Mega projects Saudi Aramco's specialty

Enormousprojects nowa specialty forSaudi Aramco

Written byJohn Palmer&Timir MukherjeeThe central control room building (foreground),shown under construction, providesa visual anchor for Saudi Aramco’s massiveKhursaniyah project. Inset: The central controlroom building in March 2007.Spring 2007 15

In a global project environment where many largeprojects struggle to meet their cost and scheduletargets, Saudi Aramco has been successfully executingits world-class mega projects with evershorterschedules, and well within budget.Of the five mega projects executed in thelast 10 years, two were recipients of the ProjectManagement Institute’s prestigious Project of theYear award, and one was honored at the 2005International Petroleum Technology Conference.Saudi Aramco is currently executing a seriesof new mega projects that will help meetthe world-wide energy demand increases and ensure thecompany’s leadership position for years to come.Huge new gas processing plants, facilities for capturingvaluable petrochemical feedstock, and new crude oil productionfacilities are all a part of Saudi Aramco’s ambitiousdomestic capital program to increase oil supplies and supportSaudi Arabia’s burgeoning petrochemical industry.Collectively, the Hawiyah, Khursaniyah, Khurais,Shaybah and Manifa programs will by 2011 increaserevenue to the Kingdom, and promote the local economyby increasing oil production capacity by 2.85 millionbarrels per day (bpd), sales gas by 1.4 billion cubic feetper day (cfd), ethane production by 450 million cfd, andcondensate by 325,000 bpd.All these projects are being executed on demandingschedules and within budget without a significant increasein company personnel while expanding the Saudi Arabianprocurement and construction content of the projects.This article will illustrate how this is being achieved.A key factor in the company’s mega-projects successhas been the broad cooperation of corporate ProjectManagement personnel with internal stakeholders andcontractors to deliver these projects. The cooperativespirit means that integrated teams resolve technical issuesswiftly, optimize scope, streamline design reviews andachieve full control of the quality and schedule.Another major contributor to the success of these projectshas been the use of best practices — in value engineering,constructability, planning for startup, benchmarking,scope definition and control, and the formal use of lessonslearned — to promote excellence.Saudi Aramco is fully dedicated to supporting SaudiArabia’s role as the leading provider of energy to theworld, and history has demonstrated its success. Thecompany will continue to build on its achievementsthrough innovation, solid integration and a strong willto meet future challenges.Today, the company’s mega projects are executed usinginternational engineering firms for preliminary engineeringand international EPC (engineering, procurement andconstruction) contractors for detailed engineering, procurementand construction, in tandem with local subcontractors.Engineered materials are purchased from internationalsuppliers and local manufacturers when possible. Smallerprojects (up to $600 million) are now predominantly engineeredand built using local contractors.MEGA PROJECT HISTORYSaudi Aramco has a 70-year history of successful projectexecution. Its facilities tend to be very large compared toClockwise from top: A welding employee of a local contractorworks on a Saudi Aramco project. The company has continuouslyincreased participation of domestic companies in itsmega projects. Mega projects are found on shore and off.Fielding drilling rigs is a logistical challenge as the companyramps-up production.16 Saudi Aramco Dimensions

similar facilities worldwide. For example, the company’srecent gas-oil separation plants (GOSPs)routinely process 300,000 bpd of crude to produceoil, water, and gas from wells averaging 5,000–10,000 bpd each. Pipelines ranging up to 60 inchesin diameter transport the oil to terminals.Enormous projects were the order of the dayearly in the company’s history, with constantlypressing needs to build new GOSPs, water injectionfacilities to maintain reservoir pressure, pipelines,oil stabilization units and export terminals. Majorcapacity expansions were built in the mid-1970’s.Until the late 1970s, projects in Saudi Aramcowere managed by operations organizations workingthrough major international EPC companies. In1977, Aramco started managing its projects withan internal organization, using Program ManagementContractors. The first mega project was avery large gas collection and distribution program— known as the Master Gas System — to eliminatenatural-gas flaring at the wellhead and provideSaudi Arabia with natural gas as a commercialresource. At that time, with expenditures runningabout $3.5 billion per year (2002 equivalent), theProject Management organization had six generalmanagers and 19 departments to manage the gasprogram and multiple smaller projects.In 1988, Arabian American Oil Company(Aramco) became Saudi Aramco, as the originalU.S. partners were bought out by the SaudiArabian Government. This change was accompaniedby increased hiring of Saudi nationals.In the late 1980s, the company started usinglump-sum turnkey (LSTK) contracts for thelargest projects, and local contractors for smallerprojects. There were no more mega projects untilthe early 1990’s.MODERN MEGA PROJECTSSince 1998, Saudi Aramco has completed fivemega projects. The Ras Tanura Refinery UpgradeProject was first, and the company learned manyvaluable lessons from it. The other four werecompleted below budget and on or ahead ofaggressive schedules, with three (cont. on page 22)A massive demethanizer tower is set in place at the company’sKhursaniyah oil-production expansion project.

