Wellhead Procurement Strategy

This article describes the key items to address to develop a Wellhead Procurement Strategy.
Vendor selection
To qualify as an acceptable equipment supplier of Wellheads and Christmas trees, the potential supplier's technical ability, quality assurance plan, and
commercial viability should conform to internationally acceptable standards and be auditable.
Tendering
Before issuing requests for proposals it is advisable to check if existing supply or price agreements for identical or similar equipment are available.
Where such agreements exist, negotiations on a single source basis should be considered. This practice increases the benefits of standardisation and
price. It is also possible that a centrally negotiated or tendered worldwide price agreement for wellhead equipment already exists.
Tender specifications
It is a practice to use the nomenclature of a known manufacturer when specifying equipment requirements. This can lead to mistakes and sub optimum
design. It is recommended to issue tender specifications which include a functional description of the required equipment, details of the environmental
situation, and information on the produced fluids and gases.
This approach gives more enterprising manufacturers an opportunity to submit alternative and sometimes more suitable designs, without invoking the
risk of being disqualified because of not adhering to the specification. Provision of a functional description will make it easier to evaluate and qualify
designs submitted by potential suppliers. This means the final decision on the acceptability of a proposal will be based upon its design and its suitability
according to the specification issued to bidders.
Technical evaluation
The recommended method for evaluating the received tenders is based on a series of tables. These tables break down the bids into discrete sections so
that each aspect of the tenders can be compared, e.g.:
General Requirements
Technical Specifications
Standard Equipment, Non-standard & Emergency Equipment and Tools
Tubing Head, Xmas Tree and Suspension Equipment & Tools
Handling, Operations & Safety
Summary of Scores
Scores Weighted per Items & Groups
It is important therefore that the method of technically evaluating the bids is decided upon before any invitations to tender are issued.
Before rating the proposals, bidders should be coded for ease of reference.
The general requirements are considered for each bidder and given a rating from O (unacceptable) to 3 (exceeds requirement). Each rating is then
multiplied by the weighting factor
The ratings are established for the hardware characteristics:
-Handling, Operations & Safety.
Contracting out
When the technical and quality related requirements of all bidders has been compared and evaluated, it merely suffices to award the purchase order to
the supplier that offers the most cost effective and safest solution for the operation and its ongoing service support or the fastest delivery.
The purchase order, contract or supply and stocking agreement should address the following elements:
Focal point for project management
Quality requirements (normally API 6A with PSL specified as appropriate)
Manufacturing point (QA rating acceptability)
Price basis (FOB, C&F or other)
Fixed pricing to end of contract or 12 months minimum with an agreed cost escalation formula in the contract for thereafter
Quantity discount structure for subsequent orders if any, or linking the contract to other contracts already existing with other Opco's
Packaging and FOB charges to be negotiated separately and not to be quoted as a percentage of the equipment value
Payment terms
Bank guarantees (if required)
Spare parts proposal with quoted prices fixed for the first five years of operation and an agreed price escalation formula thereafter
Required level of after sales services specified
Availability of Field Service Personnel and their cost
Buy back clause for equipment remaining at contract campaign end
Provision of running tools on Loan/Rental
Quality Control requirements
Inspection programme during the manufacturing Process
Quality Plans, where applicable.