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Shell Exploration & Production
Cop
yri
gh
t: S
hell
Exp
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& P
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Ltd
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UK Norway Share Fair
April 20th 2006
Ardoe House Aberdeen
Alastair Reid
Supply Chain Team Leader - Projects
Agenda
• Overview - Shell Exploration & Production• Global Category Management• Selling to Shell E&P in Europe• Norwegian Focus• Contact us
EP Key Locations
USAUSA
NigeriaNigeria
OmanOman
BruneiBrunei
NW EuropeNW Europe
AustraliaAustralia
CanadaCanada
MalaysiaMalaysia
Shell Exploration & Production
Strategic focus: fit-for-purpose strategies for major spend categories.
Business integration: Supply Management hardwired in business processes
• dedicated global matrix organisation, clear accountabilities
• processes to enable synergy with suppliers & efficient requisition to pay
Common approach: common processes, tools & behaviours.
• Best practice processes, min standards & enabling tools, “one voice” to market
• Consistent & pervasive performance mgt with credible measures to monitor progress & support delivery of benefits.
Valued people: competent professionals working on strategic level.
• Assuring competence development to meet business needs
E&P Supply Chain Strategic Elements
Global Category Management
• Dedicated capability across a majority of third party spend for major market categories
• Global strategies that support business objectives
• Making full use of market intelligence
• Sourcing contracts optimise total cost of ownership
• Post contract award: continually improve cost and value performance as well as ensuring contract compliance
Global Category Management
PRODUCTION : boats, helicopters, prod chemicals, Integrated Services, Facilities Management, installed base
compressionCAPITAL PROJECTS : linepipe, pipelay services,
compression, subsea facilities - deepwater, agency manpower
SEISMIC, IT, TRAVEL, CONSULTANCY and other SERVICES
WELL ENGINEERING: rigs, bits, cementing, OCTGs, completion equip, expandables, liner hangers, fishing/ milling, coiled tubing, ESPs, well control, casing/tubing
running, Directional Drlg/WirelineUpstrea
m Busines
s Categor
y Groupin
gs
Regional/OU structure
Stakeholders
E PE u r o p e
• 1 Management team
• 1 Business plan
• 1 Strategy
• Aligned policies
• Aligned procedures
• Integrated support team
Shell Exploration & Production in Europe
Shell Exploration & Production in Europe
• Approx. 4,500 employees - contributing approx. one third to Shell EP Business.
• And the prize in each country:
– Norway - Est. 70% hydrocarbons still to be produced.
– U.K. - just under 50% hydrocarbons still to be produced.
– The Netherlands - Over 50% still to be produced.
– Ireland - Plans to bring Irish gas onshore
– Germany - Successful gas production in Europe’s biggest mature energy market.
– Italy - Turn largest onshore oil accumulation in Europe into a legacy position.
– Austria - Successful mature operator with growth aspirations.
– Denmark - Successful venture with an extended licence period (2042).
• UNDERPINNING OUR BUSINESS IS LEADERSHIP IN HS&E PERFORMANCE
Support Manager SCM
Alex de Jager
ASSEN
Well Engineering SCM
ABERDEEN
Projects SCM
Iain Middelton
ABERDEEN
Services SCM
Marie Marsh
ABERDEEN
Production SCM
Neil MacLean
ABERDEEN
NOV SCM
Clive Bray
STAVANGER
Jeff Prestwich
Supply Chain Manager
John Lickvar
ABERDEEN
Supply Chain Management in E&P in Europe
Drilling
Well EngineeringCapital Projects
E&M, Logistics
Production Services
IM/IT, Geosciences
HR, FM
Assurance, Process,
External relationships
Non Shell
Operated Ventures
Number of Current EPE Contracts
Supply Chain UK Norway The Netherlands Ireland Italy
Production 826 538 53 233 2 0Projects 349 63 38 22 226 0Services 908 310 432 138 22 6Well Engineering 284 127 73 61 23 0
Total 2,367 1,038 596 454 273 6
Total
Projects15%
Services38%
Production35%
Well Engineering
12%
Integrated Service Contractors (ISC)
• Significant volume of our activity is performed by ISC's
• Where we have an ISC - generally
– Shell contract with 1st tier suppliers
– ISC contract with 2nd tier suppliers
• Key contacts within the ISC’s are available
Supply infrastructure
EPE gas/oil fields
Norway/Brent “Central” Onegas“Mature”
Sigma 3AKOP AJSWGE
LandGroningen
GLT Proj
LOP(Projects)
MultiGasGLT Maint OMC
Maintenance only
Projects only
P + M
Shell Exploration & Production in Europe - ISC Overview
Integrated Maintenance and Modifications Contract (ISC) Aker Kværner Offshore Partner (AKOP)
Integration with and between Stavanger and Kr. sund organisations
• Project Engineering and Engineering & Maintenance
• Engineering Services: Mechanical, E&I, etc
• Support: Procurement, Cost/ Plan, DCC etc
• Prefabrication
• Construction: Mechanical, E&I, Structural, Process, Safety, Surface Treatment, Insulation, Scaffolding
• Maintenance Support: disciplines as above
• Subcontracts:• Surface Treatment, Scaffolding/ rigging, Insulation• Process Support: pressure testing, high pressure cleaning, nitrogen purging.
