Good morning and good afternoon. My name is Matt Seinsheimer, Vice President of Investor Relations, and I'd like to welcome you all to TechnipFMC's Analyst Day broadcast live from our offices here in Houston. I wanna say thanks to all of you, many of you who have traveled across the globe to be with us here today, and I would also like to welcome all of those of you attending via the webcast. We're excited for all of you to participate today as we discuss how TechnipFMC continues to drive real change in both traditional and new energy businesses. Before we jump in, let me take you through some general housekeeping items. First, we will give some forward-looking statements today. This information will be based on our best estimates, and the outcomes are subject to change and risk, which are identified in our SEC disclosures.
I encourage you to read these disclosures on our website. Let me also spend a few moments on safety. Today, we are at our John T. Gremp Campus. We are currently in SO1, which is our main administration building. It's on the lower right side of the screen. We will also spend time in SO5 and S11, which are shown on the upper left. We don't anticipate any emergency events today, but if you do hear an alarm, we will escort you to the muster zones, all of which are identified on the map. The primary muster zone for this room is just located to the back or to the north of us, and it's outside in the southeast side of the parking garage. We also have emergency response teams available for you if you have any medical or health-related issues.
During the afternoon, we'll take you through several interactive sessions showcasing our technologies and integrated solutions where we will be traveling through working facilities. In order to ensure everyone's safety, we've shut down production in these areas, so you won't need safety glasses or hard hats. However, we do ask that you proceed with caution as you navigate through the facility throughout the day. I would also like to stress that no photography is allowed throughout the day as well. With regard to COVID-19 protocols, we will be upholding the guidance from both the World Health Organization and CDC to ensure everyone's health and safety. With this in mind, the event has been planned to allow for proper social distancing throughout the day. We do request that you wear your mask at all times.
Touch points have also been minimized, and there are sanitation stations available throughout the building. Now on to our agenda. Doug and other members of the executive leadership team will start the day by highlighting the real change that we have delivered thus far, as well as the steps we are taking to transform how we operate our business today and best position our company to help meet the energy needs of tomorrow. We'll then take a 20-minute break before we share our market outlook and financial update. We'll close the morning session and webcast with a Q&A session hosted by the entire executive leadership team. I will come back before lunch and share the afternoon agenda with those of you here in Houston. Finally, we want to ask for your help today in deciding how TechnipFMC can best give back to others in support of this event.
Each year, TechnipFMC employees are given time off that they can use to volunteer to the organizations that matter most to them. Today, we're going to do something similar. Rather than give you a traditional gift as a reminder of your visit, we're going to instead give those allocated funds to charitable organizations. Each of you have been given TechnipFMC Bucks that can be allocated to any of the five organizations that you see behind me, all of which support efforts to address environmental, social, and governance issues. To be clear, we will provide the donation. We simply ask that you help tell us where it should go. Please make your selections just outside the main event room to the right, and we will report back the results to you at the end of the day.
Now, I will start the day with a video demonstrating a much more comprehensive view of everything that we are doing in ESG. I also want to say just thank you again for your participation today. I hope that you enjoy the video, and more than anything else, I hope that you have a fantastic day while visiting us today at TechnipFMC. How we do business is as important as why we do business. That's why our people strive to make a positive impact every day. Since our beginnings in 2017, acting sustainably has been one of our key priorities. In 2018, we laid out our three-year sustainability roadmap, taking action to support communities, advance gender diversity, and to respect our environment.
Our achievements range from the small scale to the landmark, and our ESG ambition is simple: to drive real and sustainable change that favorably impacts our company, our industry, and our communities. Under the three pillars of our ESG scorecard, environmental, social, and governance-
Our transparent metrics focus on delivering real results. Our environmental commitments help us and our clients be more sustainable. We're TechnipFMC, so expect bold ambition. We will cut our CO₂ equivalent emissions by 50% by 2030, reducing the fuel we burn and the energy we buy, and we're making great progress.
Only vessel of our type in the world using battery hybrid technology. We've cut our emissions by 20%, as we do not need to constantly run backup engines to maintain DP redundancy. We've got clean power on demand.
We hope that by working on a sustainable future, cutting down on our carbon emissions, we will leave a better planet for our loved ones.
We are pushing toward 33% of our orders being lower carbon, leveraging our digital technologies and integrated offerings. We've just recently defined our Scope 3 targets and are focusing on our supply chain and business travel. We're also reducing water consumption and increasing recycling and reuse each by 10%.
I'm standing on part of the causeway which was built using demolition waste from site. We've been reducing, reusing, and recycling at Evanton, and it's saved us $1 million. Our green team are finding ways to do more.
We test equipment in this water-filled test gas pit at John T. Gremp Campus. We used to use trucks to take away the dirty water. Now we use divers to clean the pool, saving us 165,000 gallons of water every time.
Our social commitments incorporate our inclusion and diversity roadmap, which act on fair representation, where we are working toward 45% of our graduate recruits being women by 2023.
TechnipFMC offers great opportunities to have a brilliant career, and my managers have always encouraged me to grow and add value to the organization. I'm proud to be one of the first women to work as an engineering manager in Brazil, execute important projects, and inspiring other women to do the same.
We are increasing the number of people from underrepresented populations in senior management by 20%. In awareness and culture, we are working toward 100% completion of our inclusive leadership e-learning by managers.
This training gives you permission to grapple with your own biases and opens your mind up to receiving different types of leadership and perspectives. It's important for an innovative company to have diversity of thought and for people to bring their real selves to work.
Finally, we continue to make a positive impact in our communities. We are supporting 800 volunteer initiatives through our iVolunteer program, where every employee is encouraged to give up 4 hours of their working time to a charitable cause.
Our neighbors were more affected by COVID-19 restrictions and hunger than the disease itself. We had to step in and help. Safely, we found a way to deliver 20 tons of food and minimize their needs.
We are also promoting education and careers in STEM with a target of 150 initiatives.
It was just about like learning new things that I had no idea that I could do.
Our focus on governance upholds the integrity of our business. We never compromise on safety, and we have a focus on prevention as demonstrated by our target of 400 completed SIF prevention projects.
We all really care about each other here, and we look out for each other at all times. Our SIF program enables us to identify and eliminate hazards that could cause serious injury, damage to the environment, or damage to our equipment. I believe that it enables us to share our learnings effectively and helps to save lives.
Our human rights due diligence is at the forefront of our agenda, and we are continually auditing the human rights practices of identified suppliers.
We have a three-year program of human rights management and monitoring throughout our supply chain. We're working closely with all of our suppliers. It's fundamental to our business that everyone has their human rights respected.
In the area of ethics and compliance, annual training is mandatory for every manager.
What unifies us in this organization is its spirit, and therefore, it is important to use annual ethics and compliance trainings to know what is right in the company's view and follow the same. I see a lot of our values and beliefs being put into action every day by our employees.
Finally, in compensation, we recognize the right behaviors across our company through our recognition and reward programs, and continue to monitor gender equity.
We hold ourselves accountable to our ESG goals. 25% of the annual bonus program for management and employees is linked to ESG performance.
There are many other ESG achievements that our scorecard doesn't capture.
TechnipFMC celebrating June as the Pride Month is for me a clean, straightforward, and bold message from top management to the whole of the organization. It gives me confidence that as a gay person, my skill and experience will be considered for their true value, irrespective of my sexual orientation.
The CEO Action for Racial Equity Fellowship is a data-driven business coalition focused on improving racial equity and social justice. The fact that my company supports the fellowship and my contributions while also helping to promote a diverse and inclusive society makes me very proud to work here at TechnipFMC.
We are proud of all we are achieving, whether that be through our ambition to achieve a 50% reduction in Scope 1 and Scope 2 CO2 equivalent emissions by 2030, our ESG scorecard that measures performance and drives accountability, or our compensation programs that are linked to ESG performance. We are TechnipFMC, and we are driving change in the energy industry.
With that powerful message brought to you by the women and men of TechnipFMC, I hope that you could see and hear and feel their individual and our collective passion and commitment to ESG and our demonstration of transparency and accountability in everything that we do. With that, I'd like to welcome everybody to today's Analyst Day. Back in 2017, we formed a company with the vision to drive real change in the energy industry. Our strategy has always been focused on the successful delivery of this vision and our foundational beliefs that how we do business as is important as why we do business. Together, our strategy and our beliefs drive our ESG practices to reshape the industry for a sustainable future. We are very excited to be with you all today, whether it be here in Houston or as part of the global webcast.
Today, you will have the opportunity to see first-hand results of our successful transformation of the subsea industry, explore some of the unique business models and technologies that are driving this success, and discover how we are leveraging our subsea expertise to the development of novel offshore energies as well as carbon transportation and storage. All of this is made possible through our core competencies of innovation, integration, and collaboration. Additionally, you will meet many of our leaders across the company. I am proud of them and the rest of the 20,000 women and men of TechnipFMC for their ongoing commitment and strong contributions to our success. We have a big day planned for you, so let's get started. With the creation of TechnipFMC, we successfully transformed the subsea industry through our integrated model, iEPCI.
iEPCI has become a brand name and a standard contracting model in the subsea industry. We have experienced swift adoption of the model and at a much faster pace than even we had hoped for. This success has also been achieved with a very diverse customer mix, with half of this group already becoming repeat customers. The integrated model improves project economics, enhances project performance, and reduces emissions. It should be no surprise that we have announced 30 integrated projects since the inception of the model. Our journey began with the award of the Equinor Trestakk Project in 2016, the industry's first integrated project. From there, we have never looked back. In the current year, we have been awarded five new iEPCI projects.
Among these are Petronas' Limbayong project in Malaysia, their first deepwater development, which is not only utilizing the iEPCI model, but also fully utilizes Subsea 2.0 technology. Our newest iEPCI client is Karoon, with the development of the Patola field. This is also our first integrated project in Brazil, and our most recently announced iEPCI project is for Tullow on their Jubilee South East development offshore Ghana. This is our first integrated project with Tullow, and through early engagement in the integrated feed stage, we're leveraging Subsea Studio to build out the optimal development, execution, and operations plan. As these latest projects suggest, we've been highly successful in achieving market penetration across the globe. From the North Sea to the South Pacific, to the Horn of Africa, to the Gulf of Mexico, and most recently, the Brazilian coast, iEPCI is transforming the economics and delivery of subsea projects.
As you can see here, TechnipFMC has truly turned the world purple. Let me put this in further context for you. The economic benefits to our customers have been compelling and a catalyst for real change. For a business model that didn't exist five years ago, more than $15 billion in integrated projects have been awarded to the industry. Over the last three years, industry-wide integrated projects have accounted for nearly 30% of the total subsea market. We are humbled by the market recognition and the attempts by our peers to replicate our iEPCI model. Today, we remain the industry's only fully integrated solution, a critical point of differentiation that allows us to get involved early in project concept and design and the opportunity to impact field architecture and equipment specifications. This is where you can have the greatest benefit to project economics.
We are the market leader of integrated project execution. Our company has accounted for 70% of all announced iEPCI projects since we introduced the model, demonstrating our leadership and success in this innovative offering. We are particularly focused on direct awards, whether they be driven through our early engagement, iFEED, or from our alliance partners. More than 60% of our iEPCI project value has come from direct awards, a distinct competitive advantage and a testament to our strong relationships as well as the trust our clients continue to place in TechnipFMC. With nearly $7 billion of subsea backlog, we can be more disciplined in project execution and selection. This flexibility allows us to preserve our capacity for work that will either be direct awarded or fully utilizes our iEPCI capabilities.
