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.
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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
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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 Previous Project
Contract Plan for QLNG Project
Actual for QLNG Project Actual for
Q-LNG
Actual for Previous
Project
ENGINEERING PROCUREMENT
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 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 Previous Project
Contract Plan for QLNG Project
Actual for QLNG Project
Actual for Q-LNG
Actual for Previous
Project
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 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%
Actual for Previous Project
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.
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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? -
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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]