Of five companymega projects in thelast 10 years, two receivedthe Project Management Institute’sprestigious Project of the Year award.

Transporting the enormousvessels required formega projects and placingthem on-site is a massivelogistical undertaking.Special, ultra-strong vehiclesare needed to movethe vessels, and sometimeselectrical power lines haveto be temporarily disconnectedor rerouted alongroadways so vessels canpass safely.Spring 2007 19

Top 10mega projectsMegaprojects in Saudi Aramco are generally defined as projects or programs exceeding$1 billion in value. The projects listed here are the company’s largest to date.Ras Tanura RefineryUpgrade Project (1991–1998)The RTR Upgrade Projectchanged the refinery configurationfrom a 300,000-bpdtopping plant to a full conversionrefinery including ahydrocracker, a visbreaker, a naphtha hydrotreater and atmosphericcatalytic conversion reformer (the largest in the world atthe time.) Utility upgrades included a hydrogen plant, new steamsystem and water disposal.Shaybah FieldDevelopment (1995–1998)The Shaybah Field facilitieswere designed to process500,000 bpd of ArabianExtra Light crude from theShaybah field, deep in theRub‘ al-Khali (Empty Quarter) desert. The oil was shipped from thefield to Abqaiq Plants in a new 640-kilometer pipeline. Becauseof the field’s remoteness, produced water and gas are reinjectedinto the reservoir to maintain pressure. The entire field had tobe self sufficient, so the scope included cogeneration, a Boeing737-capable airport, residential and industrial facilities, and a400-km road through the desert.Hawiyah Gas Plant (1997–2001)The Hawiyah Gas Plant provided facilitiesto process 1.6 billion cfd of nonassociatedsour gas from the highpressureKhuff and Jauf gas reservoirson the south end of the Ghawar field.Gas plant facilities included gas-condensateseparation, acid-gas removal,dehydration and sales gas recompression.Auxiliary facilities included wellheadconnection and gas gathering, a gas transmission pipelineto the Master Gas System (MGS) and expansion of the MGS, sulfurrecovery and truck shipment facilities, condensate transport andinjection into the crude gathering system for transport to RasTanura Refinery, local maintenance and plant management facilities,and construction of a new road to the plant.Haradh Gas Plant(1999–2003)The Haradh Gas Plant has adesign capacity of 1.6 billioncfd of combined raw feedof Khuff sour and sweet gasand Unayzah sweet gas todeliver 1.5 billion cfd of dry sweet gas to Saudi Arabia’s MasterGas System. The plant consists of two gas-sweetening and threesulfur-recovery trains, two condensate stabilizers, two sourwaterstrippers and four gas processing trains for gas dehydration,dew-point control and sales gas compression. The plantrecovers 170,000 bpd of hydrocarbon condensate and 90 metrictons per day of elemental sulfur. Auxiliary facilities included:well-head connection and gas gathering; a 42"– 56" diameter,395-km gas transmission pipeline to the Master Gas System andexpansion of the MGS; sulfur recovery and truck shipment facilities;condensate transport and injection into the crude gatheringsystem for transport to Ras Tanura Refinery; local maintenanceand plant management facilities; and construction of a newaccess road and an airstrip for the plant.Qatif Field Development (2001–2004)The Qatif Program provided facilitiesfor 500,000 bpd of Arabian Light andMedium crude oil from onshore and300,000 bpd from offshore. This wasfirst Saudi Aramco facility to combineproduction of Arabian Extra Light,Light and Medium grades. The facilitieswere also designed to process 370 millionstandard cubic feet per day (scfd)of associated gas and 40,000 bpd of condensate. All crude isdesalted, stabilized and processed, then shipped to Ju‘aymahand Ras Tanura terminals for direct export. The gas is processedat Berri Gas Plant. The facilities included three new GOSPs, fivenew and 10 upgraded offshore platforms, a major expansion ofBerri Gas Plant, 34 drilling islands, and a 140-megawatt (MW)Cogeneration Plant, providing steam heat for oil dehydration andpower for offshore electric submersible pumps. Pipeline workincluded all gathering lines including offshore, and shipping linesfor oil, gas and condensate.20 Saudi Aramco Dimensions

