Saudi Aramco: Oil to a Thirsty Market- International Cooperation Brings New Oil Field on Quickly 1
Abstract on the success through innovation, solid integration and a In a global project environment where many large projects strong will to meet future challenges. struggle to meet their cost and schedule targets, Saudi Aramco has been executing its world-class mega projects with ever shorter schedules, and well within budget. Of the five mega TABLE OF CONTENTS projects completed in the last ten years, two were selected as Project Management Institute project of the year, and one was Page No. honored at the 2005 International Petroleum Technology Conference. 1. Abstract I Saudi Aramco is currently executing a series of new mega 2. Introduction 2 projects that will help meet the worldwide energy demand 3. Project Scope and Schedule 3 increases and ensure its leadership position for years to come. Huge new gas processing plants, facilities for recovering A. Oil Processing valuable petrochemical feedstock, and new crude oil B. Gas Processing production facilities are all a part of Saudi Aramco's ambitious domestic capital program to increase oil supplies C. Water Supply and Injection and support Saudi Arabia's burgeoning petrochemical D. Pipelines industry. E. Utilities and Industrial Support Facilities Collectively, the Hawiyah, Khursaniyah, Khurais, Shaybah and Manifa programs will increase revenue to the Kingdom F. Project Schedule and promote the local economy by increasing oil processing 4. Meeting the Challenges 7 capacity by 2.85 million BPD, sales gas by 1.4 BCFD, ethane production by .45 BCFD, and condensate by 325,000 BPD. A. International Cooperation All of these projects are being executed on demanding B. Project and Off Job Safety schedules and within budget without a significant increase in Company personnel while expanding the Saudi Arabian C. Running the Khursaniyah Project City procurement and construction content of the projects. D. Construction Skill Training This paper will focus on the Khursaniyah Project, which will E. Schedule Improvement Methods produce 500,000 barrels of oil per day only 34 months after the start of preliminary engineering, fully six months faster 5. Megaproject Success Factors 11 than any previous Saudi Aramco project, in the most resource competitive market the oil business has ever seen. The A. Leadership execution of this project required a new contracting strategy, B. Communication novel engineering and construction methods, with international cooperation of international engineering, C. Best Practices procurement, and construction firms and suppliers from all over the world. In addition to the oil facilities, the project will complete a new one billion cubic foot per day gas plant receiving gas from five different sources with varying pressure and H2S content. The scope also includes all of the infrastructure facilities, huge water supply and injection plants, and all of the oil and gathering and product distribution pipelines. The project also requires a temporary construction city for over 30,000 men in the desert. This city has people from over 30 countries, speaking 15 or more languages, all focused on achieving one goal - on time completion of the most complex project ever done in Saudi Arabia. The city has many of the same challenges of a normal city - traffic, safety, food and water supply, housing, training - and many unique ones. The paper will focus on the management challenges of a few of these unique issues. Saudi Aramco is dedicated to supporting Saudi Arabia's role as the leading provider of energy to the world. History has demonstrated its success. Saudi Aramco will continue to build Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly 2 2. Introduction Saudi Aramco. This change was accompanied by increased hiring of Saudi Arabs and allowing attrition of experienced Saudi Aramco is the national integrated oil company for Saudi expatriates. In the late I980's we started using LSTK contracts Arabia, operated for profit, with a production capacity of 10.5 for the largest projects, and local contractors for smaller million barrels per day, mostly for export. The Company also projects. During the 1990's we built the Ras Tanura Refinery processes about 7.7 BCFD of associated and non-associated Upgrade, where we learned a lot of hard lessons, and the gas and operates five refineries with a total capacity of 1.8 Shaybah Field Facilities, deep in the desert, 450 km from the million barrels per day, plus two joint venture refineries in nearest town, in only 36 months. Saudi Arabia and several international refining joint ventures. Modern Mega Projects Saudi Aramco has projects in development to add nearly 3 million barrels per day of crude processing capacity by 2011, Below