Leveraging our FEED capabilities at the very beginning of a project can bring the highest degree of integration and innovation, delivering better economics for both parties while providing us with increased schedule visibility. Outside of project-related work, our subsea services business is also largely direct awarded. This business is supported by TechnipFMC's installed base of over 50% of the world's subsea infrastructure, where we inspect, repair, maintain equipment using an OEM-type model. We anticipate this combination of iEPCI, services, and direct awards will represent approximately 50% of total subsea inbound in 2021. Customer collaboration has been enhanced by our iEPCI offering. The strong industry adoption has expanded the number of alliances and partnerships, and we fully expect this trend to continue. Today, our list of client partnerships has grown to 15, relationships that we greatly value and that will help drive change in the energy industry.
As energy markets evolve, the mix of operators is likely to change, too. Recent strategy updates provided by a few companies contemplate an accelerated path away from conventional oil and gas. As these operators begin to shift their plans, that opens the door for others to expand their resource base, particularly offshore. As these companies look for partners, they are increasingly turning to TechnipFMC and our expertise in integrated project execution. We are well-positioned for this asset transition and are rapidly developing strong partnerships with the next generation of subsea operators. Beyond our strong customer relationships, we have many other valued partners and alliances. Nearly three weeks ago, we announced a global commercial alliance with Saipem, which will enable us to create greater value to our clients through the collaboration of complementary assets and capabilities. We are very excited about the potential of the new alliance.
This was a key strategic move by our company that will notably expand the potential market for iEPCI while also delivering on our commitment to an asset-light model, which allows for more efficient capital allocation and improves financial returns. Pipelay vessels are a core competency required for the delivery of every subsea project. There are three primary approaches to pipelay, typically referred to as reel lay, J-lay, and S-lay, with the primary difference being driven by the type, size, and weight of the pipe as well as the proximity of land-based facilities. Reel lay is the most commonly used vessel type. We are the leader in reel lay, and that was the iEPCI application that we initially targeted. Here, our customers not only benefit from our disruptive technologies such as Subsea 2.0, robotics, and digital controls, but these projects also fit comfortably within the capability of our fleet.
The majority of iEPCI projects are executed using reel-lay vessels. In order to continue to extend our reach and bring the benefits of disruptive technologies and the integrated commercial model to all clients, we further challenge conventional thinking, resulting in our existing alliance agreement with Allseas, which provides us with S-lay capabilities. Through our recently announced alliance with Saipem, we add the last remaining piece of the pipelay ecosystem. Saipem is a well-known leader in SURF, with a strong track record of delivering some of the world's most challenging projects. We now have access to their best-in-class J-lay vessels, technologies, and capabilities. This ecosystem is unparalleled in the industry, and it will allow us to continue to expand the iEPCI market to levels that would not have been achievable otherwise.
Over the past 35 years, our first generation of subsea equipment succeeded in making the impossible possible, taking us into deeper waters, higher pressures, higher temperatures, and more demanding environments. In thinking about our next generation of subsea systems, we challenged ourselves to make the possible more economical. The solution was Subsea 2.0, which we first introduced at this event in 2017. By simplifying and standardizing components, products, and processes, we are able to industrialize our subsea offerings. We are now extending Subsea 2.0 across our portfolio of products to include all system-level components as well as our new generation all-electric subsea system that you will hear much more about later today.
We have had strong client acceptance of Subsea 2.0, with essentially all major operators that we have pursued either adopting the new platform or in the final stages of approval. These adopters are not geographically specific, as we are seeing uptake in all basins globally. We expect more than 50% of our tree orders will be Subsea 2.0 over the next two years. Importantly, the success and swift adoption of Subsea 2.0 has provided us with the volume needed to drive a completely different operating model, which we will discuss shortly, and that has never been used in the subsea industry. Let me now speak to the expanding role of digital within our company. Today, digital is embedded in virtually all of our technology developments.
Our digital transformation continues to accelerate, delivering next-level productivity in all aspects of our operations while bringing additional value to our customers and greater differentiation to TechnipFMC. There are three major elements of our digital transformation. First, becoming a data-centric company, where our seamless digital thread and solutions connect directly to our customers' systems. Second, developing intelligent products and vessels, where we go beyond our standard offering to create hybrid solutions that generate better performance. And third, driving towards autonomous operations, which allows us to further progress towards unmanned facilities and operations to improve health, safety, and environment, reduce carbon footprint, and improve efficiency. Building on these, I'll highlight a couple of the initiatives currently in use or under development. First, we are encoding decades of experience and know-how in our Subsea Studio platform.
Here we can initiate the digital thread at the field development stage, which orchestrates the way we work and connects to our engineering configurators. This is our platform where we connect our digital solutions with customer ecosystems to seamlessly share data. We configure, standardize, and ultimately automate engineering, improving efficiency, reliability in design, planning and risk mitigation, and collaborative work. Second, we are investing in a number of applications to monitor, measure, and reduce the carbon footprint of oil and gas operations. In basins across the U.S., flaring from production facilities can account for 70%-90% of a site's total emissions. Flaring is increasingly being limited by more stringent regulatory requirements and pipeline constraints, resulting in operators shutting in or dialing back production. Our E-Mission solution is the next level of optimization for production facilities.
Using process automation and data, the system provides constant monitoring and adjustments in real time to minimize flaring by up to 50% while maximizing oil production. The technology is core to our iProduction offering and can be applied in existing facilities globally. We look forward to showcasing Subsea Studio, E-Mission, and other digitally enabled solutions during this afternoon's sessions. Four years ago, in this very room, I shared with you our bold vision to drive real change and transform the energy industry. The creation of TechnipFMC led to something new, something revolutionary, iEPCI. Today, iEPCI is an industry standard with worldwide adoption, and we are the clear market leader. We lead our industry because of our commitment to innovation, integration, and collaboration. It's what we do. The success of iEPCI has strengthened our offering.
We have become a more attractive partner, growing our alliances and positioning ourselves to be the partner of choice for offshore operators of today and tomorrow. By extending our next generation Subsea 2.0 platform, we are demonstrating how we deliver the best solutions more economically, and how we are working towards lowering the carbon footprint of conventional oil and gas developments. Our digital transformation brings more value to our clients by integrating systems which give them data they can act upon. By digitizing everything from concept to delivery and beyond, we are able to improve efficiency and ultimately reduce emissions. It is my pleasure to now ask Justin Rounce, our Chief Technology Officer, to join me on the stage, as well as Luana Duffé, who will be joining us remotely from Rio de Janeiro. Luana has recently been appointed as our Executive Vice President of New Energy Ventures.
Justin will start off by showing you how we are industrializing our processes using a configure-to-order model that we are leveraging across our business. As I mentioned earlier, this model has never been used in the subsea industry, and he will show you in detail how it is impacting our company. Luana will then discuss how we are extending our core competencies, innovation, integration, and collaboration to position ourselves to be a partner of choice in the development of novel sources of offshore energy, as well as carbon transportation and storage. She will go beyond aspirational goals, and instead focus on real partnerships, alliances, and technologies that have created opportunities that will ultimately transition TechnipFMC into the new energies of tomorrow. As you can see, we have many incredible things going on, but what excites me most is our people and their passion.
Throughout the day, you will hear and have the chance to meet many of the members of the leadership team, all of whom truly represent the power of purple. Together, we're paving the path forward for TechnipFMC by continuing to develop the technology and talents on which we pride ourselves. The world is changing. Change is in our DNA. It is evidenced through the real progress and results we are sharing with you today, and we'll continue to drive change in the industry, energy industry of today and tomorrow. It is my great pleasure to now hand the podium to Justin.
Thank you, Doug, and good morning. It's great to see everybody. Throughout the day, you'll see real examples of how we're using both digital and new technologies to introduce innovative products and services across both of our business segments. Several of these new technologies are focused on providing our customers with lower cost solutions, greater efficiencies, and shorter cycle times, benefits that have become a hallmark of our driving change culture. You will also see new technologies focused on carbon reduction and renewable energy that will expand existing markets and create new opportunities for TechnipFMC. Today, I'll speak specifically to the progress we have made on the development of our all-electric subsea production system. This product line, which we now refer to as Subsea 2.0, extends across multiple technology frontiers in that it provides cost and efficiency benefits while also reducing the carbon footprint of traditional energy developments.
First, I'm going to introduce you to configure to order. Typically referred to as CTO, this operating model is not a new concept. However, it is revolutionary to our industry, and TechnipFMC has successfully implemented CTO to fully leverage the product benefits that have been enabled by the transition to Subsea 2.0. At our investor conference four years ago, we illustrated how subsea projects have traditionally been executed, what I will call business as usual for our industry. Each client's project is designed with unique requirements and differing levels of technical challenges. We typically approach these projects the same way, engineering a new product architecture for each unique project with no consideration given to the impacts across the entire value stream that can alter how we supply, manufacture, install, and ultimately service the product.
This traditional approach is commonly referred to as engineer-to-order and results in longer delivery times, higher operating costs, and more complex project execution, all driven by the customer's unique requirements for the product. At our 2017 investor event, we also introduced Subsea 2.0. While dramatically simplified in its design, the Subsea 2.0 platform addresses nearly 70% of the intended market requirements utilizing a thoughtful and revolutionary product architecture. Importantly, we did not take the approach that our customers can only choose one of our existing designs to standardize upon as others are doing. Rather, we built a new platform and system architecture from the ground up that was specifically designed for configurability. While still challenging convention in its design, we did not require our customized to compromise on critical requirements that they have repeatedly told us provide value to them.
As Doug highlighted, the product line has been a tremendous success. With significant customer adoption, we have now industrialized our project-oriented business. With this operating model, we can leverage the efficiencies of standardization while still addressing the unique requirements of individual projects, all of which can be selected from a product catalog that unlocks efficient manufacturing and servicing of our equipment. CTO has enabled us to create a value stream that delivers a more competitive offering to the market when compared to an equivalent engineer-to-order product, resulting in a 25% reduction in cost, a 50% reduction in product delivery time, and a manufacturing throughput that has more than doubled within our existing footprint. The shortened product delivery time provides material benefits that extend beyond manufacturing.
By reducing the delivery schedule by 50%, we can substantially reduce the critical path for iEPCI system execution and our clients' time to first oil. When we first made the decision to transition to CTO, a team of more than 170 experts from across the company came together, and with a blank sheet of paper, set out on a journey to design and implement a completely new way of working for our company and our industry. They first mapped the way we traditionally execute projects, then eliminated the primary forms of waste, and finally streamlined the remaining processes to ensure that configure-to-order could successfully industrialize our project business. This resulted in three CTO principles that serve as the fundamental basis of how we operate in this environment. Firstly, we eliminated design engineering by integrating our digital tools.
Next, we redefined our sourcing strategy by utilizing pre-approved suppliers and standard configurations. Finally, we transformed manufacturing flow by leveraging configurable assemblies. I'll talk more about each of these principles and what we have done to achieve them. Integrated system design does not start at the moment a customer gives us a contract. It begins long before that in the customer's office during the front-end development. Using configure-to-order, all equipment options are pre-engineered to meet the array of system requirements needed. Our digital configuration tool, Subsea Studio, embeds all of our standard product configurations into a system-level offering. This accelerates the project feed stage by enabling subsea field scenarios to be built faster, providing our clients with multiple realizations that they can then assess and optimize to more quickly develop the best system solution for their needs.
Once a contract has been awarded, we then integrate these requirements into our project execution model known as the configurator. This triggers the automatic generation of all system documents for execution, allowing manufacturing both internally and across our supply base to begin immediately. This allows for the tedious and iterative process of requirements reconciliation and design engineering to be completely eliminated. Importantly, with CTO, there are zero hours required for product design engineering, which eliminates six months of lead time from the critical path when compared to a project designed using the traditional approach. Our second CTO principle is focused on our supply chain. This extensive group of external partners is responsible for manufacturing and delivering a significant portion of the components on our subsea systems. Supply chain success in our CTO journey was absolutely critical to meeting our targets.
