Q1 2005
Featuring:
K2 Deepwater Development Developing Reliability in New Deepwater Note From The CEO Russia: The Place To Be Lanny Waguespack Joins INTEC
Employee of the Quarter Offshore Training Offshore West Africa Safety Moment Quality Corner
Eni's K2 Deepwater Development
INTEC Engineering was awarded the contract for the basic engineering as well as the construction/installation support for Eni Petroleum’s K2 subsea tieback to the Marco Polo TLP in the Gulf of Mexico. The initial scope of work included detailed design of the pipe-in-pipe flowlines and wet insulated SCRs. Flow assurance was required to verify sizes and operating parameters. INTEC assisted Eni's Integrated Project Team (IPT) with their subsea production and controls equipment manufacture and testing, route survey, permitting and project scheduling. INTEC Engineering will continue to work with Eni on this project through the installation of the dual flowlines in January 2005 and the SCR installation later in 2005.

Location and Field Architecture
The K2 development in Green Canyon Block 562 is located 118 miles (190 km) south of Fourchon offshore Louisiana (See Figure 1). The development wells are in 3900 ft water depth and the TLP is in 4300 ft water depth. The trees and umbilical are designed for 15,000 psi nominal pressure. The flowlines are designed for 11,250 psi.

Initially, two existing wells in the North Fault Block will each be connected through two insulated rigid jumpers to both the East and the West PLETs at the end of a pipe-in-pipe in-field flowline. A single well will be completed and tied directly into the flowlines in the South Fault Block via in-line termination sleds (ILTs). Provisions have been made for the future connection of one well in each of the North and South Fault Blocks at a later time. The product is carried through one or both of the two 12" X 7" nominal diameter pipe in-pipe flowlines from the PLETs to the Marco Polo TLP located 7 miles away. The dual flowline architecture allows round-trip pigging from the Marco Polo TLP.

A multiplex electro-hydraulic system will be used to control and monitor the subsea wells from a Master Control Station (MCS) on the host platform. Horizontal subsea trees and wellheads are rated to 15,000 psi. The controls umbilical contains super duplex stainless steel tubes and electrical quad cables.

Design Challenges
INTEC Engineering has been performing complex design work to meet the following challenges:

  • The pipe-in-pipe installation will be a reel lay, and the SCRs will be installed using J-lay
  • The integration of the SCRs to the existing TLP with its limited access and allowances for hang-off weight combined with stress joint receptacles that have to be installed offshore
Scope of Services
  • Flowline Engineering and Fabrication Support
  • Flowline Equipment Design and Specifications, i.e., PLETs, ILTs, well and flowline jumpers
  • SCR Engineering and Fabrication Support
  • SCR Equipment Design and Specifications, i.e., stress joint, interface piping, transition to pipe-in-pipe flowlines
  • Subsea Control System Engineering and Systems Support
  • Control Umbilical Preliminary Design and Specification
  • Control Umbilical Installation Support
  • Materials and Welding Engineering and Fabrication Support
  • Survey Assistance
  • Construction and Installation, Support and Bid Preparation/Evaluation
  • Supply of Quality Surveillance throughout fabrication of hardware and pipe systems
  • Preparation of Pipeline Right-of-Way Permit documents
Project Status
The project is progressing as planned. Installation of the subsea facilities started in late October with the loadout and installation of 15 km of umbilical. In December 2004, the offshore work continued with the installation of the trees on the existing wellheads using the Q4000. In early 2005, some of the flowlines were installed using the installation vessel 'Deep Blue.' The jumpers and flying leads were installed later in February. The SCRs and remaining flowlines are planned for installation in April.
Back to the Future: Developing Reliability in the Implementation of New Deepwater
Some new clients' initial perception is that INTEC Engineering is a 'Concept' or 'Front-End Engineering' design house. In reality, INTEC and its highly experienced staff have been involved in all aspects of project development including the fabrication, installation and commissioning of a system. Our construction management and detailed design experience varies from BP's Gulf of Mexico installation of the Mardi Gras Transportation System to the 115 km direct subsea tie-back of Burullus Gas' Simian-Sapphire fields offshore Egypt. Recognizing what works in the field and placing it into a working framework is the method that we use to ensure the lessons learned return in the form of high quality concept and front-end design.

At the December 2004 meeting of the SUT in London, our Deepwater Connection Production Manager, Peter Hadfield, provided an inside look at developing reliability of the DMaC Connection System. Peter's unique perspective is derived from his active role in the beginning of Fuel Subsea Engineering's development team (1989) to the present, with over 750 connectors installed offshore west of Shetlands. The most formative years were from 1994 to 1996 during the BP Foinaven and Schiehallion projects.