is a summary of the schedules for the megaprojects four BCFD of gas stripping capacity, and 1.8 BCFD of gas completed and in progress since 2000. The first three were processing capacity. about the same size and complexity, with lessons learned providing the impetus for schedule improvement. The Saudi Aramco Project Management is charged with the Hawiyah NGL Recovery project processing four BCFD of gas responsibility of managing all engineered projects exceeding is more technically complex and larger than any previous $2 million in value. For the last five years, PM has managed project; it will complete in less than 42 months. on average 150 active projects from S2 million to £2 billion with 650 - 750 project personnel, plus about 150 support Project & Start Year Yr1 Yr2 Yr3 Yr4 personnel in estimating, contract management, and best Hawiyah Gas Plant-1998 practices implementation. Engineered project capital Haradh Gas Plant-2000 expenditures averaged S2.5 billion per year for the last five Qatif Program-2001 Hawiyah NGL Rec-2003 years, and will exceed $7 billion per year for the next few Khursaniyah O&G-2005 years as the megaprojecls are executed. Shaybah Expansion-2005 Today, the megaprojects are executed using international Khurais Field-2005 engineering firms for preliminary engineering, international Manifa Field-2006 EPC contractors for detailed engineering and procurement and ^^B Preliminary Engr. t J Reimb. Engr/Proc ^^m LSTK local subcontractors for construction. Engineered materials are The Khursaniyah program, described herein, will complete in purchased from international suppliers and local 34 months primarily due to a new contracting strategy manufacturers when possible. Smaller projects (up to $600 allowing reimbursable engineering and procurement until a million) are now dominantly engineered and constructed using final LSTK price was negotiated. The Shaybah Expansion is a local contractors. smaller scope project to expand the original Shaybah Facilities. The Khurais program to add 1.2 million BPD of oil Mega Project History processing is much larger than anything done previously, Saudi Aramco has a history of successful project execution for requiring a little more time. Manifa will add 900,000 BPD of the last seventy years. Facilities tend to be very large oil capacity from shallow offshore fields, requiring three years compared to similar facilities world wide, with the average for a causeway and drilling islands before offshore drilling Gas-Oil Separation Plants (GOSP) at 300,000 BPD to process commences. oil, water, and gas from wells averaging 5 - 10,000 BPD each. The primary benefit of all of this mega project activity is an Pipelines averaging 30" - 60" transport the oil to terminals increased oil processing capacity of nearly four million barrels with a shipping capacity commensurate with production. per day by 2011. Megaprojects were the order of the day early in the Company history, with new GOSP's, pressure maintenance with water injection, pipelines, oil stabilization, and export terminals. Oil Processing Capacity Increase Major capacity expansions were built in the mid-1970's, after the first oil embargo. Until the late 1970's, projects in Saudi g 4500 i 1 Aramco were managed by operations organizations working E 4000 j=j- through major international EPC companies. (n 1977, Aramco started managing its projects with an internal organization, using international contractors for engineering and construction. The first megaproject was a very large gas collection and distribution program to eliminate flaring and provide Saudi Arabia with natural gas. At that time, with expenditures running about S3.5 billion per year (2002 ° m io r- co o> o T- o o o o O T- T- equivalent), Project Management had 6 General Managers and o o o o o o o 19 departments to manage the gas program and multiple N W CM M W W M smaller projects. ■ Qatif ■ Haradh III D Khursaniyah In 1988, Arabian American Oil Company (Aramco) became a Shaybah ■ Khurais ■ Manifa Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly 3
2. Project Scope and Schedule A. Location
