august / 22, 2013 dongkuksteel r&d center bong kang_eng.pdf · api 2w en 10225 norsok m-120...

August / 22, 2013

DONGKUKSTEEL R&D CENTER

ContentsContents

1. Global energy trend

2. Introduction of offshore business

3. Offshore market outlook

4. Applied offshore structural steel

5. Status of principal and demand forecast for plate

6. Summary

.• Energy demand will continue to grow with increasing population and development world economies

• Traditional energy sources are expected to continue to dominate (Oil, Coal, Natural gas)

- Status : Economical benefit, Enough infra., Easy transportation

• Renewable sources such as wind, solar, geothermal, wave/tidal will also grow

- Status : Low Economical benefit, Not enough infra., Immature technology

• Nuclear is uncertain

1 / 29

Sq

ua

dri

llio

n[1

01

5]

Btu

(2

.93

x1

01

1k

Wh

)

Sq

ua

dri

llio

n[1

01

5]

Btu

(2

.93

x1

01

1k

Wh

)

Source : U.S. Energy Information Administration, Report DOE/EIA-0484 (2011)

A. Which sources are dominating the energy market?


B. Short & Long-term oil price dynamics

2 / 29

Source: Infield Systems, BP (2013)

0

20

40

60

80

100

120

140

2000 2002 2004 2006 2008 2010 2012

$/b

bl

Brent

Mid. oil price

[ Brent annual average price ]

High oil price

Low. oil price


B. Short & Long-term oil price dynamics

3 / 29

Source: Infield Systems, EIA (2013)

0

30

60

90

120

150

180

210

2002/01 2004/01 2006/01 2008/01 2010/01 2012/01 2014/01 2016/01 2018/01 2020/01

$/b

bl

Brent Unsustainable Short-Run Spikes

Source: Infield Systems, BP (2013)

[ Long-term Brent price scenarios ]

• Supply and demand fundamentals are sufficient so as to support oil price appreciation in the long-run


4 / 29

[Global oil supply and demand balance in 2020 ]

103.498.9 94.6

10599.5 95

0

20

40

60

80

100

120

140

High Case Base Case Low Case

Demand Supply

mb

pd

Source : Infield Systems, IMF (2013)

C. Global oil supply and demand balance


-1%

0%

1%

2%

3%

4%

5%

1971-75 1976-80 1981-85 1986-90 1991-95 96-2000 2001-05 2006-10 2011-15 2016-20

Avearge Global GDP Demand Growth Rate Avearge Oil Demand Growth Rate

5 / 29

[ Global oil demand/global GDP growth rate ]

Source : Infield Systems, IMF (2013)

C. Global oil supply and demand balance


• Supply and demand fundamentals are strong enough to support oil prices appreciate in the long-run.

• Supply and demand for oil market are well balanced by 2020

6 / 29

[ New oil project sanction price/quantity ]

0

5

10

15

20

25

30

30 40 50 60 70 80 90 100 110

mil

lio

n b

bl/

d

$/bbl

Ultra-Deep Water Deepwater Traditional Heavy Oil Shale Oil

Source : Infield Systems, Goldman Sachs, BP (2013)

D. New supply potential


7 / 29

• The average marginal cost of supply for the most expensive new oil projects has exceeded $95/bbl.

- Canada's oil-sands need an oil price of $100/bbl to achieve an adequate return on capital

- If oil price stays below $95 for a sustained period a number of marginal fields will be shut down,

including supply from small U.S. shale oil producers

[ Fiscal budget breakeven oil price in the middle east ]

Source : Infield Systems, Goldman Sachs, BP, (2013)

E. Up and downside pressure for oil price

0 20 40 60 80 100 120 140

Iran

Bahrain

Iraq

Oman

UAE

Saudi Arabia

Kuwait

Fiscal Breakeven Oil price

2012 Brent Average


* OPEC Average $95/bbl(2012) → $109/bbl (2017)

[ Production Cost Curve ]

Source : Infield Systems, Goldman Sachs, BP, (2013)

