By reinventing products, integrating technologies and simplifying architecture, FMC Technologies and Technip aim to redefine the subsea industry while improving project economics—as one company.

The two, which will become TechnipFMC if their pending merger closes as expected in early 2017, are targeting segments of the value chain where their offerings are complementary and connected. They also want to reduce interfaces with optimized designs, speed up time to first oil and ultimately improve life-of-field solutions and subsea economics, according to Doug Pferdehirt, president & CEO of FMC Technologies.

“That is our approach,” Pferdehirt said Sept. 6 during the Barclays CEO Energy-Power Conference. “The market will react as the market will, but we have seen a strong acceptance from our customer base for this approach.”

Looking to past decades, Pferdehirt pointed out some pitfalls the subsea industry has faced as leaders in subsea production systems (SPS) and subsea, umbilicals, risers and flowlines (SURF) focused on going deeper and producing better reservoirs. They worked to deliver production both safely and economically at higher pressures, he said, but equipment and technologies were not integrated, with packages offered and tendered separately.

“We didn’t come together until we met on the seafloor,” Pferdehirt said. “Because of that, contingencies needed to be built in. Additional interfaces needed to be built in. Very costly connection systems needed to be deployed. No one had the view and no one had the incentive to look at this as it is—one complete subsea production system.”

The planned merger, which was announced in May, comes as the oil and gas industry struggles to rebound from lower commodity prices caused by a global hydrocarbon oversupply . Companies have sought ways to lower project costs, become more efficient and work smarter in hopes of preserving cash flow and growing profits.

Redefining Industry

The three-step strategy toward redefining the industry involves reinventing products, integrating technologies and redefining subsea.

Pferdehirt used a subsea manifold to make his point. It is an important piece of equipment, but over the years it has become bigger and more complex due to engineering specifications and other requirements—all of which have driven up costs. However, the almost 200-ton subsea manifold has been reinvented. A smaller version does the same job, but with half of the parts and half of the weight. Plus, it can be delivered in half of the time, he added.

“This isn’t a dream. This isn’t a prototype. This is an actual product that we are manufacturing for customers today, taking orders and will be including in our tenders going forward,” said Pferdehirt. “This is substantial change, and this is just the beginning of how we’ll reinvent our products.”

From here, the companies integrate their technologies: subsea processing joins electrically trace heated pipe-in-pipe to better handle flow assurance issues and increase efficiency; connectors integrate with flexible pipe to reduce installation times and lower costs; and subsea architecture such as manifolds is simplified while equipment or technology needed to connect different companies’ packages is removed altogether.

These were among the few examples presented.

“This is how we will redefine subsea,” Pferdehirt said.

The so-called TechnipFMC integrated approach has the potential to shave up to 30% off the SPS and SURF costs, lower the number of SPS interfaces needed and reduce flowlines and risers, he added. It is also expected to hasten installation, lower execution risk and accelerate time to first oil.

Budding Relationship

FMC and Technip are building on a relationship formed in 2015 with the Forsys Subsea joint venture. Since the alliance was formed, Forsys has landed 16 integrated FEED studies, Technip CEO Thierry Pilenko said, before noting the diverse mix of the joint venture’s FEED studies.

Field types include both brownfields and greenfields, and customers are IOCs, NOCs and independents working in just about all parts of the world.

The two companies are addressing concerns by enabling brownfield and long tiebacks, engaging in the design optimization process early, integrating full-field development and using technology to drive efficiency and simplification, according to Pilenko.

“We cover everything in the subsea space from the wellhead to the platform,” Pilenko said while pointing out the benefits of having all subsea offerings under one roof. These include FEED and subsurface expertise, SPS, SURF, life of field, and monitoring and topsides and facilities.

The combined force could lead to integrated technology, a more cost-effective operating structure and integrated offerings outside the subsea space, he added.

One of the latest contracts awarded to Forsys Subsea was for a FEED study for Statoil’s Testakk Field offshore Norway. The field is being developed as a subsea tieback to the Åsgard A FPSO.

Henning Gruehagen, head of Forsys Norway, told SEN in May that FMC and Technip saw cost increases in the subsea space as a challenge that needed to be solved. He estimated that integrated offerings could drop the time from concept to first oil by six to 12 months. Cutting the amount of equipment installed on the seabed and using smaller vessels helped cut costs on Trestakk by 25%.

The merger essentially pushes the Forsys Subsea concept.

Merger On Track

The all-stock transaction is expected to produce pretax cost synergies of about $400 million by 2019.

“We will be one of the largest oilfield service providers worldwide and we will have an industry-leading balance sheet from which to deliver and execute this new platform,” Pferdehirt said.

In May, Reuters reported Technip had a market value of about $6.2 billion, compared with FMC Technologies’ $6.5 billion. Technip has annual revenue of $13.5 billion, more than double that of FMC Technologies.

Pilenko will serve as executive chairman of TechnipFMC while Pferdehirt will be CEO, the companies said.

In July, the companies said the pending merger received an early decision from U.S. antitrust regulators under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), concluding antitrust review of the transaction in the U.S. under the act. But other conditions must be met before the pending merger becomes reality, including the conclusion of antitrust reviews in other countries and approval from each company’s shareholders.

—Velda Addison