Thanks to significant engineering and development testing over 5 years, the DMaC connection system was adopted for the BP Foinaven project in 1994. The engineering was sound, but the DMaC at that time was still perceived as unreliable. By 1996, the DMaC connector was adopted for Schiehallion, and it was now considered extremely reliable. How was the perception of the DMaC connection system changed in this relatively short period of time?

In order to answer this question, it first requires another question. What is Reliability for a subsea connection system? Reliability is achieved for a diverless subsea connector when:

  1. It is able to be integrated in the structure without problems.
  2. It passes its "mate-up" tests the first time.
  3. It is connected quickly and predictably.
  4. It works without intervention.
  5. It can be disconnected and reconnected.
Identifying the objectives for a reliability system is the first step to measure where you are versus where you want to be. The roadmap that takes you between these two points is captured in the following framework.

Engineering on the drawing board needs to be coupled with engineering following offshore experience. In spite of best efforts, there may be unforeseeable events. Early installations of the DMaC Connector faced jumper twists or calcification of the hub face that were not predictable in the initial design phases. Solving these unforeseen problems resulted in a step-change improvement in the system's performance. This is why the doers have to work side-by-side with the thinkers.

Improvements in engineering need to be communicated effectively up and down the supply chain. The original 1994 strategy for the DMaC supply chain was to procure completed assemblies and inspect on completion. By 1996, this was replaced by more integrated supply chain where there were inspections at every stage and final assembly was performed in-house. Natural sideeffects of more active involvement up and down the chain resulted in the following:

  • Selection of suppliers based on best value, not lowest cost
  • Constructive competition between suppliers was promoted
  • A small number of sub-subcontracts resulted in long-term partnerships based on personal relationships
  • Prompt payment and sustainable profit
  • Direct control of material movements were managed and all interfaces double checked
Significantly, investing time to correct problems and continually improving the supply chain resulted in lower costs and a significantly more reliable product.

Being present as an inspector in many stages of the supply chain is necessary but not sufficient. DMaC also owes its transformation due to the stewardship of the development, fabrication and installation teams. The DMaC team developed a group of multi-tasking individuals that understood their place in the chain as well as those stages both up and downstream. A flat hierarchy was promoted based on communication and not based on blame. Lessons learned sessions were regularly focused on how to meet the clients’ needs instead of how to protect your own.

This resulted in a highly motivated team that is better informed and more satisfied with their job. Satisfied employees are long-term employees. This helps retain specific knowledge that leads to reliably performing systems that give consistent client satisfaction. Lastly, this entire process is not able to breathe unless it is living in a healthy contractual environment. Foinaven was executed in a lump sum, unit rates contract that made it difficult to implement changes. Schiehallion was developed on a cost plus basis, which provided flexibility to adapt as appropriate to harness reliability benefits. The healthy contractual environment is a natural extension of the supply chain and stewardship relationship that existed between BP and ourselves. The client must also be integrated into our no-blame, communicative culture to reap the best value for the project.

The results of this process after Schiehallion speak clearly for themselves:

  • Over 324 connections made
  • 100% first time make-up
  • 10 hours deck-to-deck for each end
  • No quality problems reach the seabed
  • Procurement strategy changes resulted in 12% cost reduction
The truth and simplicity behind this framework shows that improvement requires change. Although change produces unknowns, these unknowns can be managed in the correct framework combining engineering, supply chain management, stewardship and the contractual environment. The final result is high reliability, reduced costs and client satisfaction.
A Note from the CEO
Quotes

Having been at INTEC now just over a year, I thought I would give our staff another window into my thinking. While I hope that most would by now have a good idea of what I believe to be important, I think that the more our own folks understand me, and vice versa, the better we can make INTEC. I decided that one expedient way of doing this was to share with them some of my favorite quotes. I love quotes because of the wit and wisdom required to pack a meaningful punch into a few words, a talent I definitely lack. The reservoir of knowledge and insight behind most quotes can embody whole books on philosophy and life.

The first quote I shared was "Good enough is the enemy of great" by Jim Collins, author of the books, Built to Last and Good to Great, both on what makes great companies great. In the interest of full disclosure, I added the word 'enough' for emphasis. I like this quote because it points to the easy way out to which most of us fall prey, rather than press on to the goal of greatness. For a company whose vision statement says we will be the first chosen for "the most challenging marine hydrocarbon development projects worldwide," can we strive for anything less than 'great?'