We needed to find sustainable ways to gain efficiencies across sourcing, procurement, and logistics. In an engineering to order model, there can be considerable variability across suppliers with respect to component costs, lead times, and manufacturing processes. Since the timing of procurement depends on the completion of engineering, it's difficult to strategically plan for and manage supplier capacity constraints. As a result, we order material in the required volumes that are specific to each project. With CTO, the greater predictability of product manufacturing and high volumes of pre-engineered components has allowed us to completely redefine the supply chain. We started with a list of our global--globally approved suppliers. Then we preselected top-performing suppliers against all parts in our configurable catalog. These suppliers were competitively selected considering quality, cost, lead time, proximity to our manufacturing locations, and carbon footprint. We're not just transforming our business.
We have partners in this journey, and we're transforming their business as well, reaching far and wide outside of our company. This transformation is making their lives much simpler in comparison to our competition, making them want to work with TechnipFMC. Once selected, each supplier's manufacturing process was extensively validated. As a result of this process, we chose a total of 88 suppliers that have now been pre-qualified for our full range of standard parts. These supply partners will receive greater volume certainty as we will make commitments to them on an annual basis, creating higher efficiencies and lower costs while mitigating the risk of inflation. Since we have chosen our suppliers in advance, we're building even deeper partnerships that can help further optimize our manufacturing flow and processes. This is not a vision; this is our new reality.
The streamlined model stabilizes the execution flow, enabling significant and sustainable reductions in lead time and risks, while increasing quality and delivery assurance. Additionally, we keep our inventory levels low by approaching required stocking of standard parts on a consignment basis with our partners, which reduces our working capital requirements while still allowing for availability of a wide range of product options. Using a standard tree configuration as an example, we have reduced the overall procurement and logistics lead time from 14 months on a traditional project to 6 months on a CTO project. Finally, our third CTO principle is focused on manufacturing. In a traditional manufacturing environment, we typically have two challenges inhibiting optimal flow. The first is higher frequency of first article builds, and the second is what we call mixed flow, both of which lead to more complex execution.
First article build simply refers to the fact that a manufacturing line is flowing a product through its facility for the first time, which often results in challenges that need to be solved on the production line. On average, the first five units of a new product build will require considerable effort to fix problems and adjust the build process. With each successive build, there will be continuous improvements before reaching a point of stabilization. At a certain point past the fifth unit, you typically reach optimization for that particular design and process. However, in an ETO environment, you rarely build more than five products that are the same, suggesting that we rarely reach the point of optimization for the vast majority of the equipment we historically built.
The other notable challenge for ETO is mixed flow, which references the predominant process in use today where unique products flow through the same manufacturing line. To put this into a more relatable visual, imagine three automobiles, a Honda, a Ford, and a Mercedes-Benz, all being manufactured in the same facility. Three very different designs, none of which share the same chassis. If all three vehicles were to share a manufacturing line, then the most efficiently built product would be at the mercy of the least efficient. There would be increased assembly complexity and greater workflow disruption. This is how a manufacturing line operates in an ETO world.
Using the same analogy for Subsea 2.0, our product architecture allows us to freeze the fundamental design of the block, which is our chassis. While allowing the configurable components to be clicked together on the manufacturing line, ensuring optimal flow through our facility. However, up until now, we've been flowing this more efficiently designed system through a mixed flow facility, mixing products that use different tools, have unique complexities, and require more time-consuming tests as a result of the varying designs. In a CTO environment, we still experienced the same learning curve that I showed you before. However, this was limited to the first project we delivered. All of the learnings from the first project could be immediately applied to the next. Further optimization developments on the second project were immediately propagated to the next two projects that were already in development.
Having a stable product coupled with significant volume in backlog allows us to pivot from a project-by-project problem-solving mindset to one of continuous improvement and optimization. As a result of our increased product volumes, we have also been able to shift from a mixed line to a dedicated line, which we have already proven reduces lead time by an additional 25%. To eliminate the constraints of a mixed flow environment, we made the decision to dedicate a facility to the manufacturing of only 2.0 products. This has enabled a facility that was originally designed to flow 16 trees per year to now manufacture up to 48 trees on an annualized basis with essentially no incremental CapEx. As already highlighted, you can only provide dedicated manufacturing lines when you have a critical mass of orders in your backlog. You simply have to have the volume.
This approach also creates a more stimulating, empowering, and inspirational work environment focused on the optimization and efficiency performance of the products. That in turn will deliver greater value to our customers and a competitive advantage for TechnipFMC. Configure-to-order transforms the manufacturing process, simplifying execution flow, improving quality, and resulting in delivery assurance while also reducing investment requirements. The industrialization of our project business through the introduction of CTO is yet another way in which we are driving real change in our industry that further improves the economics of our customers' projects while driving greater efficiencies for TechnipFMC. With CTO, we have designed an environment, a process, a culture, and tools which are scalable and, more importantly, are transformational to the future of our company.
Our customers require a product platform that provides them with choices which meet their unique and evolving needs, but also provides the significant speed, cost, and efficiency benefits that come with product and process standardization. This is exactly what configure-to-order does. In conclusion, when we set out our vision for Subsea 2.0, our goal was to create a product platform with real differentiation and to create value for our clients, our investors, and our people. The creation and acceptance of the 2.0 product was a critical milestone in the evolution of our business, providing the essential volume required for the adoption of CTO. With more than 50% of tree orders over the next two years connected to this work, we can maximize the efficiencies afforded to a standard, yet configurable product that is manufactured in a dedicated facility.
This new volume paradigm has translated into time and cost benefits across the value chain. With CTO, we're eliminating design engineering up to 28,000 hours and six months of lead time per project. We're redefining our sourcing strategy, removing significant inventory from our balance sheet, and we're cutting up to eight months of lead time, and we're transforming our manufacturing flow, providing us the ability to increase annual throughput by up to two and a half times, all resulting in up to 25% lower product cost and a 12-month delivery time, savings that are both real and sustainable. We have paved the way for other products to adopt a similar operating model, enabling an enterprise-wide way of working. Looking beyond CTO, which is all about how we operate our business, we continue to pave the way forward with the introduction of new subsea technologies.
We believe the electrification of the subsea system is yet another potential game changer for the subsea market. Electrification offers advantages to all subsea wells and is particularly well suited for the development of long tiebacks, gas fields, water injection, and carbon transportation and storage. Looking more closely at tiebacks, our all electric system not only improves project economics, but in many cases, it allows for the development of new reserves which were previously deemed uneconomic. More specifically, all electric enables long tiebacks from the host facility by eliminating all hydraulic infrastructure from the umbilicals, distribution hardware, and the topside power unit, and reducing the need for additional infrastructure above the waterline. This can extend the potential length of a subsea tieback by more than four times compared with today, and reduce capital expenditures by up to 10% when considering the full iEPCI scope.
Aside from the potential reduction to capital investment, all electric systems can increase well uptime and production rates, have the ability to be powered by renewable energy, and provide a digital solution with enhanced data management and greater system flexibility via software updates instead of more costly hardware replacement. Our Subsea 2.0 system already contains most of the products required for electrification, enabling us to continue to maximize volumes in standard products contained within our existing CTO operating model. Electrification is not only about complete systems. There is huge value in deployment of electric systems within the subsea infrastructure, even if the field is not fully all electric. Let me share three examples. Firstly, with electrification of our umbilical cables, they are further simplified by eliminating hydraulic lines in the design.
Using the tieback example for reference, we could remove up to 100 km of hydraulic lines from a traditional umbilical application. We continue to transform our umbilical designs through the qualification of alternative materials for power distribution. One example of this is our patented use of 6000 series aluminum, which has enhanced fatigue and creep properties and replaces high demand copper for the primary source of material that's used today. We plan to leverage this technology in our new energy business where it's particularly advantageous for floating wind applications. Moving to controls, our 800 Series controls were developed as part of our 2.0 product line. With our advanced digital architecture, we now have the ability to update installed systems via software rather than changing out hardware. We also have the ability to manage power consumption, which is tremendously important in a brownfield environment.
These types of modern flexibilities are an important part of what we can do now, and which no other competitor can offer. Finally, we've talked about the use of advanced robotics and actuation when we introduced the robotic valve controller, or RVC, to the market. This product is used to manipulate our manual valves through automation. Let me be clear, no other competitor offers this technology today, exemplifying our commitment to digital technology. We have recently commercialized our second generation RVC, which I'm pleased you'll be able to see this afternoon. Our innovation extends beyond robotics with our battery powered electric actuator technology, where we are the clear industry leader. This year marks the twentieth anniversary of TechnipFMC's first electric actuator, which was also another industry first, and we have sold well over 500 systems since the introduction of this capability.
This technology has multiple applications, such as high resolution electric chokes with advanced positioning capabilities that can it can increase production rates through flow optimization. Electric actuators are also used in our manifold valve assemblies and significantly reduce the size, cost, and carbon footprint of these structures. The electrification of our subsea production system extends into our complete integrated field offering, and we call this E 2.0. Our E 2.0 products will use our configure to order model and leverage standard parts to further drive a volume paradigm while maintaining our revolutionary product architecture to enable consistent manufacturing flow. This step change in technology bridges the gap between our conventional oil and gas business and our new energy business.
Here, we're combining all of our learnings from Subsea 2.0, CTO, and electrification to fast-track the development of new solutions designed specifically for the carbon transportation market. You'll see a very real example of this on display later this afternoon. Ladies and gentlemen, I've shared a lot with you so far this morning, and we could not be more excited about CTO and the transformation of our operating model. More than 50% of our equipment backlog will benefit from this paradigm shift, and we expect this to increase year after year. Our all-electric portfolio is leading both in technology innovation and industry adoption. With over 500 systems benefiting from our all-electric technology, we are well-positioned and in advanced discussions with several customers for full-field deployment.
Finally, I wanted to highlight that the combination of 2.0 technology with our CTO operating model and all-electric systems are real, being delivered to our customers today, and are having a material impact on the industry and our performance. I'm very excited that you will see many of these technologies later today. With that, it is my great pleasure to introduce Luana Duffé, who will share some more about our novel energy technologies and business. Thank you.
Thank you, Justin. I'm Luana Duffé, Executive Vice President for New Energy Ventures, and I'm extremely happy to have the opportunity to lead our diversification efforts beyond oil and gas. Since our inception as an integrated company in 2017, we've been pursuing innovation to reduce emissions within the conventional energy space. We have also been exploring ways to position TechnipFMC in the energy transition by delivering differentiated solutions and leveraging our core competencies and existing resources. We are ready to accelerate and grow our contribution to this transition, and New Energy Ventures will play a key role for our company in this journey. The global society is committed to reduce emissions towards net zero, and there is a general consensus we need to accelerate this ambitious goal. However, there is no silver bullet to solve this challenge. Success will come through real collaboration.
We will need to develop new technologies and solutions faster than ever before, and the ocean will remain a key part of the equation. That said, fundamental to our strategy is our strong belief that offshore will be the next frontier in the energy transition. As you all know, TechnipFMC lives offshore. We even like to say we own the water column. We are the energy architect in subsea, known for our ability to execute and integrate complex systems. Our goal is to be a key enabler of the offshore renewable industry. To get there, we will leverage our subsea and surface expertise, our collaborative and innovative mindset, as well as our demonstrated capabilities in project integration. We will continue collaborating with energy companies and technology providers to bring to market innovative solutions that are best suited for offshore applications while maintaining an asset-light model within our business.
As a result of our evolution in the new energies arena, we are further refining our market approach, which we have defined through three main pillars. Our first pillar is greenhouse gas removal, which for us will begin with CO2 transportation and storage. The second is offshore floating renewables, meaning wind, wave, and tidal technologies. The third is hydrogen, which will promote better energy management and efficiency through our Deep Purple offering and digital solutions. Now, I will share more details with you on each of our pillars and how TechnipFMC will continue driving real change in the energy transition context as well. Our first pillar is driven by our ability to immediately leverage our surface and subsea solutions and services to make an immediate impact in the emerging carbon transportation and storage industry. The capture industry is maturing for both low and high carbon point sources.
