Hugo Heerema – CEO, Bluewater – Netherlands
Hugo Heerema, President and CEO of Bluewater Energy Services, discusses the company’s role as a developer of technology in extreme conditions that are pushing the boundaries of both the FPSO and single point mooring systems markets.
Bluewater’s vision is to be globally recognized in the energy sector as an independent, world-class provider of innovative, solid technologies and reliable and safe services. In today’s uneasy market, how is Bluewater strengthening this mission?
Aside from our competencies in the development, operation, and lease of FPSOs, I attribute Bluewater’s strong market position to the company’s innovative capabilities in single point mooring systems (SPM). In this space, our products range from relatively small, but tailor-made catenary anchor leg mooring (CALM) systems for unloading and offloading terminals to integrated turrets in large, offshore vessels. Turnover wise, our SPM projects are valued anywhere from 10 million USD to 800 million USD—a wide band that encompasses the full range of Bluewater’s continuously innovative capacities. For example, based upon the same type of tower we built for Sakhalin back in 2005, we’re almost ready to launch a new loading tower that incorporates Arctic proof technologies, allowing for effective loading of onshore oil onto shuttle tankers that navigate through icy waters ten months of the year. This is the just one example of how Bluewater is pushing the boundaries on novel technologies and staying competitive in the marketplace.
The specialized nature of the services we offer in single point mooring systems and FPSOs, in addition to long-term contractual obligations, with minimum guarantee periods, have allowed us to more or less neutralize the effects of short-term demand fluctuations. That being said however, without an adequate backlog, we typically find ourselves more vulnerable towards the end of a contract lifetime and focus all our efforts on securing redeployment as soon as possible.
What makes Bluewater a worldwide specialist of large complex Turret Mooring Systems?
We have always been a specialist on single point mooring systems. Up until the late 1990’s, we have consistently supplied some ten large turrets to many of the leading NOCs and IOCs across multiple regions such as South America and the North Sea. But with an increasing level of competition in the industry over the years, Bluewater has made significant investments in R&D to distinguish our products and services, and ultimately brand us as the leading innovators in the market. At this moment Bluewater is turnkey supplying two very large turret mooring systems to Saipem for Total Angola’s Kaombo FPSOs. Our efforts have not only focused on developing technology on the back of a project, but also individualizing our specialties to bring some truly unique patents to the market, whether it’s in the areas of LNG loading and offloading systems or floating production and storage facilities.
How does Bluewater differentiate itself from the competition?
Compared to our peers, we have extensive experience operating FPSOs in dynamic positioning mode (DP). We’re actually now close to signing a contract in Mexico, where our FPSO will be operating on a 10-year basis with production activities spanning 20 different wells, averaging half a year stay per well. In these cases where installing mooring systems for multiple half year productions incurs massive capitalized costs, DP serves as the more cost-efficient and economical method for production. We’ve applied DP in places such as China where turbulent weather conditions from typhoons often force our vessels to relocate to calmer areas on a moments notice. In the same variation, Bluewater’s disconnectable turrets also allow for more mobility in temporarily circumventing volatile weather forecasts and then subsequently resuming operations at a later time. Or to economically mob and demob from the production location should modifications to the vessel be needed e.g. in case of a tie-in of another reservoir. Collectively, our specialized products are specifically tailored for specialized circumstances and allow for the utmost operational flexibility, regardless of geographic regions.
Given your extensive history in this industry, how has the FPSO market evolved over the years?
Companies have traditionally leased FPSOs to develop marginal fields. However, over the years, FPSOs have gradually evolved into a full development alternative to fixed platforms, especially for deeper and more remote waters. Today, FPSOs are regularly being used in water depths from 500 meters to 3 kilometers. Bluewater is experienced in operating in harsh environments and in areas with stringent regulatory requirements. We are not operating at the very low end of the market anymore, where there are no technological challenges and less safety and redundancy requirements. Asia and Africa, which have traditionally sat in the lower ends of the market, now encompass the same level of quality, capabilities, and regulatory requirements as tighter jurisdictions such as the UK or Norway, certainly when the international oil companies are involved.
