Qalhat LNG Project

7/30/2019 Qalhat LNG Project

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QALHAT LNG PROJECT

QALHAT LNG PROJECT

GASTECH 2005

Mamoru Nakano, Deputy General Manager

Gas Value Chain Project Division,

Chiyoda Corporation

Arnoud van der Post, Manager of Consultancy & Start-up

Shell Global Solutions International B.V.



© Gastech 2005 Nakano 2

1. INTRODUCTION

Chiyoda-Foster Wheeler and Company LLC (CFW), a joint venture established in the Sultanate of Oman successfully

constructed the first LNG plant in Oman (2 Trains x 3.3 MTPA LNG grass root plant) in the year 2000 before the

contractual completion dates of 38 and 42 months, for the first and second train respectively. After completing the

project, CFW was awarded the EPC contract from Qalhat LNG S.A.O.C. (QLNG) for a single train expansion (3.3 MTPA)

in January 2003. The construction site is at Qalhat near Sur, 350 km away from Muscat.

The governance of the project is undertaken by an independent Owner team, referred to as the “Qalhat LNG project

team”. Resources, including the Project Director (M. Merzian) are supplied by the Project Technical Advisor: Shell

Global Solutions International BV. The Qalhat LNG project team manages the EPC contract with support as required

from their Technical Advisor.

The QLNG Project has the following special features.

- Fast Track Project of 34 months with Long Lead Equipment (MCHE/ Main Cryogenic Heat Exchanger and

Refrigerant Compressors) to be ordered after the EPC contract award.

- Flawless Start-Up (Trademark of Shell Global Solutions International BV). To cope with the short duration of the

Start-Up period (1 month from Plant Completion to First Shipment), QLNG has adopted a new concept of Flawless

Start-Up with the guidance of QLNG and its Technical Advisor Shell Global Solutions International BV (SGSI).

- Accomplishment of high Omanisation ratio (ratio of Omani employees against total employees). 35% is adopted

while 15% was applied for the previous project.

The plant construction is ahead of schedule, with a high performance of objectives and high HSE record, and will near

completion in the last quarter of the year 2005.

2. FAST TRACK PROJECT

Scope of the project is as shown below:

1 x 3.3 MPTA LNG Train composed of MCHE licensed by Air Products and Chemicals, inc. (APCI), Frame-6 Propane (C3)

Compressor and Frame-7 MR Compressor manufactured by GE Nuovo Pignone (NP)

2 X Frame 6 Gas Turbine Generators

1 X Sea Cooling Water System

1 X Instrument Air Compressor

1 X Air Separation Package

1 X Feed Gas Receiving Station

In many LNG plant projects, since plant completion is dominated by the manufacturing duration of the Long Lead

Equipment (MCHE and Refrigerant C3, MR Compressors), the clients order the Long Lead Equipment in advance of the

EPC contract award and it is assigned to the contractor in order to reduce the project duration. In the case of the

QLNG project, and also the previous project, this Long Lead Equipment was ordered after the EPC contract.

The 1st train of the existing LNG plant took 38 months from the contract award to Ready for Start-Up (RFSU), while the

QLNG Project is scheduled to be completed in 34 months.

To achieve this shorter project duration, the full string tests of refrigerant compressors at the shop have been waived

due to the identical design with the previous project, while the gas turbine solo run and compressor mechanicalrunning test were performed. Extensive inspection items are reviewed and conducted in order to maintain integrity.

To increase further integrity, the manufacturer’s packing information data is merged into the contractor’s site material

control system (MARIAN oracle based software) with extensive packing inspection compared with the sub-supplier’s




original design drawing. The MCHE was erected 21 months after the contract and the Refrigerant Compressor after

22 months. Comparison below with the previous project, using the parameter of remaining months after site erection

to RFSU, shows that the Long Lead Equipment delivery does not adversely affect subsequent construction activities.

Namely, the saved time is allocated for construction work in the QLNG Project.

