Claus Myllerup, Alistair Jones and Chris Chung, Partners, Lloyd’s Register Singapore
Three heads from the organisation’s Singapore office, Claus Myllerup, Alistair Jones and Chris Chung, discuss the business in the region, its oil and gas developments and how its new structure and Global Technology Center in Singapore will serve the future of oil and gas.
On business in Asia
Will Asia continue to be an industry force?
Claus Myllerup (CM): Yes, undoubtedly. There are major regional projects on the horizon as well as a range of ongoing oil and gas activities, fueled by ever-increasing energy demands. With its relatively shallow waters, Asia will become one of the largest investors in offshore fixed platforms, and China and Malaysia will dominate demand. In total, fixed platforms will account for more than 70 percent of the region’s total platform CAPEX. In addition, over the next five years South East Asia could see the development of three FLNG projects, located in Indonesia and Malaysia. In terms of the pipeline sector, CAPEX is forecasted to increase by 35 percent over the next five years, with India and Malaysia investing heavily in offshore pipelines. National Oil Companies will continue to be the main focus of investment in the region, with International Oil Companies following closely behind.
Why is Asia important to your global operations?
CM: Looking at our inspection services alone, the region is absolutely key. This is due to the magnitude of fabrication taking place in Asia for the global offshore industry, from both the perspective of drilling structures and individual components. We have five separate service lines within LR Energy: Inspection, Compliance, Asset Integrity, Drilling and Consultancy.
Alastair Jones (AJ): In the case of drilling inspections, Singapore is especially important. The country leads the world in terms of the number of jack-up rig constructions; a position it has held for several years. Some 70 percent of the world’s self-elevating units are made in Singapore. Our acquisition of ModuSpec in 2008 has placed us in a leading position as specialist providers of drilling rig inspections.
CM: In Singapore, we are also heavily represented when it comes to traditional marine classification activities, which encompass floating offshore installations. From our Kuala Lumpur hub, we provide a number of valuable asset integrity services to the region, especially in Malaysia given the number of offshore operators based there. These services assess the condition of physical assets to present reliable input on their safety, reliability and operating performance. We also support our clients in the region with consultancy services, helping them to best meet industry safety regulations and standards. China and South Korea continue to be at the core of this type of work.
What are your broader regional ambitions?
CM: Our mission globally is to help energy companies to operate with confidence and tackle the industry’s ever growing technical, regulatory, commercial and environmental demand, which is why we acquired ModuSpec in 2008. For over 25 years, ModuSpec has been one of the world’s premier drilling industry inspection and training companies. In Singapore, the ModuSpec local office was founded some 23 years ago and has continued to excel in increasing safety awareness, and pioneering best practices around the Asia Pacific area.
In 2012, we acquired Houston-based, well control specialist WEST Engineering Services (WEST) to further enhance our drilling industry services portfolio globally. This acquisition resulted in the merger of ModuSpec and WEST into Lloyd’s Register Energy, Drilling (LRED). This new business line already has a Singapore branch with more than 100 employees serving operators and key stakeholders local to the area, which is an important strategic focus for us.
Furthermore, with our latest investment announced in September 2013 in subsurface and well engineering specialists, Senergy, we are further improving our total offer to industry with a comprehensive portfolio of services to the upstream sectors of exploration, production and transportation through to refinery and beyond. With extensive experience in the fields of well control and drilling equipment surveys, commissioning and assessments, we continue to support clients across the Asia region, helping operators save time and money by improving the reliability, safety and environmental impacts of their drilling program.
A key priority for Lloyd’s Register is supporting Asian equipment providers and oil and gas operators to raise standards in a commercially viable way, in an industry where regulatory attitudes are disparate. Look around the world and you will see that the approach ranges from a desire to know in detail the activities of certifying agencies, and receive extensive documentation associated with this, to one where only the final operator has any contact with the regulator, and documentation is kept to a minimum. To compound matters, recent accidents continue to change the shape of the legislative landscape. Some governments are implementing more stringent regulatory regimes to better protect oil and gas industry workers; others leave operators to prevent all types of accidents using their own safety-case methods. With no consistent approach internationally, operators are required to tailor all aspects of their safety system approach to the regime in which they operate.
We know we can make a positive difference in these important areas because of our long-term experience in the North Sea, where players have been at the forefront of safety. For suppliers, when we perform advanced fire simulations on oil and gas assets in the North Sea, for example, we transfer our knowledge to Asian projects. That is important for a couple of reasons. First, structures built in Asia might be heading for North Sea operations. Second, we know manufacturers based in the region will not accept being second best when it comes to quality.
For operators it is important that, from an early stage, they fully understand the regulators’ perspectives and expectations and establish the most advantageous relationship to minimize any issues. We can help here as a proactive certifying agency that is involved in-depth not just with governance, but quality systems, asset integrity, consultancy and project management. Across all of our business units, we see a bright mutual future in supporting the region’s needs and ambitions to meet the industry’s increasing challenges.
On oil and gas developments
How has the Macondo blowout changed the world of classification?
CM: The classification business has always been inextricably linked to the way legislation develops. The US regulatory landscape following Macondo is clearly different than before the incident and that has implications for classification. At face value, the legislative changes can be seen as advantageous for class societies; we are being asked to take a more detailed look at assets, processes and operations to meet stricter demands. This is not just in the US. There has been a domino effect across the international arena. But these changes need to go beyond traditional notions of classification.
