Presentation Content

Marine Warranty Company Profile. What Is Marine Warranty?

ROLE OF THE MARINE WARRANTY SURVEYOR IN OFFSHORE CONTRACTS

Why do we need Marine Warranty?. Warranty Surveyor Scope.

Kent Fong

Warranty Procedures Key Points Summation. Q & A.

Marine Warranty Company Profile

A Marine Warranty Company needs to have the appropriate Experience base within the multi-discipline team to provide services to Underwriters and their Insured Parties including:Naval Architectural & Structural Analysis Engineering Verification Review

MARINE WARRANTY COMPANY PROFILE

Pre-Risk Studies

Marine Ops Technical Support

Hazid Risk Identification & Mitigation

Vessel Inspection & Audits

Marine Ops Oversight & Approval

Damage Claims Assessments

Marine Warranty Company Profile

Required to have Multi-discipline Engineering & Marine expertise. Staff profile should include: Master Mariners Marine and Offshore Engineers Subsea and Pipelines Engineers Structural and Civil Engineers Naval Architects

Marine Warranty Company Profile

Due to the increasingly Global nature of offshore projects Warranty Companys need to be able to provide Office and site based personnel in the worldwide major oil centres. As an example LOCs current office locations are as follows:-

Aberdeen Halifax Houston Florida Tampico LONDON

Stavanger Sakhalin Tianjin Shanghai Qingdao Dubai Qatar

Abu Dhabi

Engineers

Mariners

Singapore

Rio de Janeiro Perth

What Is Marine Warranty?

During the construction phases of offshore projects, a Construction All Risks (CAR) insurance policy will be taken out by the Owner, Operator or their Contractor to cover against losses during construction, Installation and commissioning activities. In most cases the terms of this Insurance policy will include a Marine Warranty Clause within which the underwriter who is placing the Insurance will require that an Independent Marine Warranty Surveyor (MWS) be appointed for the project top act as marine experts on their behalf. It is the responsibility of the Assured (the insured party) to engage the MWS provider either through existing agreement or via commercial Tender. However, the Warranty Surveyor chosen must be acceptable to the Insurer and in many cases only a few specialized Warranty Companies will be listed in the policy as acceptable for the performance of the work.

WHAT IS MARINE WARRANTY?

What Is Marine Warranty?

The role of the Marine Warranty Surveyor is to act on behalf of the Insurer and the Assured to ensure that specific project operations are performed to recognized codes & standards and within acceptable risk levels. These risk levels being tolerable to the insurance interests, to the industry as well as to national and international regulatory bodies where appropriate. The scope of the approval activities to be performed by the MWS will be agreed between the Assured and the Underwriter based on the proposed project activities and the associated risk levels for these activities. If MWS approval is not provided prior to the commencement of a scope defined operation then the Assured can be called in breach of their Warranty and this will allow the Insurer to avoid the policy in the event of an incident.

WHY DO WE NEED MARINE WARRANTY?

Why Do We Need Marine Warranty?

Underwriters have recognized that all marine operations are high risk due to their very nature and that their claims profiles in marine related projects is thus also high. Additionally in the current commercial climate there are many additional factors which add to project risk. Some of the main risks to offshore projects today are as follows:-

Why Do We Need Marine Warranty?

These Main Risk Factors lead to some of the following causes of major marine incidents:-

The Marine Environment Shortage of Vessels/Equipment Shortage of Marine Qualified Personnel Increasingly Shorter Project Schedules Increasingly Tighter Project Budgets Pushing the boundaries Water Depths, Novel Installation Methodologies etc

Design Failure - Extreme environment (incorrect criteria or non adherence to environmental limits. Design Failure - Poor design (Lack of time to prepare or inappropriate experience). Poor Procedures - Lack of time to prepare or inappropriate experience. Operator Error - Overwork or lack of training. Vessel or Equipment Failure - Over work & lack of routine maintenance. Equipment Materials failure Insufficient QA/QC. Failure to capture lessons learnt Lack of Time or Loss of Expertise.

Why Do We Need Marine Warranty?

Benefits of a Marine Warranty Surveyor: Independent:As an independent party the Warranty Surveyor is not constrained by financial or contractual motives when performing operations assessments. This is particularly important with respect to EPIC type contracts where contractors are far more commercially driven. Operations Experience:Project teams are generally focused on just 1 project at a time for long periods, typically 3-5 years. The Warranty Surveyor has a much broader exposure and archive knowledge of global offshore projects, the possible risks involved with marine operations, and previously encountered problems. Marine & Engineering Expertise:Operator and Contractor Project Teams are becoming smaller all the time, with less marine and engineering bias. The MWS can provide both Marine and engineering expertise/advise to the project when required.