The map above shows the Arabian Peninsula with the oil and B. Oil & Gas Production Facilities gas fields in green and red. The picture on the right shows the The Khursaniyah Facilities will process oil from three medium location of the mega projects in the Eastern Province. Saudi size oil fields - Khursaniyah, Fadhili, and Abu Hadriyah. Oil, Aramco's headquarters is located in Dhahran. Riyadh, the gas and water from 69 directionally drilled wells with an capital city of Saudi Arabia, is shown on the left edge of the average production rate of 7,000 barrels per day will be piped photograph. The Khursaniyah Field is located about 200 km to two satellite gas-oil separation plants at Abu Hadriyah and northwest of Dhahran. The nearest city is the port of Jubail, Fadhili for further shipment to the Central Processing Facility about 100 km northeast of the field. (CPF). Production from the wells is measured with a three phase meter, and then sent through manifolds and trunklines to Khursaniyah Program a gas oil separator. There, most of the gas, water and salt are separated from the oil for further processing, and the oil is stabilized by heating to remove the remaining gas before it is shipped directly to the Ju'aymah Terminal for export. After separation from the production stream, produced water is further processed to remove most of the residual oil, then blended with injection water for reservoir pressurization. Associated gas production of 300 million standard cubic feet per day is compressed to 1200 psi and sent to the new gas plant being built simultaneously. Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly 4
B. Water Supply and Injection Facilities The remaining 550 MMSCFD of gas, stripped of ethane and heavier NGL, is recompressed and used for fuel or sent to the Produced and well water are treated and pumped to injection sales gas grid for distribution. into the reservoir for pressure maintenance. The water supply wells pump water from the aquifer for oxygen scavenging, 290,000 barrels per day of natural gas liquids consisting of then high pressure pumps supply water to the injection wells. ethane, propane, butane and other condensates are stored in six 10 meter diameter by 70 meter long high pressure storage C. Gas Treatment Facilities tanks (see inset article.) From storage, the C2+ NGLs are sent to Ju'aymah Gas Plant for separation and distribution to industrial customers who use these products to make plastics, fertilizers and other commercial products for use in Saudi Arabia and exported around the world. 1800 tons per day of sulfur is removed from the process as a high concentration acid gas, is distilled in three sulfur recovery units and shipped as molten sulfur to Bern Gas Plant for sale to industrial facilities or export.
D. Pipelines The gathering system for the project includes gathering lines from 69 oi) wells and 77 water supply wells and three production trunklines to the CPF. Three high pressure water injection trunk lines feed XXX distribution lines to injection wells. New gas and condensate cross country lines from other The Khursaniyah Gas Plant receives 300 MMSCFD of sour fields complete the gathering and distribution. gas from Khursaniyah along with 700 MMSCFD of high and low pressure gas from three other sources and 100,000 BPD of Product pipelines include the oil line to Ju'aymah terminal, hydrocarbon condensate for joint processing. All gas is gas to the nearest sales grid junction, and NGL to Ju'aymah compressed to 1200 psig, dehydrated and desulfurized, and Gas Plant. then gas and natural gas liquids are separated in multiple columns. Most of the ethane is removed using a lurboexpander and a stripper column operating at -106 degrees Centigrade.
KHURSANIYAH — Just as necessity is the mother of invention, challenge is the mother of innovation. Al-Zamil Heavy Industries' (ZHI) challenge at Saudi Aramco's Khursaniyah Gas Plant Project (KGP) is to build 39 pressure vessels all to be delivered in only 21 months from the date of the purchase order, six of which are the Khursaniyah Natural Gas Liquids (NGL) bullet storage vessels. These six vessels weigh in at 1,050 metric tons each, with a diameter of 6.6 meters, an overall length of 67.7 meters and a wall thickness of 82 mm. Figuring large in ZHI's solution to the challenge is to build and heat-treat the vessels on-site. This is no small feat and is the first time that kind of manufacturing job has been performed at a Saudi Aramco site by a Saudi manufacturer. KGP is faced with more than its fair share of challenges, ranging from its strict schedule and a global shortage of steel, to a scope of more than 400 pressure vessels of different sizes and wall thicknesses. ZHI has started to assemble a huge furnace on site, which will be lifted in pieces and placed over the huge vessels. Electric and gas heaters will be used to raise the vessel temperature to 690 degrees Celsius to perform a seven-day thermal treatment process on the vessel. The Saudi Aramco Project Management Team (PMT) first explored the idea of on-site manufacturing with local manufacturers during the program planning phase. ZHI was the one manufacturer to step up to the challenge and quickly set out to work with Saudi Aramco, breaking records in the process. ZHI used the largest gantry crane in the Middle East — 120 metric tons with a 40 meter span — and, in just three months, erected a completely certified pressure-vessel-manufacturing facility.
