Part 2 - Rethinking the FLNG vendor supply chain

Mark Tipping's picture
Mark Tipping, Principal Engineer for FLNG Development, Lloyd’s Register
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This is the second part of a two-part article. The first part can be read here.


Challenging the supply chain: First, codes and standards must be chosen. Should an owner opt for the vendors’ benchmark—typically an industry standard, such as ASME, AWS, IEC or Class—or their own proprietary requirements? This decision is rightly seen as a matter of risk vs. cost, but it needs broader consideration. By setting its own standards, a company can reassure stakeholders of the very best project intentions, and satisfy the demands set by legal and supply-chain specialists. However, this approach will be expensive, arguably prohibitively so, for such vast FLNG projects. Vendors will charge a premium for delivering equipment to tailored specifications and owners will need to check that their specifications are being met.

This is a global task across a supply chain that will span some 25 countries, or more if sub-suppliers are factored in. Will best intentions deliver the required equipment, systems and components to the yard? These are the early days for FLNG, but supply chains are already being challenged. It is not difficult to imagine an emerging pattern where initial standards are diluted, equipment is sourced from outside of approved vendor lists, and a project’s progress is stalled as suppliers realise that the specifications go beyond what was envisaged.

Inevitably, newbuild costs will escalate, as will the risk that supply chain issues will become operational problems.

Greater equipment integration: There is another compelling argument for rethinking the codes and standards. FLNG newbuilds adopt the traditional approach for offshore projects—that is, applying marine standards to every component below the main deck (except the accommodation) and internationally recognised petrochemical standards to the topsides and process equipment. This approach is not fit for purpose. On FLNG assets, marine, topside and processing equipment are more greatly integrated than has previously been the case, with some marine equipment migrating into the topsides and, conversely, certain topsides components moving down into the hull. Drawing an arbitrary line along the main deck and applying codes and standards according to the break is not a cost-effective nor safe answer to realising the most from the supply chain, especially when considering the challenges it faces.

The solution is to review both the marine and petrochemical standards based on process requirements and safety considerations, assigning equipment, components and systems to either the marine or offshore process according to best engineering and safety practices rather than where the deck begins. At Lloyd’s Register, we have formalised this task into a Classification Plan, part of our organisation’s Offshore Rules. This initiative brings together over 50 years of offshore experience, including our technical knowledge of LNG containment and liquefaction technology, FPSO development and process engineering systems (featured image). Besides better delineation of codes and standards, our approach offers owners a means to identify their critical asset equipment and rate them accordingly. [...]

Focusing efforts now on the FLNG vendor supply chain offers compelling benefits. Getting the right equipment in place will ultimately contribute to the longevity of an asset. This focus will also develop a much-needed third type of specialist, one who bridges the gap between marine and topside equipment. Employing personnel who are qualified and experienced in applicable FLNG project standards and procedures will help revolutionize this innovative technology.

Article originally published in the official Gastech 2015 show daily by Gas Processing. Read the full article.

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