Project Management Institute

Staying power

by Manuela S. Zoninsein * photos by Jonathan Danker/PixSync Photography

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Petri Jokinen, Neste Oil, Singapore

For the city-state of Singapore, innovation and enterprise are key components of national government policy. From enticing the Fédération Internationale de l’Automobile to set up its first nighttime Formula 1 racecourse along its shores to embracing foreign venture start-ups, the island nation welcomes top-notch know-how from all over the globe. It has also demonstrated a commitment to environmentally sustainable technology, including clean water projects, LED (light-emitting diode) lighting experimentation and solar cell production facilities.

These factors, combined with the fact that Singapore is a major oil refining center, put the nation on Neste Oil's radar when the Finnish refining and marketing company looked to expand its renewable fuels business abroad.

“The government played an important role in promoting our investment,” says Matti Lievonen, president and CEO of Neste Oil, Espoo, Finland. “Singapore has fulfilled all our expectations.”

The €550 million megaproject's plan consisted of designing and constructing a renewable diesel production plant, including a process plant, a utilities system, a tank farm, an operations center, and maintenance and administration buildings.

4,800 At its peak, the number of construction team members working on the project, hailing from 13 countries
13.8 million The total hours spent on the construction portion of the project

Internal studies for the project began in 2006, and by November 2007, the company's board of directors greenlit the investment.

One of the project's first steps was to partner with a local governmental agency. Neste Oil worked closely with the Singapore Economic Development Board (EDB), which helps companies establish operations domestically.

“This cooperation provided excellent support for us in finding a suitable plant location, all permitting activities, recruitment and training of local personnel,” says Petri Jokinen, managing director of Neste Oil's Singapore subsidiary.

The EDB, for example, helped the company find a suitable plot of land free of any local opposition to the plant, “so the process went smoothly,” he says. The project team broke ground in March 2008 at a greenfield site in Tuas, an undeveloped part of the island.

CREATING A CLEAN FUEL

To reach the plant's desired capacity of 800 million kilograms (881,849 tons) of renewable diesel per year, the organization relied upon its proprietary and newly developed NExBTL (next-generation biomass-to-liquid) process technology. The plant converts a variety of renewable feedstocks, in particular vegetable oils and waste animal fats, into renewable diesel. Because it essentially creates a sulfur- and aromatics-free fuel, it's one of the cleanest diesels in existence.

The first part of the project was aimed at perfecting the NExBTL process—making certain that it met stringent demands of each particular market in which the company operates or plans to operate.

“The biofuels legislation is fragmented at the moment in Europe, as it is around the world,” Mr. Jokinen explains.

The company needed to address two main categories: greenhouse gas reductions and feedstock sustainability requirements. “Both of these have been confirmed by performing life cycle calculations according to methodologies required by regulators,” Mr. Jokinen says.

In addition, NExBTL technology development focused on product quality and feedstock flexibility—two factors that differentiate it from other fuel production.

The biodiesel is produced by hydrotreating vegetable or waste oils by removing sulfur. The end result is a product the company says combusts efficiently, keeps engines clean and reduces greenhouse gas emissions by 40 to 80 percent. It can be used in modern diesel engines without modification, works in airplanes and is available to be used as part of a fuel blend.

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In January, the refinery received International Sustainability & Carbon Certification, confirming that the plant meets the sustainability criteria of the European Union's Renewable Energy Directive and the product is suitable for meeting Germany's bio-content mandates. Given that Europe is a key market for the company, and that Germany in particular is a major consumer of biofuel, Neste Oil focused on attaining this certification.

SAME SAME BUT DIFFERENT

Neste Oil already operates two renewable diesel plants that came on stream in Porvoo, Finland in 2007 and 2009. But launching a project in a new part of the world required significant groundwork to develop contact with local authorities, talent and partner organizations.

“The two Finland plants were our first commercial NExBTL plants, so of course there was a lot of learning,” he says. Those lessons proved vital when the project team drafted its plan, especially concerning process equipment and plant operations requirements.

The previous experience didn't translate 100 percent to the Asian initiative, though.

“Some solutions in the earlier plants were not repeated in the same way in the larger, scaled-up facility,” Mr. Jokinen says.