Remaining Months to RFSU

Previous Project Qalhat LNG Project

Main Cryogenic Hest Exchanger 12 months 13 months

MR Compressor with Driver 9 months 13 months

C3 Compressor with Driver 10 months 14 months

The overall strategy of the QLNG Project is to save the time on engineering and procurement, fully utilizing tangible

assets from the previous project during construction, without a loss in quality. Engineering was concentrated on the

modification area, and vendors were selected in consideration of the impact on re-engineering in the case of new

vendors’ selection. Consequently, the same vendors as with the previous project were selected, except in the case of

static equipment. Lessons learned from the previous project were analyzed and categorized phase-wise. These

were implemented at each EPC phase. The progress curves below show that this strategy has achieved success.

2003 2004 2005 2006

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR

0 1 2 3 4 5 6 7 8 9 10 1 1 12 1 3 14 1 5 16 1 7 18 1 9 20 2 1 22 2 3 24 2 5 26 2 7 28 2 9 30 3 1 32 3 3 34 3 5 36 3 7 3 8

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Actual for Previous Project

Contract Plan for QLNG Project

Actual for QLNG Project

Actual for Previous

Project

Actual for

Q-LNG

2003 2004 2005 2006

J AN F EB M AR A PR M AY J UN J UL A UG S EP O CT N OV D EC J AN F EB M AR A PR M AY J UN J UL A UG S EP O CT N OV D EC J AN F EB M AR A PR M AY J UN J UL A UG S EP O CT N OV D EC J AN F EB M AR

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%



Actual for QLNG Project Actual for

Q-LNG

Actual for Previous

Project

ENGINEERING PROCUREMENT

2003 2004 2005 2006


0 1 2 3 4 5 6 7 8 9 10 1 1 12 1 3 14 1 5 16 1 7 18 1 9 20 2 1 22 2 3 24 2 5 26 2 7 28 2 9 30 3 1 32 3 3 34 3 5 36 3 7 38

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%



Actual for QLNG Project

Actual for Q-LNG

Actual for Previous

Project

2003 2004 2005 2006


0 1 2 3 4 5 6 7 8 9 10 1 1 1 2 13 1 4 1 5 16 1 7 1 8 19 2 0 21 2 2 2 3 24 2 5 2 6 27 2 8 2 9 30 3 1 3 2 33 3 4 3 5 36 3 7 38

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%


Contract Plan for Qalhat LNG

Actual for Qalhat LNG

Actual for Previous

Project

Actual for

Q-LNG

CONSTRUCTION OVERALL

For construction, in order to allow a good environment and better productivity for the mechanical work, which involves

higher risk activities, the joint efforts of CFW and QLNG were concentrated on earlier completion of the underground

work compared with the previous project. The table below using the parameter of remaining months to RFSU, shows

that this strategy is also being well achieved.




Remaining Months to RFSU

Previous Project Qalhat LNG Project

Main Pipe Rack Completion 22 months 23 months

Process area Underground CableInstallation

14 months 21 months

Main Equipment Erection Completionexcept for MCHE, Refrigerant Compressors

13.5 months 15.5 months

Previous Project：

15 Months till RFSU (As of September,1998)

Qalhat LNG Project：

22 Months till RFSU (As of January, 2004)- Amongst World Record? -




3. FLAWLESS START-UP (Trademark of Shell Global Solutions International BV)

Aiming for a short Start-Up Period (1 month from Plant Completion to First Shipment), QLNG has adopted a new

concept of Flawless Start-Up, with the Guidance of QLNG’s Technical Advisor, Shell Global Solutions International BV

(SGSI). This is explained below.

To ensure a successful execution of the project and a successful first production cycle of the new assets Shell Global

Solutions applies a proprietary methodology entitled Flawless Start-up Initiative® during project execution. This

methodology entails two steps:

Operations Implementation Planning (OIP) which aims to prepare the future asset operator for all aspects of the

production phase. This includes but is not limited to: operations and maintenance philosophy, organization &

manpower, prototype and risk assessment, competence development & assurance, manuals, check-lists and

instructions, development of management system (ISO-9000 model), etc. This OIP process ensures that at the

moment of asset hand-over the Plant, the People and the Procedures are in place and fit-for-use. OIP development is

normally done by the future asset owner and falls outside the scope of the EPC contractor. The graph below gives an

impression of how OIP develops and matures during the project preparation and implementation.