Two important questions remain: Where are we going to store it, and how we will get it there? We anticipate that there will be social repercussions from storing significant volumes of CO2 on land, especially in areas of high urban population. We believe one of the safest and most efficient storage locations is offshore, where the carbon can be maintained in naturally occurring reservoirs and saline aquifers. To get it there safely, reliably, and efficiently, we will offer a fully integrated carbon transportation and storage system. Our scope will begin at the central gathering station, where the CO2 will be compressed and monitored throughout the process and will end at the injection well.
The overall system is being designed using our subsea and surface-based technologies, including dry and wet trees, gas processing system. Our control and automation platform, as well as our flexible pipes, including the thermoplastic composite pipe from our recently announced Magma Global acquisition. All of these differentiated technologies are needed to address the unique challenges found in CO₂ transportation. Beyond project execution, we will also deliver life of field services, including well intervention services and real-time performance monitoring of the entire system. From a market point of view, we foresee the U.S. Gulf Coast as one of the first major sequestration hubs, because there are more than 100 facilities in this region, each emitting more than 1 million tons of CO₂ per year. Just last month, we formed a strategic alliance with Talos Energy, focused on accelerating the adoption of carbon capture, transportation and storage.
Talos has been selected as the operator of the United States' first major offshore storage hub, and we will work together through the full life cycle of site characterization, front-end engineering and design, execution, and life of field to de-risk project execution, accelerate time to market, and demonstrate real value by delivering cost-efficient solutions. Overall, the alliance combines Talos' strengths in offshore operations and our subsea and surface expertise, technology integration leadership, and life of field servicing capabilities. We have already identified three potential projects, with the first commercial opportunity likely to happen in the near future. We believe this pillar will likely be the first one to make an economic impact for TechnipFMC. Now, moving to our second energy pillar, we aspire to position TechnipFMC as the leader of floating renewables industry. Let's just start by looking at offshore wind.
This energy source has become well-established over the last decade, and is now the lowest cost energy source in some countries. This industry is built on bottom-fixed wind turbines that are typically installed in shallow waters and close to shore. We're focused on floating wind applications instead. Today, the floating wind market is still emerging, with only two projects delivered so far. We contributed to one of them, Equinor's Hywind project in Scotland, during the demonstration phase in 2009, and during the project execution in 2017. Market projections foresee significant growth in this area, going from almost nothing today to an installed base of 30 GW by 2030. While 2030 seems a long way out, to achieve such intense growth during this period, we require differentiated technologies, product standardization, and an integrated approach.
That makes floating wind a natural opportunity for our company for multiple reasons. First, the skills needed to develop these large infrastructure projects are closely aligned to our track record in subsea. Second, we're exploring new technologies that could benefit from our standardization mindset to bring scalability. Third, we're leveraging our extensive experience in project integration, perhaps our strongest point of differentiation. We see strong integration potential across offshore renewable markets. For example, by combining wind and wave or wind and hydrogen, we could maximize energy generation and efficiency since the incremental CapEx and OpEx needed is much lower than a standalone product for the same energy generation. We will approach these new integration opportunities in renewable energies with the new execution model, which we are introducing today as Integrated Offshore Novel Energies, or simply IONE.
You all know the success of our iEPCI offering for the conventional oil and gas space, and we believe iONE will play a similar role for the new energy mix. By acting as system integrator in a complex and rapidly changing environment, we can play a meaningful role in enabling offshore renewable solutions. Similar to our strategic rationale behind the Talos alliance, in March, we announced an alliance with Magnora, a Norwegian developer with a history in traditional offshore renewable energy projects, to accelerate our presence in this fast-growing market. We will work closely during the conceptual and design phase, allowing us to significantly influence the project economics and development while de-risking project execution. Together, we are actively pursuing new offshore wind opportunities in Scotland and Norway. In the future, we intend to look for additional opportunities worldwide.
Now, regarding wave energy, earlier this year, we announced a partnership with Bombora, a renewable technology company focused on wave energy. Our collaboration with Bombora is also driven by our integrated model, iONE, to combine wind and wave technologies onto a single floating structure, therefore maximizing the efficiency of the overall system. Taking the integrated approach even further, we're also exploring ways to integrate wind and wave with hydrogen. Here, we're working with Floating Power Plant to integrate hydrogen into their wind wave floater structure. This will also serve as a full-scale validation for our Deep Purple offering in an offshore environment, accelerating the technology readiness for commercial projects. This pilot will be executed at Canary Islands, and it is focused on providing power to remote locations. All that said, we see great potential for a more established wind technology to pull through wave and hydrogen energies.
Now, I would like to close this pillar talking about tidal energy, where we're also making tangible steps forward. Compared to wind, tidal energy is a more reliable and consistent energy source generated from sea currents driven by the natural rise and fall of the ocean. We see great potential given its predictability and the need for diversification of energy sources. Here, we have been collaborating with Orbital Marine Power, who we believe to be the most mature of all tidal technology providers, and whose one turbine has been installed and is grid-connected in United Kingdom. Additionally, since the development phase of tidal opportunities is likely to be much shorter than floating wind due to their already consented sites in Europe, we expect floating tidal projects to be commercialized much sooner, with concrete opportunities beginning next year.
Now, shifting gears to our third pillar, we believe hydrogen will become a crucial energy carrier for storage and transportation of energy, and it will play a very important role in bringing reliability, stability, and efficiency to renewable sources. In simple terms, green hydrogen is produced through the electrolysis of water powered by renewable energy. It can be used for decarbonization of heavy industry, domestic heating, transportation sector, or converted to other zero emission fuels. As announced last year, Deep Purple is our solution for integrating renewable energy with hydrogen to form a complete zero emission offshore energy system. It can be configured to a specific energy demand and application, and includes power generation, seawater treatment, electrolysis, hydrogen storage, and re-electrification. To better address the reliability and efficiency challenges, we have also been developing a digital solution to enable flexible operation and
of the system during the rapid changes in wind and load. In periods with good wind conditions, energy can be provided either directly to the consumer or used to produce hydrogen, which could be compressed and stored subsea. In periods with no wind, the stored hydrogen can be re-electrified in fuel cells to produce the power needed by the consumer. In this way, power can be delivered consistently and reliably regardless of wind conditions. Additionally, our unique subsea storage system provides more storage than what's possible with batteries. Each hydrogen storage module can store up to 12 tons of hydrogen, which can be used to generate 200 MWh of electricity, the energy equivalent of 4,000 electric car batteries. Our hydrogen solution covers two main segments that together represent a total addressable market of 6 GW by 2030.
The first is offshore green hydrogen production and subsea infrastructure for coastal applications. Here, offshore hydrogen production will enable the harvesting of wind resources far from shore, where transport of electricity could be challenging. A hydrogen pipeline offers up to 10 x more capacity for energy transfer compared to a power cable. Our subsea storage system can be used to store a large amount of hydrogen close to end markets along the coastline. The second is off-grid energy systems, delivering renewable and stable power to traditional energy installations in remote islands. The opportunities linked to this market are primarily driven by the need for decarbonization. For example, replacing gas turbines and diesel generation sets. By combining offshore wind and hydrogen, we can enable 80%-100% reduction in emissions.
While giving you more color on our step towards these two main markets, you will see again that the strategic partnerships have been an important part of our strategy in order to accelerate the time to market of our solutions. We've been developing Deep Purple since 2016, and we have made significant progress with the conceptual design. We're now going through an extensive technology qualification phase, where we expect to have our solution fully commercial by the middle of this decade. Earlier this year, we kicked it off the Deep Purple pilot project. We have invited energy companies, Vattenfall and Repsol, hydrogen technology companies, and as well, a few other partners into this pilot. We're currently in the process of engineering and procuring a small-scale version of Deep Purple.
Next summer, we will have a fully operational test pilot at one of our Norway facilities to demonstrate the system and validate our digital solution. In Norway, we're working towards larger scale offshore hydrogen storage as part of the Hardanger Hydrogen Hub initiative. We're working with the Statkraft, one of the largest generator of renewable energy in Europe, to qualify the technologies and digital solutions that will make the project a reality. We have received one third grant, and we're in the process of applying for demonstration funding of a full-scale storage model. In Portugal, we have been working with EDP through their renewable brands to develop an offshore production and transportation system for green hydrogen generated from offshore wind, which we refer to as the Beyond Project. This includes the development and integration of modular solutions for offshore hydrogen production and conditioning of export pipelines.
As you can see, we're also making significant progress with our third pillar. I would like to close by reiterating that a realistic path to net zero can only be achieved if we all work together. It will require close collaboration from consumers, governments, and business. The novel energy space could be close to $80 billion total addressable market for TechnipFMC by end of 2023, with offshore floating wind leading the growth today and likely picking up after 2027, followed by greenhouse gas removal and hydrogen. As this is based on announced projects mainly focused in Europe and the U.S., we believe the estimate has the potential to go higher. However, this won't be a one-horse race. There will be multiple winners along the way, and our actions clearly demonstrate that we intend to support several of them to ensure they reach their full potential.
We see our role in the long-term path to net zero as the offshore energy architect. We will enable and accelerate the technical and economic viability of greenhouse gas removal, offshore floating renewables, and hydrogen. Our success will be driven by leveraging our core competencies and by partnering with our clients and technology providers to develop groundbreaking solutions, and more importantly, by using our fully integrated delivery model, which I introduced today as iONE or Integrated Offshore Novel Energy. We believe iONE will become the industry standard for driving and enabling the development of renewable offshore energy solutions. As you can see, we're making solid and tangible progress in establishing a clear path for TechnipFMC in the energy transition. We're fully committed to playing a meaningful role in this challenging but also exciting transition period.
We're confident we have the right competencies, resources, and teams to make this a very successful journey. We're bringing our energy to deliver the energy the world needs. Thank you very much for your time. Now I will turn it back over to Doug.
Thank you, Luana, for an inspiring message and sharing real examples of the technologies, partnerships, and opportunities we have built in the new energy market. Most excitingly, the introduction of our unique execution model, iONE. This morning, you have heard some very exciting messages. Since the creation of TechnipFMC just four years ago. The iEPCI model has become a brand name and a standard commercial model, far exceeding the normal adoption rate in the industry. iEPCI now represents approximately one-third of the total market. Today, you've heard how we've evolved Subsea 2.0 and made it E 2.0, our all-electric solution.
Later today, you'll get to see firsthand CO2.0, our carbon storage solution, all built on the same technology platform, all leveraging the configure-to-order operating model, which Justin described in clear detail, the benefits of which are unique to our company because of the volume and market position we have in the subsea industry. Luana went on to talk about many new opportunities and how we are positioning ourselves as the offshore architect of the new and novel energy future, fully leveraging our existing engineering, manufacturing, supply chain, and project teams, and benefiting from our core competencies of innovation, integration, and collaboration. We will be the key enabler allowing these new and novel energies to reach their fullest potential offshore, both in terms of scale and economic value.
I couldn't be more proud of what we've shared with you during this opening keynote session, and there's a lot more to come. We'll take a short break, after which Jonathan Landes, President of our Subsea division, will share our market outlook, and then Alf Melin, our Chief Technology Officer, will put some financial numbers behind what you've heard this morning, something you don't want to miss. We will start the next session promptly at 10:20 A.M. Thank you very much for your attention and attendance.
