lng experience owner & investor project...

LNG Experience

Owner & Investor Project Management

Project Management (Operator / Investor)

• Most mega projects fail to meet FID Cost & Schedule

• Contracting Strategies are not meeting the challenges

• Regulatory Permitting Activities are often under-estimated

• Tighter labor market coming

• Even for Co-Investor, governance entails similar liabilities and responsibilities and therefore requires a spectrum of capabilities similar to an operated business.

LNG : “Plan the Work and Work the Plan”

• First LNG Cargo Delivered in 1964• 2017 29 Importing Counties and 19 Exporting Countries

supplying 250 mtpa

• 2020 Forecast 40 Importing Countries and 24 Exporting Countries supplying 350 mtpa

• 2025 LNG Demand Forecast 400 mtpa

Typical LNG Project

•Pre Final Investment Decision 3 to 7 years Planning– Feasibility Studies and Approval Process– Pre FID Evaluations– FERC Approval & Permit required in the US– Plan the Work

•Project Execution 4 to 5 Years

FERC Status

Owner Management – Where we can Help

– Feasibility and Approval Process– Pre FID Evaluations• Contractor Selection Evaluations• Scope Validation• Execution Strategy

– Modularization vs. Stick Build • Cost Validation• Schedule Validation• Team size, structure and content (staffing – both

competency assessment and sourcing)• Risk Identification

– Execution• Progress Monitoring and Control• Risk Mitigation

OWNER PROJECT MANAGEMENT SUPPORT

v PROJECT MANAGEMENT

v PROJECT DUE DILIGENCE

v COST REDUCTION METHODS

v EXECUTION PLANNING

v REGULATORY PLANNING

v CONTRACTING STRATEGY

v TENDER PACKAGE DEVELOPMENT

v FID ESTIMATE & BENCHMARKING

v SCHEDULE & BENCHAMARKING

v COST CONTROL & FORECASTING

v DEVELOPMENT OF WBS WORKPACKS

v SAFETY & RISK MANAGEMENT PLANS

v FACILITIES COMPLETION METHODS

v MOC PLAN

v COMMISSIONING & S/U PLANNING

DRL CAPABILITIES

WE HAVE MANAGED 110 JOBS IN USA

FEASIBILITY and APPROVAL PROCESS

Feasibility & Approval Progress

• Feasibility and Approval Process

– Establishing a Value Chain

– Commerciality• Supply• Demand

– Permits

– Risk and Opportunity Assessments

Project Management

• Key Risk mitigation & Predictable Outcomes are established in the early stages..

• You have to KNOW what is coming down the track thru EXPERIENCED PMT.

Project Assurance

• Audits• Reviews

– Participation at Stage Gates (Value Assurance, Estimate and Schedule Reviews)

– Activity Health Checks– Project Execution Plan Review

• Assists (Peer Assists, Senior Discipline Counsel)• Value Improving Practices

– Technology System Selection– Process Simplification– Constructability Review– Lessons Learned– Benchmarking

• Quality Assurance

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Examples of Review Activities

LNG PLANT : Pre Final Investment Decision

CONTRACTING and CONTACTORSELECTION

& EVALUATIONS

What scope breaks/splits minimize execution risks?

What Contractors fit the different scopes of work?

What contracting approaches minimize the Owner’s commercial exposure?

Tender Evaluations

LNG PLANT Cost and Main Contractor


SCOPE VALIDATION

Contractor Scope ValidationIdentification of Risks and Opportunities

LNG PLANT Equipment Weight vs Capacity

LNG PLANT Total Weight vs Capacity


MODULARIZATIONvs.

STICK BUILDEVALUATIONS

Stick Build ?Modularization Percentage ?

•Onshore Plant Construction decision on Modularization vs. Stick Build has many variables and for each individual project the answer is not always the same.•Modularization introduces multiple construction locations and consequently required early decision making and good management.