Hawiyah NGL Recovery Program(2003–2008)The Hawiyah NGL Recovery Plant willprocess 4 billion standard cubic feetper day of sales gas from Hawiyah andHaradh Gas Plants to yield 310,000 bpdof ethane and natural gas liquids. Theprogram will also expand the existingHawiyah Gas Plant by 800 million cfd;install or expand pipelines for productshipments to Jubail and NGL to Ju‘aymah Gas Plant, and expandJu‘aymah NGL fractionation facilities.Khursaniyah FieldDevelopment (2005–2007)The Khursaniyah ProgramFacilities will process500,000 bpd of ArabianLight crude oil and process1 billion standard cubic feetper day of associated gas in a new grass roots gas plant. Theoutput of the gas plant will include 280,000 bpd of condensate.The new facilities will also include new industrial support facilities.Due to the increased international demand for oil, SaudiAramco decided to accelerate the development of these fieldsusing new contracting strategies for the GOSP and the gas plant.EPC contractors provided proposals based on an enhanceddesign basis and uplifts for engineering and procurement witha provision to convert the contracts to LSTK. Preliminary engineering,detailed design and procurement were done on a reimbursablebasis to expedite the work.Khurais Field Development(2005–2009)The Khurais program will build facilitiesfor 1.2 million bpd of ArabianLight crude through a new CentralProcessing Facility (CPF), the largest ofits kind in Saudi Arabia, near the townof Khurais. A new gas plant will treatthe associated gas, producing 70,000bpd of condensate and 420 million cfdof gas. The program will also provide 4.5 million bpd of seawaterfor injection to support the increased production from Khuraisand Ghawar fields. The seawater injection pipeline network willconsist of 920 kilometers of 48"–60" pipe. In addition, the programwill also increase the existing East/West NGL pipeline capacityfrom 425,000 bpd to 555,000 bpd to manage the increased NGLproduced at Khurais. Other pipeline work includes all of the oilgathering and water injection distribution and sour gas toShedgum Gas Plant. Infrastructure work includes an air strip,residential facilities for up to 1,000 personnel, and an industrialcomplex to handle facility maintenance.Shaybah Field Expansion(2005–2008)The Shaybah crude expansionprogram is designed toincrease Arabian Extra Lightoil production capacity fromthe current 500,000 bpd to750,000 bpd. The program includes installation of a new GOSP andexpansion of the gas compression and injection facilities. A majoroil pipeline loop will provide the increased oil transport capacity.Manifa Field Development(2006–2011)Under the Manifa program,Saudi Aramco plans to installcentral facilities at Manifa toprocess 900,000 barrels perday of Arabian Heavy crudeoil. The Manifa Central Processing Facilities (CPF) will includegas and oil separation, wet crude handling, gas compression, gasconditioning, crude oil stabilization, produced water disposal andwater injection facilities. The CPF will be designed to process900 mbcd of crude oil; approximately 120 million scfd of associatedgas, 50 mbcd of hydrocarbon condensate will be produced asresult of this crude increment. The gas and condensate willbe processed at Khursaniyah Gas Plant, and the crude will betransported to Ju‘aymah Terminal for export. This program ischallenging primarily because of the location of the Manifa fieldin shallow water in the western Arabian Gulf, requiring a 41-kmasphalted causeway and 27 drilling pads in the shallow water.This shallow bay contains the most prolific shrimping area inSaudi Arabia, and all precautions will be taken to maintain thisvital resource for the country. The program will include installationof four oil-producing offshore platforms with 10 producingand two evaluation wells each, and seven water-injection platformswith 10 water injectors each. Electric submersible pumpswill provide artificial lift for production, which will be shippedwithout processing for multiphase flow transportation to thecauseway and shore-based CPF.The entire Shaybahoilfield complex had tobe self-sufficient, so the scopeincluded a Boeing 737-capable airport.Spring 2007 21