Good morning. It's great to be with you here today. My name is Jonathan Landes. I'm the President of Subsea. During this session, I'm going to share three key factors that will shape the future for TechnipFMC. First, our long-term outlook for energy and intermediate-term view on Subsea, both of which incorporate our framework for the energy transition. Second, our outlook for Subsea services, which we believe is poised to benefit from strong market growth and new service initiatives. Third, our early assessment of inbound order potential from the energy transition, which is supported by real project opportunities from our evolving platforms in both carbon transportation and storage and novel energy. First, let me address how we're thinking about energy over the long term. Predicting the long-term outlook requires both conviction and flexibility in assumptions and a willingness to adapt over time.
Our outlook includes an aggressive shift towards the energy transition, but it also takes into account that the desired pace of change is much faster than the market's ability to keep pace. There are many different views on the future for energy demand. Two scenarios from the IEA that extend out to 2040 are displayed here. The more aggressive demand scenario, referred to as the stated policy scenario, illustrates higher energy demand but a more conservative path toward transition, as it assumes governments will not reach all of their announced sustainability goals. The second scenario, referred to as the sustainable development scenario, results in lower energy demand and a surge in clean energy policies investment where all current net zero pledges are achieved in full and extensive efforts are made to achieve near-term emissions reductions.
In both cases, renewable resources will experience significant growth, becoming as much as 50% of the energy mix by 2040 in one scenario, although still requiring considerable support from conventional sources such as oil and gas. Our long-term energy outlook falls within these two views, reflecting global energy demand in 2040 that is approximately 9% higher than 2019 levels, and expansion in renewables, the fastest source of supply growth, to just over 30% of the energy mix, and a significant contribution from fossil fuels, which we estimate will comprise nearly 70% of energy supply in 2040. In our view, oil demand could still be as high as 100 million barrels per day, with approximately 25% of global production coming from offshore.
Regardless of how the demand scenario plays out, we are confident in two things: that the energy transition is real, and that oil and gas will remain an important part of the energy mix for an extended period of time. With that in mind, let's take a look at the medium-term outlook for oil and gas, specifically deepwater. Here we have provided Rystad Energy's market outlook for deepwater oil and gas capital expenditures. Key takeaways from their forecast include an expectation for increased deepwater investment in support of higher energy demand and an increased mix of global deepwater production. Our internal view of deepwater CapEx is a bit more conservative when compared to Rystad, although we both envision a period of strong investment through 2025.
While not shown, we both anticipate deepwater spending over the second half of the decade to be even greater than the levels achieved in the first half. Some of the primary drivers supporting TechnipFMC's spending outlook include the robust tender activity we are experiencing today, and resilient subsea economics with nearly 90% of subsea CapEx through 2025 forecasted to have a break-even of less than $40 a barrel. TechnipFMC is well-positioned for success in this environment, with strong customer partnerships and relationships, differentiation through integrated project capabilities, and technology leadership across the value chain.
We have played a significant role in helping our customers reduce project cost and delivery schedules, and we will continue to focus on solutions that can increase project returns, such as our commercial alliance with Saipem that allows us to leverage complementary assets and capabilities that further expand our opportunity set, particularly for iEPCI in a very capital-efficient manner. As I mentioned earlier, one of the primary drivers for our near-term order outlook is expected strength in subsea services. In recent years, we delayed some growth initiatives due to the softer market conditions. This year, growth in services has inflected. We now expect subsea services inbound orders to reach $1.1 billion in 2021, with additional growth of approximately 35% through 2025, outpacing the overall services market due to new and expanded offerings. This growth will be driven by many factors.
First is market growth, which is currently estimated at a 5% annualized rate through 2025, supported in part by the deepwater CapEx trends just discussed. We expect this will drive growth in our core services activities, specifically installation and maintenance that follows subsea project awards. We also have several unique opportunities that extend beyond the core market and further support our outlook. The first is our revolutionary Gemini remotely operated underwater vehicle, which is transforming the ROV industry. Through technology differentiation and optimized services, the system's delivering significant time savings on a rig's critical path and enabling the transition to a pay-for-performance commercial model. Our first two Gemini systems were successfully deployed over the last year with Shell, and our success has resulted in contract awards for three additional Gemini systems, which will be fully mobilized by the end of this year.
We are now expanding this service across our customer base, and we are excited to show you the superior robotics of GEMINI later this afternoon. We are also changing the business model for well interventions, transitioning from our historical role as a vessel stack provider to becoming an intervention services company by offering more rig-based activities from the vessel and introducing new services such as riserless coiled tubing and vessel-based plug and abandonment. Integrated Riserless Light Well Intervention, or RLWI, provides a cost-effective alternative to rig-based solutions, reducing cost, interfaces, and personnel on board, while increasing overall efficiency and performance. Earlier this year, we purchased the remaining shares of the TIOS joint venture. This transaction brings us additional subsea expertise that will enhance our Life of Field services capabilities and provide a complete range of well services to our clients globally.
Finally, our integrated Life of Field model is designed to unlock the full potential of subsea infrastructure by transforming the way services are delivered and proactively addressing the challenges faced over the Life of Field. Our Life of Field platform leverages our installed base, the largest of any company in the industry, and is enabled by our connected digital-ready assets and a data-driven approach that provides a step change in the client experience. Today, we have over 250 products monitored for integrity in real time and over 600 wells monitored for production. Through these and other initiatives, we are leveraging and extending our core competencies of innovation, integration, and collaboration to further enable our services business. Now let me turn to our outlook for subsea inbound orders.
In the near term, the market continues to strengthen as evidenced by growth in our subsea opportunities list and in current year order trends. As many of you know, we publish a global map highlighting future subsea project opportunities. This represents our view of the publicly identified opportunities exceeding $250 million in value that we believe have the potential to reach final investment decision over the next 24 months. Recent updates have been supportive of the outlook. In our third quarter update, the opportunity list expanded for the fourth consecutive quarter and now shows project opportunities totaling $19 billion for potential award when assuming the midpoint of the project ranges. Current year order trends are also supportive of the growth outlook.
Through the first nine months of the year, we invented $3.9 billion of orders and reaffirmed our view of continued growth into 2022, as reflected by our expectations for inbound orders to approach $7 billion over the next five quarters. In addition, our integrated FEED studies, a strong proxy for future orders, have significantly increased to levels last seen in 2019. This growth in integrated FEED activity builds an expansive pipeline of proprietary integrated opportunities. As the cycle progresses, we see the potential for 2025 inbound to approach the $8 billion in inbound orders received in 2019. Let me take a step back now and place the broader energy outlook into three distinct time periods that really simplify our view over the next twenty years.
In the near term, we remain confident that we are entering into an upcycle that is bullish for oil and gas. Beyond the anticipated increase in project activity, we believe that this cycle will also see more tieback activity than in previous cycles, and TechnipFMC will benefit from our installed base of subsea equipment. A period of transition will follow the upcycle with an expansion in CCS opportunities as oil and gas volumes plateau in this time period. We also believe that growth in renewable offshore resources coupled with hydrogen storage opportunities will accelerate to meet increasing demand. Ultimately, we will see a new normal emerge with the continuing shift in the supply mix. Many of the future opportunities are likely to develop in our own backyard.
With over 70% of the world's surface covered by water, we believe that offshore and subsea will be the next frontier for the energy transition. Wind, wave, tidal, and hydrogen will become well-established, driven by the continued development of new technologies and systems that will further reduce unit costs, making many more renewable options economically viable. The sheer scale of the infrastructure requirements needed to meet the future demand will necessitate offshore solutions. The future for subsea is indeed exciting. We are well-positioned in both the traditional and new energy markets, and we have made meaningful progress with industry participants, demonstrating the importance of partnerships and collaboration. Now, let me talk a little bit about the near-term opportunities for new energy ventures. We see many ways in which TechnipFMC will play a meaningful role in the energy transition.
While projections may vary from one source to another, we have estimated the various addressable opportunities available to our company across the three main pillars highlighted today: greenhouse gas removal, offshore floating renewables, and hydrogen. The global map you see here illustrates what we believe to be real addressable opportunities for our company across carbon transportation and storage and novel offshore energies through 2025. Although project approval and timing are less certain for these evolving markets, we are comfortable estimating the potential for our company based on ongoing initiatives, our alliances and discussions we are having today. At this point, we have identified several opportunities that together could reach $1 billion in inbound orders to TechnipFMC through 2025. We have split the opportunity set into two distinct geographies. Europe continues to lead the energy transition, representing approximately two-thirds of the potential award activity, followed by North America.
We also believe that Asia-Pacific and South America, particularly Brazil, will ultimately provide additional opportunities for us in the second half of the decade. These regions are notably well-placed due to a combination of novel energy resources, existing infrastructure and competencies, and governmental support. Now, let's shift to how we're thinking about the combination of opportunities and how they'll shape our company going forward. Throughout this session, we have touched on three key factors that are shaping our future. Here, we've illustrated one example of how the intersection of these factors could play out for TechnipFMC over the next 20 years. First, we discussed our long-term outlook for energy and intermediate term view on subsea. We believe that we are in the midst of a strong oil and gas upcycle, which will result in strong order inbound through much of this decade.
With this backdrop, we will give growth in both our project and services businesses. Additionally, we highlighted that the outlook for subsea services extends beyond the expected services market growth, which will be driven by higher project activity and a rebound in deferred maintenance. New opportunities like GEMINI and expanded service offerings in risers, light well intervention, and life-of-field services will leverage the aging hydrocarbon infrastructure. As we move further in time, new opportunities will emerge from services related to carbon transportation and storage and novel offshore energies, further leveraging our existing footprint. Which brings us to the third major factor shaping our future, the energy transition. We identified near-term order potential for TechnipFMC of up to $1 billion through 2025, which is also expected to accelerate through the back half of the decade.
We don't know the exact timing of project awards, and we don't know which technologies will be the ultimate winners. As the transition accelerates, so too will the opportunity set for TechnipFMC as we further align across multiple platforms and technologies. Ultimately, we will reach a period of new normal. The layering effect of traditional and energy transition projects will allow us to transfer the same competencies, capabilities, and teams from one revenue source to the other. Our service offering will be incremental to these project activities and is poised to benefit from aging infrastructure and an expanding install base across both old and new sources of supply. I think it should be clear that from our perspective, offshore will play a major role in long-term energy supply, and that TechnipFMC will continue to be a leader in this new energy future.
Before leaving the stage, I would also like to stop for a moment and say thank you for your time today. While there is still much more for you to see here over the course of the day, I do hope that when you leave us this afternoon, that you share the same level of enthusiasm and excitement that we all have for the TechnipFMC story. Now I'd like to hand it over to Alf Melin, our Chief Financial Officer, who will walk you through our financial outlook.
Thank you, John. Good morning. Good afternoon. Just for clarity, I am Alf Melin, Chief Financial Officer of TechnipFMC. If you heard anything different, I am the Chief Financial Officer. I've had the opportunity to speak to many of you since assuming my current role earlier this year. For those of you who I have not met, I have been with TechnipFMC for over 25 years, working in multiple financial and operational roles across both our segments. While not new to the company, I do believe I bring a fresh perspective to the role while also having the historical context. It is great to be here with you today, together with the rest of the leadership team that is driving this organization's future forward towards its future ambitions.
I would like to begin my discussion with a brief overview that I hope will help set the stage for the financial outlook that will follow. First, TechnipFMC is truly an international company. While we may be sitting here today in Houston, over 90% of our revenue is generated from outside of the continental U.S. Second, we expect Subsea to be the primary driver of revenue and EBITDA growth over the near to intermediate term, supported by a strong market outlook and a multiyear project backlog that is poised for future growth. On a trailing twelve-month basis, Subsea accounted for approximately 85% of total company revenue and adjusted EBITDA for the two operating segments.