"The key to success is the constancy of purpose" by Benjamin Disraeli, a former British prime minister. I usually think of this quote in conjunction with another from an unlikely source, filmmaker Woody Allen. It is, "Ninety percent of life is showing up." For me maintaining a constant drumbeat to success begins with being present. It means never letting up and overcoming the cowardice that fatigue can bring, especially when tough choices must be made. Like the fine print in most

contests, 'must be present to win', life requires physical as well as mental commitment to achieve something.

The next quote I shared was "Consensus is the absence of leadership" by Margaret Thatcher, another former British prime minister. Some would have us to believe that if we can just all agree, then things will work out. However, I prefer another quote, "If everybody is thinking the same thing, then somebody is not thinking," by Benjamin Franklin. We must all dare to cut against the grain, at least occasionally, to make changes.

"Do or do not do, there is no try," by Yoda, that famous Star Wars philosopher. It is simple and powerful, make up your mind and let nothing deter you. Too often we only hope something can be accomplished rather than steeling ourselves to accomplish the end result and not being discouraged by the arduous path to get there.

Finally, on a philosophy of life that I would aspire to, "We make a living by what we get, we make a life by what we give." None other than Winston Churchill is attributed with this wise counsel. For me it applies just as strongly in the professional arena as in the personal. I see one of my primary responsibilities as providing others with all the tools, physical and mental, to achieve their goals. When those around you win, you win! We live and work in a world where the pie is big enough for everyone to have a slice.

These quotes, in a subtle way, assist me in maintaining my focus on success both at work and home. They are sign posts that help keep me "between the ditches." While I sometimes find the ideals they describe impossible to live up to, I know there is value just in the striving.

Johnny Reed
CEO

Russia: The Place To Be
"You cannot understand Russia with your mind. You can't measure it with universal dimensions. Russia has something special. In Russia you must simply believe." These simple words, written by the 19th-century Russian poet Fyodor Tyutchev, have reassured many a distressed Western soul seeking to comprehend Russia or Russians by "rational" criteria. Indeed, this enormous country with its complex, ancient history seems inordinately difficult for an outsider to understand by any means, rational or otherwise.

Russia is a miraculous country and still mysterious to many foreigners, with many cultural and historic treasures, unspoiled nature and industrious, bright and hospitable people. Russia mothered Peter and Catherine the Great, Dostoevsky, Tolstoy, Pushkin, Tchaikowsky, Nabokov, among others, who have contributed to the rich cultural heritage of the world.

Russia today is a nation of enormous diversity and tremendous energy. It is as if the cultural traditions of a century ago have re-awakened with a newfound strength: ancient cathedrals are being rebuilt and restored, colorful markets buzz with activity once again, and literature and the arts are quickly regaining the creative renown they enjoyed decades ago. A new Russia is now in full bloom. Russia is the largest country on earth, with enormous tracts of land that have been opened to travelers only in the last few years. With a population of more than 148.5 million in the early 1990s, Russia ranks sixth in the world after China, India, the United States, Brazil, and Indonesia. Of all the 15 former Soviet Union republics, Russia has the greatest ethnic diversity, with about 75 distinct nationalities. The most important cities on the European side are Moscow and St. Petersburg (formerly Leningrad). This is the heartland of Imperial Russia, and these great and ancient cities often become the focus for most tourists.

Moscow is one of the biggest cities in the world. The first tribes appeared on the territory of the future Moscow in the Neolithic epoch. The oldest settlements, dated three thousands years ago, were discovered within the area of the presentday city. The reference to Moscow, as to a town, is mentioned in the old manuscript of 1147. In 1156, Prince Yury Dolgoruky erected wood walls around Moscow. He is frequently regarded as a founder of Moscow, and his monument is among the most honored in Moscow.

The Tatar-Mongolian invasion in 1237-38 produced a great destruction of Moscow. However, Moscow recovered rather rapidly (in the second half of 13th century), and became the capital of the “independent” Moscow principality. Today Moscow occupies an area of 1,035 square kilometers. Moscow has more than 5,000 streets and the population is about 9 million people, plus more than three million tourists and guests coming annually. Moscow city is the barometer and nucleus of the changes sweeping through Russia. Nowhere are Russia's contrasts more apparent than here - ancient monasteries and ultra-modern monoliths stand side by side, and new Russian millionaires and poverty-stricken pensioners walk the same streets. The general public now prefers visiting the beautiful churches vandalized or abandoned during the Soviet era of hard line atheism that are lovingly now being restored. But the real flavor of this Moscow city is in its small nooks and crannies, each of them unique. Moscow city's origins, as a symbol of Russian spiritual and political power, go back 850 years. They reflect Russia's state of instability in its day-to-day life, and when the winds of change start blowing, they blow through Moscow first. Moscow city holds in the Russian imagination a symbol of spiritual and political power. Throughout much of its history the city was known as Holy Moscow and considered by Russians to be the "Third Rome" after Ancient Rome and Constantinople.