E. Up and downside pressure for oil price


8 / 29

Gas Development

Production

Condensate

LNG Liquefaction

Transportation

LNG Regasification

Power plant /Large industry

Power plant /Large industry

Transportation

Pipeline Transportation MidstreamProcess(NGL)

Household/smallerindustry

Exploration

Discovery

Distribution

Oil Development

Production

GatheringCenter

PipelineTransportation

Refining

Petrochemfeedstock

Petrochemical

Plant

Bulkproducts

Specialtyproducts

Wholesale

Retail

Industry

Industry

Industry

Cars, trucks, etc..

Exploration Drilling / Production P. T. S

Oil refinery and petrochemical

Natural gas

Upstream Midstream Downstream

* P. T. S : Processing, Transportation, Storage


9 / 29

A. Value chain for oil & gas

10 / 29


Source : Offshore magazine (2012)

B. What is offshore structure?

11 / 29


0

20

40

60

80

100

120

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

$ p

er

barr

el

Num

ber

of

Units

Year of Build

Support Production

Development Oil Price(2009 $s)

1970sThis offshore

boom followedthe 1973 "Oil Crisis"

2000sThis boom

accompaniedthe oil price

rise

Source : Clarkson research (2011)

A. Investment correlated with oil prices


12 / 29


※ CAGR : Compound Annual Growth Rate

01000020000300004000050000600007000080000

2011 2012 2013 2014 2015

North Sea

01000020000300004000050000600007000080000

2011 2012 2013 2014 2015

North America

01000020000300004000050000600007000080000

2011 2012 2013 2014 2015

Brazil

01000020000300004000050000600007000080000

2011 2012 2013 2014 2015

West of Africa

01000020000300004000050000600007000080000

2011 2012 2013 2014 2015

Asia Pacific

Ship yards in Asia

Counted through operation in regions where operated

(Unit, $ : Million)

12% might be increased within 4 year

B. World oil producing regions & growth rat

13 / 29


Projection based on 180 fields currently under developments 1079 potential development fields (oil)and 1006 gas fields

0

5

10

15

20

25

30

35

1980

1985

1990

1995

2000

2005

2010

2015

2020

Million B

PD

Year

N. America NW. Europe

M. East & ISC S. America

Asia Pacific W. Africa

Caspian Black Sea Stagnation

?

Forecast


C. Offshore oil production and forecast

14 / 29

Source : Douglas Westwood (2012)

200mn boepd

180mn

160mn

140mn

120mn

100mn boepd

70mn boepd

60mn

50mn

40mn

30mn

20mn boepd

70mn boepd

60mn

50mn

40mn

30mn

20mn boepd

Growingoffshoreproduction

Growingdeepwaterproduction

Growingoffshore gasproduction

Global Oil & Gas Supply 1970-2020 Offshore Supply by Depth 1970-2020 Offshore Supply by Type 1970-2020

OffshoreOnshore

DeepShallow

Offshore GasOnshore Oil


D. Principal trend for world energy business

15 / 29


Source : Pareto research. ODS-Petrodata

E. Deepwater : Golden triangle

16 / 29



F. Africa is on the move

17 / 29



0

5

10

15

20

25

30

35

40

45

50

2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E

Rig

s (f

leets

)NCS rig fleet : current + additions

G. North sea : increasing by more than 50% from 2011 to 2015

§ 18 new high-end jackup likely before 2015§ New demand expect to be for replacing unit and support vessels

18 / 29


§ Total undiscovered oil in the Artic : 90 billion barrels - 13% of world undiscovered oil- 30% of world undiscovered natural gas- 20% of world undiscovered natural gas liquids

§ Top 7 location for oil & gas in the Artic

- 87% of the total undiscovered Artic

Source : www.geology.com (2012)

Petroleum provinceCrude oil(Bill. Barrels)

Natural gas(Tril. Cubic feet)

Natural gasLiquid(Bill. Barrels)

Total(Oil equivalentIn Bill. Barrels)

