Modularizationpresentationfor Hbr

15 August 2007Bill Meyer

Modularization

Introduction

William (Bill) Meyer - Director Project Execution DevelopmentFoster Wheeler USA Corporation

Contact: 2020 Dairy Ashford Road, Houston, TX 77077Ph. 281 597 3000Direct 713 255 6089


1. Modularization drivers

2. Module types

3. Installation methods

4. Engineering and Procurement impacts

5. Logistics

6. Module Fabrication

7. Critical success factors

Modularization

Turner Industries

IntroductionTo

Foster Wheeler

International Engineering Firm (EPC)International Engineering Firm (EPC)with over 100 Years of with over 100 Years of

Dedicated Services to the Dedicated Services to the Process and Energy IndustriesProcess and Energy Industries

Foster Wheeler

A global business: over 10,500 highly skilled people

Reading

Milan

Houston

Singapore

CLINTON, NJ

Helsinki

Corporate CenterOperating Unit HQs and/or Main Engineering CentersRegional Engineering CentersSales/Local Service OfficesManufacturing Centers

A global network of high-quality resources, enabling us to deliver local service and local content, and to access local labor markets

Shanghai

Chennai

Foster Wheeler Operations

FOSTER WHEELER LIMITEDFOSTER WHEELER LIMITED

FW Energy InternationalFW Energy InternationalFW Energy CorpFW Energy Corp.

ENGINEERINGAND

CONSTRUCTION

ENGINEERINGAND

CONSTRUCTION

FW USA Corp.FW USA Corp.FW Energy Limited FW Energy Limited -- U.K.U.K.FW Continental EuropeFW Continental EuropeFW Asia PacificFW Asia Pacific

ENERGYEQUIPMENTENERGY

EQUIPMENT

2006 Revenue: $2.8 Billion Backlog: $5.4 Billion2006 Revenue: $2.8 Billion Backlog: $5.4 Billion2006 Revenue: $2.8 Billion Backlog: $5.4 Billion

Foster Wheeler Corporate Overview

RefiningPetrochemicalsChemicalsHydrogen / GTL / GasificationOil and Gas PowerPharmaceuticals and Fine ChemicalsBuild Own and Operate

Fired HeatersCoke Drum Unheading SystemsSteam GeneratorsBoilersCondensersSCR’s

ENGINEERING ENGINEERING & CONSTRUCTION & CONSTRUCTION SERVICESSERVICES(EPC or (EPC or EPCmEPCm))

EQUIPMENT EQUIPMENT SUPPLYSUPPLY

Foster Wheeler Services & Products

Leader in Refinery Process Engineering

200+ Hydroprocessing Units200+ Crude Units200+ Vacuum Units80+ Catalytic Reforming Units100+ FCC Units80+ Cokers40+ Alkylation Units50+ Deasphalters20+ Catalytic Polymer Units30+ Aromatics units20+ Lube refineries50+ Hydrogen Plants80+ Sulfur Plants

Reactor Regenerator Assembly with UOP VSS Technology at Premcor FCCU, Memphis, TN

Sriracha, Thailand

Singapore

Houston, Texas

Milan, Italy

Madrid, Spain

Perryville, New Jersey

Paris, France

Reading, U.K.

Foster Wheeler E&C Centers

North America 1,300United Kingdom 3,200Italy 1,200France 500Spain 650Singapore 400Thailand 600China 900Other worldwide 1,750+

Total 10,500+

FW Houston presence since 1940sSince 1994, U.S. EPC Center for Oil & Gas, Refining, and Petrochemical ProjectsOffice space in 3 buildingsCapacity for over 1200 Engineering and Design StaffFully Integrated Design Systems (CAD) and Communications Technology

Foster Wheeler Houston Operations

End market diversity of backlog

December 29, 2006Total: $5.4 billion

Backlog includes flow-through costs

29.0%

17.2%

32.0%

16.6%

3.2%2.0%

Oil & Gas

Refining

Chemicals

Power Equip. & Services

Pharmaceutical

Power Plant Ops, Other &Eliminations



2. Module types



Modularization


Modularization execution benefits:

1. Cost reductions 2. Schedule reductions3. Risk reductions

Modularization


Cost Downside

Increased cost of steelIncreased cost of shippingPotentially - increased cost of transport and installation

Modularization


Cost Downside

Increased cost of steelIncreased cost of shippingPotentially - increased cost of transport and installationIncreased cost of engineering

Modularization


Cost Upside

Move labor cost offsite to cheaper labor supplyReduce indirect costs (camp, construction supervision, consumables etc at the site rates)Improved productivity (weather, flexible workforce, site accessability etc)Reduced schedule - reduces construction indirects[Positive impact to NPV if revenue stream begins earlier]

Modularization


Cost BenefitsEconomic Productivity Factor

On-site Off-siteLabour Productivity 1.70 1.2

Composite Manhour cost $105.00 $55.00Relative manhour cost c/w Gulf Coast $178.50 $66.00

Economic productivity ratio 2.70 : 1

Modularization


Cost BenefitsEconomic Productivity Factor using Far East Yards

On-site Off-siteLabour Productivity 1.70 3.5

Composite Manhour cost $105.00 $12.10Relative manhour cost c/w Gulf Coast $178.50 $42.35