On-site manufacturing will bring about many advantages for KGP, including a faster completion period, instant access to critical components for easier quality control and inspections, as well as minimal transport costs. On-site manufacturing of some of the world's largest process vessels not only increases local market participation but also helps realize company's strategic imperative of promoting the Kingdom's economy. Saudi Aramco: Oil to a Thirsty Market- International Cooperation Brings New Oil Field on Quickly 5
E. Utilities and Industrial Support Facilities Major buildings other than the control room include an administration building, maintenance and training Power for the project is supplied by Saudi Electric buildings and other support buildings for the eventual staff Company and a 300 MW cogeneration plant using two 150 of 550 management, operating and maintenance personnel. MW combustion gas turbine generator sets. Waste heat from the turbines is captured and used for crude The project includes state-of-the-art security for the plants stabilization. and the industrial support facility.
The central control room combines control systems for the F. Project Schedule: The project was designed for 38 oil and gas facilities, the largest such facility run by Saudi months from the start of the design basis and 34 months Aramco upstream operations. The communications from the start of detailed design, compared to industry network includes fiber optic cables to all of the wells for average of 54 and 45 months respectively. See details on process control and measurement, telephones, radio and the Schedule Improvement Methods of Challenges. emergency communication systems. ■BSElyaTTProgram Bl B 2005 1| 2006 2007 - 2008 I monniiiEi EM rnrIEEE 3192 - Khursaniyah Gas Plant
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4. Meeting the Challenges A. International Cooperation Foster Wheeler in Reading, UK. The engineering, procurement and construction management firms are The biggest challenge to design and build a facility of this Snamprogetti, Milan for the Central Processing Facility, magnitude in 34 months is the required cooperation of and a consortium of Bechtel, Inc. and Technip SPA for the hundreds of different firms supplying materials and up to Khursaniyah Gas Plant facilities. The remaining work is 30,000 personnel on site at any time. contracted to multiple Saudi Arabian firms that provide The overall project management is being supplied by 85 construction plus some engineering and procurement. Saudi Aramco managers, engineers and administrators, To complete the international scope of the project, let's most with mega project experience, but never of this look at where the materials are coming from. As you can magnitude. The project scoping documents were done at see, this project is a world wide effort. Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly Khursaniyah Producing Facility Suppliers %
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^ Italy 1 HC Comprrilor s Puiripi Saudi Arabia USA F I....:-- All C5.S5 Vwwtj * T«lfe» Turbo f np.indc^i D*liy B. Project and Off Job Safety Khursaniyah Saudi Aramco gives safety the highest priority on our projects, Fatalities /g L Project Safety and as a result, our contractors have excellent safety records. Khursaniyah is no exception with 30 million manhours of & Results construction work with no lost time incidents. The chart on Lost Time / 0 \ the right shows the safety pyramid indicating a very safe facility for personnel. Restricted,Wor k 1 Continuing this safety record is one of the most important responsibilities of the entire management team. They manage this with training, daily safety awareness sessions at the work / Recordable = 4 \ sites, and by constant vigilance. They plan to keep up the no lost time accident record to pass the current record of the Haradh Gas Plant of 42 million manhours. First Aid = 733 \ Near Miss ■ 1450 \ / Based on 3D MM MH @ YE 2006 \ KHURSANIYAH - Contractors are taking great pride at this fast-track, 42 square-kilometer megaproject, in their record of 30 million man hours worked without a lost-time accident. Safety officials on the project say the milestone is the result of early planning and the cooperation of thousands of workers on site each day. "We integrated safety into the design process," said Dave Brotherton, HSE manager for Bechtel-Technip Joint Venture. "We then developed an HSC plan using best practices from Bechtel and Technip. We've worked with CCC on many projects around the world, so we know the best of CCC's HSE procedures. We integrate the best practices throughout the organizations involved in the project." Because of the tight construction labor market, the contractors knew they would be recruiting a largely unskilled work force, which prompted a focus on training. "From a very early stage, we had to develop orientation training, which covered such simple issues as climbing ladders or climbing onto a scaffold to wearing a harness and the value of safety helmets, safety boots and eye protection," Brotherton said. "With a more skilled work force, you would expect people to already know these things." Comprehensive training programs ensured the transformation