When it comes to illustrating the enormous scale of the project to build the world’s largest gas-to-liquids plant in Qatar, the statistics paint the most vivid picture. Some 2 million tonnes of freight was shipped into a dedicated berth at Ras Laffan port. More than 750,000 cubic metres of concrete was poured during construction. And enough steel was being used during the peak construction period to erect the equivalent of 2.5 Eiffel Towers a month.
We made significant investment before the final … decision. The project was … planned for success
Keith Walters, Pearl GTL project director
While the local Al-Jaber began site preparation works for the construction phase at the 2.5-square-kilometre plot in 2006, the project actually started life four years earlier with the signing of a statement of intent between UK/Dutch Shell Group and the Qatari government. The following year, seismic studies were completed, which led to the drilling of appraisal wells and the signing of a development and production sharing agreement (DPSA) in 2004.
Even before the final investment decision was taken in 2006, the front-end engineering design (feed) was completed, the project management team was appointed and all the major contracts were tendered and long-lead items ordered. The feed work, including work conducted internally by Shell, took almost 1 million man hours to complete.
“We made significant investment before the final investment decision,” says Keith Walters, project director at Pearl GTL. “So the project was always planned for success.”
With a capacity of 140,000 barrels a day of GTL products, the Pearl GTL project is the largest of its kind in the world. It is based on Shell’s Bintulu plant in Malaysia, which started up in 1993 and was the company’s first commercial GTL plant. The facility at Ras Laffan represents a massive scale-up in size. It is five time larger and has two production trains instead of one.
Once or twice we had to inject a bit of cash flow, but that was recovered. We did expect worse
Keith Walters, Pearl GTL project director
“One of the first challenges was to get the contracting strategy away. We carved the plant up into a number of assets and we ended up with a mixture of lump-sum contracts and EPCMs [engineering, procurement and construction management],” says Walters. “There were 10 major contracts, but well more than 100 significant smaller contracts, from catering and bus contracts to hire cars through to billion-dollar lump-sum deals.”
Key Pearl GTL contracts
Cost-plus contract: Project management contract JGC/KBR
Lump-sum turn-key contract:
- Pipelines & platforms J Ray McDermott
- Buildings Strabag
- Storage tanks Chicago Bridge & Iron
- Feed gas preparation Chiyoda/Hyundai Heavy Industries
- Liquid processing unit Toyo/Hyundai Engineering & Construction
- Air separation units Linde
- Effluent treatment plant Al-Jaber/Veolia/Saipem
- Main automation contract Honeywell
- GTL process JGC/KBR
- Utilities JGC/KBR
- Jetty and pipeline corridor JGC/KBR
A joint venture between Japan’s JGC and KBR, a subsidiary of the US’ Halliburton, was awarded the project management contract (PMC) for the project. “It was an integrated PMC strategy” says Walters. “We had a delivery team for each asset mixed up with Shell guys.”
The joint venture was awarded EPCM deals for the GTL plant and the captive power plant, as well as the feed study. KBR took responsibility for the EPCM for the utilities, while JGC looked after the GTL plant and the feed.
To protect Shell’s proprietary technology, the GTL plant could not be awarded under competitive tender. “JGC worked with us right through the feed and has been involved in Bintulu and the size of the package was outside the lump-sum ceiling that people would be prepared to quote for,” says Walters. “The other part that was EPCM was the utility plant, there are too many variables with that and we could not afford late delivery.”
The remaining work was awarded competitively as lump-sum turnkey contracts and winning bidders were selected in consultation with state-owned Qatar Petroleum (QP). Germany’s Strabag was given the contract for the buildings. A joint venture of Chiyoda and South Korea’s Hyundai Heavy Industries won the feed gas preparation package, which included construction of acid gas removal and sulphur recovery units. Germany’s Linde built the air separation unit, while a joint venture of Toyo and South Korea’s Hyundai Engineering & Construction won the storage facility package comprising two storage farms with six tanks at the port. Another 32 tanks at the main site was awarded to the US’ Chicago Bridge & Iron.