05/01/20052004 Shell Global Solutions

C

How does the OIP typically develop?

Development of OIP

Operations

PhilosophyPhase I of

OIP

Phase II of

OIPPhase III of

OIPFinal Version

OIP

Review

ProjectLessons Learned

Review

OIP

Process

Lessons Learned

Commission

&

Start-up

Initial

Production

Phase

Development of the project

ProcurementScouting

&

Feasibility

Basis

of

Design

Detailed

Engineering

Basic

Engineering

Packages

Construction

Value improving practices

Site

ManagementSystem

Quality Execution Plan . Problems encountered during initial operation of many previous projects have been

analysed for root causes which were captured in Lessons Learned databases, subdivided by relevant disciplines.

These lessons learned are accounted for in all stages of today’s projects: from Basis of Design through Detailed

Engineering and Procurement right through to Construction and Commissioning. Examples of these lessons learned for

an LNG project include: Build Clean program, tightness (internal & external), functional testing and integrity,

operability/maintainability/accessibility, etc. The execution schedule reflects the integrated execution of identifiedactivities in construction, commissioning and start-up whilst respecting the Inspection and Test criteria. As an

important feature of this Execution Plan a number of Key Success Area’s (KSA) are identified and each KSA is assigned

a focal point.




Shell Global Solutions

$$

Plant performance after Mechanical Completion

P e r f o r m a n c e

tCSU - first cycle operation

Trouble-free Start-up and Operation

Expectation:What performance

should look like

Historical :Typical plant performance

curve over timewith

dormant problems fromprevious project phases

now coming to li ve.

Historical :Typical plant performancecurve over timewi th

dormant problems fromprevious project phases

now coming to li ve.

Improvement 2 :Preparation through Flawless®

Improvement 1 :Preparation through OIP

This structured approach of the Quality

Execution Plan has led to a first-time-right

commissioning & start-up resulting in a

considerable gain in time and money. Not only is

the contractual delivery date ensured, but early

production adds significantly to Return on

Capital Investment.

The Flawless Start-up Initiative® as described requires full involvement and commitment from the FEED contractor

as well as from the EPC contractor during the project. For the QLNG project this has been the case, and a selective

FSI program was devised and agreed with CFW, the details are further described in the next chapters. In addition,

team members with extensive background and experience in the FSI activities were assigned to the Owner’s project

organization to work with CFW on the agreed program.

SGSI normally acts in a guiding role to facilitate the contractor’s work and/or assist the owner’s project team. This is

done through awareness sessions, engagement workshops, detailing the Flawless program, guiding & mentoring the

focal points in their role and in conducting so-called “health checks” as an independent second pair of eyes to review

adequacy and compliance to the agreed Flawless Start-up program.

With the guidance of QLNG and SGSI during the Engineering and Procurement phase, the modified areas from the

previous project and new technologies not employed on the previous project were thoroughly investigated and

identified as “Novelty Items”. Since the interval between the completion of the previous project and the QLNG project

is long (three years) and there have been new technology improvements during the period, there were 79 “Novelty

Items” for Engineering.

These Novelty Items were fully analyzed and measures taken to ensure a smooth start-up and reliable operation.

At the initial construction phase, a Key Performance Indicator (KPI) was established to monitor the achievement of

Flawless Start-Up in the following categories called “Key Success Areas”.

- Tightness (External & Internal)

- Cleanliness

- Mechanical Integrity

- Electrical Integrity

- Prototype

- Complex System

- Testing

- Handover, Deliverables and Plans

In accordance with the Key Success Areas, the workshops facilitated by QLNG and SGSI were conducted in a phasedmanner, in accordance with the mobilization of Key Personnel to site. QLNG, CFW and Subcontractor Key staff joined

the workshops.




A part of the payments for "Change in the Work" in connection with additional activities required to achieve the

selected KPIs are made in line with the level of the achievement of the KPI, as an incentive/ penalty scheme. This

scheme encourages CFW and its Subcontractors to attain higher score in the KPI.

After the setting up of standard and measurable criteria, implementation at site was started. A symbol was chosen

and banners, visible criteria and photos of good and bad examples were placed in many locations on the site. Anincentive scheme for the workforce + supervisors has been introduced and a Daily Award and a Bi-Monthly Award areprovided.