of this unskilled work force into a skilled one. Future scaffolders, riggers, equipment operators, welders and safety officers received courses that led to certification. Scaffolders, for example, learned from inspecting more than a dozen structures created with deliberate flaws so they would be able to recognize potential dangers on the job site. Brotherton said another key factor for the success so far is the project's Safety Task Analysis and Risk Reduction Talk (STARRT program.) Each day, the first order of business is the STARRT in which the work of the day is discussed in detail along with the potential hazards. Even when the work is identical to the day before, STARRT starts the day. Employees also have embraced a near-miss card program that creates a communication loop between workers, safety officials and company managers. Brotherton credits employee enthusiasm for this program as a keystone in accident prevention at the job site. The communication continues up the company ladders when top safety officials from each contractor and Saudi Aramco meet as an HSE Steering Committee, which examines a variety of issues and is empowered to fine tune project procedures to ensure continuous improvement in safety. Brotherton notes contractors from around the globe have been watching this project with great interest and likely will adapt some of these procedures to improve safety on their job sites in the future. "Every day on this project is a learning process," Brotherton said. "It's very exciting." Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly 8 C. Khursaniyah City One of the seldom discussed challenges of running a megaproject in a remote area is the building and running of the city required to support project operations. For Khursaniyah, the city will house a peak of some 30,000 people, over 90% of whom are not native to Saudi Arabia. Most come from India and Southeast Asia. The amount of traffic is immense, with as many as 20,000 vehicles per day coming into and out of the plant, all with a purpose, and a place to drop off their loads and pick up new ones. As you can imagine, most of the services of a typical city are here - recreation facilities, traffic control, dining facilities, etc. And many are not - you won't find shopping, restaurants or bars. Recreation facilities include playing fields for soccer and cricket, gymnasiums and fitness equipment and common areas where old friends and new friends can enjoy conversation over a cup of coffee or tea. Employees get laundry service several times weekly. This fledgling city, complete with fire protection, clinics and security, has its own Governing Council, comprised of company officials of the several entities working together at Saudi Arabia's largest construction site. Together, they sort out the challenges presented by any municipality, from sewage treatment and rubbish collection to the traffic congestion created by hundreds of buses and various company vehicles and the steady stream of 2,500 trucks arriving on site daily. "It's important to make sure the workers are comfortable," Hallaq said "The training goes better, and the employees are more motivated on the job." At the end of this project, the city of Khursaniyah will cease to exist. The land will be returned to its original state, and the housing dismantled to be reassembled at the site of the next Saudi Aramco megaproject What will remain is the Khursaniyah Oil and Gas Production Facility - a tribute to the thousands of men who made this incredible complex rise from the sands -- and who once lived there. Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly 9 D. Construction Skill Training The Khursaniyah Project is being built during the biggest oil and gas construction boom in history, creating resource shortage of every imaginable commodity, and shortages of skilled personnel for almost every job. To execute the work, the contractors must train people in basic and advanced skills of every kind. Many workers have come directly from farms in Saudi Arabia, India or Bangladesh; some have never seen a desert, or sometimes even a city. But somehow, they learn, they grow, and they become skilled at their particular craft. KHURSANIYAH - One of many young Saudis who has found a rewarding career in the building trades is 26-year-old Fawaz Hassan of Al-Hasa, an agricultural center in the Kingdom's Eastern Province. Hassan earlier worked as a communications operator, but when he got the chance in the spring of 2006 to train as a safety officer for Consolidated Contractors Co. at the Saudi Aramco Khursaniyah megaproject, he jumped at the opportunity. "My brother worked in safety, and he encouraged me to get into involved in it," Hassan said. "I got training here with CCC, and I have a certificate now. I also got OSHA training. We had three or four classes a week for two to four hours. It was all done while I was on the job in Khursaniyah." Because of his brother's experience, Hassan's family was supportive of his decision to enter the building trades. He said he hopes to get married one day soon now that he knows he has the wherewithal for a nice home and the other needs of a young family. "I'm working with good people here, and there's a real spirit