The spring and fall in Moscow are usually rather mild. Summers are hot! The average summer temperatures are around 70-80 deg F. (20-30 °C). If you come in the summer you'll be surprised at how warm Moscow can be.

I can't help mentioning the Russian cuisine. Needless to say that Russian food is one of the world's most original and I would even say great cuisines. Just a few years ago traveling in Russia meant facing shamefully unappetizing hotel meals masquerading as authentic national fare, but today the secrets of great Russian cuisine are being rediscovered. And what better introduction to Russian culture could there be than a steaming dish of beef pelmeni (dumplings) alongside a mound of black caviar, or a piping-hot bowl of borsch, with onions glimmering in a deep purple broth, or breaded kotlety po-tsarsky lathered with a rich brown sauce, or the fantastical "bird's milk" torte. Yes, Russian cuisine is built on starches and creams, but it is also, when prepared properly, replete with fresh vegetables, fresh fish, copious amounts of healthy herbs and garlic, and, possibly, some of the best mushrooms you may ever taste.

Russia is important to world energy markets because it holds the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest oil reserves. Russia is also the world's largest exporter of natural gas, the second largest oil exporter, and the third largest energy consumer. By the end of the 20th century, the available onshore oil and gas resources were almost depleted. That is why the oil and gas activity is shifted to the offshore resources, first off the continental shelf. The Russian shelf is the largest in the world, 85% of which is located in the Arctic sector. The oil and gas resources off the continental shelf of Russian Arctic Seas are the main reserve of the stable domestic oil and gas industry development in the 21st century. Realizing the strategic needs in the energy resources of the shelf, the Russian Government and oil and gas companies have undertaken active efforts to start offshore fields development.

The grave events of Sept. 11 have emphasized Russia's potential role as a new alternative source of massive oil supplies that are politically more reliable than those from the volatile Middle East. Noticeably, Russian oil companies are getting ambitious - they would like to take as much as a 15 percent market share of the U.S. oil market.

INTEC has established very good contacts in Russia in the Russian oil and gas sector. We have been fortunate to be a part of some of the most challenging projects such as the Russia-Turkey gas pipeline (Blue Stream) that set deepwater pipelay records at 6,900 feet, unparalleled in the world. Another project INTEC is working on now with the Russian gas giant GazProm is the North European Gas Pipeline (NEGP), which brings me to Moscow as INTEC’s project manager for NEGP.

NEGP creates principally new routes for Russian gas exports to Europe. Project implementation will allow diversifying gas export flows to directly connect the gas network of Russia with the countries of the Baltic region and with the European gas grid. NEGP is featured with avoidance of transit states along its route. It decreases sovereign risks and costs of gas transmission and at the same time enhances reliability of gas export supplies. NEGP will run under the waters of the Baltic Sea from Vyborg to the coast of Germany (in the vicinity of the town of Greiswald). NEGP will deliver gas to consumers in Germany, to Great Britain and other countries. Some other projects such as Shtokman (huge offshore Arctic field development), and Bydoratskaya Bay (challenging Arctic pipeline), and Jubga-Sochy (offshore Black Sea pipeline) offer exciting future challenges.

Finally, as mysterious and challenging as it is and with all of its business opportunities, Moscow/Russia is definitely the place to be.

Lanny Waguespack Joins INTEC
Lanny Waguespack joined INTEC as Vice President for LNG Engineering Services - effective 17 January 2005. In this capacity, he reports to Chris Tam and assumes the prime mission of further establishing INTEC within the LNG energy market with the immediate goal of continuation of the group development efforts.

Lanny's role will encompass four objectives.

