Enormous. projects now. a specialty for. Saudi Aramco

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1 Enormous projects now a specialty for Saudi Aramco

2 By Steve Ell The central control room building (foreground), shown under construction, provides a visual anchor for Saudi Aramco s massive Khursaniyah project. Inset: The central control room building in March Expo 2010, Shanghai 39

3 audi Aramco s reputation for successfully executing large, complex projects has resulted in an ever increasing and varied workload being given to the company s Project Management (PM) organization. Over the last 20 years, the number, size and complexity of megaprojects being executed has continually increased. In addition, due to the successful execution of oil and gas projects related to the company s core business, the Kingdom of Saudi Arabia has turned to Saudi Aramco to execute large, high-profile infrastructure projects vital to the Kingdom s future growth and development. Huge new gas processing plants, crude-oil production facilities and refining facilities are all a part of Saudi Aramco s continued ambitious domestic capital program to increase oil and gas supplies and support Saudi Arabia s burgeoning petrochemical industry. Saudi Aramco has recently initiated a series of mega projects to help the world meet energy demand increases and ensure the company s leadership position in the energy-supply sector for years to come. Collectively, the recently completed Hawiyah, Khurais and Shaybah programs, plus the soon-to-be-completed Khursaniyah program, will increase revenue to the Kingdom and promote the local economy by increasing oil production capacity by 1.95 million barrels per day (bpd), sales gas by 1.28 billion standard cubic feet per day (scfd), ethane production by 450 million scfd, and condensate by 275,000 bpd. All these projects are being executed on demanding schedules, while expanding the Saudi Arabian procurement and construction content of the projects. This article will illustrate successful project management practices that are used and identify current and future mega projects that the PM organization will execute utilizing these practices. MEGA PROJECT HISTORY Saudi Aramco has a 72-year history of successful project execution. Its facilities tend to be very large compared to similar facilities worldwide. For example, the company s gas-oil separation plants (GOSPs) routinely process 300,000 bpd of crude to produce oil, water, and gas from wells averaging 5,000-10,000 bpd each. Pipelines ranging up to 60 inches in diameter transport the oil to terminals. Enormous projects were the order of the day early in the company s history, with constantly pressing needs to build new GOSPs, water-injection facilities to maintain reservoir pressure, pipelines, oil stabilization units and export terminals. Major capacity expansions were built in the mid-1970 s. The first mega project was a very large gas collection and distribution program known as the Master Gas System to eliminate natural-gas flaring at the GOSPs and provide Saudi Arabia with natural gas as a commercial resource. At that time, the Project Management organization had six general managers and 19 departments to manage the gas program and multiple smaller projects. In the late 1980s, the company started using lumpsum turnkey (LSTK) contracts for the largest projects, and local contractors for smaller projects. There were no more mega projects until the early 1990 s. Clockwise from top: A local contractor welder works on a Saudi Aramco project. The company has continuously increased participation of domestic companies in its mega projects. Mega projects are found on shore and off. Fielding drilling rigs is a logistical challenge as the company ramps-up production. 40 Dimensions

4 MODERN MEGA PROJECTS Since 1998, Saudi Aramco has completed nine mega projects. The Ras Tanura Refinery (RTR) Upgrade project was first, and the company learned many valuable lessons from it. Four other mega projects were completed below budget and on or ahead of aggressive schedules, with three of them winning major international awards. In addition, the King Abdullah University of Science & Technology (KAUST) was completed on an aggressive 1,000-day schedule to allow classes to start as planned in September There have been two dominant contributing factors to these successes: Communication: clear direction from Corporate Management; CEO meetings; unambiguous common goals broadcast to all members of extended project teams; and the capture and distribution of lessons learned from previous projects. Organization: formal implementation of best practices; a culture of continuous improvement; project team continuity; and successful contracting strategies consistently applied across all projects. THE MANAGEMENT PROGRAM Taking the concepts learned on the RTR upgrade, the company s PM organization transitioned to implementers of project management best practices. Starting in 1998 and carrying through to the present, several programs were instituted that changed the PM organization s culture to one of continuous improvement: The company is an active member of the Construction Industry Institute (CII) in the United States, and Project Management adapted CII s best practices, known as value improving practices, and established a Value Practices Unit to formally implement them across its projects. This group of experienced personnel works with project teams in formal, facilitated sessions to optimize the impact of selected value practices. The company is also a major supporter of the Project Management Institute (PMI) in the Arabian Gulf. More than 240 project engineers have obtained PMI s Project Management Professional certification. (cont. on page 46) A massive demethanizer tower is set in place at the company s Khursaniyah oil-production expansion project. Expo 2010, Shanghai 41

