PMI 2002 Project of the Year
Saudi Aramco's Hawiyah gas plant
SAUDI ARAMCO'S HAWIYAH GAS PLANT
Natural gas is a precious resource, but the Hawiyah project team proved that exceptional management presents even greater value.
Project managers led the Hawiyah Natural Gas Project to deliver:
■ Four months early, allowing early production and revenue
■ At 9.74 percent lower cost: Overall aggregate change-order values were less than 1 percent for the entire program
■ With improved quality: The overall welding rejection rate was less than 4 percent for the gas plant and less than 2 percent for the pipelines
■ With impressive attention to safety: The last 36 million man-hours of the project were accomplished with no lost-time incidents.
Few people have the opportunity to shape the natural resource needs of an entire kingdom. Saudi Aramco's Hawiyah Gas Plant proved a monumental undertaking, but project managers were up to the challenge. With a solid plan and methodology, the team overcame all obstacles to deliver a megaproject that exceeded expectations.
In the early 1990s, Saudi Arabian studies projected that by mid-2002, the Kingdom's future natural gas demand would far exceed the processing capacity of its Master Gas System. Although Saudi Aramco, a global energy supplier that fuels Saudi Arabia's industrial sector, upgraded three existing gas plants in the mid-1990s, new local plants were needed.
In 1996, the Hawiyah Gas Program was launched 60 kilometers (36 miles) south of Udhailiyah in Saudi Arabia's eastern province. The new plant was to receive sweet (low-sulfur) gas from the Jauf reservoir and sour Khuff gas from wells in the Hawiyah fields.
According to Mohammad A. Al-Juwair, Saudi Aramco general manager, the program was designed to speed development of Saudi Aramco's non-associated gas resources (produced directly from gas reservoirs and not as a secondary product of oil production) and to liberate major quantities of oil for export. With increased natural gas capacity, a number of local industries, including the Kingdom's national electric company, could transition to natural gas.
The monumental task involved global suppliers, more than 10,000 workers of 50 different nationalities, and government supervision and support. Despite the challenges of working on a project of this magnitude, the Saudi Aramco project management organization delivered the plant more than $200 million under budget and four months ahead of schedule. Today, the Hawiyah project has the capacity to process 1.6 billion cubic feet of raw gas per day, enough to power a city of 6 million people, or Saudi Arabia's two biggest cities, Riyadh and Jiddah, combined.
Project management efficiencies and an attention to detail brought this impressive plant online.
Saudi Aramco's project management and operations organizations led the effort, with key specialists from support organizations. This fully integrated staff was able to resolve technical issues faster, reduce unnecessary spending through design and cost optimization, and achieve full control of quality and schedule.
“We believe that the Hawiyah plant has set a new paradigm for Saudi Aramco,” says Thamir Al-Rushayd, Hawiyah Gas Plant department manager. “The Hawiyah team approach with tight integration within Saudi Aramco and all contractors has allowed clarity of purpose, and minimum changes made our design and production proceed smoothly.”
Saudi Aramco had the benefit of previous experience and a consistent project management practice. The planning and execution for the Hawiyah program was conducted as a typical project in five phases:
Detailed design and procurement
Commissioning and startup.
|The scope of work and interrelationships of the entire project were defined through this series of project execution plans.|
|MUHAMMAD A. AL-JUWA I R,GENERAL MANAGER OF SOUTHERN AREA PROJECT MANAGEMENT, SAUDI ARAMCO|
The Saudi Aramco Facilities Planning Department developed design-basis documentation, and Parsons, Pasadena, Calif, USA, performed front-end engineering that included a formal execution plan and baseline schedule. “In developing the milestones schedule, we compared the project schedules with our experience in previous comparative projects such as the Shedgum Gas Plant,” Al-Juwair says.
“Careful planning allowed us to always move forward toward what was needed for early startup,” Al-Rushayd says.