of teamwork. This is a great place to build my knowledge and my career," Hassan said. I want to develop myself because I don't want to stay in one place. I am going to stay a part of this CCC team." Hassan said he encourages other young Saudis to enter the construction trades "I tell my friends that if they get the chance to come onto this kind of job, they will have a good future. I tell them they should take English courses and work on their computer skills, and they'll get good jobs, too." E. Schedule Improvement Methods Due to the increased design, prices for final LSTK contracts were negotiated international demand for oil, Saudi Aramco decided to with the contractors. accelerate the development of these fields using new The strategy provided multiple advantages, allowing: contracting strategies for the GOSP and gas plant. Multiple strategies were used to meet the 34 month preliminary a. The contractors to focus on the long lead items for engineering to mechanical completion schedule (compared to preliminary and detailed design and early an industry average of 45 months) for a project of this size and procurement of long lead equipment and materials. complexity. All of the methods below combined to allow the b. The contractors and Saudi Aramco to select material schedule to be met. suppliers and construction contractors based on a I. Contracting Strategy: The normal contracting strategy combination of cost and delivery time. It also of completing preliminary engineering, obtaining enabled manufacturing slot commitments. commercial proposals, and awarding lump sum turnkey c. Changes to the design without the normal change contracts would have taken at least 42 months - 8 months order process. longer than allowed. Instead, Saudi Aramco chose to use a Converted LSTK (CLSTK) contract. d. Continuity between preliminary design and detailed design. For this method, EPC contractors provided proposals based on an enhanced design basis and uplifts for e. Alignment of purpose between Saudi Aramco and the engineering and procurement. Preliminary engineering, contractors, since in the reimbursable phase, all detailed design and procurement were done on a parties are working to complete the project on lime, reimbursable basis to expedite the work. At about 70% without an overriding concern for cost Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly 10 f. In the actual situation, the choice of contracting based on predetermined factors included in the bid strategy enabled Saudi Aramco to obtain the services documents. of major EPC contractors when they still had c. The Al-Zamil on site fabrication (discussed above) of manpower resources available. With the increase in high priority vessels eliminated the time and risk of world wide construction, a delay of one year could transportation from overseas plants, and allowed the have limited the contractor choices and possibly project team to closely monitor fabrication progress. increased prices substantially. 4. Construction: The strategy also had the disadvantage of an uncertain cost when the project was funded, and a risk of failure to a. Because of the CLSTK contracting strategy, the negotiate a lump sum conversion, which would convert contractors were able to gain commitment of the major the contract to reimbursable, increasing costs and possibly construction subcontractors early in the process, delaying completion. assuring availability of many of the key personnel required for construction management. b. The team chose to use a combination of concrete and 2. Design: The Khursaniyah Producing Facility contractor steel pipe racks because of the shortage of steel maximized the use of "Smart" design tools, a first for fabrication facilities. The columns were mostly Saudi Aramco, including 3D-CADD integrated with prefabricated and shipped to the site, with the final smart P&ID's, Instrumentation and Electrical Drawings. concrete work done on site. The concrete racks, used These tools greatly enhanced design accuracy, for the first time by Saudi Aramco, substantially reduce consistency, quality, and change control. Saudi Aramco future maintenance and the need for fireproofing the developed a quality assurance tool that checked P&1D steel racks; however, they limit future flexibility for design details overnight, and provided a detailed report on variances the next day. 3. Procurement: In addition to the contractual advantage for procurement, the project team pursued several other techniques which help meet the schedule. a. The team advised local manufacturers several months before bidding that large orders would be solicited soon, giving those willing to take a risk on expanding capacity an increased probability of getting the orders. Wasim Kabour - Project Engineer b. Long lead items, including structural steel, major rotating equipment items and most of the pressure vessels were purchased based on preliminary information to assure fabrication slots. Pricing was Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly 11 F. Megaproject Success Factors: considerations into the project from the beginning. Saudi Aramco believes that the success of the recent and Project engineers work as one team with Plant current megaprojects is