Our subsea business is also supported by a substantial backlog totaling $6.7 billion at the end of the third quarter, more than one-third of which is scheduled for execution beyond 2022. While not the primary driver of our financial results, Surface Technologies is positioned to benefit from its international differentiation as well as a focus on cash generation. This business generates more than two-thirds of revenue from markets outside the United States, where it benefits from a strong competitive position and a differentiated product and services offering. As we have previously stated, Surface Technologies will also have a more focused playbook in the United States, where we are driving towards greater cash generation through the cycle. As John just discussed, we have increased confidence in the intermediate term outlook for the conventional oil and gas business.
The detail we have provided so far also demonstrates our confidence that the changes we have been making to our business model will translate into improved operational performance. More specifically, we are forecasting that Subsea revenue will grow from $5.4 billion at the midpoint of our 2021 guidance to approximately $7 billion in 2025. This is an increase of over 30% with the main drivers of this growth being the higher project revenue related to increased market activity and higher Subsea services revenue driven in part by internal growth initiatives. We also expect our Subsea adjusted EBITDA margin to increase from 10.5% at the midpoint of our 2021 guidance to approximately 15% in 2025. This means an increase of 450 basis points. There are four main drivers for the increase in our Subsea margins.
First are the benefits we will realize through increased productivity, including the transition to the configure-to-order operating model. Second is the inflection in backlog margin, where we expect further improvement as we complete projects that were inbound during more difficult industry conditions. Third is the increased utilization of both plants and vessels. Fourth is a stronger contribution from subsea services. Taken together, this combination of revenue growth and margin expansion could increase subsea adjusted EBITDA to over $1 billion and be on pace to a near doubling in this time frame. The timing may not fall precisely on 2025. Maybe we reach our goal a year earlier, maybe slightly later. The external conditions and our internal improvements give us confidence that we can deliver an improvement of this magnitude with several of the key drivers firmly within our own control.
Finally, Luana and John shared with you our expectations for a growing contribution from both novel offshore energies and carbon transportation and storage. We currently estimate inbound orders could reach $1 billion through 2025, which will be converted into revenue over the forecast period and beyond. While it is still early to discuss the overall profitability of these revenue streams, any contribution from these new revenue sources would constitute upside to our financial projections. Perhaps the most important message I would want to reiterate today is our increased focus on cash, both cash generation and capital discipline. We believe it to be essential to increasing shareholder value. How do we intend to increase our cash flow? First, we will be capitalizing on the growth we have outlined for our subsea business. Within this forecast, we also expect to achieve an improved normalized framework for our overall business.
Taking a longer term view of our organizational expense items, we would expect corporate expense in the range of $100 million-$110 million, income tax expense of approximately 30%, and net interest expense that will significantly decline from the current run rate, driven by the anticipated change to our capital structure, which I will discuss shortly. The normalized framework will also be impacted by how we manage our capital. Here I'd like to highlight the following. First, working capital. We expect working capital flows to balance out through cycle, although it is still subject to fluctuation in any one period given the timing of inbound awards and project milestones associated with long duration subsea projects. Second, capital expenditures. For 2021, our guidance for capital expenditures represent approximately 3.8% of revenue.
Looking ahead, we would expect capital expenditures to range from 3.5%-4.5% of revenue. While there could be some increase in CapEx in a growth environment, we would anticipate the ratio to move toward the lower end of the range as revenues move higher. Turning to Surface Technologies, I would note here that it is more difficult to forecast a multi-year outlook as we have limited backlog coverage beyond the next 12 months. Hence, we're not providing a specific intermediate term forecast for this segment. Having said that, we do expect Surface Technologies to benefit from the same market backdrop that is driving our Subsea revenue outlook.
We would also expect to see a benefit to margin with higher activity levels, with the current business mix certainly supporting incremental EBITDA margins of approximately 30%. As I stated earlier, we remain very focused on cash generation from our surface business, as well as managing the capital required to generate favorable returns. Our cash flow is improving. We are driving our operating results higher, and we are focused on converting a larger portion of our operating profit into free cash flow. We are forecasting free cash flow conversion defined as free cash flow divided by adjusted EBITDA to be in the range of 40%-50% by 2025. In order to affect the spin transaction earlier this year and best position both companies for success, TechnipFMC incurred additional leverage, partially offset by a 49.9% ownership stake in Technip Energies.
Since that time, we have been focused on improving our capital structure, which will be achieved through improved operational performance, monetization of our stake in Technip Energies, and a reduction in total outstanding debt. I've already spoken about our operational outlook. To date, we have significantly reduced our stake in Technip Energies, selling shares in both public and private transactions for total proceeds of approximately $900 million. With regard to debt reduction, we believe that the optimal capital structure for TechnipFMC will achieve the following key objectives. First, it will ensure that we can maintain strong access to credit at all times. Second, it will allow for continued investment in our business through the cycle. Third, it will provide us with flexibility to distribute capital to our shareholders.
In order to achieve these objectives, we are targeting a gross debt balance of $1.3 billion over the coming years. This implies a reduction of approximately $1 billion from the current debt level. We will achieve this through a combination of activities that will evolve over time. At this time, we plan to retain a portion of our current cash balance towards repaying scheduled maturities totaling $630 million through the end of 2023. As additional funds become available, we can accelerate debt reduction through future tender offers where it makes economic sense to do so. This could include further purchases of the 6.5% notes maturing in 2026, which also have call provisions beginning in 2023.
Our capital management plan also assumes that we retain a minimum cash balance of $800 million to meet operating needs of our business. The timing of reaching a gross debt balance of $1.3 billion could extend beyond 2023. However, it is our intent to initiate shareholder distributions before reaching an absolute debt goal. TechnipFMC has a history of returning cash to shareholders through both dividends and share buybacks, with over $1 billion in combined distributions between 2017 and 2020. We intend to initiate a quarterly dividend in the second half of 2023 at a rate that is sustainable through cycle. Longer term, we will also consider opportunistic share buybacks to supplement these recurring dividend payments. It is important that we deliver on our promises.
We have highlighted our focus on our credit metrics, where improving our balance sheet is a key component of that strategy. We will reduce our outstanding debt, and our recently executed tender for $167 million of high coupon notes reflects continued progress towards this initiative. While credit rating agencies mostly focus on gross debt, it is also important to look at net debt, which accounts for cash and cash equivalents. Our net debt has improved every quarter in 2021 and stood at $1.2 billion as of September 30, down more than 30% since the first quarter. Much of this improvement has come from the monetization of our stake in Technip Energies. As a reminder, we owned 49.9% of Technip Energies' outstanding shares at the time of separation.
We have sold approximately 75% of that original stake at a pace faster than we had originally established for ourselves, and for proceeds of approximately $900 million. At this point, we believe the perceived overhang of our well-telegraphed liquidation has been removed, as evidenced by the 20% appreciation in the share price of Technip Energies since our last sale transaction in September. Today, our remaining 12% ownership stake has a market value of approximately $340 million. As we have previously stated, we intend to fully exit this position by the end of 2022, which will further improve our net debt position upon monetization. In summary, I very much share the enthusiasm you have heard from my colleagues throughout the morning regarding the future for TechnipFMC.
Today, we have outlined a very robust framework for the intermediate term that is supported by a number of drivers, including a strong market outlook and the success of our unique commercial models. These are creating strong operating leverage, particularly in Subsea, where we could see a near doubling in adjusted EBITDA by 2025. We're also driving free cash flow higher, and with higher free cash flow and improved capital structure, we will have the flexibility needed for both sustainable shareholder distributions as well as the strategic investments we will pursue to ensure TechnipFMC remains a market leader as we transition to the energy future of tomorrow. Thank you.
As we transition to the Q&A session, we're going to bring on the remaining members of the ELT, the executive leadership team, as well as the morning speakers. The incremental members include Barry Glickman, our President of Surface Technologies, Nisha Rai, Executive Vice President of People and Culture, as well as Victoria Lazar, our Chief Legal Officer. We will also have Luana Duffé joining us again from Rio de Janeiro. We have just about an hour scheduled for the Q&A session. James Davis from the IR team will help me manage the microphones through this session. We ask that you please raise your hand, and one of us will bring the microphone to you. Due to COVID protocols, we'll ask that you allow us to handle the microphone throughout your question.
We ask that you please state your name and company. Then as a customary practice, we ask that you limit yourself to one question and one follow-up. Just remember this time we control the mic, so we will cut you off after one question and one follow-up. With that, I'll turn it, James, if you'd like to take our first question, please.
Guillaume Delaby, Société Générale. Thank you very much for the presentation. Maybe I got the impression that there was a missing element, if I may, is about the future of the Surface Technologies division. During the Q3 doc, you made a big separation between North America and essentially Middle East. What is going to be the status and the future of the Surface division for the next three years? And could we imagine maybe a split between North American operation and Middle East operation? Thank you.
Sure. Thank you very much. Look, it's been operated as two distinct segments within a segment, and we've talked about that for a long time. We have our Surface Americas business, and we have our Surface International business. We've talked about it for years that there's very different drivers behind those two businesses. In one, we're the clear market leader, Surface International, and it's beyond the Middle East, but yes, there's a lot of Middle East component to it. We benefit from the fact that we have a very elevated level of technology, and with that comes differentiation. For those of you who are able to join us this afternoon, we're actually going to show you firsthand a US land tree next to a Middle East tree.
We're going to talk about how the fact that there's 15 x more value in the Middle East tree than in the Surface Americas tree. Clearly, that's a market as a technology company to where you'd expect us to be a leader and one that would be more favorable to our business. At the same time, we're moving forward in Surface Americas to do what we can to change the operating model from that has really become quite fragmented, the supply base, and quite commoditized, to being able to put more of a differential element in for ourselves, and we do that through digital. I was stumbling with digital and differentiation, my apology. You hear us talk about iComplete, you hear us talk about iProduction, you hear us talk about E-Mission today for the first time.
These are some very interesting things that we're doing to decarbonize the U.S. market, which is a role that we think we could play a leading role in. If you will, not so much around the product, but more around the production and the decarbonization in the U.S., and that's important to us. Since you mentioned the Middle East, I don't want to miss the opportunity. Barry just returned from the Middle East, and we had also said on that same Q3 call that we anticipated some material orders from the Middle East for our surface business in Q4. Barry, how's that coming?
It's coming well, and you know that because I was welcome to come home. There was an announcement this morning from the Abu Dhabi National Oil Company, ADNOC, on a number of orders that they've placed with major suppliers that totaled $6 billion in total. Of that, there was $3.3 billion in wellhead, of which we received 50% over the next 10 years. The value for TechnipFMC is just over $1.6 billion over the next 10 years, which to us is a fabulous endorsement of our 40-plus year relationship with ADNOC, the value that they see in our technology, and their and our commitments to the growth of production in Abu Dhabi, as well as the expansion of our presence locally and the development of the workforce.
Thank you for welcoming me home, Doug.
Congratulations, Barry. That's actually the largest in the history of the industry and for our company for Surface Technologies, so we couldn't be more proud of our Surface Technologies international business.
Yeah, good morning. Arun Jayaram from JP Morgan. I was wondering if you could provide more thoughts on the margin improvement you expect from, call it, 10.5%-15%, and perhaps how much of that is driven by, call it, self-help versus just the market getting a little bit better.
That's a very important question. I'll start and then, John, if you want to add a little bit to it. It's principally self-help. If there's one key message that you take away from, you know, this panel or Q&A session, and hopefully from the whole event, it is we have not been sitting around idle. It was a challenging time the world just went through. It was a challenging time our company went through, and as individuals, let's face it was a challenging time for all of us and our families. Some opted to hit the snooze button. We did not. We stayed fully engaged. We continued to drive and invest in technology. We continued to drive and invest in our people.
We continued to drive and invest in creating new integrated offerings and new opportunities and new ventures, as Luana talked about earlier in the new model of iONE. Because of that, you see the majority of it coming from self-help. Now don't get me wrong, in the same period of time, we've increased our market position and now the market is growing. The math behind that will help us tremendously as well. John, did you wanna add something?