5 Of five company mega projects in the last 10 years, two received the Project Management Institute s prestigious Project of the Year award. 42 Dimensions

6 A multi-jet fountain complements the cool stone and glass exteriors of buildings at King Abdullah University of Science and Industry s beautiful new campus on the Red Sea. Opposite top: An artist s rendition of an aerial view of the King Abdullah Petroleum Studies & Research Center in Riyadh. Opposite bottom: Transporting the enormous vessels required for mega projects and placing them on-site is a massive logistical undertaking. Special, ultra-strong vehicles are required. Expo 2010, Shanghai 43

7 Top 10 mega projects Megaprojects in Saudi Aramco are generally defined as projects or programs exceeding $1 billion in value. the projects listed here are the company s largest to date. Manifa Field development ( ) Under the Manifa Program, Saudi Aramco will install central facilities at Manifa to process 900,000 barrels per day (bpd) of Arabian Heavy crude oil. The Manifa Central Processing Facilities (CPF) will include gas and oil separation, wet crude handling, gas compression, gas conditioning, crude oil stabilization, produced water disposal and water injection facilities. The CPF will be designed to process 900,000 bpd of crude oil, approximately 120 million standard cubic feet per day (scfd) of associated gas and 50,000 bpd of hydrocarbon condensate that will be produced as a result of this crude increment. The gas and condensate will be processed at Khursaniyah Gas Plant, and the crude will transported to Ju aymah terminal for export. This program is challenging primarily because of the Manifa field s location in shallow water of the western Arabian Gulf, requiring a 41-kilometer (km) asphalted causeway and 27 drilling islands. This shallow bay contains one of the most prolific marine ecologies in Saudi Arabia, and all precautions will be taken to maintain this vital resource for the country. The program will include installation of four oil-producing offshore platforms, with ten producing wells and two evaluation wells each, and seven water-injection platforms with ten water injection wells each. Electric submersible pumps will provide artificial lift for production, which will be transported as multiphase flow to the causeway and shore-based CPF. King Abdullah University of Science and technology ( ) King Abdullah University of Science and Technology opened in September 2009, completing construction in record time. It is an international, graduate-level research university dedicated to inspiring a new age of scientific achievement in the Kingdom that will also benefit the region and the world. The University will pursue its research agenda through four strategic research thrusts focused on areas of science and technology that are important to Saudi Arabia, the region and the world: 1. Resources, Energy and Environment; 2. Biosciences and Bioengineering; 3. Materials Science and Engineering; 4. Applied Mathematics and Computational Science. The project constructed academic, research and residential facilities to support approximately 3,000 postgraduate students and 500 faculty members. The University s campus is made up of 21 buildings, including four research centers equipped with advanced laboratories, in addition to administration buildings, specialized academic buildings, a university center, library, auditorium and conference center. Wasit program ( ) The Wasit Gas Program will construct an onshore grassroots Central Processing Facility (CPF) to process 2.5 billion scfd of gas from the Arabiyah/ Hasbah offshore fields and produce approximately 1.75 billion scfd of sales gas. Offshore gas wellhead production and tie-in platforms along with associated pipelines and cables will be installed to provide the feed gas to the CPF. The program also provides for installing Natural Gas Liquid (NGL) fractionation facilities inside the Wasit CPF to allow for processing a 240,000 bpd C 2 + NGL stream produced at Khursaniyah. Khurais Field development ( ) The Khurais Program, the largest integrated oil project in Company and industry history, was completed in The program increased production capacity of Arabian Light crude by 1.2 million barrels per day from the Khurais area, provided for dehydration of 450 million scfd of gas, and expanded the Southern Area sea-water injection capacity by 4.5 million bpd to support increased production from the Khurais and Ghawar fields. jizan refinery and terminal ( ) A 400,000 bpd refinery and associated terminal facilities will be constructed within the Jizan area. The semi-conversion refinery will be capable of processing Arabian Heavy and Medium crude oils to manufacture approximately 100,000 bpd of gasoline, 180,000 bpd of ultra-low-sulfur diesel, and 80,000 bpd of fuel oil, depending 44 Dimensions

