KBR, long a dominant player in regions like the North Sea, has cast its offshore gaze around the world, looking to expand its geographical presence, its offerings and the way in which it delivers on its projects. Jennifer Pallanich hears about the company's oil & gas growth strategy.
KBR aims to double its oil and gas business by 2012; last year, the firm's oil & gas revenues tallied at $582 million. The firm has devised a three-point plan: increase geographical presence; increase technical services offerings; and change the way the company delivers those projects.
Oil & gas division president Roy Oelking, who joined KBR nearly two years ago, is charged with delivering an increased workload. One way he's working to expand KBR's geographical footprint is by helping the company re-enter the 'huge' Gulf of Mexico market. 'If you want to emerge as a major player in the oil & gas business, you've got to be in the Gulf of Mexico,' he says. It helps that the Gulf is in KBR's backyard.
The company's efforts to win work in the Gulf are starting to bear fruit, with the wins of the hull FEED for the Jack/ St Malo development and the November 2009 announcement that it had won the topsides FEED for the Big Foot field, both Chevron projects in the deepwater Gulf of Mexico.
That's a big stride for a company that, as Oelking puts it, two years ago 'wouldn't have been on a bid list' for those projects. 'The Gulf of Mexico is going to produce another wave of even deeper water facilities,' says Oelking, whose career spans 36 years with McDermott and WorleyParsons.
Rebel LeBoeuf, VP of project management for Americas for the oil & gas division, says the goal is to re-establish KBR as a premier provider of upstream oil & gas engineering and procurement services. Right now, his team is working on the FEEDs for the two Chevron Gulf of Mexico projects.
The Big Foot field, located in Walker Ridge block 29 in 5600ft of water, is expected to be developed with a dry-tree floating drilling and production facility using an extended TLP. FloaTEC is handling the hull FEED.
'It has one of the largest drilling rigs that has ever been put on a floating facility to date,' LaBoeuf says.
The Big Foot topside oil and gas processing facilities in 5300ft water depth would include inlet separation, gas compression, dehydration and export, oil treatment and export pumping, produced water treatment, and required utility systems. Water injection facilities would be provided with the initial facility installation to enable reservoir pressure maintenance early in the life of the field.
Under the contract, KBR is providing engineering and project management services to develop the process design; specify the required equipment; layout, modularize and integrate the decks; perform the necessary structural analyses; and provide the electrical power generation and distribution system designed to support the platform and the downhole electrical submersible pump requirements. KBR is also assisting Chevron in estimating the cost of the facility and plan the subsequent phases of the development, which is expected to see first production in March 2014 from two wells.
KBR is also carrying out the hull and mooring FEED for the Jack/St Malo deep draft semisub while Mustang has the topside and interfaces FEED.
The Jack semi is expected to have 21 steel catenary risers. KBR's Granherne division has a numerical analysis model that allows it to design a riser 'and give you a very good indication of whether it's going to work in the environment you want to put it in', LaBoeuf says. 'Yes, you can put something out there that will float, but will it work with all of that gear?' He says the model will give a thumbs up, or down, on any suggested designs.
On the heels of winning the pair of Chevron projects, KBR is pursuing a trio of others in the Gulf of Mexico, one offshore Canada and two offshore Western Australia. Winning one of these 'would put KBR back on the upstream map', emphasizes LaBoeuf.
New markets
Two regions the company has focused on in addition to the Gulf of Mexico are Kazakhstan and Brazil, says Oelking, noting KBR has opened offices in both countries. 'We're definitely penetrating new markets,' he says, acknowledging the challenge is to move from that to securing projects.
'The Caspian is the major area of growth at the moment, both Kazakhstan and Azerbaijan,' Lindsay Woodhead, VP for project management for Europe, Africa and Middle East for KBR's oil & gas division, says. The company is working to build up the KBR office in Kazakhstan. Within five years, Woodhead says, KBR expects the Kazakhstan base to be a stand-alone office with up to 300 employees. 'There's a lot of megaprojects still to come in that area,' he says. Recently, KBR also opened an office in Azerbaijan. Woodhead calls it a one-stop shop. BP is currently the only operator in the country.
The work in the Caspian has kept the UK's Leatherhead office busy. The current job is designing the seventh platform in a program for BP for installation in the Azeri-Chirag-Gunlashi (ACG) fields offshore Azerbaijan in 125m-170m water depth.