While the process technology is the same, there were differences in its implementation. The project team had to adapt to a whole new set of challenges, including a different business culture and new regulations, legislation and governance. Permitting for the facility in Singapore required nominating various independent professional engineers who had to perform reviews of the structural designs and conduct verifications during the construction phase. Though this requirement necessitated additional quality-control steps, it “also helped assure that the construction conforms to the design requirements,” Mr. Jokinen says.

Additionally, the entire project had to be accomplished within a tight three-year schedule. Neste Oil management had put in place an aggressive growth strategy for increasing production capacity of NExBTL renewable diesel.

“We knew there would be some modifications during execution but still had to be able to run it as a fast-track project,” Mr. Jokinen says. “Traditional approaches to project management with well-defined periods for all steps couldn't be followed strictly.”

So Neste Oil established key criteria and relied heavily on a skilled project team, most of whom had been involved in the previous two refinery projects.

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ADDING FUEL TO THE FIRE

Prior to launching the refinery megaproject in singapore, Neste oil had established cooperative agreements with suppliers to source feedstocks for its home-base plants in Finland.

on the new, larger initiative, the company had to expand that operation, and further develop the sustainability practices to meet the most stringent regulatory requirements.

That process was all the more important because the cultivation practices of palm oil, one of the main ingredients in NExBTL creation, have caused controversy among environmentalists worldwide. The vast majority of the world's palm oil comes from southeast Asia—but the same lowland forests that provide palm oil for production are the only remaining orangutan habitat.

Managing this outspoken group of stakeholders has been eased by the creation of the Roundtable on sustainable palm oil, a not-for-profit organization with the objective to develop and implement global standards for sustainable palm oil.

Now, Indonesia, as the world's largest palm oil producer, is becoming a benchmark for emerging markets to adopt sustainable practices, with new regulatory and legal certifications passing into protocol.

Project team members “had good access to detailed information about the technology and the kind of solutions that are available,” as well as those elements to be avoided, Mr. Jokinen says. This was accomplished through the establishment of a process licensor team that provided all required support and background information for the technical and project management team during design, construction, commissioning and facility start-up.

SINGAPORE'S GOT TALENT

While Neste Oil owns the process technology, it sought a contractor for developing an engineering package.

The organization sent out an RFP (request for proposal), and following a competitive bidding process, the Italian company Technip was chosen as the EPCM (engineering, procurement and construction management) contractor.

As for operations and maintenance, Neste Oil's project leaders chose to recruit and build that team using Singapore residents. Technip also dipped into the local talent pool for its construction contractors.

A skilled worker base cemented Neste Oil's decision to build up a permanent division in Singapore, Mr. Jokinen says. “As the country has a significant amount of oil refining and petrochemical industry, there are already a lot of professionals with the right type of education and industrial experience,” he explains. “In other places in the world, not having that kind of established industry in place would mean the company would have to invest much more in training personnel.”

In Singapore, rather than worrying about building up appropriate technological and managerial competencies, “we were able to do hiring in a marketplace where the right kind of personnel exists,” Mr. Jokinen says.

“The talent pool in Singapore is absolutely first-class,” Mr. Lievonen agrees.

FORWARD MOTION

The project team addressed safety with execution design reviews of the plant's hazards and operability. Safety requirements were included in contracts, and contractors received specialized training. A behavior-based safety system was also implemented, covering all safety concerns and procedures that could arise, with the goal of decreasing the number of work-related injuries. Those results were discussed monthly by senior management, and all recordable safety incidents were investigated formally. Technip and other contractors were then required to propose actions to rectify problems.

IT systems needed during the construction phase fell under Technip's domain. Neste Oil ran a parallel sub-project to define and implement all telecommunications, IT network infrastructure and business applications according to the organization's corporate practices.

The construction team discovered that different methods had to be used compared to projects in Europe, for example. Much less pre-cast concrete structures were used, while more activities were performed with manual labor.

Construction completed on schedule and on budget last year, and commercial operations began in November.

Today, the Tuas refinery produces 1 billion liters (2 trillion gallons) of diesel fuel per annum.

Next up for the company is a similarsized facility in Rotterdam, Netherlands as well as a change in the variety of feedstocks used in the biodiesel creation process. PM

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK AUGUST 2011 WWW.PMI.ORG

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