Why Do We Need Marine Warranty?- Common Issues

Structural Capacity Weight & CofG Changes Stability Issues Poor Engineering/ Procedures Lack of Certification Equipment Capacities Late Vessel Changes Inappropriate Selection or Non-adherence to Environmental Limits

Warranty Surveyor Scope

Scope Definition. The extent of the MWS scope will be negotiated between the Insurer and the Assured. Generally the insurers requirements for the warranty scope will be based on the following:- level of internal assurance measures already in-place. - Class & Regulatory body involvement. - Complexity, Novelty or Sensitivity of the proposed operations. - Asset Value / Project Schedule criticality. - Assureds previous insurance history and Underwriters claims history on similar projects.

WARRANTY SURVEYOR SCOPE

With due consideration to the above, the insurer will allocate a risk level to each key marine operation based on the ALARP principle and the Marine Warranty scope will be a function of this risk.

Warranty Surveyor Scope

CONSEQUENCES

Warranty Surveyor Scope

Risk Level Catastrophic Disastrous Simple operations and high redundancy Well controlled simple operations or operations with high redundancy W3 W2 W1 W3 W2 Warranty Level W0 Warranty Scope No Warranty Basic quality level for marine operations no warranty approval required Limited Scope of Warranty Warranty approval to be issued either based on documentation review only (e.g. MoDU location approval) or surveys on site (e.g. Lashing of ship cargos). The most relevant alternative to be selected by the warranty surveyor Standard Scope of Warranty As W1 but including both evaluation of design documentation and operational procedures and pre-operation verification surveys (e.g. towed barge transportation) Full scope of Warranty As for W2 but including on-site surveillance during the operation (e.g. Skidded loadout, Jacket launch, topsides lift, float-over, complex subsea installation)

Probability of Hazard
Likely Reasonably probable Unlikely Remote Extremely remote Theoretically possible

Minor

Severe

Fatal

W2 W1 W0

W3 W1 W2 W1 W0 W3 W2 W1 W0

Complex or weather sensitive operations

W2

Scope Reduction for e.g. Repeat or similar operations

W0

W1

Complex and weather sensitive Operations

W3

Typical Marine Operations

Intolerable Risk Border area (ALARP) Tolerable Risk

Warranty Surveyor Scope

Risk Level Simple operations and high redundancy Well controlled simple operations or operations with high redundancy Warranty Level W0 Warranty Scope No Warranty Basic quality level for marine operations no warranty approval required Limited Scope of Warranty Warranty approval to be issued either based on documentation review only (e.g. MoDU location approval) or surveys on site (e.g. Lashing of ship cargos). The most relevant alternative to be selected by the warranty surveyor Standard Scope of Warranty As W1 but including both evaluation of design documentation and operational procedures and pre-operation verification surveys (e.g. towed barge transportation) Full scope of Warranty As for W2 but including on-site surveillance during the operation (e.g. Skidded loadout, Jacket launch, topsides lift, float-over, complex subsea installation)

Warranty Surveyor Scope

Generic Warranty Surveyor Scope: Validation of project conceptual design basis & criteria. Review & Approval of marine operations procedures and associated engineering. Attendance at marine related hazard identification engineering meetings and procedure reviews. meetings,

W1

Complex or weather sensitive operations

W2

Scope Increase For e.g. High Asset value / Schedule Impact or claims history

Inspection/audit of marine transportation, tow and construction vessels, jack-up rigs and Mobile Offshore Drilling Units. Attendance on-site to witness and approve W1,W2 or W3 Marine Operations As required.