(cont. from page 17) of them winning major awards. Therewere two dominant contributing factors to these successes:• Communication factors: commitment from CorporateManagement; CEO meetings; clear, common goalsfor the extended project team; lessons learned fromprevious projects.• Organizational factors: formal implementation ofbest practices; a culture of continuous improvement;project team continuity; and successful contractingstrategies. Many of these factors are applied to thewhole project system.With the increased demand foroil, Saudi Aramco has significantlyincreased its capital program, withsix active corporate mega projectsand three joint-venture mega projects.The company continues toset aggressive targets.FACTORS CONTRIBUTING TO SUCCESSThe Ras Tanura Refinery Upgrade Program, started in1991 and completed in 1998, was a watershed projectin many respects. This $1.3 billion project was the firstmajor expansion of the RT Refinery, which started refiningoil in 1947. There were very few personnel in thecompany that had managed any mega projects, muchless a complex refinery project, so experienced industryengineers were hired to help.The company was also moving away from doing itsown inspection to requiring contractors to inspect theirown work. The project, though ultimately successful, wascompleted nearly two years behind schedule. The companylearned from a multitude of mistakes on this project thatit must:• Assure that all stakeholders are completely aligned.• Provide very clear project scopes and minimize scopechanges after the Design Basis.• Clearly state the quality requirements in the contract,Changes havereduced averageproject schedules froman average of 48 months to 35 months.not in an attachment.• Keep management and key technical personnel on thejob for the entire project.Another mega undertaking, the Shaybah project, wasstarted in 1995 and completed just 36 months later, ontime and on budget, despite the amazing logistical challengesof building the company’s first major project in thedeep desert. On this project, project management professionalslearned from success: minimal scope changes; welldefined scope; tight communication internally and externally;and alignment of all of stakeholders.The last significant learningstep was benchmarking. A projectsystem benchmark study of 30projects was conducted by IPA(Independent Project Analysis) in2000, showing that the company’sprojects were taking 60 percentlonger than the industry as a wholeand cost almost 30 percent more.The company began to incorporate this learninginto change.IMPROVING THE PROGRAMChange started with Total Quality Management in 1994,with quality teams and enthusiasm. PM personnel werereluctant to change much until the learning from the twoabove projects and the benchmarking hit home. From1998 to 2002, several programs were instituted thatmade the changes permanent and actually changedthe culture to one of continuous improvement:• A lessons-learned system was established starting in1995, and added to the knowledge base of projectpersonnel. The company also joined the United StatesConstruction Industry Institute (CII) to take advantageof their best practices and sponsored a chapter of theProject Management Institute in the Arabian Gulf. Allof these changes began to increase the level of expertise.22 Saudi Aramco Dimensions