•Challenges associated with Large–scale Modularization

– Engineering & Design Needs to be Completed Earlier and with higher manhours relative to Stick Build

– Increased Steelwork– Increased Temporary Facilities – Earlier Procurement– Significant Shipping Requirements (More Complex Logistics)– Increased Interfaces– Planning and Control Challenging

Onshore Plant Construction

• Positive Features of Modularization for Unique sitespecific conditions include:–Higher Labor Productivity–Mitigation of Weather Related Delays. Seasonal

concerns limiting suitable periods for stick build construction (related factors such as excessive mud or ice)–Lower Labor Costs when compared to remote or

expensive locations or with limited labor supply–Mitigation of Schedule Risk by shifting construction

work to a controlled manufacturing environment–Potential Safety Risk Reduction from building in a

controlled manufacturing environment

Onshore Plant Construction - Modularization

•STICK BUILD FAVOURED WHEN– Availability of labor at low all-in cost– Suitable Site without large site preparation works– Suitable Climate conditions for outdoor works all year–Stick Building Enables

• Low Construction Cost• Schedule Flexibility• Use of large unskilled work force• Local Content

•MODULAR FAVOURED WHEN– Local labor costs high– Indirect resources are high cost & have to be imported– Remote location– Site Preparation is significant– Climate conditions are challenging– Restrictions on use and availability of land–Modular Construction Enables

• Reduced Plant Footprint• Reduced Construction Area• Onsite manhour reduction• Superior Fabrication Conditions• Delay to Early Works


BUTINDIVIDUAL PROJECT

ASSESSMENT REQUIRED AT PRE

FEED STAGE TO DETERMINE THE APPROPRIATE

EXECUTION STRATEGY. THIS MUST REALISTIC COST and SCHEDULE

ESITATION.

HISTORICAL PERCIEVED BENEFIT

OF MODULAR CONSTRUCTION

SCHEDULE (and COST) MAY HAVE BEEN

OVERSTATED

•There are circumstances where Modularization offers significant benefits, but realization of these benefits requires early management and planning to ensure that the required Execution Strategy is embedded through out all project phases

•Selective Modularization may provide a more cost and schedule effective result

•Each Onshore Project should develop it’s OWN UNIQUE Execution Strategy and associated level of planning and management.


22

Early Planning for Modularization


COST VALIDATION

Contractor Cost EvaluationIdentification of Risks and Opportunities

LNG PLANT Cost per tpa

LNG PLANT Cost Drivers

• Major Cost Drivers include:– Scope is the Biggest Driver• Capacity / Functionality / Process

Selection / Layout

– Location• Labor Availability / Weather

– Execution Strategy– Legislation / Regulatory– Market Conditions– Performance

Minimum Process LNG Plant

Maximum Process LNG Plant

Some Differences :-• Plant Location• Cost of Labour• Feed Gas Composition• Product Specification

• a feed gas handling and treating section• a liquefaction section• a refrigerant section• a fractionation section• an LNG storage section• a marine and LNG loading section• a utility and offsite section

LNG Plants : All Plants are Not Alike

LNG PLANT Cost Differences

Sabine Pass LNG ProjectComparison to Gorgon LNG

Sabine Pass LNG Gorgon LNG

• Gorgon LNG 3 x 5.2 mtpa. Train (15.6 mtpa)• Remote Location Australia (Nature Reserve)• Acid Gas Removal and Inlet Facilities• Jetty 2.1 km in length• Estimated Equip & Bulk Weight 270k tonnes• Execution Duration to First LNG 80 months• FID 13 September 2009• First LNG Export March 2016• Cost US$33.5 billion

• Sabine Pass LNG 4 x 4.5 mtpa. Train (18 mtpa)• USA Gulf Coast Industrial Heartland• No Acid Gas Removal Facility• Two Unloading Docks• Estimated Equip & Bulk Weight 180 k tonnes• Execution Duration to First LNG 46 months• FID June 2012 • First LNG Export May 2016• Cost US$12.2 billion (incl. LNG Terminal)

Cost Difference US$21.3 billionIndicative Reasons for Cost Difference

• Difference in Process / Layout / Infrastructure US$4.00 Billion• Site Labour Unit Costs US$6.00 Billion• Duration Related Costs US$2.20 Billion• Company Owner Cost Unit Rates US$2.00 Billion• Site Labour Productivity US$1.75 Billion• Equipment / Bulk Procurement Unit Rates US$1.50 Billion• Remote Location US$2.85 Billion• Addition Weight due to Module Build US$1.00 Billion

GORGON LNG PLANT SABINE PASS LNG PLANT

Comparison Sabine Pass vs. Gorgon

Comparison Sabine Pass vs. Gorgon


SCHEDULE VALIDATION

LNG Plant Execution Duration vs. Capacity

LNG PLANT DATA

LNG PLANT DATA

LNG PLANT DATA

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