Yeah. Yeah, let me just. Of course, there's a market piece which we spoke about earlier, but in terms of how we're positioned in the market as it continues to grow, in our view, in terms of this very bullish oil and gas cycle, number one, you know, we've structurally changed how we work. Subsea Studio is a good example of that. Second, the integrated market's continuing to grow, as we spoke about and as, of course, you all have seen. The other one is our direct award partnerships and alliances. We continue to grow those. Those are exclusive to us, and it creates a unique opportunity set. You know, the other one is around, and you heard Justin talk about this with 2.0 CTO, look, this is coming into stride.
The other element, of course, is our completion of the pipelay ecosystem with Saipem. You know, we have access to the world-class vessel lay assets, access to world-class J-lay assets. We, of course, bring in the world-class reel-lay assets all around the integrated model. In together, you know, we are better positioned today moving into this cycle than we've ever been as a company. You factor in the market dynamics, which we have all talked about earlier, and we couldn't be better well-positioned to capitalize. A lot of what you've seen in Al's numbers are a full recognition of that.
Thanks. Yeah, I wanted to ask about the Saipem and Allseas arrangements, and clearly they expand your opportunity to touch all of the market. I wonder, do these projects that contemplate cooperation between you and your traditional competitors? Will Technip always be the lead contractor on the contracts that involve Saipem and Allseas, or would you also sub into them on their projects as well? What do these alliances mean for margin uplift or margin pressure, as you cooperate on these?
Sure. Let me start with again, why it was such a key strategic decision by our company. There was really two choices, you know, max out the IEPCI market potential, which is 1/3 of the total subsea market today, right? Still growing. Allow it to reach its fullest potential. There are some geographies where reel lay assets, which is our primary assets, in the majority of the market, in the majority of the IEPCI market, but there are some markets where reel lay is not competitive or, quite frankly, not really a viable option. There were some markets and some clients that we could not bring IEPCI to. Now, the traditional way of addressing that, and you all know this, would be to build a new boat and build a bigger boat and build a more expensive boat.
We've said since we created TechnipFMC that we were going to have capital discipline and focus on through-cycle returns. We would resist that temptation. What it took was people to act differently, someone to take the lead in the conversation that says, "Is this in the best interest of the market? Is this in the best interest of our clients to just build and add more capacity, which adds more costs, which it, you know, decreases returns, destroys project economics, so forth and so on?" We went out and we talked to, in other cases, as you point out, our natural competitors and said, "Is there a way to work differently together?" Now, people have to trust you when you knock on the door to have that conversation.
If you're a company that does not naturally cooperate well, that doesn't have 50% of their business direct awarded to them because of their relationships and their partnerships, some with major oil companies that have extended over two decades, it's a short conversation. Because what? What is missing? Trust is missing. We believe, and we strongly, as the individuals here and across the company, firmly believe that we are a company that can collaborate well and that is built upon a long foundation of trust. We're able to have those conversations. We went out and we said, "Okay, there's an S-lay capability that we would benefit from. There's a J-lay capability that we would benefit from. Let's find the best partner.
Let's reach an agreement to where we can mutually benefit from that without going back into a capital spending cycle." You heard Alf say very clearly, this company will not go into a capital spending cycle, even though we will be growing, and that's how we're gonna drive the returns. The actual commercial model will could be a combination. It'll be project specific. By the way, we have some of those today. We do that today. But some of those may be a prime and a sub. Some may be inverted, some may be a consortium-type model. That's largely driven by the client. Clients have different appetites and different appreciations for different type of commercial models when it comes to two companies collaborating, and we would work with them.
both across our ecosystem, as we call it, so with Allseas and with Saipem, we have a very open relationship where we identify those opportunities together, and then we work together with the client on what they feel would be the best model. Clearly, the end result is the IEPCI market will expand, and we will benefit from that along with our partner.
Hi, Doug. Dave Anderson, Barclays. Question about your $8 billion in subsea orders that you said by 2025. I'm curious on the mix of the customers, especially if we compare it to, say, 2019. If we think about the BPs and the Shells and the Totals, hard to see them kind of really push you on the deep water side considering their kind of decarbonization ambitions. I'm curious as to how you think that makes them, particularly thinking about the independents and how much of a part of the mix that becomes in 2025, and also what that means for margins. 'Cause I think we've talked about this in the past, that, you know, the BPs have their kind of way of doing things, whereas independents might be more, I guess, inclined to give kind of that design to you guys.
If you can talk about that mix, it'd be helpful. Thanks.
Sure, Dave. So first and foremost, as you know, I say this every time because it's in my heart, I love each and every single customer. We're humbled when they trust us with their projects, and we just try to help every single project reach its fullest potential, helping our customers in the meantime. In my prepared remarks, I did talk about basically the customer transition, and that we do anticipate that there will be some acceleration of that. We've seen it happening now over the last decade. This isn't new. Over the last decade, our customer list has expanded actually quite dramatically. Traditionally, it was a relatively small list of customers, a big market, but a small list of customers, and we all know who those players were. They are all still operating deep water.
They're all still operating subsea, and we don't anticipate that terminating anytime soon. At the same time, though, there has been an increasing level of, and I'm gonna use your terminology, independence or new entrants into the market. What is true is when they look around, they typically come to us first in the conversation, and they typically don't go beyond us. In other words, it ends up in a direct award to us, in many cases, an exclusive iEPCI alliance with us because they see that we bring and the only company that can bring the full capabilities. We can bring them full capabilities where they may not have the same experience or resources that others, the traditional customers, had built up over time on those projects. Clearly, we prefer iEPCI Subsea 2.0 direct award with a partner. Clearly, we do.
Why is that? We both benefit. We both benefit from that because that's the way we can deliver the most economical subsea project.
Jean-Luc Romain, CIC Market Solutions. How do you see the competitive landscape evolving for subsea equipment? It seems some of your competitors are not following the path or you talked about snoozing minutes ago. How do you see that evolving?
Sure, Jean-Luc. You know, always difficult, and never do I want to represent, you know, or even, you know, comment on, you know, our competitors' strategy. I think that's a question for them. What is clear is we would not be in the position we are today if we didn't have the courage to create the integrated model which required bringing together Technip and FMC Technologies to create TechnipFMC. We just would not be there. It created a $15 billion market set that was not there. We've captured 70% of that, the majority of that being directly awarded to our company. It's clearly the model that worked. We did, you know, we did it. That was our strategy.
We're more than humbled by the results of that, and we think that the integrated market is only going to grow. We just talked about one way we're enabling that, which is through our new vessel, our pipelay ecosystem that we built along with our partners Allseas and Saipem.
Waqar Syed, ATB Capital Markets. A question on the CTO process that you're implementing. I think it was mentioned, if I understood it correctly, that you're going to allocate a minimum set of orders to your suppliers. You know, given that you can, you know, the market can still surprise, how do you manage that risk going forward if you know, the commitments that you're making, how would you know, manage that risk if market turns the other way around?
Most great question. I'm gonna ask Justin. You know, he gave the keynote on CTO and, you know, just you know, it may have sounded academic, but it's real. It's how we operate the company today. As Justin said, we would not have been able to, therefore others are not able to, if you don't have the size and the scale that we now demand in the market, is what enabled us to go the technology of 2.0 and then the size and scale to go to CTO. Justin, can you particularly address the supply chain side of that?
Sure, yeah. They're asking us with these dark masks, they can't hear us very well, so we'll take it off to answer the question. Yeah, it's a great question. Firstly, as Doug pointed out, and as I mentioned in my prepared remarks, you can only do this if you have volume. With 50% of, you know, our orders over the next two years representing 2.0 and CTO, it gives us a lot of confidence in the volume. Secondly, you know, I think we've really changed the paradigm and the relationship with our supply partners. You know, it's not three bids and a buy on every single project in the way that we used to work. Our partners are part of the ecosystem.
We very much depend on them as they do with us, which has given them the confidence to, you know, change the model where they hold standard parts on a consignment basis rather than us carrying that CapEx on our balance sheet. It's a different relationship, it's a different ecosystem, and then you'll hear a little more today about the analytics that we use that both looks in history and forward to help us, you know, manage the requirement for the volumes. Again, having that 50% and growing set of orders in backlog gives us a lot of confidence on how we manage the volumes with our supply partners.
Waqar, for us, it was a natural evolution. Our clients treat us this way. Remember what I said earlier, one of the largest IOCs, 25 years actually, this year is the 25th anniversary exclusive partner subsea worldwide. I am sure someone in their supply chain over the last 25 years asked the same question, but we built our relationship on trust. We measure, we have very firm metrics to ensure top quartile performance for them among their peer group, and we've been able to deliver that. If our clients will treat us that way, why shouldn't we, you know, treat our partners in the supply chain that way? It does. It takes time.
You have to build these relationships, but they can be very advantageous in both directions, you know, in both an upmarket and downmarket, which again, over the last 25 years, clearly we've been through some market cycles, as well with our clients.
Yeah. All right.
Yeah. Hello, it's Mark Wilson, Jefferies. Thank you for the presentation. I'd like to just check on some points regarding. Talked a lot about the Subsea 2.0 and iEPCI model, which has been such a success and focused on the cost, the electrification, the lower carbon footprint of the overall setup. I totally understand that, but I'd like to also ask if oil and gas market is gonna grow back to the levels we saw in 2019, and indeed deliver on 100 million barrels a day plus, I'd like to check on the more traditional technical capabilities of this equipment that we probably used to speak to.
Certainly if we're going down the route of these long tiebacks, I'm talking about the temperature, pressure, capabilities of this equipment, 15,000-20,000 PSI, subsea separation and downhill pumping capabilities. Where do you stand, and do we have to push the envelope on the Subsea 2.0 technical capabilities in order to get back to this market you see by 2025?
Yeah, thank you very much. The short answer is no. Although, to be very transparent, that doesn't mean Subsea 2.0 will be 20K. Okay? We believe, and by the way, we have 20K. We're well beyond 15K, so we have 20K today, but it won't be a Subsea 2.0 system. Why is that? There won't be the volume there.
It's just the market size will not really benefit from the scale and volume to be able to leverage something like Subsea 2.0 or even the configure to order model. It'll be different, and it'll be a little more traditional. But we have temperature covered, we have pressure covered. We now covered the long tiebacks, which was a key question, and I know you're gonna be with us this afternoon, Mark. You'll see it. And you're gonna talk to the system engineers who design that work, and you can ask them, you know, ask them that exact same question. They're gonna show you where we've done the world's longest electrically trace-heated pipe-in-pipe, which is very important for long reach outs. We did that for our alliance partner, Neptune, on the Fenja project.
They're also gonna talk to you about how the all-electric system enables much longer step outs because we're not trying to push hydraulic fluid at such a distance, and we can obviously do that with electricity and operate all of our valves in a much smaller footprint as well. You know, for us, it's a little bit what I said in my prepared remarks. You know, you're describing what we focused on for a long time, which was making the impossible possible, deeper, hotter, higher pressure, longer tiebacks. We really have to shift to making that economical because there are other choices for our customers' capital expenditure, both in traditional and new energies that compete with offshore.
I think what we've done is we've been able to significantly improve their financial returns and the project returns, I should say, and then indirectly their returns as a result of what we've been doing. That's why when John presented the opportunity set, you know, he mentioned that the vast majority of those opportunities that we see that we're basing our outlook on are economical at a $40 break even or below.
Hi. Thank you. David Smith at Pickering Energy Partners. I completely agree, potential for all-electric subsea systems is pretty exciting, you know, especially in a deepwater market that is increasingly focused on tiebacks. You've given a lot of different targets this morning. Would you mind taking a stab at how electric systems might evolve in the mix of subsea orders?
