By Andrew Hobbs
BETTER engagement with project teams through planning, more efficient use of technology and avoiding micro-management are among the lessons learned by liquefied natural gas project developers in Australia.
Speaking at the 18th international conference & exhibition on liquefied natural gas (LNG 18), the leaders of five Australian projects all said they had faced high levels of public and government scrutiny as work progressed.
Chevron Australia managing director Roy Krzywosinski said the company’s Gorgon project was one of the most heavily scrutinised projects the company had ever done.
Looking back on development of Gorgon, he said that if Chevron were to do it again, he would carry out more detailed engineering ahead of a final investment decision.
“When you get into the mega project range, you really need to do more homework, especially if you are building a project on a remote location,” he said.
“We need to understand all the material and all the bits and pieces we need to build this thing because then that helps inform what kinds of logistics you need. It also informs how much pre-investment you should make on your infrastructure.
Mr Krzywosinski said the company also had to ensure the infrastructure being installed was ready to take on the rigours of the project.
“You really need to understand the engineering, what kind of material you need, the volumetrics as well as the weights. You have to know how you are going to move it and how you are going to get it up there.”
Gladstone LNG vice president of downstream Rod Duke said his project had made extensive use of technology in meeting the challenges of developing the large number of coal seam gas fields that feed into the project.
“We clustered all of our engineers – all of the smarts around that operations centre in Brisbane, and we had 35 people in the field running 800 wells,” he said.
“They’re busy, but it certainly made it a much more efficient operation.”
Mr Duke said he felt this approach was the way of the future, adding that the group was looking to improve and expand on this approach.
“We think it puts us in a strong position where of course an ongoing reduction in upstream development costs and a winding down of operating costs is going to be essential especially in our current cost environment to our future success,” he said.
The biggest lesson learned in the development of his project was in establishing the right approach to project delivery, particularly in relation to contract management and contractors, Mr Duke said.
He said project developers had focused on ensuring the project teams were the right size – peaking at 75 people for a two train project.
“That approach of letting a contractor do their job and not micro-managing we think has been good for the contractor and good for us as well.”
For Page Maxson, chief executive of the Australia Pacific LNG project (APLNG), developing solid and open relationships with major contractors had paid off during the course of the project.
“The contracts where we were collaborative from day one performed much better than the contracts where we switched part way through because they weren’t working,” he said.
“What we found was by doing it collectively was that work goes on smoothly and you can keep that out of the execution and you get better solutions.”
“You need that open and collaborative environment for instances like this to happen,” he said.
As an example of this, Mr Maxson cited the development of the Curtis Island project, where contractors and the APLNG team had informed management that work on the materials offloading facility would be between four and five months late.
“So we said alright – get whoever you need from home offices, experts whatever, go to Gladstone, get into a hotel for a week and just try to make it better,” he told the LNG 18 audience.
At the end of that week, Mr Maxson said the team had sorted the issues out, finishing only one week late from the original schedule and at a net additional cost of $12 million – which Mr Maxson said was not trivial, but not a major problem in the scheme of a $10 billion project.
“The key thing was you need the environment where the problem has surfaced early enough for you to do have time to do something about it,” he said.
“So if you don’t have an environment where you and your contractor are sharing your issues then you might find out about this when it is too late to do something about it.”
Taking the pressure off the team to investigate the problem more thoroughly had also had a positive impact, he said.