  • Develop and lead a highly focused team of engineers in gaining workload for strategic LNG projects in North America.
  • Build on our relationship with existing and new clients by working at the top levels and providing early strategic assistance.
  • Leverage our existing technology by working with our current stakeholders in pipelines, terminals, floating systems, subsea and technology groups.
  • Provide direction and serve as point man for selective future LNG-related projects outside of North America.
Lanny's career spans more than 30 years in the midstream oil and gas business. He has held leadership positions in operations, engineering, business development and transaction management involving LNG project development, gas and oil gathering, processing, treating, and transmission. He also has extensive experience with gas marketing and power generation. He was most recently Vice President, Midstream Projects at Randall & Dewey.

The strength of INTEC is highly vested in our ability to maintain leadership in technically challenging frontier projects. We are confident that LNG offers considerable opportunity, and we are equally confident that Lanny's entrepreneurial leadership will bring success to this initiative.

Offshore Training at the Technical University of Clausthal
INTEC Engineering values personal development in all of its areas of operation. The only way for INTEC to provide high caliber engineering is to continue to ensure that the industry has a healthy supply of qualified engineers who have sampled the offshore experience. On January 28, 2005, our Manager of Operations in Delft provided a lecture to the students of the Technical University Clausthal regarding 'Deepwater Pipeline and Subsea Design'. Mr. Tucker's course started with an overview of the design process and the relevance of flow assurance in systems engineering. The second portion of the lecture delved further into the 'nuts & bolts' of pipeline design and subsea hardware. The course focused primarily on key topics facing the industry today and what would be expected from the engineers of tomorrow.
Safety Moment
At one of our project meetings, this picture was shown during the safety moment. The obvious irony of the beaver caught underneath his own handiwork drew some chuckles, including mine. Underneath the humor, however, is a deadly serious message.

Many accidents happen when we are in our comfort zones, when our actions or reactions have become second nature as part of a lifelong routine or training regimen.

When we are too comfortable with our environment and are cruising on autopilot, accidents happen. A single unexpected upset in this environment can be disastrous. For that same reason, most car accidents happen within five miles of home.

Please don't let your comfort zone get the better of you.

Employee of the Quarter
Danilo de Hollanda Fernandes
Danilo de Hollanda Fernandes has a Masters degree in Civil Engineering from the Federal University of Rio de Janeiro (COPPE/UFRJ). His thesis research was on steel structures under elevated temperatures.

Currently, Danilo is studying his Doctorate degree in COPPE/UFRJ in offshore structures. His research consists of a free span pipeline analysis, a computer program software that specifically, carries a dynamic and fatigue analysis of pipelines for offshore applications.

Danilo joined INTEC do Brasil in April 2004 as a project engineer and has done several analyses including free span, buckling, hydrodynamic stability, offshore installation, route analysis for pipelines, and steel structure design.

He is also an instructor in Veiga de Almeida University, teaching dynamic analysis and steel structure design.

Danilo enjoys sports, including running and climbing. In 2003, he ran the half Marathon of Rio de Janeiro (21 km) and recently the Sao Sebastiao run (10 km). He and Luciano Franco, both project engineers at INTEC, have climbed several mountains in Rio, including Sugar Loaf and Corcovado mountains.

Since last year, Danilo has dedicated part of his time to studying philosophy. He is always buying books, mainly about engineering. Today, his personal library includes over 250 books.

Danilo and his fiancee plan to be married in 2007.

INTEC at Offshore West Africa
INTEC participated in the Offshore West Africa Conference in Abuja in March. This growing forum included over 1100 delegates. Participating from INTEC were Graham Taylor, Engineering Manager from our EAME office, and Jim Osborn, head of business development for North America.

Key topics were planning for the increasing requirements for local content in Nigeria and identifying new opportunities in the ultradeep waters in the Joint Development Zone between Nigeria and Sao Tome and Principe.

Quality Corner
Having just successfully completed our 3rd periodic audit, the Houston office has learned a few things from the experience. In DNV's drive to distinguish itself from other certifying agencies, it has added an aspect to its audit philosophy. DNV clients will have an opportunity to identify additional audit criteria for upcoming audits. DNV describes "Risk Based Certification" auditing as a method for us, their clients, to:
  • Focus on what is important to us,
  • Tailor the audits to our challenges,
  • Increase knowledge of our management system's ability to meet business goals, and
  • Build our own path towards business improvement
We will be able to do this by communicating issues/actions that we've identified as important to DNV for inclusion on their audit checklist. Then at the next periodic audit, they'll review our intended actions against progress and tell us how we are doing. They will also give us the benefit of their experience in the area and tips on implementation. All this at no additional cost or increased time.

This information is just a short summary of the program. I urge you to contact your DNV representative for a more thorough explanation.

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