The project included the development of a block in Qatar’s giant gas reservoir, the North Field. The contract for the drilling and building of two wellhead platforms and two 60 kilometre pipelines to the shore was awarded to the US’ J Ray McDermott in 2006. Each platform weighs 3,600 tonnes. Drilling for the wells was finished in early 2010 and was completed in record time, by working on two wells simultaneously. The 22 wells were completed in an average of 45 days, with the fastest well taking just 28 days. Previously, the industry standard for completing a production well on the North Field was 75 days. The drilling crew saved more than 600 days drilling time compared with previous performances, resulting in a cost saving of $46m. Two 30-inch diameter pipelines were built to link the platforms to the Pearl GTL plant onshore.
The main onshore construction got under way in 2007 at the height of a region-wide construction boom. The first stone was laid by Qatar’s heir apparent Sheikh Tamim bin Hamad al-Thani.
Launching at a time when the construction market in the GCC was overheating made the task of procuring workers and equipment even more difficult.
“We saw a significant cost escalation and a lack of competition in the marketplace to win our contracts,” says Walters. “Just getting the workers was a challenge. It is good there are companies like [Athens-based] CCC [Consolidated Contractors Company] out there. At peak, we had 17,000 people from them alone. They were one third of the workforce.”
Further cost escalation came from rising raw material prices. This hit lump-sum turnkey contractors more than it hit Shell, which was mainly exposed to price inflation through the EPCM contracts.
“There were some discussions about cost recovery,” says Walters. The boom was quickly followed by a global recession. This provided a different set of challenges, as contractors and suppliers were suddenly faced with financial difficulties, which threatened Pearl’s completion schedule. “Once or twice we had to inject a bit of cash flow, but that was recovered. We did expect worse,” says Walters.
The recession also cooled an overheating construction market. As activity across the region slowed and resources were freed up, work on the Pearl GTL project accelerated.
The Pearl GTL is the largest industrial project ever undertaken in Qatar. At the peak of the construction period, the project used 52,000 workers.
To assist the logistical task of moving millions of tonnes of construction materials to Ras Laffan, Shell contracted Geneva registered Archirodon Group to build a $30m material offloading facility in the port. Some of the plant’s components required special delivery arrangements. The 1,200 tonne reactors, which are at the heart of the GTL process and hold 29,000 tubes of catalyst, were built at two factories in Germany and Italy.
Once they had been shipped from Europe to Qatar via a fabrication site in the UAE, the 24 reactors had to be rolled on to barges to be taken ashore and then trucked 10km to the site. Due to their size, roads had to be closed off and electricity lines taken down.
Shell deployed a 30-strong planning team to coordinate the assembly of the various components of the plant. A pain-staking approach to planning was essential for the construction of the giant complex and it was during the start-up period when the team’s work would be put to the hardest test. In many ways, the start-up period began with the construction of the plant, says Stephen Johnson, Shell’s commissioning and start-up manager for Pearl GTL.
“We already delivered a start-up strategy five years ago. Having come up with that strategy, we then use that to guide the project teams in setting up the contracts for building the plant, and we used that basic start up strategy to guide the completion of the plant,” he says.
This strategy was communicated down to the contractors, allowing the planners to work towards an ordered commissioning sequence.
“We’ve been able to guide every construction contractor to deliver his piece more or less exactly on the date we wanted to,” says Johnson. By the end of 2010, the major construction of the Pearl GTL was complete.
The start-up of the plant was complicated by the nature of the integrated gas production and GTL complex. It takes about two hours for the gas leaving the wells in the North Field to arrive onshore. It then takes another eight minutes for the gas to be funnelled through the gas treatment section. A minute later, it will have passed through the reactor.
The start-up manager was also responsible for putting together the team of around 1,000 people, who now run and maintain the plant. These employees were hired three years before the start up and were put through a Pearl GTL specific training scheme that lasted up to
18 months. After being trained, they were posted with the project teams, where they ensured that the quality controls were in place. “We wanted experienced people, who worked in an oil and gas plant before,” says Johnson.
Commissioning of the first train began early in 2011 and the first gas began flowing from the wells on 23 March. The gas processing plant then began producing condensate, LPG, sulphur and methane for the GTL process. “The very final base oils are more complex to produce, so the plant and the cracker have to be tuned more sharply,” says Walters.