based on a combination of the Operations and Maintenance during pre- following factors. commissioning, commissioning, and start-up. This philosophy was extended to integrating the plant 1. Effective Contractors and Contracting Strategies operation inspectors with project inspection staff, All of the megaprojects to date were built by both local which led to elimination of unnecessary inspection and major international EPC contractors. Each layers and resulting conflicts. megaproject was divided into several large sub-projects b. Executive Sponsorship with well defined interfaces. Contractors selected for bidding on the megaprojects all had successful experience Each megaproject has a Senior Vice President from on smaller projects, so they had already learned about Exploration and Production or Gas Operations as an Saudi Aramco procedures and processes, and, in turn, we executive sponsor. His role, along with the VP of were familiar with their methods. At Khursaniyah, EPC Project Management, is to assist the project team contractors with previous successful experience with within his organization, with other organizations Saudi Aramco were able to build on their experience and inside the Company, with the project contractors, make improvements in the processes, many of which and, perhaps most importantly, with the Government were archived as Saudi Aramco lessons learned- agencies involved in the project. This high level of All of the completed megaprojects were based on a sponsorship has provided certainty of internal detailed project proposal and Invitation for Proposal (1FP) resources, and great leverage on external resources. documents, which include mandatory design and However, with the high profile of the megaprojects, procurement standards based on international standards. and the importance of their success to Saudi Aramco, The contracts are dominantly LSTK with contractors the Saudi Arabian Government, and eventually the providing detailed engineering, procurement, and world, the de facto sponsors will always be the construction according to the IFP. Saudi Aramco makes Company President, Abdullah S. Ju'mah, and the Oil extensive use of purchase order novation to reduce critical Minister, Ali Al-Naimi. path equipment lead times. (Novation: Saudi Aramco originates purchased contracts for long lead materials to c. Team Continuity begin engineering; the contracts are transferred after One of the most important lessons from Ras Tanura award to the contractor as part of his scope of work) (frequent changes) and Shaybah (minimal changes) They also provided the contractor with detailed designs was the value of maintaining the project team intact for major standardized components, such as structural throughout the project life. On today's megaprojects, steel and substations, to expedite procurement and management takes extra care to assure that construction. management personnel are in place for the entire project, and that project team member changes arc For Khursaniyah, this process was substantially modified minimized. by the CLSTK process above. Communication 2. Leadership a. Common Goals a. Integrated Team Common project goals are achieved by extending the The integrated team concept has been proven integrated project team to include the design throughout the history of project execution. For contractor, major manufacturers and suppliers, and Saudi Aramco megaprojects, the integrated teams are EPC contractors and subcontractors. Formal team composed of participants from all Company stakeholder organization. Full time team members building exercises are held at each stage and team will generally come from Project Management spirit is actively promoted. Contracts are designed to (-60%); Operations (-20-30%); and Inspection, promote common goals as much as possible given the Central Engineering, and Materials Management diverse interests of the various participants. (-10-20%). Part time team members come from For example, on the Qatif project, an element of trust finance, law, contracting, environmental, and others. was established to the extent that contractors willingly came forward and 0 fife red numerous cost The management team is also mixed with operations saving proposals during the detailed design process. and Project Management sharing the leadership roles. One contractor stated, "Saudi Aramco helped us to This combination of integrated team and integrated finish on time and helped us to make it profitable in management has ensured that the ownership of the every respect. We were encouraged by the PMT to project results is shared. Operations personnel talk directly to the customer to understand their appreciate the opportunity to learn how their facility desires & needs." is built; by so doing, they improve their ability to operate effectively. Inclusion of maintenance Saudi Aramco provided the right environment and personnel helps the team design maintenance atmosphere for cooperation. The prime objective Saudi Aramco: Oil to a Thirsty Market- International Cooperation Brings New Oil Field on Quickly 12 was always the job, not for one side or the other to Saudi Aramco has not used benchmarking win. Neither Aramco nor the contractor could have extensively for