• A Value Engineering Unit was formed after early successesshowed that VE could significantly reduce projectcosts. Five people were trained and certified, and theunit continues today.• Project Cost and Schedule performance targets wereinstituted in 1999 for on-time and on-budget completions,value engineering and value improvements.Recording value improvements (improvement ideas proposedby team members) acknowledged their contributionand provided incentives for finding ways to savemoney. This effort was enhanced by the advent of abalanced scorecard (BSC) for projects starting in 2002,when several other performance measures were added.• A standard contract schedule for quality, introduced in2000, significantly improved project quality. Furtherquality improvements, especially for local constructioncontractors, were promoted with a project quality measurefor the BSC, focusing on adherence to requirements,and in 2002, requiring conformance to ISO 9001 andrelated documents.• After several years of moderate success asking projectteams to implement CII best practices and the lessonslearned program, Project Management established aBest Practices group in 2002 to formally implementthese concepts. This group of experienced personnelworks with projectteams in formal, facilitatedsessions tooptimize the value ofselected best practices.The result of thesechanges is that averageproject schedules havebeen reduced from anaverage of 48 months(from start of preliminaryengineering to mechanicalcompletion) for projectsFrom left opposite page: Workers on Saudi Aramco megaprojects come from all over the world. Officials at theKhursaniyah project construction start-up include SaudiAramco Project Management vice president Ali A. Al-Ajmi(fifth from left) and Khursaniyah Project Department managerGhalib A. Al-Alwan (second from left). Chinese presidentHu Jintao visits Dhahran in 2006 in support of growingcommercial ties between the Kingdom and China; Ali A.Al-Ajmi speaks at the Hawiyah project groundbreaking. Youngcompany employees track information on work stations atHaradh GOSP-3. A workman carries pipe at the Khursaniyahconstruction site. Safety is the No. 1 priority at Saudi Aramcoprojects. Below: Groundbreaking at the Hawiyah NGLRecovery Project.started in the early to mid-1990s to an average of 35months in 2006. About 50 new projects start each year.On-time performance has increased from 40–50 percentin the late 1990s to 80–90 percent for the last five years.On-budget performance (including contingency) hasincreased from 50–60 percent to 80–90 percent. Projectquality has improved substantially, and start-up time hasdecreased to less than one month for almost all projects.Safety performance for construction contractors has alsoimproved substantially, with less than one lost-time incidentper 10 million man-hours in each of the last four years. It isimportant to note that this statistic is not comparable withU.S. statistics because thereare no OSHA regulations;minor injuries and off-sitetraffic accidents are oftennot recorded.Since 1998, VE studieshave saved over $2 billion— roughly 7 percent ofproject value, and valueimprovements initiatedby the project team orcontractors has exceeded$1.8 billion.Spring 2007 23

FURTHER IMPROVEMENTSaudi Aramco conducted its second IPA system benchmarkin early 2004 for 30 projects that started during1999–2003. The results showed improvement from theoriginal study in 2000, with average schedules about 25percent longer than industry and costs about 15 percenthigher. However, it identified multiple specific areas forimprovement. Consequently, the company launched aCorporate Capital Program Best in Class initiative with23 of the 24 Administrative Areas participating. Ninemajor improvement areas were identified, and the initiativesare all moving into the implementation phase.Since 1998, valueengineering studieshave saved over $2 billion.These initiatives are expected to have a great impacton cost and schedule performance of all Saudi Aramcoprojects:• Greater use of Innovative Contracting Strategies, whichfocus on converted LSTK, using reimbursable engineeringand procurement and then converting to a regularlump-sum contract at 50–70 percent of detailed design.• Standardized Component Design. The first effort was astandardized substation design using precast walls androof with top-entry electrical wiring, allowing a slabfloor and experienced erection subcontractors. Thisdesign will save design time and about 3–4 monthsin substation construction.• Increased accountability during the design basis(IPA FEL 1 & 2) now uses a more formalizedgate approval process.24 Saudi Aramco Dimensions

The extremely long delivery arm of cement-pumping equipmentat the Khursaniyah site appears to be an appendageof an alien creature. The equipment is used to delivercement to difficult-to-reach areas. Massive amounts ofcement are used in mega projects.• Project team integration for groups of small projects basedon mega project success in this area.• More rigorous review of plot-plan layouts and equipmentperipherals and instrumentation.• Procurement process improvements including standardizedprocurement systems for local contractors and requisitiontemplates.• Construction productivity improvements for local contractorswho employ personnel from Third World countrieswith limited industrial experience. The initial focus is onreducing interruptions.• Productivity improvement for local design contractors,focuses on construction feedback to the design processand design quality control.• The Integrated Project Technology initiative will increasethe use of information technology (IT) for improved projectprocesses, data management and flow, and for programmanagement reporting. ■