Complex and weather sensitive Operations

W3

Warranty Surveyor Scope

Warranty Surveyor Scope - Examples

Scope Item Activity Description Doc Review Attend Operation Issue Report Issue CoA

Marine Operations Load out*, Float out, Float on/off. Towed and Self Propelled Transports. Launching, Upending, Positioning. Setting, Piling, Grouting. Lifting, Lift-off or Mating Operations. Transit and Positioning of Jack-ups. and semi-subs. Pipelaying & Flexible/Cable Lay Subsea structures Installation Operations. Pipe/Cable Crossing & Trenching
Substructure Loadout Transportation & Installation

Jacket Transport & Tow Vessel Surveys Jacket Initial Skidding to Loadout Area Jacket Loadout onto transportation Barge Jacket Seafastening and Sailaway Jacket Launch, Up-end, & Wet Tow Jacket Set-down/Installation Jacket Pile Handling & Piling (1st Pile only)

X X X X X X

X X X X X X

X X X X X X X

X X X X X

Warranty Surveyor Scope - Examples

MIA Scope Item Activity Description Doc Review X X X X X Attend Operation X X X X X Issue Report X X X X X X X Issue CoA X X X X X

Line pipe Transport & Tow Vessel Surveys Line pipe joint Loadouts Export Pipeline and Flowlines transportation & Installation Line pipe joint seafastening and Sailaways Line pipe joint Discharges Line pipe transhipments to Pipelay Vessel Lay vessel Suitability Survey Line pipe/ flowline Installation

WARRANTY PROCEDURES

Marine Warranty Procedures

Marine Warranty Procedures

Desktop Review A front end review of the project design basis, specifications and limiting criteria is performed. The limits are agreed and become governing for later Marine Warranty Review. Procedures and engineering document reviews are then carried out by MWS discipline Engineers/Mariners. The reviewer(s) carefully works through each document to ensure they comply with the required standards and the agreed criteria. The outcome of the review is communicated to the client in a document review letter containing comments to the particular document and indicating the Marine Warranty status of the document as follows:C = Conformance (Approved) NC = Non-conformance (Not Approved) TQ = Technical query (Not approved until technical issue addressed) A = Advice, (reply not required Approved) Document is approved once all indicated non conformances or Technical queries have been addressed.

Desktop Review (Off site)

Design Basis and Criteria Review

Design Basis and Criteria review

Attendance (On-site)
Condition and Suitability Surveys of Vessels

Engineering and Procedures review

Engineering and Procedures Review

Issue Marine Validation Letter

Issue Marine Validation Letter

Marine Operation Attendance

Issue Certificate Of Approval

Marine Warranty Procedures

Attendance
Condition and suitability of vessels confirmed

Marine Warranty Procedures

Certificates of Approval are required for each MWS Scope defined marine operation. The issue of the Certificate is the culmination of the marine warranty process and is often reflected as a hold point or milestones in the project Inspection and Test Plans. These Certificates are the main deliverable to the Insurer in the event of a claim. The Certificates are further supported by the marine review letters and vessel survey and site attendance reports provided by the MWS.

Marine Operations Site Attendance

Prior to approving a marine operation involving vessels it is required that the vessel be surveyed by the MWS to confirm its suitability. Several key requirements are checked: Vessel condition is suitable for the task Vessel has required statutory certification Vessel is adequately manned and managed Vessel specifications/capacities have been accurately presented. The attending surveyors role is to ensure conceptual reviews are reflected in the physical form for the envisaged operation. Often the attending surveyor is incorporated into the JHA and or Hazid process. Key preparations elements of the operation are checked and verified prior to issue of the Certificate of Approval. The operation is then monitored to ensure compliance with the approved procedures.

Certificate of approval

Issue Certificate of approval

Marine Warranty Procedures

Certificates of Approval are required for each MWS Scope defined marine operation. The issue of the Certificate is the culmination of the marine warranty process and is often reflected as a hold point or milestones in the project Inspection and Test Plans. These Certificates are the main deliverable to the Insurer in the event of a claim. The Certificates are further supported by the marine review letters and vessel survey and site attendance reports provided by the MWS.

Certificate of approval

Loadout Float-out Sailaway Load-in Back-load Launch Upend Lifted installation Float-over MoU positioning Mooring Hook-up Pipelay & Crossings

KEY POINTS SUMMATION

Key Points Summation

Marine Warranty is an integral part of Marine Project Insurance requirements with approval of specific Marine Operations by the MWS being a Condition of the project CAR insurance. The MWS scope is negotiated between the Assured and the Underwriter based on the details of the project and previous claims histories. The MWS is engaged by the Assured but must be Approved by the Underwriter The key to the role of the MWS is their independence meaning they

ANY QUESTIONS?

are not constrained by financial or contractual motives when performing operations assessments
If MWS approval is not provided prior to the commencement of a scope defined operation then the Assured can be called in breach of their Insurance requirements by the insurer.