West Siberian Basin 3.66 651.50 20.33 132.57

Artic Alaska 29.96 221.40 5.90 72.77

East Barents Basin 7.41 317.56 1.42 61.76

East Greenland Rift Basin 8.89 86.18 8.12 31.39

Yenisey-Khatang Basin 5.58 99.96 2.68 24.92

Amerasia Basin 9.72 56.89 0.54 19.75

West Greenland-East Canada 7.27 51.82 1..15 17.06

H. Artic : Preparing for the future

19 / 29


[ Operating environment in the arctic area]

§ The most reliable and robust technology have to be developed as “zero-leakage”, and “maintenance-free” solutions must be sought and qualified. § The development of arctic oil and gas fields will require new low temperature High Strength Steels,

including welding, and integrity management capable of significantly reducing the probability of failure in critical extreme environments methods and acceptance criteria must be available.

H. Arctic : Preparing for the future

20 / 29


Source : Douglas-Westwood (2012)

[ FPS market forecast for deepwater ]

I. FPO market forecast


21 / 29



[ Forecast for each type of unit ]

Units 2012 2013 2014 2015 2016 2017

FPSO 14 13 17 17 23 24

FPSS 0 2 3 2 1 1

SPAR 0 0 3 0 2 2

TLP 0 1 1 3 1 5

Total 14 16 24 22 27 32

I. FPO market forecast

SMYS

Standard

Top side Hull side

API 2W EN 10225 NORSOK M-120 Ship building DNV OS-B101

355MPa API2W50 S355 Group MDS-Y20A/D/E

AH/DH/EH/FH 36NV A/D/E 36

NV AW/DW/EW 36

420MPa API2W60 S420 Group MDS-Y30A/D/E

AH/DH/EH/FH 40NV A/D/E/F 420NV DW/EW 420

460MPa S460 Group MDS-Y40NV A/D/E/F 460NV DW/EW 460

500MPa MDS-Y50NV A/D/E/F 500NV DW/EW 500

550MPa NV A/D/E/F 550



22 / 29

4. Applied structural steel

A. Main steel grade

Z-direction Properties

• Reduction of area : above 35%

• Required process

: Soft reduction, Ca treatment, etc.

23 / 29

High Strength

• YP 420MPa → YP 460 & 500MPa

• High strength & Low Ceq. (below 0.42)

• New process : AcC + T Process

Good weldability & CTOD Properties

• Heat input : 7kJ/cm ~ 50kJ/cm

• CTOD Properties

- Design Temp. : -10℃→ -20 ~ -40℃

- Required CTOD : above 0.25mm

Subsea pipe

• YP 450MPa → YP 560MPa

• Thickness : 25mm → 41mm

• Sour resistance : Below CLR 10%~15%

Strain-aged / PWHT

• Strain-aged CVN Impact Test @ -40℃

- condition : 5~8%strain, aging 250℃x1hr

• Simulated PWHT : 580℃ 1hr/inch

B. Required properties of structural steel and subsea pipe


§ Hull side

§ Top side

Applied steel grade : API2W, EN10225, NORSOK

Applied steel grade : Ship building, DNV OS-B101

24 / 29

High strength, Low temp. fracture toughness

TopSide

Past Present Future

SMYS : 355, 420MPa

Thick. : up to 60mmt

Opt. : -

Applied : offshore str.

SMYS : 420, 460MPa


Opt. : CTOD -20℃


SMYS : 500, 550 ~ 690MPa

Thick. : 100mmt

Opt. : CTOD below -20℃


HullSide

SMYS : 355MPa


Opt. : -

Applied : Ship build.

SMYS : 420MPa


Opt. : Z-Prop.

Applied : Ship build.+ offshore str..

SMYS : 420MPa


Opt. : Z-prop.Applied : Ship build.

+ offshore str.

