration
Partners: Lloyds Register Consulting, LR Senergy, Welltec, and DTU
Objective: Develop novel technologies for predicting and performing optimal
control of the flow between wells and the reservoir.
Funding: DKK 14M from The Danish National Advanced Technology Foundation
Total budget: DKK ~29M
Duration: 4 years
Work Packages:
WP1: Well flow modelling
WP2: Reservoir-to-well connectivity
WP3: Reservoir uncertainty analysis
WP4: Integration and optimization
Duco de Haan
SVP LR Energy - Drilling

E duco.dehaan@lr.org
ModuSpec and WEST Engineering Services are now Lloyds Register Energy - Drilling
Working together
for a safer world
Lloyds Register and variants of it are trading names of Lloyds Register Group Limited, its subsidiaries and affiliates.
Copyright Lloyds Register [Entity]. 2013. A member of the Lloyds Register group.

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DrillSafe Industry Trends & Opportunities

Lloyds Register Energy - Drilling

Introduction Lloyds Register Energy

Energy Market Global view

Lloyds Register Energy - Drilling

Drilling Market trends

Industry wide Challenges

Example of Key Solutions

Future proofing our Organization

formed in 1760 in Edward Lloyds coffee house

to examine and classify merchant ships according to their

from energy, rail, food safety to power and manufacturing

Lloyds Register Energy - Drilling

Lloyds Register today

Over 9,000 employees worldwide

Four business divisions:

Management Systems (LRQA)

Three regions: Asia, EMEA (Europe, Middle

Lloyds Register Energy - Drilling

Organisation has new structure from July 2012

New parent, Lloyds Register Foundation, a

Lloyds Register Group Limited (Lloyds Register)

No external shareholders / non-profit distributing

Lloyds Register Foundation compliant with UK

Lloyds Register Energy - Drilling

Expanding the Energy Business

Noise and vibration analysis

Human factors expertise

Subsea domain expertise

Plant integrity and reliability

Lloyds Register Energy - Drilling

Introduction Lloyds Register Energy

Energy Market Global view

Lloyds Register Energy - Drilling

Drilling Market trends

Industry wide Challenges

Example of Key Solutions

Future proofing our Organization

Energy Market Global view

Multi-Year E&P Spending Forecast

IEA crude oil price forecast

World Energy Outlook: BP 2014

International Energy Agency July 2014

*World Energy Outlook: BP 2014

Drilling Market Trends

Seismic activity down (predictor for rig demand)

Rates trend towards operating cost level

Margin operators and drilling contractors down

Lloyds Register Energy - Drilling

Drilling Market Trends

A. Cold stacked rigs coming into market.

Lloyds Register Energy - Drilling

Introduction Lloyds Register Energy

Energy Market Global view

Lloyds Register Energy - Drilling

Drilling Market trends

Industry wide Challenges

Example of Key Solutions

Future proofing our Organization

Future Technology, Innovation & R&D

Spending on research and development by the oil and gas

Industry wide challenges

Shortage of skilled professionals