The planning process evolved during the preliminary engineering/project proposal phase. Overall, the Hawiyah Gas Plant was divided into three major lump-sum turnkey (LSTK) contract packages, with additional contracts awarded for infrastructure and communication facilities. JGC, Yokohama, Japan, handled the gas processing facilities; Techint, Buenos Aires, Argentina, managed the inlet and auxiliary facilities; and Technip, Rome, Italy, administered the utilities and sulfur-recovery facilities. The pipelines and upstream facilities were a joint venture of Techint and Saipem, Rome, Italy.
“Following contract award, each services firm developed a project execution plan that described in detail how he intended to integrate work under the engineering, procurement and construction interfaces,” Al-Juwair says. “The scope of work and interrelationships of the entire project were defined through this series of project execution plans.”
The team also utilized benchmarking studies by the Independent Project Analysis Group to refine the project schedule. “Based on this study, we elected to reduce the overall duration by 10 percent,” Al-Juwair says. “In establishing the schedule, we also elected to complete the site work during the LSTK bidding period.”
The team also decided to combine precommissioning and commissioning activities, resulting in schedule improvements from three to four months.
Formal value engineering studies also made up part of the front-end engineering effort. “More than 50 potential items valued at approximately $300 million were proposed,” Al-Juwair says, “But just 10 of those items valued at $26 million were accepted and incorporated into the final design.”
Major items were:
Use of single-ply roofing membrane
Reduction of fencing length around a flare/burn pit area
Optimization of the size and number of blowers and type of drivers for the sulfur recovery unit
Elimination of a de-aerator overflow pump
Revision of the pipeline route
Deletion of isolation valves.
Saudi Aramco viewed the front-end process as an opportunity to develop young engineers and cross-train all personnel. “For example, a presentation on different aspects of the plant's operation was developed and presented each week by one of the younger engineers,” Al-Juwair says. “It gave them deep insight into not only the project management aspect of the project but also the operation and maintenance of the plant. They were assisted in developing the presentations by one of the more experienced engineers, and this developed both presentation skills as well as giving all our engineers a better understanding of the plant's operation.”
Avoiding the Storm
The Hawiyah project's most pressing risks were associated with equipment standardization, purchase orders for long-lead-time items, operation of equipment in desert conditions and selection of the control system vendor, according to Al-Juwair.
“Since there were three major LSTK contractors completing various portions of the Hawiyah Gas Plant, there was a risk associated with each contractor, such as equipment standardization,” Al-Juwair says. “The Saudi Aramco project personnel worked with the LSTK contractors to ensure that the first purchase order placed would determine the source for all the contractors.”
The procurement of long-lead items, such as gas compressors, main transformers and the control system, was critical for the overall program. The equipment had to integrate with the contractor's initial design, an uncertainty when orders are placed for custom equipment so far in advance. “To mitigate this risk, the owner must identify the technical detail upfront and complete procurement prior to bidding so that the information is placed in the bid documents,” Al-Juwair says. “The contractor must then place any risk-associated cost in his bid, if any, for working with the [new] equipment.”
The purchase orders for the structural steel and the carbon steel pipes were placed within four months of the contract's award. To further reduce risks, project engineers were assigned to each purchase order to monitor the overall progress, including visits to the fabrication shop to resolve any outstanding issues.
The harsh desert environment also could impact equipment functionality: Summer temperatures in the Hawiyah area can exceed 52° C (126° F). The equipment procurement team thoroughly reviewed normal equipment operating temperatures prior to purchase, and environmental protection was added to design as needed.
Construction of the plant started in July 1999. The main substation and steam boilers were along the critical path.
The major problems encountered during this phase were excessive initial welding rejects and a delay in receiving underground utility pipe, structural steel and major equipment, such as the control system and the boiler.
“The welding problems were overcome by intensive monitoring and training of the welders, proper preparation and expert interpretations of the welds through mobilizing highly qualified interpreters,” Al-Juwair says. To combat the material delays, the team set different work priorities, changing work sequence and expediting efforts at the fabrication shops.