C. Design change for applied steel


5. Status of principal project and demand forecast for plate

25 / 29

Nigeria

Norway

Republic of the Congo

Australia

Vietnam

Indonesia

UAE

Russia

UK

Papua New Guinea

Malaysia

Israel

USA

Brazil

Gendao Gehem

Ichthys FPSO

Lavaca Bay FLSO

Gina Krog P/J

Mariner Platform

WheatStone

Dong Platform

Yamal P/J

Hebron P/J

Carigali Hess

Moho Nord_TLP

RoseBank_P/J

Point Thomson

Adma-Opco

Ichthys CPF

Statoil_FSU

Mafumeira

Matin Linge

Egina

Petronas FLNG2

Petronas FLNG1

Moho Nord_FPU

Bressey_Platform

Upper Zakum

Aasta Hansteen

A. On-going principal project

26 / 29


Items Fixed Platform MODU* / MOPU*

On going P/J

• Wheaststone_Chevron

• Dong Hejre_Dong Energy

• Mafumeira_Chevron

• Mariner_Statoil

• Dagny_Statoil

• Hebron_ExxonMobil

• Carigali Hess_Petronas

• Ichthys_Inpex FPSO

• Petronas FLNG

• Statoil FSU

• Gendalo Gehem FPU

• Lavaca Bay Excelerate FLSO

• Aasta Hansteen Statoil TLP

Main steel gradeAPI 2W50, 60

NORSOK Y20, Y30, Y40, Y50

• Top side : API 2W50, 60

EN S355, S460, S500

NORSOK Group

• Hull side : Ship’s Class

* MODU : Mobile offshore drilling units* MOPU : Mobile offshore production units

Fixed Platform FPSO FLNGTLP

A. On-going principal project

27 / 29


Project Country Order P/J Type Budget (USD bn)

1. Brass LNG

2. Moho Bilondo

3. NASR

4. UAE Zadco

5. PNG

6. Rotan LNG

7. Shtokman

8. Bock-B gas

9. Black A-18

10. Tamar gas

11. Luno

12. Barossa

13. Browse

14. Browse

15. Wester Isles

16. Heidrun

17. Luva

18. Greenland Offshore

19. Nom con son 2

20. Abadi LNG

21. ConocoPhilips

Total

B. On the bidding project (EPC, 2013~2014)

28 / 29


Project type

Plate & Section demand prospect (Unit, ton)

2013 2014 (At present)

Drilling

Jack-up rig

Semi-sub

Drill ship

Production

Fixed platform

TLP

Spar

FPSO / FLNG

The others

Total

Plate

Section

Sub total

ReferenceDouglas Westwood report_2012

Rig Zone Report_2013Infield Systems_2013

Boston Consulting_2010Clarkson research_2011

IR report (DSME, SHI, HHI)* Total amount of used plate & Section = Average weight for each unit × the number of Unit

1.98 2.00

2.02 2.02

2.08

2.14

2.06

2.16

2.27

1.80

1.85

1.90

1.95

2.00

2.05

2.10

2.15

2.20

2.25

2.30

2013 2014 2015

Ste

el dem

and (

million t

on)

Low

Base

High

C. Demand forecast for plate and section

Annual growth around 4%~5%

6. Summary

29 / 29

ü Taking into economical consideration, traditional energy sources is expected to

continue to dominate next decade.

ü Offshore units are mainly operated in nine spots, such as Middle East, West Africa,

North America, Asia Pacific, South America, Northwest Europe, Russia etc.

Among the these area, West Africa, Northwest Europe, South America lead a

deepwater development which is related with FPSOs order.

ü Mainly used steel grade in recently project are yield strength level 350Mpa to

460Mpa according to API2W, EN10225, NORSOK standard.

Next year yield strength 500Mpa grade is going to be reflected in design for

structural use. Also, they need resistant to low temp. fracture toughness for severe

operating condition.

ü Total demand for steel plates and sections might be around 2 million ton in 2013.

and steel quantity used in offshore market might be increase around 4%~5%

annually by 2015.

august / 22, 2013 dongkuksteel r&d center bong kang_eng.pdf · api 2w en 10225 norsok m-120...

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