MASKING TAPE

EAL FULLY WITH MASKING TAPE

PLYWOOD FULL PLATE COVER

Progress of FSU workshop action points

0%10%20%30%40%50%60%70%80%90%

100%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Weeks following action plan issuance

% a

c t i o n p o i n t s

c l o s e d

Cleanliness Tightness Mech static Electrical

Instrument Mech Rotating Outstanding Target

Below Line Linear (Line)

During the workshops, action items are

discussed and agreed. The first phase ismainly the incorporation of ITP (InspectionTest Plan) and change of MS (MethodStatement) in order to achieve the KPI.The closure of workshop action items aremeasured continuously and the graph on theleft shows that this has progressed well.




4. SUSTAINABLE DEVELOPMENT

Accomplishment of the high Omanisation ratio (35%) has been set up as the target for the QLNG Project. Also, based

on Lessons Learned from the previous project, contribution to local society has been set up as another target.

Currently in the Sur area, two major projects are under execution. One is a fertilizer project and the other is the QLNG

Project. The combined requirements of the Omani workforce are tabled as below.

Total Work Force Number of Omani Omanisation

Fertilizer (Start 2002) 8,000 1,600 20%

Q-LNG (Start 2003) 3,500 1,200 35%

Total 11,500 2,800

Ref. Previous Project: Peak Number of Omani; 1000, Omanisation; 15%, Number of Trained Omani; 350

Since this scale of skilled Omani workforce was not initially available, extensive recruitment and training was required

to achieve the project targets.

1st Priority to "Sur" area

like neighbouring villages of Qalhat

Al-Gahilah etc., and Sur to wn

2nd Priority to Sharqiya region

other than "Sur" area

3rd Priority to other areaSur town, Qalhat, Al

Ghallilah etc

Sharqiya region like

Ibra and Jalan.

Other areas in Oman like

Muscat and Nizwa.

1st priority

2nd priority

3rd priority

The following five KPIs were set up by CFW in order to measure the quality of sustainable development in addition to

the Omanisation ratio.

ANA LYSIS OF INSTRUM ENT DAM AG E PROTEC TION

0

50

100

150

200

250

Process Area cum Utility Area cum Off-Site Area cum NO.of Fail

Process Area cum 16 32 32 48 64 81 99 117 135 135 153 171 189 207 225

U tility Area cum 8 16 16 24 32 40 48 56 64 64 72 80 88 96 104

O ff-Site Area cum 1 2 2 3 4 5 6 7 8 8 9 10 1 1 1 2 13

N O.of Fail 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

12/1 12/2 12/3 12/4 12/5 12/6 12/7 12/8 12/9 12/10 12/11 12/12 12/13 12/14 12/15

A daily surveillance report is prepared by theCFW supervisor, and if any adverseindication has appeared on the daily report,corrective action is taken at the initial phase.To feed-back corrective actions in asystematic manner, “Q-Slip” cards areadopted. If any non-compliance is found,the CFW supervisor writes the correctiveaction to the Subcontractor and if thecorrective action is taken, this sheet isreturned to the originator. To track this, acopy is sent to CFW “Flawless Start-up” coordinator.

For the best contribution to local society,during the recruitment a Concentric Circularphilosophy was adopted. That is, at first findcandidates from the region near the site, if

sufficient candidates are not available, selectcandidates from the next nearest region.

This has been achieved by the full support andclose communication with the Director Generalof the Ministry of Manpower (MOM) in Sur.




KPI 1. Accomplishment of 35 % Omanisation

KPI 2. Employing Omani people from neighboring villages, Sur and Sharqiya region

KPI 3. Off-the-Job training for Omani people

KPI 4. Employing Omani people graduated from Off-the-Job training

KPI 5. Local procurement and/or local subcontract from neighboring villages, Sur andSharqiya region

CFW organized a dedicated Sustainable Development Team and an Omanisation Club with Subcontractors for bilateral

communication and exchange in a successful way to improve its quality.