Bruno Chabas told us that SBM Offshore was leading the charge in bringing down delivery times and increasing standardization in the FPSO market. Will Bluewater accept SBM leading this initiative or do you also have a contribution to make the sector more efficient?
Currently, there is no industry-wide coordinated effort in increasing standardization, as all oil companies have their own agendas, technical capabilities, and philosophies. Standardization does make sense from an efficiency perspective when you’re dealing with the same client year over year, such as was the case with SBM Offshore. When Petrobras served as a flagship client, they were able to build FPSOs purposed for comparable oil fields with the similar environmental conditions for over 15 years. However, if you develop a FPSO in the West of Shetland for the UK Regime or an FPSO for Pemex in the Mexican Gulf, there’s simply no way you can manufacture generic type vessels fit for purpose in such dynamic environments.
Bluewater has a blame-free reporting culture, based on the philosophy that while an individual can make mistakes, your management systems should radically reduce the probability. How has such an open environment promoted safer operations around the globe?
Our safety record is not strictly a result of our blame-free culture. There is no excuse for repeatedly making the same mistake, as there is simply no justification for a lack of attention. It’s more the open and honest reporting of incidents associated with a blame-free culture that has evidently elevated our safety initiatives and performance. Furthermore, root cause analysis is performed on every high-potential event, heavily evaluated, and then factored into the design of our FPSOs and into our safety management systems. For us, safety is not incidental, but an integral part of our day-to-day operations. Bluewater boasts centralized corporate and operational support, while tailoring maintenance philosophies to localized circumstances. A vessel in East Timor, for instance, is operated with the same level of excellence in health, safety, environment, and quality (HSEQ), as in the UK. We have defined our safety initiatives as a function of unity, rather than a standalone culture, and it has proven quite successful for us so far.
BlueTEC is a game changing concept in the tidal energy industry that reduces the cost and risks associated with tidal energy projects. How has this project poised the company to expand its presence in the renewable energy sector?
Considering Bluewater’s in-depth capabilities in mooring systems and floating behavior, we set out to develop tidal energy through BlueTEC. Combining the expertise of several other Dutch companies in the maritime and more specific offshore industries such as Van Oord, Damen, and Tocardo, we are now installing the first-ever BlueTEC platform in Texel. More than just a floating tidal energy platform, this joint project represents a consortium of Dutch companies that are committed to developing clean and sustainable energy through cost-efficient alternatives. The real intention of course is to make tidal energy competitively cheaper than offshore wind, with a less heavy presence of government subsidies than is the case with the multitude of Dutch offshore wind farms in the North Sea. The idea of innovating upon the operational and durable capacities of current renewable technologies, especially in terms of cost efficiency, was the challenge we initially set out to overcome with BlueTEC. I believe we’ve succeeded in that respect, but the technology still has a long way to go before it gets to the point of scalability.
As Bluewater’s leader since the early 1990s, what changes do you still have left to implement and where do you hope to see Bluewater in the next five years?
Our strategy moving forward will focus on organic, but careful growth. In my opinion, the FPSO business has seen an influx of capital, but lack of knowhow and experience in recent years—constituting the large volume of failures and takeovers. We tend to forget that some companies have become large through acquisitions. This industry has been taking a lot of risks whether it’s overly optimistic redeployment forecasts, capital-intensive investments, and minimal contract terms that contribute to a lack of financial security. Streamlining operations and optimizing cost-efficiencies will help weather adverse conditions, but only a healthy industry can make the move to the future. As an industry, we need to focus on more coalition building to integrate best practices across the board.
When you took over the company in the 1990’s you were looking to conquer the North Sea. To this end, what’s keeping you motivated now?
I’ve grown up alongside oil and gas with family discussions centered on the subject, and I entered the industry myself back in 1979. My hope was and is to position Bluewater as the leading developer and provider of specialized technology tailored to extreme environmental conditions. With technically competent staff across various fields, we’ve been able to bring some truly innovative products to the market, and I look forward to further providing our clients with same ingenuity that they’ve come to expect in the years to come.