2.9Technology

MANAGEMENT approach

To develop its technology strategy, SBM Offshore first engages externally with its clients and internally with Product Line divisions to identify and analyze the key technical and business trends in the offshore industry. Armed with this market-based information, the Company predicts future technology gaps and strives to find innovative, safe, reliable and cost-effective solutions to meet these challenges. SBM Offshore’s technology team actively works towards this goal by transforming and innovating to ensure that the Company is well positioned for future projects as clients’ needs evolve.

In 2017 the Company continued to transition its focus from FPSO and mooring technology, where it is already recognized as a world leader, to increasingly diversify its efforts into emerging technologies associated with Gas, Power and Renewable Energies.

The Company operates a robust technology development process, which ensures that continued investment in each new development project or innovation is justified against a business case. Moreover, SBM Offshore develops its new technology through a structured stage-gate process − in place since 2012 − to ensure that it is fully mature before being offered for sale or introduced into projects. This Technology Readiness Level (TRL) process includes full scale prototype testing of new proprietary components and full FEED level definition of new systems as part of the qualification requirements.

In 2017, to complement the TRL process, the Company introduced a Business Readiness Level (BRL) system, which manages business maturity, measuring the readiness of functions such as procurement, construction, installation and operations to adopt the new technology. The BRL process endeavors to ensure business maturity progresses at the same pace as technical maturity.

KPIs and Targets

Technology development continues to be guided by four key principles:

1. To be driven by market demand − development projects must reflect the current and future challenges faced by customers
2. To strive for improved safety through inherently safe design
3. To increase the Company’s overall rate of return on investment through reduced costs, increased efficiency and/or improved performance
4. To retain its technology leadership position in the offshore market by continually innovating and developing sustainable solutions

Given the market’s need to reduce capital costs, and SBM Offshore’s strategy for affordability and improved competitiveness, a significant part of the development work in 2017 focused on using technology to reduce field development costs, or to increase functionality for the same cost. This primary objective to reduce the cost of its core products is already giving tangible benefits.

The success of SBM Offshore’s Technology division is measured by the quantity and quality of new designs and proprietary components delivered and ready for market (TRL4). The Company sets targets for the number of new systems and components to be delivered at various TRL levels during the year, and actively manages the development work to achieve these. Over 100 TRL stage gates were passed in 2017.

Competitive Advantage through Technology

SBM Offshore strives to deliver high performance solutions that meet or exceed client’s expectations and go beyond what is available in the market. During 2017, revenues were generated from several projects where technology played an important part in SBM Offshore being selected for the contract award.

2017 Performance

The major development projects undertaken in 2017 include:

• Fast4Ward™ standardization project has transitioned to full project execution mode.
• Floating Offshore Wind, where the mini-TLP concept has been further developed to optimize industrialization potential, and a development study is ongoing with a client.
• The S3 WEC (Wave Energy Converter) project continues towards pilot tests at sea.
• Latest digital solutions adopted to improve fleet operational performance and increase EPCI efficiency. Pilot projects were completed in 2017 with benefits to operations. The plan is to roll them out to wider application in the Company’s fleet in 2018.
• Continued development for floating gas solutions with its innovative TwinHull^TM FLNG concept, targeted at mid-scale capacities and its new build hull concepts for FLNG, covering a range of capacities.
• Development of FLNG topsides concepts jointly with a leading LNG contractor.
• Development of a new LNG-to-Power concept, combining an FSRU with an on-board power plant for direct export of electricity to shore.
• Continued work to build expertise in the Steel Lazy Wave Riser (SLWR) design as a cost effective solution for ultra-deep water and/or HPHT fields.
• A range of new swivels for enhanced performance is being developed, and construction of a prototype swivel was completed in 2017, with fabrication of a dedicated test rig now underway.
• Company secured its first co-development project in Brazil, under the ANP R&D funding program.

Intellectual Property

The Company maintains a significant Intellectual Property (IP) portfolio including patents, trademarks, and copyrights. Around 170 patent families cover a wide range of items including FPSO mooring and turret systems, semi-submersible and tension leg FPUs, hydrocarbon transfer and processing systems including LNG and gas processing, drilling and riser technologies and offshore installation. During 2017, the Company divested non-core patents, made 16 new patent applications in different countries and progressed with action against several parties for infringement of SBM Offshore patents, reaching settlement with two parties. The Company has also agreed the sale of its share of joint IP for a mechanical connector for steel risers to partner GMC Inc, who will continue to commercialize the product.