A key factor in typical well blowouts is the lack of operational feedback or, rather, an inefficient translation of data into useful information. In a decision-intensive environment, it is crucial that personnel are presented with easily discernible information. For Lloyd’s Register, we have for many years taken decision-support technologies that lead risk management in the nuclear industry, and translated them for use in the oil and gas business. As the technical, regulatory and environmental challenges heighten, we see the ability to be able to draw on cross-industry competencies and technologies as essential. Societies such as ours can put their joined-up expertise to real, practical use, addressing pressing safety issues, such as our recent innovation in a software tool that enables operators of oil drilling units to make much better and faster decisions on whether a blowout preventer should be pulled from its sea bed operation to the surface for inspection, or if it is safe to continue its operation without inspection. This dynamic software is already proving that technology integrated with human decision making is saving operators millions of pounds in downtime and reducing the risk of incident.
Today’s projects are increasingly complex. How do you best serve an industry whose supply chain stretches across the globe?
CM: Answering that question was the motivating factor behind our organization’s restructure over the past year. We have evolved our portfolio of services to one that is globally uniform. This approach was initiated by our floating offshore installation unit, which highlighted that to best service client projects, it needed to provide consistency of support across every major oil hub. A global philosophy now applies across all of our business units. Our Global Technology Centre (GTC) in Singapore will also play a pivotal role [see later].
From your perspective, what are the crucial elements for a successful project?
AJ: Project management frameworks will become increasingly critical as we see the emergence of mega projects, which are often pioneering in their nature. The world’s first Floating Liquefied Natural Gas (FLNG) unit is a recent case in point. This project involved a myriad of activities across the globe with different contracting strategies, and engineering works and material sourcing taking place in various locations. Our experience in the industry, which we acquired over decades, and global reach put us in a strong position to support groundbreaking projects such as this one. Throughout our history, we have demonstrated that we can help clients handle the complexities of pioneering projects and innovate accordingly, from supporting the world’s first FPSO (Floating Production Storage and Offloading) and disconnectable FPSO to the first FLNG unit. In May 2013, our drilling assurance business in Singapore was presented with the award for ‘Most Honoured Drilling Services Provider’ at the Deepwater China Convention in Shenzhen. The accolade was the result of votes received from leading Chinese oil and gas companies, including operators, equipment manufacturers and construction yards.
CM: For a project to be successful, it is imperative that we have an in-depth understanding of what makes a client successful. In short, what are our clients’ true expectations? Lloyd’s Register is present across the supply chain, so one way that we can contribute to project success is by passing this understanding onto suppliers, enabling them to get it right the first time and avoid unnecessary cost and time delays. A simple example highlights the value of this approach. A newly assigned supplier in, say, China might not understand why they need to contract a surveyor to issue a quality certificate, with costly implications later down the line for the client. However, if every supplier knows their role in the complete project, these issues can be avoided. People really do make the difference.
On the Global Technology Center
Why did you base your second Global Technology Center (GTC) in Singapore?
Chris Chung (CC): Our GTC in Southampton focuses on the marine industry; in Singapore our efforts are directed at the energy sector. Our key objective here is to help clients introduce new or improved technologies into their markets in a safe and reliable manner.
For us, Singapore was an obvious destination for a centre of technical excellence. It is in Asia for a start, a region that is among the fastest growing across the energy supply chain. Singapore also dominates offshore structure construction. To this, add that Singapore is a diverse mix of cultures, languages and capabilities, which complements the GTC’s multi-disciplinary nature. Tomorrow’s technological answers will arrive in the shape of highly complex systems. We must adopt an interdisciplinary research approach today and Singapore is the ideal location to bring all of the necessary elements together.
A year on, how is the GTC performing?
CM: Although still in its infancy, the GTC has exceeded every expectation in terms of attracting the right people and building a model team. This is encouraging in an industry where demand for talent outstrips supply. We put such success down to being able to tell the GTC story and communicate our objectives, which has led to some of the industry’s best people joining us to contribute and make a difference to the industry.
The team is already delivering results. GTC contributed significantly towards publishing our organization’s latest Offshore Rules (which include Floating Offshore Installations at a Fixed Location and the Mobile Offshore Unit rule sets), notably around drilling unit structures from a safety and operational viewpoint. We are currently developing some interesting subsea unit concepts, focusing on how best to monitor performance and interpret these results. And we are working alongside A*Star and a number of universities to provide insights for the very large hydrodynamic test facility that is being built in Singapore. For a technology center that is just a year old, we are very proud of our achievements to date, but watch this space. More activities are planned and we will continue to publish research as soon as it is completed.
CC: The GTC is undoubtedly heading in the right direction, at speed. Increasingly, we are attracting the attention of the research world as well as the industry. Not only have we formed great relationships with Singaporean universities and research organizations, but also with their Chinese, Indonesian and Malaysian counterparts, among others. This robust research network will enable us to exchange ideas and champion new game-changing research.
Alongside the GTC’s objective to advance technical innovation, are you exploring other research avenues?
CM: Improving safety is at the core of what we do and that means addressing new areas that are intertwined with technical developments. For instance, we are currently looking at the benefits of expanding into the ‘soft sciences’. Given the importance of the human factor in operations, social science may well improve our understanding of how people work and interact in noisy, sensory environments. It may also suggest ways to make learning more efficient and effective in live operations.
What will the GTC deliver next?
CC: This October, we launched the Lloyd’s Register Training Center, which is being led by our drilling business and offers an extensive range of staff development capabilities. This training will be supported by GTC’s advanced industry research. Another key differentiator is that our training activities will extend beyond the classroom to operational settings, helping personnel work smarter in their everyday environments.
What does the GTC mean for the future?
CM: An important facet is investing in the right talent now to tackle tomorrow’s projects as effectively as possible. Our people have always made our business and we want this to continue, in pace with innovation, industry challenges and client needs. To our existing pool of talent, the GTC will deliver a new breed of technical expert: researchers who can apply the latest scientific technologies to support energy projects and approach and analyze oil and gas challenges from a scientific standpoint. This is a unique approach and we hope that this innovative investment in people and their development will catch on across the industry.