That's a great question and a fair question. We don't have an exact number, but I struggle to envision where all-electric doesn't have a similar impact as the Subsea 2.0, if you will, doesn't have a similar impact as 2.0. What does that mean? That means, you know, becoming a majority in a half a decade or something like that. There's really no good reason not to use an all-electric system. Obviously, our customers wanna lower their carbon footprint. This is a key enabler to help them do that. It allows us to increase the tieback radius by 4 x. You can go 4 x further away from the host facility. Huge, huge impact on project returns versus a new floater. It just makes all the sense in the world.
Now, you know, there's always a period of qualification that's required to get, you know, the industry comfortable, but we didn't just start with all-electric today. We said it's now commercial. We've gone through that long qualification period, and it was important. It was important that it was done in earnest, and along with our clients. That's behind us now. We are now into the commercial discussions. Quite frankly, I don't see why we, you know, a project would not use all electric. Again, this afternoon, you'll see, David, how we can. There's always the question of how do you work that into a brownfield scenario versus a greenfield scenario, and we'll be going through that this afternoon.
If I may. Can you hear me?
Yes.
Maybe, if I may, to add something here related to all-electric.
Mm-hmm.
NEV. All-electric is clearly a great example on how we're leveraging our existing solutions to deliver innovation and create an immediate impact in the energy transition arena as well. When we started the development of the integrated carbon transportation and storage system, we didn't start from the 1.0 platform. We started it straight from the 2.0 platform, leveraging CTO and the all-electric solution. I would say that we are already starting from a very differentiated technology level and only going forward, which will give us a differentiated position in this market. Being very transparent, we have never considered using hydraulic system for the NEV space.
Hi, Samantha Hoh from Evercore ISI. It was interesting to see the TAM mix for your new energies between Europe and North America. It's been amazing to see how quickly carbon transportation and storage has grown here in the Gulf Coast. I was wondering if you could talk to just how quickly the maturation cycles are happening here in the U.S. Is that a model for what you see spreading elsewhere in the other continents? Maybe how that mix shifts will evolve over the second half of the decade in the other regions.
Sure. I'll start, and then I'm gonna ask Luana to kinda highlight the Talos relationship and where some of those opportunities that we're exploring along with Talos Energy. I agree with you that, you know, I think we and the industry were very focused on hydrogen just a short period ago, and I think the realization is that hydrogen's gonna take longer and be much longer cycle times. Whereas in terms of carbon capture and storage and our role in that, which is around the carbon transportation system and taking it offshore, which is the natural place to store carbon and the safest place to store carbon, has absolutely accelerated. We're really glad that we were working on the qualification of our CO2.0 tree. And you will see that today.
This is all real and out there in the market. You know, and I'll give an example of the qualification around a CO2 injection tree versus a hydrocarbon tree. The requirement of valve cycles, which is part of the qualification to ensure sealing over a period of time, you will cycle a CO2 valve 100 times more than an oil and gas valve for the same, you know, for an oil and gas application versus a CO2 application. Now that's significant. If we hadn't been involved in working with the regulators and understanding this and building it into our technology program, we'd be far behind. We are the only company who has a qualified, certified CO2.0 or a CO2 tree, which we call CO2.0, and you'll see that this afternoon.
Luana, maybe a little more about the Talos relationship and maybe how quickly some of these carbon opportunities are moving forward.
Sure. Absolutely. Thanks for the question. As I mentioned early in my presentation, last month, we formed a strategic alliance with Talos Energy, focused on accelerating the adoption of carbon capture, transportation, and storage. We're currently discussing three tangible opportunities in Gulf of Mexico, and we expect them to materialize in the next coming years until the middle of this decade. Talos has been selected, as you may know, as the operator of United States' first major offshore storage hub. We will work together through the full life cycle of project characterization and engineering in order to de-risk project execution and accelerate time to market and deliver cost-efficient solutions.
Maybe just to finish, maybe I would like to highlight here, as well, that the materialization of this alliance is a good example again on how we're leveraging our existing client base to create an immediate impact for TechnipFMC.
Waqar Syed, ATB Capital Markets. Just on the same theme, Talos, I believe yesterday announced that they have won a contract with Freeport LNG. Will FID have a role in that? Just on the same thing, on inbound orders, you announced a large project award in Subsea in Guyana. Could you maybe provide some guidance on when it may enter inbound orders?
Waqar, I started smiling on the first part, and I started smiling more on the second part, and I may have cracked my cheeks. Absolutely, the answer to the first is absolutely yes. It's a strategic partnership we formed together to go out and address carbon capture storage solutions in the Gulf Coast. The answer is yes. Jonathan, how about telling us a little bit about the recent award, the award announced last night?
No, look, we're super excited. You know, this is our fourth consecutive award in Guyana with ExxonMobil. You know, the trust, the collaboration, the partnership that we have with Exxon is really special. You know, we have over 60 Guyanese now employed in Guyana. Just a great team, a great project and set of projects, and no, we couldn't be more delighted and excited that Exxon selected us again to be their partner as we continue this journey in Guyana. Thanks for asking that question.
Just to follow up on that question, is ExxonMobil using the Subsea 2.0 technology? If not, I know their strategy is to design one and build many, and I just wonder if maybe you could elaborate on how this is, I believe their fourth project, and how that's evolving over time.
Yeah. The Subsea 2.0 platform for us is very specific, right? It's built on the configure to order model, and we don't deviate from that definition, if you will. What we're doing for ExxonMobil in Guyana is absolutely benefiting from design once and build many. As John just pointed out, this is now our fourth project. You may have noted in the press release it was this project alone was 51 trees. You know, it it's substantial. Now, is it specifically Subsea 2.0 as we define it? It's not specifically Subsea 2.0, but it absolutely is leveraging from design once and build many.
Sorry. Yes, another question, if I may. Could you maybe provide some more color about the geographies which are going to fuel the recovery of Subsea? So of course, we think about South America, but maybe if you can give us some prospects regarding West Africa or Asia. This is my first question. My second question is about how the competitive landscape, you are going to hate that, Doug, I'm sorry, is evolving in terms of main products. In other terms, on which kind of products are you gaining market share? Are you gaining market share on trees? Losing market share on flexible or whatever? Maybe if you can provide us some a little bit of product-by-product dynamics.
I know you're not going to like it, but
You know me very well. We're an integrated company, right? We don't just sell trees or just sell pipe. We're an integrated company. We sell integrated projects. That's a majority of what we do, and we think we're the best at it, and I think the market has acknowledged us for it. Look, we won't go one by one because, again, I think it's just evidenced by our position in the market. We've built a leadership position across the portfolio or our customers would not be giving us integrated projects, right? We don't force anything on our clients. We do not force it. I've seen that not work in my past. When we talk about an integrated project, you have to have the best in class in everything that you do.
That starts with the people, and that goes all the way through to the final product. If not, and our clients don't wanna use a portion of our portfolio, then they do that. I can tell you, I can't remember the last time they did that. That to me must say they stack us up pretty competitively and now with the latest, you know, innovations around, for instance, our subsea controls, even more so. I'm gonna ask John, after I answer your first part of your question, I'm gonna ask John to talk about Hybrid Flexible Pipe, 'cause I do think it's really important to understand where we are. Again, this afternoon you're gonna see that, and you're gonna talk to the individual who's actually responsible for that program and see firsthand where we are.
We'll summarize that certainly for our guests on the webcast here in a minute. The first part of your question, it's very much about South America. It's very much about Brazil and Guyana, and towards the end of the decade, we believe Mexico. In addition to that, it's around the North Sea, both the U.K., but principally Norway. A little later in this decade, we would expect to see increased activity in Asia driven by the LNG projects, many of which will need new wells to feed the LNG plants that have been constructed, which are almost exclusively getting their gas from offshore, and those wells are depleting. All wells naturally deplete with time. We see a whole 'nother cycle of developments in Asia towards the mid and latter part of the decade.
In Africa, both, you know, quite frankly, East, West, and North Africa will continue to play a role, although it will be more intermittent than the other areas. I wanna close by going back to South America. It's very important to us. Brazil is very important to us. You know, we've been there a long time. We have 98% local content. We have more capability in Brazil than in anywhere else. We've been there for five decades. We're the market leader. We couldn't be more proud of Brazil. One of the things we need to continue to do in every market that we serve is innovate, or you cannot maintain leadership. Jonathan, HFP.
Yeah. No, thanks, Doug. Great setup. Look, you've all seen our announcement. We acquired the remaining shares of Magma, and we couldn't be more excited about the future with hybrid flexible pipe. Hybrid flexible pipe is solving the stress corrosion cracking industry challenge that exists in Brazil. It will reinstate the complete ecosystem that Petrobras has established for decades around having a logistics base, PSV frame agreements, and then frame agreements for flexible supply. This ecosystem is very unique and special, and HFP is gonna reestablish that for Brazil. It's bigger than just Brazil. Also, HFP, in particular TCP, is gonna be a leverage into NEV.
In terms of what we're doing for hydrogen, CO2, the carbon transportation, the storage ecosystem that's being developed, it's gonna be part and parcel to what we're doing there as well. This afternoon, you're gonna see a good piece of this in our technology demonstration, so stay tuned.
Hi, Marshall Cowden from Hotchkis & Wiley. Thanks for taking the question. You know, you mentioned in the TCO part of the presentation that you had taken one of your facilities and taken capacity from 16 to somewhere in the 40s on a tree line. You know, I think you laid out a bullish case, but you know, I don't think we need to triple industry capacity here. I'm curious, just as you think about, you know, this opportunity, does it change your roofline requirements? Then if you have any views on kind of, you know, we used to have several hundred trees of capacity industry-wide. Has that shrunk at all or shrunk to an adequate degree? Would be curious your perspective there.
Justin, I'm gonna take, because I just want to really drive Marshall, thank you for asking the clarifying question. Justin, you know, tried to be very, very explicit, but I just want to re-emphasize what we said. You know, please don't walk away from here thinking we're spending more CapEx to increase our volume of our, you know, our available throughput. What he was emphasizing was the new model. The configure to order model allows us just to have non-disruption to flow much quicker through the exact same plant with the exact same capital, no incremental, and deliver that throughput capacity. I agree with you. We're not here saying the industry needs to triple its capacity. We're the ones growing.
We're growing in the market as well, and our ability to be able to do that without increasing capital will drive returns.
Hi, I'd like to take off my mask. I'd like to understand how you work alongside or with Technip Energies on those integrated projects that will involve floating facilities, FPSOs, such as like the TEN project. That goes forward into, say, the floating offshore wind that New Energy Ventures is looking at. Is there an agreed arrangement for working on such projects in the future, and is that the company you'll work with whenever there is a floating element?
Sure. Let me be clear. Our integrated model does not include the FPSO. We do have a contract where Technip Energies is providing the FPSO, and we provided already 98% complete installed the entire subsea infrastructure, and it went very, very well. That is not our model. Our model never was and does not, is not today to include the floating structure as part of our iEPCI offerings. It’ll be no different in NEV. Will there be floating structures? Maybe. You know, tidal, wave, hydrogen may not require a floating structure. But if there is a floating structure, that will be provided by an E&C contractor. We are not an E&C contractor. To your question specifically about Technip Energies, obviously, they’re former colleagues and friends.
They're doing well, which we are hugely appreciative of that. We wish them all the continued success. If there was a benefit of us being together on a project, of course, I would always prefer to work with somebody I know and admire. That is in no way our strategy, either in New Energy Ventures or in conventional or traditional energy.
Sorry. Any other questions in the room? I promise I didn't mean to scare anybody off in my original instructions. Okay. Well, with that, we will go ahead and close out the Q&A session. I'd like to thank all of you that have joined the Analyst Day webcast today. We hope you found the morning both informative and insightful on the future of TechnipFMC. Feel free to reach out to any member of investor relations to answer any follow-up questions you may have. We hope you have a great afternoon and a great evening. We will now end the webcast.
Thank you.