The transport barge that plies the Caspian Sea had a weight limit of 15,000 tons, which accordingly limited sizes of platform jackets and topsides each to 15,000 tons. Woodhead says recent upgrades to the barge will now allow it to transport up to 18,000 tons. That makes way for the latest platform - No. 7 on the drawing board - to be a bit heftier than its predecessors.
Six KBR-designed jackets - all weighing in right at that 15,000 ton-mark - have been installed to date for the BP-run AIOC.
Additionally, the Leatherhead office is working on the concept phase for platforms for the Shah Deniz project offshore Azerbaijan in 50m-600m water depth.
'Our history in jackets goes right back to the North Sea; big ones,' Woodhead says of the Leatherhead office, such as the replacement Piper B jacket. KBR's North Sea pedigree dates back to the Brown & Root era, in 1976. 'Just as the North Sea was beginning,' he says. Historically, KBR's Leatherhead base concentrated on both deep and shallow water, but this has shifted. 'Our ongoing strategy is to do big jackets in water depths to 200m,' Woodhead says. 'We're good at that. We've been doing it for years and we're going to keep doing it for years.'
The Leatherhead office has recently applied its talents to the 22,000 ton jacket for Woodside's North Rankin B field offshore Western Australia in 125m of water and the Quad 204 jacket for the Schiehallion field in 350m-450m of water West of Shetlands. 'It's one of the few big UK projects ongoing today.' That unit is a turret-moored FPSO for the BP-operated field.
Much of the work KBR does on jackets is 'not technology dominated. It's execution, planning-dominated,' Woodhead says. He acknowledges evolutions in technology: 'There've been changes, but I don't think they've been giant leaps.'
Potent brands
Richard D'Souza, VP of Granherne, says he's 'a big believer in technology. Always have been.' D'Souza, who's been in the industry for 35 years, says considering the depths the industry is drilling and producing in: 'We didn't get there by accident. We got there by operators taking risk and contractors developing technologies.'
Granherne, a process, risk & safety consultancy, formed in 1984. It specializes in offering field development scenarios that offer the best return and the greatest flexibility. KBR bought it in 1996 but opted to let the name remain. 'This brand has endured. For a reason,' D'Souza says. 'As the fields become a lot more complex, there's a lot more at stake.'
Granherne has operated separately from KBR although it's been able to draw on KBR's strength. As D'Souza puts it: 'When we need them, we have access to them. It makes us that much more potent.' Granherne's Houston office opened in 1999 and its first job, the following year, was FEED for the Kizomba A surface wellhead platform and subsea elements now producing offshore Angola in 4000ft of water.
As more floating assets dot the waters of the world, 'companies are realizing they have to manage the integrity of these assets and find ways to minimize shutdowns,' D'Souza says, adding: 'We wanted a piece of that.' That desire, he adds, led to the April purchase of Energo, which specializes in integrity management. 'We needed that element to complete the cycle of field development planning.'
Oelking says KBR is expanding its offering 'into what we think is a new and growing market, integrity management'. Oelking says he sees many opportunities for the Energo-fueled Granherne segment.
D'Souza, who's been with KBR since 1999, says some secrets to surviving in the very competitive business Granherne plays in are to have a clear mission, stick to the mission, develop a relationship with the client and differentiate oneself from the competition. The caliber of people is 'probably the most differentiating thing in an overheated environment like we saw a few years ago', D'Souza says. Retaining a core team is vital, he believes. 'Even during this lull, many companies were laying people off. We have not done that. Granherne has not had any major layoffs since its inception, that I can recall.'
GVA is another brand that has kept its identity while under the KBR umbrella. The company is working to enhance the GVA hull offering, which LaBoeuf believes will serve as a differentiator for KBR.
'We're well on our way with riser and hull technologies to address the deepwater Gulf of Mexico market, and we have some work to do with mooring and the subsea group, which we're going to get in the coming years,' LaBoeuf says.
Interface management will be a focus, LaBoeuf says. 'A lot of people do a really good job of managing the hard interfaces,' he says. But soft interfaces - or information such as whether a certain element complies with regulations - are a different matter, he says. 'I've never seen a project fall on the sword because of hard interfaces, but I've seen soft interfaces cause delays.'
Oelking says KBR's oil & gas business had moved somewhat away from a project delivery model to a technical services company, and the pendulum is now swinging back. It's not so much that KBR wants to turn its back on technical services, according to Oelking, but the aim is to maintain that expertise in a manner compatible with winning some of the EPC projects on the horizon.
'What we do is really amazing stuff as an industry,' Oelking says. 'In a generation, we've gone from the shallow waters off the coasts of Louisiana and Texas to 8000ft.' OE