Economic productivity ratio 4.21 : 1

Modularization


MODULE vs STICK COST DIFFERENTIALS

Modular versus Stick built costs

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0$60.0

$70.0

$80.0

$90.0

$100.0

Modular Cost Stick built Cost

Installation cost ΔShipping cost ΔConst. Mngmt cost ΔFoundation cost ΔSteel cost ΔEngineering cost ΔCamp cost Δlabor cost

Savings

Milli

o ns

$

Modularization

Existing Project Data

(Note – All projects have different cost drivers )



$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0


Installation cost Δ

Shipping cost Δ

Steel cost Δ

Engineering cost Δ

Camp cost Δ

Labour cost




Shipping cost Δ

Steel cost Δ

Engineering cost Δ

Camp cost Δ

Labour cost




Shipping cost Δ

Steel cost Δ

Engineering cost Δ

Camp cost Δ

Labour cost

COST DRIVEN MODULAR PROJECT

SCHEDULE DRIVEN MODULAR PROJECT

COST DRIVEN STICK BUILT PROJECT

Modularization


Schedule benefits

Schedule benefits

Modularization


Modular

Stick Built

Schedule Comparison – Modular vs Stick Built

0

10

20

30

40

50

60

70

80

90

100

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36

Duration - Months

Prog

ress

%

Order Placement Engineering ConstructionOrder Placement Engineering Construction

Return

Modularization



2. Module types



Modularization


Module Types

1. Pre – Assembled Units (PAU’s)Multi disciplined modules including:- tagged and non tagged items, steel, piping, electrical,

instrumentation, fireproofing, insulation


Module Types

1. Pre – Assembled Units (PAU’s)


Module Types



Module Types



Module Types

2. Pre – Assembled Racks (PAR’s)Piping modules including:- steel, piping, electrical cable tray, fireproofing, insulation

Site built steel or concrete

columns


Module Types

2. Pre – Assembled Racks (PAR’s)


Module Types

2. Pre – Assembled Racks (PAR’s)


BHPBilliton – Module Types

3. Vendor Assembled Units (VAU’s)PAU’s assembled by a vendor


BHPBilliton – Module Types

3. Vendor Assembled Units (VAU’s)


4. Vendor Package Units (VPU’s)Complete packages purchased from a vendor

Module Types


5. Remote Instrument Buildings (RIB’s) Sub-stations etc

Module Types


5. Remote Instrument Buildings (RIB’s) Sub-stations etc

Module Types



2. Module types



Modularization


Installation Methods

Crane Installation



Strand Jack Installation



Transporter Installation









Jack-down Installation



2. Module types



Modularization


E & P Impacts

Planning is Critical for Modular Projects


Differences can includeLocation of pumps

PAR 02/03

PAR 04/05

PAU 01

PAU 02

PAU 03 PAU 05

VAU 02

etail above

Modular

Stick built

E & P Impacts


Differences can includePipe track to pipe rack

E & P Impacts



Easy Install Easy Ship

E & P Impacts



Additional clearance can be provided

where required

E & P Impacts


E & P Impacts

Piping design file layoutLink files for pipe stressingSplit files for quantity takeoff and procurement


E & P Impacts

Site based Loads, Clearances and Critical Dimensions

Crane loadsModule clearancesCrane clearancesFoundations toleave low etc





E & P Impacts

Loads applied to Modules

Fabrication yard supports


E & P Impacts


Transporting in theModule yard


Module yards


E & P Impacts


Sea acceleration forcesduring shipment


E & P Impacts


Sea acceleration forcesduring shipment


Type of ship – RO-RO, LO-LO, H/L

E & P Impacts


E & P Impacts


Transporting on site



E & P Impacts


Logistics and therefore loads imposed is project specific

E & P Impacts


E & P Impacts


Installing on site


E & P Impacts


In-situ on foundations


E & P Impacts

Procurement ComplexityNumber of delivery locations impact ordering and material tracking

EquipmentDeliveries

Material Logistics for theStick-Built Project

Install

Dock

Truck


E & P Impacts

Procurement Complexity

Truck

Materialyard

Dock

Transport

Install

Material Logistics for themodularized Project

Truck

Truck

Install

Module Fabrication Yard

EquipmentDeliveries

Port

ModuleDeliveries

Loadout

to ship

Bulk Materials and minor equipment

Modules andmajor equipment


– Potential to ship stick built materials in “dead space” on HL ships

E & P Impacts


E & P Impacts


E & P Impacts




2. Module types



Modularization


Critical Success Factors include:Experienced team with tried and proven systems

Modularization CSF’s

Client / Project # Modules

Goro Nickel Project 625

Singapore Aromatics 213

TARP, Thailand (2X strategy) 65

Celanese, Singapore 25

ExxonMobil LSADO Altona (FEL) 13

SINCOR (FWUSA Shop) 10

Clark/Premcor, Texas 12

Shell, Deer Park, Texas 14

Mobil Coryton, UK 53

Statoil, Norway (1980s) 205

Business

Modularizationpresentationfor Hbr