In June 2001, the major utility systems and the first high-pressure steam boilers were completed and commissioned ahead of schedule. Because chemical cleaning minimized blows in the steam systems, the overall schedule improved from two to three months. Early completion of these systems was essential to achieve schedule improvements targeted for the inlets and process facilities.
Late in construction, major modifications to portions of the gas plant and pipelines were necessary to combat the severe corrosion potential of the sweet gas from Jauf field. These changes posed a significant schedule obstacle, but the Hawiyah team engineered aggressive corrective measures, and the problem was averted.
Despite the pace and complexity of execution, LSTK contractors achieved a Saudi Aramco record for safety. JGC achieved 10 million lost-time-free man-hours; Techint accomplished 8 million; TPL reached 7 million; and al-Osais and CCE each reached 2 million.
The team managed work safety issues by:
Implementing a comprehensive safety program
Assigning safety specialists
Providing rewards and incentives for safety achievement
Conducting regular safety audits.
Communicating progress with so many diverse stakeholders outside the company pushed the project team to examine its reporting plan. The project team and support organization personnel met weekly to review progress and identify problems. Although the project was situated far from inhabited areas. Saudi Aramco felt it important to communicate progress to residents and global employees through its weekly newsletter Arabian Sun and local newspapers.
All the contractors, quality managers and the project team members met monthly to review quality performance, outstanding problems and shared lessons. Modifications to the project plan were managed through a formal project change request procedure, already part of the Saudi Aramco budgeting and control processes.
Senior management participated in five “CEO Meetings,” which allowed the major contractors and company executives to review project status and critical issues. As a result, contractor CEOs always knew how the performance of their companies compared with the others and with program objectives.
“From the first CEO meeting held just four months after the contracts were signed, it was clear that this was to be a win-win situation for all,” Al-Juwair says. “At that first CEO meeting, the timetable of the project was accelerated by one month, which amounted to a $40 million savings.”
In addition to these formal meetings, all program progress from the initial kick-off was reported regularly to Saudi Aramco's executive and corporate management. “This kept management in the loop and kept support high in the management ranks,” Al-Juwair says. “With the high level of interest within the company and Kingdom of Saudi Arabia, an additional monthly progress report was provided to corporate management on the program's progress until mechanical completion was accomplished.” Also, a Hawiyah Gas Program Web site was developed to provide constant online progress and information.
The key performance indicators (see chart, “How Are We Doing?”) were measured and compared with previously agreed targets monthly. Appropriate actions ensured that these indicators fell within the agreed targets. “For example, the project management index targets were maintained through stringent review of Saudi Aramco's and the contractors' manpower to execute the project,” Al-Juwair says. “As a result of this review, approximately 40 field supervisory positions were not filled, although budgeted. This resulted in further improvement on the targeted project management index. The project management index, project management team costs as a percentage of total project costs, were less than 3 percent for the Hawiyah program.”
Near project completion, the Hawiyah team held a three-day workshop to capture their lessons learned. While the project was a great success, Al-Juwair would have done a few things differently. “The need to split the overall program into three LSTK contracts was marginal at best,” he says. “The program could have been executed with fewer contractors, which would have resulted in improved interface coordination.”
In addition, Al-Juwair says other possible changes would include:
Targeting completion of air, water and steam utilities four months earlier than planned
Assigning full-time engineers at the major fabrication shops
Selecting multiple sources for procurement of bulk materials.
In the end, planning for startup, which began during the front-end engineering phase and continued throughout the life of the program, produced the early on-stream date as promised. On 24 September 2001, the Hawiyah plant, which was 98 percent complete, began operations four months ahead of schedule. With the successful launch, the sales gas supply was increased by 1.4 million cubic feet per day, a 35 percent boost, meeting Saudi Arabia's goals and ensuring the energy needs of the future.
“Hawiyah also reaffirms a key project strategy of Saudi Aramco—that is, to make project management a core competency,” said Saudi Aramco CEO Abdallah S. Jum'ah at a formal recognition ceremony. PM
PM NETWORK | JANUARY 2003 | www.pmi.org