High Quality Engineering for Deepwater Assets

Q: What is KBR’s history regarding its involvement in Mexico, and how has it evolved to its current state?

A: In the upstream segment, KBR has a 50-50 joint venture with Grupo R called Mantenimiento Marino de México (MMM), focused on the maintenance of offshore oil and gas assets. Our second organization is our Western Hemisphere High-Value Engineering Center (HVEC) in Monterrey, which has been in position since 1997. More than a local office, it is one of our high-value engineering centers that covers all of the Americas. Any project we carry out in the continent will at some point rely on the Monterrey office, as it produces high-quality results and is extremely responsive. As a company with a well- balanced portfolio, we develop technology in-house while also acquiring innovations from third parties. In the fourth quarter of 2015, we announced the simultaneous acquisition of three technology companies, and moving forward we will be acquiring more.

Q: What is the attractiveness of deepwater projects in Mexico for KBR?

A: KBR is a prominent company in the offshore oil and gas industry, having carried out many large, sophisticated, and complex projects. Since we work with all of the major oil companies around the world, we are able to evaluate the economics of any project to make the best value decisions with our customer, be it shallow water, semi-deepwater, or deepwater undertakings. We are currently working with BP on the US side of the Gulf on the Mad Dog Phase 2 project, which is one of the world’s largest planned deepwater semi-submersible oil production platforms. KBR is working toward making the project’s economics work at the lowest possible oil price.

Q: Could you tell us about your GVA subsidiary and how it is adapted to the Mexican environment?

A: GVA is part of KBR and is a specialist naval architecture and marine hull company. In the case of a floating production facility, the topside sits on a hull, which is a proprietary design of ours, as it was developed by GVA before it was acquired by KBR in 2002. We also use these hulls for deepwater drilling rigs and production platforms. GVA is an important part of our overall portfolio, with a solid track record in terms of quality, safety, reliability, and availability. The reason GVA is suitable for the Gulf of Mexico is that there is a lot of stormy weather in that area, be it hurricanes or tidal surges. Our hull is extremely robust and resilient, and is by far the best value in harsh circumstances and remote areas. A few years ago, when there were many hurricanes off the coast of Texas, there were many problems with rigs, but ours were the most stable.

Q: To what extent is implementing technology with long- term benefits in spite of its initial investment part of your strategy?

A: Normally, our GVA hulls are large facilities, but in deepwater, we are making a slim-line version, which leaves a considerably smaller footprint and will carry a lighter topside. The technology, robustness, and safety features are identical to that of our traditional line. The product was officially launched at the Offshore Technology Conference in Houston in May, and it will be relevant to some of the deepwater assets in Mexico when the oil price allows this technology to kick in.

Q: What are your main expectations in terms of the offshore market’s behavior?

A: As the oil price goes down, the focus of attention switches to producing more efficiently from existing infrastructure. Cost-effective and state-of-the-art maintenance will be required to get the most out of the existing assets, which we call “sweating the assets”. That is the focus of our maintenance company and we expect this work to continue or pick up when foreign companies enter the Mexican side of the Gulf. Whether it is for brownfields work with existing assets or greenfields work with new assets, maintenance is a staple procedure.