8 on the crude mix processed. It is envisioned that the proposed refinery will ultimately be integrated with a future nearby worldscale power and water facility. The marine terminal will have the capability of receiving Very Large Crude Carriers for the supply of crude to the refinery and will have berths to support product exports from the refinery. Khursaniyah Field development ( ) The Khursaniyah Program Facilities are capable of producing 500,000 bpd of Arabian Light crude oil and processing 1 billion scfd of associated sour gas in the integrated grassroots plant. The Khursaniyah Oil Processing Facilities includes gas/oil separation, wet crude handling, crude oil stabilization, and gas compression to treat the wet crude from the Abu Hadriyah, Fadhili and Khursaniyah fields. The Khursaniyah Gas Plant facilities consist of one high-pressure gas sweetening train, two low-pressure gas sweetening trains, three sulfur recovery trains, two hydrocarbon stripping trains, and two C 2 + NGL recovery trains with 290,000 bpd capacity. In addition, two co-generation units were built along with water treatment facilities to serve the oil and gas complex. The output of the gas plant includes 550 million scfd of sales gas and 1,800 metric tons of molten sulfur. Shaybah ngl Facilities ( ) The Shaybah NGL Program will construct a grassroots NGL recovery plant at the Shaybah Field. This facility will extract the valuable NGL com ponents supplied from various GOSPs and deliver lean gas to GOSP-2 and GOSP-4 for re-injection. The Shaybah NGL Program also includes gas handling facilities to debottleneck Shaybah GOSP-1, 2, 3 & 4. Karan Field development ( ) Karan is the first nonassociated offshore gas field to be developed by the Company. The offshore facilities at Karan consist of four production platforms connected to a main tie-in platform, which will be installed with associated power and communication facilities. The gas will be transported via a 110-kilometer subsea pipeline from the field to onshore processing facilities at the Khursaniyah Gas Plant. The gas will be processed through three trains, each with a capacity of 600 million scfd, and will include facilities for gas sweetening, acidgas enrichment, gas dehydration and supplementary propane refrigeration. The facilities also will include a co-generation plant with boiler, a sulfur recovery unit with storage tank, substations and a transmission pipeline linked to the Kingdom s Master Gas System (MGS). King Abdullah petroleum Studies and research center ( ) The Ministry of Petroleum and Mineral Resources directed Saudi Aramco to design and construct the King Abdullah Petroleum Studies and Research Center in Riyadh. The Center will be a world-class energy research institution that will broaden the Kingdom s capability to study and anticipate future changes in the global energy arena and develop insights and policy alternatives to sustain and enhance Saudi Arabia s prominence in petroleum and other suitable energy areas. The Center s development program will comprise procurement and construction of a complex of buildings that will include a main building for research facilities and administration offices, a building for a physical and cyber library, a conference center with support facilities, Information Technology Center, musalla and educational and training facilities. The program also includes requirements for site development, utilities roads, and a residential housing compound. Qatif Field development ( ) The Qatif Program provided facilities for 500,000 bpd of Arabian Light and Medium crude oil from onshore and 300,000 bpd from offshore. This was the first Saudi Aramco facility to combine production of Arabian Extra Light, Light and Medium grades. The facilities were also designed to process 370 million standard cubic feet per day (scfd) of associated gas and 40,000 bpd of condensate. All crude is desalted, stabilized and processed, then shipped to Ju aymah and Ras Tanura terminals for direct export. The gas is processed at Berri Gas Plant. The facilities included two new GOSPs, five new and 10 upgraded offshore platforms, a major expansion of Berri Gas Plant, 34 drilling islands, and a 140-megawatt (MW) Cogeneration Plant, providing steam heat for oil dehydration and power for offshore electric submersible pumps. Pipeline work included all gathering lines including offshore, and shipping lines for oil, gas and condensate. Expo 2010, Shanghai 45