For Off-the-Job training, which is mainly applied to the skilled workforce, the majority of Subcontractors are takingadvantage of a training subsidy from the Government and sending their trainees to training institutes, and someSubcontractors utilize their own training course. The number of Omani people trained as of November 2004 exceeds700.

Subcontractor GraduatedTrainees

UnderTraining

Number of TotalTrainees

Civil Work 76 0 76

Mechanical, Electrical andInstrumentation Work

241 110 351

Paint and Insulation Work 164 83 247

Waterfront and Marine Work 8 0 8

Heavy Rigging Work 6 0 6

Catering Service 11 0 11

Operation and Maintenance 3 0 3

TOTAL TRAINEES 509 193 702

To maintain a high HSE standard with the many new trainees entering the construction site, HSE training refresher

courses for all Omanis at site were held continuously. These refresher courses were held in addition to ordinary HSE

induction and specific HSE education courses. CFW introduced English and IT training courses for their Omani staff in

order to increase their communication with expatriate staff and help familiarize them with office work. College

graduate students were provided with on-the-job training in the company organization.




1

-150

-50

50

150

250

350

Feb-03 . Nov-03 Oct-04

324 Interviewed (MoM)

94 drop out of trainees

20 quit site

168 Trainees

74 Trainees joined54 Working force

Interviewed Working force

32% conversion

Civil Subcontractor Omanisation Achievement

To extend the Omani employment as long as possible, work force transfer from a company to another was consideredamong the concerned companies in the project and some successive employment was made. Also, a list of Omani

employee is submitted to the Ministry of Manpower two month prior to the demobilization from the project to enhance

next job opportunity of Omani engaged in the project.

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To increase the local procurement from neighboring villages, CFW published a list of locally available materials and

resources, and leaflets about the QLNG project.

Based on this feedback from subcontractors and local suppliers, a local content database was prepared and the

database was shared with subcontractors at the Omanisation Club. CFW/ Subcontractors made such local

procurement and sublet work with an annual sum of over one million Omani Rials.

The graph on the left shows the track record of

trainees starting from the stage of recruitment up to

conversion to the actual workforce. In short, 32%

of trainees were converted to the actual workforce.

The total trainees were 168 selected from 324

candidates through MOM and trained. Among 168training candidates, there were 94 drop-outs before

graduation because of lost interest or mismatching

of expectation and 74 graduated/ joined site work.

During approximately one year (Nov’03 to Oct’04),

20 graduated workers quit and 54 employees finally

became “experienced workers”.

CFW has a supporting system called aSustainable Development Help Desk (SD

Help Desk) for easy communication betweenOmani Staff and Expatriate Staff. The SDHelp Desk is composed of experiencedOmanis. In case of difficulty of explanationof a work request from an expatriate, thework is explained by this SD Help desk. TheSD Help desk and Sustainable developmentteam became members of the CFW SDCommittee and feedback from Omani Staff and expatriate staff is discussed weekly.




CFW received an honorable award of “Best Omanisation Company” from the Minister of Manpower in commemoration

of the remarkable performance of “Omanisation” as one of the ten best companies on 9th February ’2004, under the full

support of the Ministry of Manpower and QLNG.

5. SUMMARY

Currently, the Project is proceeding smoothly and we are making every effort to complete it successfully. Fortunately,

the project programs for Sustainable Development and Health, Safety and Environment are progressing well, so far.

CFW is performing the project to the satisfaction of the client, Qalhat LNG S.A.O.C. under the assistance of SGSI.

Leaflets introducing the QLNG project weredistributed through the Oman Chamber of Commerce and Industry, Sur Municipality, theOffice of the Walli and directly to shops and

contractors in this region.




CONTACT POINT:

Mamoru Nakano Deputy General ManagerGas Value Chain Project DivisionChiyoda Corporation

TEL: +81 45 506 7206FAX: +81 45 506 7029Email: [email protected]

Arnoud J. van der Post Manager Operations ConsultingShell Global Solutions TEL: +31 70 377 2676FAX: +31 70 377 1550Email: [email protected]

Maurice Merzian Executive Project ManagerQalhat LNG S.A.O.C.

TEL: +968 699 566FAX: +968 699 552Email: [email protected]

Qalhat LNG Project

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