Option.• Civil: roads, structures, buildings, concrete, drains. Option• Material frame agreements: piping, steel, cable trays, nuts and bolts etc.
• Does not include: maintenance discipline contracts (valves etc – managed directly), front end engineering/ concept. Larger mods/ projects can be run separately
Our Value Proposition to Suppliers
Relationships
• It is our aim to work effectively with the industry, and where business needs justify and competitive supply assured, we build long-term relationships based on trust and clear, mutually agreed objectives.
• We capture the efficiencies of dealing with suppliers, for example through standardising prequalification and terms & conditions.
Collaboration
• We work with suppliers in development and deployment of key technologies.
• We actively promote the fair sharing of risk between supplier and operator, which is increasingly important as we venture into more technically and commercially challenging environments.
Performance
• Relationships with suppliers who perform to an excellent standard will be nurtured.
• We measure performance and build differentiating performance into our contracting strategies.
• Shell E&P in Europe use the oil & gas industry supplier database - Achilles in Norway and FPAL in UK and NL which eliminates the need to maintain our own in-house supplier database.
• Achiles and FPAL give us a structured way of identifying and selecting potential suppliers & contractors based on the quality of their data in the database.
• Suppliers interested in working with us should register with Achilies andFPAL and build up an attractive supplier profile by registering as fully and as accurately as possible.
• Large or Critical suppliers may also be required to undergo FPAL Capability Assessment, to reduce duplication of requests for information in the tender process.
Doing Business With Shell Exploration & Production in Europe
The Supply Chain Code of Practice outlines a set of best practice guidelines for the UKCS oil and gas industry to:
First adopted by the industry in 2002, signatories undertake to work towards full compliance. They include major purchasers (UKCS operators and principal contractors) and suppliers (companies providing goods or services).
Transparent planning of contracting activity by major purchasers to improve supply chain capability
Streamline pre-qualification, tendering and negotiation processes to reduce billing costs, eliminate waste and value and increase competitiveness
Increase feedback dialogue and shorten payment cycles to improve performance
• Communicate forward plans to the industry
• Support the annual industry Share Fair
• Publicise a list of internal contacts
• Where pre-qualification data is required only invite bids from suppliers registered with FPAL
• Eliminate supplier data duplication by utilising FPAL
• Use industry standard ITT Models where appropriate
• Provide appropriate de-briefing for all bids
• Use industry standard contract forms
• Include payment terms of 30days in all contracts
• Include performance indicators
• Give FPAL performance feedback
• Pay all valid invoices within 30 days
• Track and discuss key contract performance indicators
• Request and participate in PLAL performance feedback
• Submit complete and valid invoices
• Adopt a prompt payment policy for own suppliers
• Keep FPAL records valid and up-to-date
• Refer purchasers to FPAL if duplicate information is required
• Participate in the Industry Mutual Hold Harmless
• Use standard industry contracts (LOGIC type or company specific global contracts)
• Review Purchaser plans, FPAL Purchaser Profiles and attend Industry Share Fairs
Shell Exploration & Production in Europe expects from vendors
• Business Principles
– Services and products delivered in accordance with Shell General Business Principles
• HS&E & Quality
– Aligned management systems and a very good performance track record
• Mutual Indemnity Agreement
– Undersign the deed
• Financial
– Satisfactory financial position to provide continuity in the market where it operates
• Technical (product features / vendor business capabilities)
– Meet requirements of (inter)national and if required specific Shell / E&P in Europe defined standards
Shell Exploration & Production
Cop
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Norwegian Specifics
Shell E&P Europe - Norway
Stavanger
Kristiansund
Aukra
Kristiansund:
Aukra:
Stavanger:
Draugen Field Production
Orman Lange Field Production (Oct.2007)
Engineering Maintenance
550 staff approx.
30 staff approx.
50 staff approx.