9 1 2 (cont. from page 41) A lessons-learned database system was established in 1995 and has been continuously expanded to add to the knowledge base of project personnel. This system was further refined in 2009, with the development of the Pitfall Prevention Tool. This tool is a checklist for all Project Management personnel to assist in early recognition and prevention of frequently encountered project pitfalls. The organization s intellectual capital is vital to its business, and systems have been implemented to facilitate intellectual capital development, such as the Project Management Knowledge Exchange Center. This website is a repository of project management references and quick reference guides with uniform process flow charts to procedures, processes and supporting documentation. The company initiated a Value Engineering Studies requirement for all projects with a value greater than $10 million. A balanced scorecard (BSC) measuring system is in place to give management up-to-date, key performance indicators for each project. Benchmarking of projects with third party benchmarking consultants continues to identify and close performance gaps in project execution. Market outlook groups have been formed to continuously monitor the market as it relates to projects. The data analysis provided by these groups is used to plan and optimize project execution strategies. the FUtUrE Project Management s culture of continuous improvement has also been accompanied by rapid growth in the size, number and type of projects that the organization changes have reduced average project schedules from an average of 48 months to 35 months. has been tasked to implement. Today, there are over 170 active projects being executed by a staff of over 1,300 direct-hire Project Management employees. In addition, local and international personnel recruiting is ongoing to fill the need for additional manpower due to the anticipated increase in project workload. The Saudi Aramco project portfolio is now split into three types of projects. The most common type of project remains traditional oil and gas projects, which are directly related to maintaining and expanding the Company s core energy business. These projects range in size from the massive Manifa oil field development program to small projects such as a control system or firewater system upgrade. The second type of project, which has become more common for Saudi Aramco over the past several years, is the Government infrastructure projects. The first project of this type was the King Abdullah University of Science and Technology, a graduate-level research university dedicated to scientific achievement in the Kingdom. Based on the success of the university project, more infrastructure projects have been added to the Saudi Aramco PM project portfolio such as the King Abdullah Petroleum Studies & Research Center. The third type is Joint Venture (JV) projects, which 46 Dimensions

10 3 4 5 are executed, owned and operated by Saudi Aramco in partnership with a foreign company. These Projects are critical to promote foreign investment in Saudi Arabia and further develop the Kingdom s downstream petrochemicals sector. The first project of this type was Petro Rabigh, a joint venture between Saudi Aramco and Sumitomo Chemical Co. of Japan, which was the company s first integrated refining and petrochemical project and Clockwise from opposite far left: (1) Workers on Saudi Aramco mega projects come from all over the world. (2) Saudi Aramco executives receive an on-site presentation about the Khursaniyah project. (3) Construction workers board buses after a day s work at the Khursaniyah complex. (4) Huge cranes assemble modules of Saudi Aramco s offshore Karan Gas Program. (5) The complexity of the Khursaniyah project is readily apparent in this shot of a processing complex. (6) A contractor employee inspects NGL bullets at Khursaniyah. (7) A panoramic photo of the central area of King Abdullah University of Science & Technology on Saudi Arabia s western coast on the Red Sea. 6 was the first Saudi Aramco venture to be listed on the Kingdom s stock exchange. The JV is currently executing the front-end engineering stage of the phase-ii petrochemical facility to be built in Rabigh, whose output will include many specialized chemical products newly produced in the Middle East. The largest example of a Joint Venture project is the potential JV with Dow Chemical Co. of the U.S, which is currently executing the front-end engineering stage of a massive petrochemical facility to be built in the Eastern Province, Saudi Arabia. Although the JV projects are not executed by the PM organization, key personnel and technical support are provided through the life of the project. As the PM organization continues to develop, it allows Saudi Aramco the flexibility to increase the number of mega projects planned, in order to remain a reliable supplier of the world s energy needs in a volatile global energy market. In the late 1990 s and early 7 Expo 2010, Shanghai 47

11 2000 s, prior to the implementation of the project management principals and continuous improvement, it was unusual to have simultaneous execution of more than one or two mega projects, as these projects were a great challenge for the PM organization to execute. However, during the most recent peak in the engineering and construction cycle, the number of simultaneous mega projects under execution by Saudi Aramco in 2007/2008 was seven: Hawiyah NGL, Khurais, Shaybah, Khursaniyah, Manifa, KAUST and Karan. It now appears that the company may be entering another period of even greater multiple mega project execution. In late 2010, the company s oil and gas sector will have seven simultaneous mega projects active: Manifa, Karan, Shaybah NGL, Wasit, Jazan Refinery, Safaniyah Phase I and Safaniyah Phase II. In the government infrastructure sector, the company will be executing the King Abdullah Petroleum Studies and Research Center, while in the joint-venture arena, the Jubail Refinery and Petro Rabigh II will be active. It is the work such as benchmarking, intellectual capital development, and the maturation of management practices and procedures by the Project Management organization that has allowed Saudi Aramco to confidently attempt such an ambitious expansion program. Since 1998, value engineering studies have saved over $2 billion. 48 Dimensions

12 The offshore Manifa oil field program will produce 900,000 barrels per day of heavy crude oil from a complex of 27 drilling pads linked by a 41-kilometer (km) asphalted causeway. The program will include four oil-producing offshore platforms (inset of jacket installation for oil platform), with 10 producing and two evaluation wells each, and seven water-injection platforms with 10 water injectors each. Expo 2010, Shanghai 49