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Interview

with Olivier Chapuis, Director and Engineering Manager, Moonpool Consultants

24.06.2010 / Energyboardroom

Can you give our readers a brief review of the reasons that drove you to set up your own company after a career with larger players in the industry?

With a background in naval architecture, I started my career at Schlumberger’s Sedco Forex subsidiary. When Sedco Forex was spun off and merged with the biggest competitor Transocean Drilling back in 2000, significant reorganization took place including a relocation of the headquarters to Houston. I then had the choice to either go there or participate in a project in Singapore as a consultant. Together with a colleague that became the co-founder of Moonpool, I initially came for a project of seven months to help construct a drilling swamp barge for Total in Indonesia. Two other projects followed afterwards and we quickly identified the need for a small company serving small drilling companies that have a range of two to ten drilling vessels. These smaller players do not have the resources to manage a complete inhouse engineering department like the large companies. The first contract for Moonpool Consultants was with PT Apexindo for the delivery of a jack up rig. This was a major project spanning over 4 years and taking up all of the company’s time. Moonpool provided a complete team to cover the whole project, from the engineering phase until the physical delivery of the drilling platform. The project was a great success with a satisfied customer.

What is your competitive edge?

The key advantage for Moonpool is the fact that the company has its roots in the operations side of the industry, i.e. the drilling side rather than the shipyard segment. This comprehensive view allows the company to identify the clients’ needs and serve them throughout the whole process. Larger companies such as Transocean are not the main target of Moonpool Consultants , but the company effectuated projects for them because they were either short of personnel or because the projects were very small. Moonpool wants to help the smaller players. Since the beginning of the new construction cycle in 2002, there were new drilling companies setting up worldwide. However, not all have the technical expertise inhouse and can thus rely on Moonpool to fill the void.

To what extent is the company oriented towards international projects?

The drilling industry is international by nature. Obviously, no one is drilling in Singaporean waters but the country is good at building rigs. Together with Korea it is the best place in the world for construction. Moonpool needs to be close to where the construction takes place. In the last five years, there were many orders for new platforms. The original players such as Sembcorp Marine and Keppel soon had too much work on their hands. As a result, many other small companies were established in Batam and other places in the region. Then in 2008, the market came down strongly and few orders came through. Moonpool strongly believes that the players that were already performing well before the upturn of 2002 are the ones that will have a better chance to stay.

With Asia leading the global recovery and Singapore growing 15% in the first quarter of 2010, how do you take advantage of this upward potential?

Again, due to the international nature of the industry, this does not make a lot of difference to Moonpool Consultants. Even if Singapore progresses well, two significant issues arose rather recently. At first, there was the credit crunch which hit moonpool very hard. We were in the middle of a big project for Swiber Pacific, a company that has very strong growth ambitions here in the region and aims to enter different markets, in this case the drilling niche. The big difference with their other activities is the higher capital expenditures, considering the fact that the cheapest design easily amounts to 300 million USD. When you compare this to a pipelaying barge, it is a big step from construction services into the drilling industry. Nevertheless, Swiber was very enthusiastic until the crisis hit in August 2008. The project was first put on hold and then postponed. For a small player like Moonpool Consultants, this was a big hit. To fill the void, the company then started working for repair and modification of existing vessels for companies such as Transocean and Songa Offshore. In addition, a new drillship has been developed inhouse. This design became Moonpool’s first solution to attract new companies in the drilling market that are generally limited in terms of financial resources. The world’s biggest shipyards like Samsung Heavy Industries, DSME and Hyunday Heavy Industries are building very large and very sophisticated drillships which can cost up to 700 million USD. Moonpool’s vision is to make solutions half the price that keep around 80% of the capacity. For many smaller drilling companies that just have some jackups and want to move into deepwater drilling, these solutions offer a good first step. Apart from the crisis, a second significant fact affected the company when the Deepwater Horizon disaster occured. Prior to this event, Moonpool had received rather positive feedback on the new inhouse design and different parties were interested. However, if you now talk to people about deepwater drilling, they will be very careful in taking any decisions. Moonpool will therefore likely need one more year to implement its new solution in the market. Regulations for BOPs will change, and many parties in the industry are waiting for these regulations to come through before making any new decisions.

With a lot of regional low-cost competition, how can Moonpool Consultants profile itself as a cost-conscious solutions provider in the region?

Moonpool Consultants takes care of the basic design. If we look at the construction, cost advantages can easily be found in neighbouring countries. Moonpool focuses on high-level design that is usually done with limited high-skilled manpower. For such activities, Singapore is a good home base. For large drilling ships, maybe half of the price comes from the equipment used within. This equipment is sourced from the USA, Norway, Germany and so on. An increasing amount of equipment is also being produced in China, but this is mainly still for shallow water solutions. To conclude, there is no point of going into a country with a much cheaper workforce if you have to give in on quality.

If we talk about quality, we also talk about HSE-Q standards. How has your previous experience with the large players in the industry contributed to Moonpool Consultants’ ambition to raise the standards in the industry?

It are in fact the large oil companies that define the rules of the game and impose their standards on the next level of contractors. That level then imposes its standards on the shipyards. You cannot work in this business if you do not follow these safety and quality standards and procedures. Moonpool Consultants takes this very carefully into account and is very aware of the need to have safety as a key priority.

Is there a way for Moonpool Consultants to be ahead of competition in terms of standards and anticipate on future regulation?

In terms of design, you keep everything what can go wrong in mind. As an engineer, you want to imagine what the people onboard will really feel and how they will better be able to escape when needed. The International Maritime Organization (IMO) and the Classification Society ask you a full list of things to do. But it is not because you have the rule that the execution will be done properly. At the end, everything needs to work in practice and be implemented properly. I am therefore curious to see what possible changes in regulation can take place after the accident with the Deepwater Horizon.

Besides engineering, you also offer onsite supervision. How does this play a role?

Onsite supervision is supervision during the construction or modification phases. When we follow up on the work on the platform, we have our team there all the time. This is the way Moonpool does it. The company wants to be there and see how things are done. Even though you made a nice design, being physically present can already be a door opener to identifying potential improvements of aspects that work less in practice than they do on paper. In this way, every platform is being delivered exactly the way Moonpool intended.

Some companies just take care of the engineering stage and never put their people on the field. Moonpool needs to have this operational feedback to maintain an open view with practical implications. You have to be able to justify your technical decisions. This is also important for new engineers as this is business you cannot learn in school. Graduates may be very well educated, but they need to be put on the field to understand the reality.

What is Moonpool’s dreamproject?

The so-called tropical driller, the inhouse project we developed as a cost-efficient solution for the market. This is our own work and own design that we would like to realize. It is nice to build other companies’ designs, but it is much more rewarding to be able to deliver projects that were entirely designed by Moonpool Consultants.

What are your personal ambitions within the company for the coming three to five years?

I always liked the technical side of the business and do not want to grow too big. Moonpool wants to keep control of its projects and deliver high quality work, rather than working on many projects at the same time. It is much harder to oversee a large group of people. Moonpool would much rather focus on more challenging and technically advanced solutions.

If you can send one last message to the readers of Oil and Gas Financial Journal, what would it be?

There has been a trend of making everything bigger and bigger in the drilling industry. Now we came at a point where the drillships and semisubs of the last generation became huge and very complex machines. This makes them very difficult to maintain and to operate. I would like to see that people become more reasonable with regards to the size of the vessels and the quantity of equipment. The philosophy we are trying to promote is that drilling rigs shall be designed around the following key principles: easy to operate, easy to maintain, as simple as possible but with modern technology, comfortable and safe life on board, innovation but costs under control.

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