megaprojects, but has used it to great been successful without the cooperation of the other advantage to identify project system opportunities for party. The idea was to create an environment with a improvement. The Hawiyah Gas Plant and Qatif "Win-Win" situation for all parties. Contractors were projects were benchmarked by an independent encouraged to speak their minds. No issues were benchmarking agency. Target setting, other than the hidden from team members, including financial tight schedules, was not used extensively. Its use is issues. The fully integrated team made decisions as reserved more for departments managing multiple partners. The integrated team structure allowed Lump small projects. Sum Turnkey (LSTK) contractors one source for b. Best Practices Implementations answers instead of the traditional way of using the PMT as a link to getting answers from the facility Best Practices, discussed above and detailed in the end-user. definition section, have made major contributions to each of the megaprojects, with each one gaining b. CEO Meetings slightly more benefit as the learning progresses. The This practice, introduced in the Shaybah program, biggest benefits accrue to the project engineers on the has produced excellent results for all of the parties. job, as they stand on the shoulders of their The CEO's of all the major contractors, suppliers and predecessors. Saudi Aramco traveled to globally located design c. Current Initiatives for Further Improvement offices or Saudi Arabia, generally twice a year, to demonstrate their high level of commitment and Saudi Aramco conducted its second system support for the program. This innovative concept benchmark in early 2004 for 30 projects that started was implemented to coordinate challenges and avoid from 1999 - 2003. The results showed some the need for getting contractor CEO management improvement from the original study in 2000, with involved only after serious problems had surfaced. average schedules about 25% longer than industry, As a result of these meetings, contractor and supplier and costs about 15% higher. It also identified CEO's were always cognizant of the state of the multiple specific areas for improvement. project and how the performance of their companies Consequently, we started a Corporate Capital compared with the others and with program Program Best in Class initiative with 23 of the 24 objectives. Administrative Areas in the Company participating. Nine major improvement areas were identified, and c. Lessons Learned the initiatives are all moving into the implementation phase. Lessons Learned from previous projects are always integrated in a formal workshops to select applicable These initiatives are expected to have a great impact lessons. The Hawiyah Gas Plant program, which was on cost and schedule performance of all Saudi completing as Qatif started, held a three day Aramco projects: workshop to gather their lessons, and many of them were used in Qatif. One example was an automated 1) Greater use of Innovative Contracting exception item management system, which was used Strategies, which focus on converted LSTK and expanded to help reduce precommissioning time (see above). and address outstanding issues proactively. This 2) Standardized Component Design. The first system has recently been updated and distributed to effort was a standardized substation design all projects, and includes automated mechanical using precast walls and roof with top entry completion. electrical wiring, allowing a slab floor and Near the end of each project phase, the project team experienced erection subcontractors. This holds a multi-day lessons-learned workshop. Lessons design will save design time and about 3-4 deemed to have company-wide application are months in construction. transferred to the Project Management's Lessons 3) Increased accountability during the design basis Learned Database for use by future projects. (IPA FEL 1 & 2) now uses a more formalized d. Improvement Culture gate approval process. A culture of continuous improvement has developed 4) Project team integration for groups of small over the last ten years, and each of the megaprojects projects based on the megaproject success in strives to improve on previous designs, and create this area. their own unique contribution to the Company's success. 5) More rigorous review of plot plan layouts and equipment peripherals and instrumentation. 4. Best Practices 6) Procurement process improvements including a. Benchmarking and Target Setting standardized procurement systems for local contractors and requisition templates. Saudi Aramco: Oil to a Thirsty Market - International Cooperation Brings New Oil Field on Quickly 13 7) Construction productivity improvements for to the design process, and design quality local contractors who employ personnel from control. third world countries with limited industrial „,,-■, , ^ - -r- , . .... experience. The initial focus is on reducing 9) The integrated Project Technology initiative interruptions. will increase the use of IT for improved project processes, data management and flow, and for 8) Productivity Improvement for Local Design program management reporting. Contractors, focuses on construction feedback