The GTL plant began production in May and the first cargo of GTL gasoil was shipped in June. It was just 90 days from start-up to the shipping of the first product.
To prepare for the commissioning, Johnson and his team tried to anticipate all potential problems. “We sat down and we brainstormed so-called ‘what if’ scenarios,” he says.
“We developed dozens of potential scenarios where the start-up might go wrong and we tried to envisage what the consequences of that were and what circumstances you would be confronted with. A large part of the team’s work in the past 12 months was working out ‘what if’ scenarios.
Johnson says that even though most of those scenarios did not materialise, practicing for the worst case scenario gave them a valuable insight into the complex that enabled a quick and capable response.
“Our motto was: do thorough planning, but then be nimble and flexible in the start up phase,” he says.
The commissioning of the first train and the power plant was executed without major incident, paving the way for the commissioning of the second train towards the end of 2011. Rather than machinery malfunctioning or not coming to life, the start-up teams had to deal with processes happening out of sequence.
Crucial to the commissioning was the balance between generating steam and producing material. Steam is an integral part to the process, as it is used to generate oxygen in the aeration units.
The captive utility plant only has a steam raising capacity of 1,200 tonnes an hour, whereas the complex requires 8,000 tonnes an hour at full throughput.
“When you’re starting up the complex, you’ve got almost a budget of power to begin the process. So with that small budget of power and steam, you can start moving some of the pieces of equipment,” says Johnson.
The start-up resembles a virtuous circle, in which the initial steam is used to create the oxygen that combines with the methane separated from the North field gas to create syngas in the gasification process.
The syngas reacts with the catalysts in the reactors, which produce the paraffinic wax that is later refined. The heat generated by this reaction creates more steam that then flows into the aeration units.
The reactors are a major source of steam. “For Pearl GTL, arguably their biggest purpose is almost to generate heat and energy and ultimately electricity for the complex,” says Johnson.
Getting the balance right was no easy task. “The trickiest part of this start-up is managing the balance between heat and material,” says Johnson. “We constantly had to ask ourselves is there enough steam, is there enough power to make the next step in the start-up process.”
The commissioning of the first train took place as the second train was still under construction. Good communication between the contractors was essential and Shell had set up asset delivery teams to facilitate this.
Consisting of Shell employees and representatives from the contractors, those teams had been based in the contractor’s head office, allowing them to built strong relationships.
To streamline the commissioning process, Shell combined the responsibilities usually held by several teams and allocated overall control to one team.
“The fundamental decision we made is that we don’t want a series of handovers. We wanted to have as few internal handovers as possible, so we had one team, which worked all the way through all of the phases,” says Johnson.
The strategy paid off, train one has successfully ramped up and now the teams are gearing up to commission the second train.
“We were very confident we could deliver it, says Walters. “QP was confident it could deliver it and Ras Laffan has a history of megaprojects. That is not to say there were not ups and downs and challenges and some risks that caught us, but that is project management. You have to work through those things; if plan A doesn’t work, make sure you have a good plan B.”
The same vigilance will be needed to maintain production once the construction and start-up teams have left the project. With the explosion at the Bintulu plant four years after start-up due to smoke from forest fires entering the air separation unit at the back of their minds, the operations staff at the Pearl GTL will be alert for any eventuality.
The Pearl GTL timeline
2002: Statement of intent between Shell and government of Qatar signed
2003: Heads of agreement signed; seismic studies completed
2004: Development and production sharing agreement (DPSA) signed; appraisal wells drilled
2005: Front-end engineering design completed; permit to construct granted; project management contractor appointed; All EPC contracts tendered; synthesis reactors ordered; development drilling contract awarded.
2006: Final investment decision; catalyst production begins; EPC contracts awarded; site preparation works and procurement commences
2007: Construction of plant and offshore platforms begins
2010: Well drilling completed. Completion of first train
2011: First gas flowing from wells; first sale of condensate and GTL product; start of DPSA; official inauguration.
2012: Second train completed
EPC=Engineering, procurement and construction. Source: MEED