Orman Lange Field - Plant & Admin
Gas Processing
Central Office
Well Engineering
Exploration Drilling
Project Engineering
Corporate Functions (FM, HR, Finance)
Operations: Mid-Norway and Norske Shell
o Office established in Kristiansund 1989
o Operations in Kr. sund in 1992.
o 1 platform & single train
o Shell ownership, skilled offshore staff
o Value creation in Mid-Norway seen as target also for Ormen Lange: 40 year perspective
E3
D3
Draugen Subsea Layout
2007/8 Activity
Draugen
• Draugen project funnel showing big potential future projects:
– new loading buoy
– CO2 pipeline supply from the beach and injection into reservoir
– re-installing a drilling rig on the platform
14
FID
ApprovalSelectPre -Init. Identify ReviewIG FG CG AG RGExecute
1st
HC
Draugen Opportunity Funnel, March 2006
E3 wellPWM Phase 2,incl. NWIT line
A-55 gasinjection
HOLD
New infill wells/remaining oil targets
RS flowbase
e-Operation
D3 well
EF Appraisal well
CO2 for EOR +Electrification
SWIT(integrity)
Platform Rig
I-gate April
I-gate Q2
F-gateMay/ June
Joint rigopportunity poss
A55 repair
F-gate May
Loading bouy
X-mas tree integrity work,D2, A53, A5 GI,EF Dev work,Draugen 2025
Fire& Gas
Leak detection
Next 4D
Trym
• Trym is a Norwegian gas/condensate development
• Trym Owners• Shell (50%)• Statoil (30%)• DONG (20%)
• Tri-lateral subsea well• Tied back to Harald
(located in Danish sector) via 5 km 8” flow-line.
• Harald is a DUC owned and Maersk operated platform.
• DUC = Danish Underground Consortium (39% A.P. Møller – Mærsk AS, 46% Shell, 15% ChevronTexaco).
• Cross border issues Norway / Denmark
Trym Development
Plan
• Rig availability - critical factor
• Drilling operations: Q1 and Q2 - 2007
• Marine installations during summer season 2007
• Harald platform modifications during Q2 and Q3 - 2007
• Production start: Q4 - 2007
Ormen Lange
Location:
Gas production:
Recoverable gas reserves:
Recoverable condensate
Water depth:
Field investments:
Pipelines investments:
Operator for developmentand construction:
Operator for production:
120 km northwest of Kristiansund
20 GSm3/yr
375 GSm3
22 MSm3
800 – 1 100 metres
Approx 55 bn NOK (2002)
NOK 5 - 17 bn NOK
Norsk Hydro ASA
A/S Norske Shell
2003
2004
2005
2006
Ormen Lange Production Stair Case
2007
•Strategies•PDO•Organisation•Design
•Recruitment•Operability Rev.•Contract Strategy•Power•Commissioning
•Recruitment•IT systems•Man systems•Procedures• Tender• Organisation
• Recruitment• Contracts• Maint. Systems• Emerg Org.• Take-over
•Commissioning•Start-UP•Transfer of Operatorship
Operational Readiness
Ormen Lange Maintenance: Outsourcing Level
CORE MAINTENANCE1st Line, Corrective and
by Shell Personnel
SPECIALIST MAINTENANCE Preventive, Corrective and Condition Monitoring
Equipment Suppliers and Other Specialists
MAINTENANCE SUPPORT BY ISC
Supervision of execution, PMRs, 1st Line
Call-off based on condition monitoring and preventive maintenance routines
Support preventive, corrective, shutdowns etc
Support38%
Core Maintenance 32%
Specialist30%
I.e. Shell ownership retained; outsourcing level:- Stable,- Builds on current organisation
Examples of Ongoing and Upcoming Tenders:
Ormen Lange and Draugen
• USC Ongoing
• Draugen Area Tiebacks 2007
• Frame Agreement for Lifting Equipment Tender Evaluation ongoing
• Maritime Support/ Tugs – Ormen Lange Tender Evaluation ongoing
• Inspection & Corrosion Monitoring tender Strategy/ plan for approval
• Condition Monitoring Services tender Prequal performed
• Quantitative Risk Assessment Services Screening & Prequal final
• Control System Support Services Strategy/ plan for approval
• Maintenance of Valves 2nd half 2006
• FM – Work Environment Q2 2006
www.shell.co.uk/supplychain
• Contracting future plans
– Updated Quarterly
– Includes key contacts and timing per activity
• Selling to Shell overview
• Shell Group Business Principles
• Supply Chain Management
– key contacts
Contact Us ……
We have a hard copy listing of contacts available for
you
For follow up please use our Contact List or contact:
Shell email vicki.caveney@shell.com
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