Cu#ng Down Construc.on Costs

Transcription

1 2nd Annual UnconvenGonal ProducGon & Well Site FACILITIES DESIGN, ONSHORE 2015 OPTIMIZING FIELD INSTALLATION & CONSTRUCTION PLANNING Cu#ng Down Construc.on Costs Ken Caldwell, EVP/CMO, Dynamic ConstrucGon Services

2 Talking Points A Brief Introduc6on to Dynamic The Elusive Successful Project False Expecta6ons Does Size MaDer? Engineering and Project Planning: It s the LiDle Things that Count! - Factors Cri+cal to the Success of One- off Well Pad Construc+on Constructability Labor Cost and ProducGvity Driving ConGnuous Improvement to InstallaGon: Design 1, Build 2 or more - The Case for a Mul+- pad Program

3 Dynamic Energy Services Interna6onal (DYNESI) Dynamic Interna.onal Green Field/Brownfield EPCI Dynamic Construc.on Services Modular and S6ck Build Dynamic Industries Modular Fabrica6on

4 The Elusive Successful Project

5 The Elusive Successful Project A well known LNG project is now forecast to be 45% above the original cost es6mate of $37 Billion and will have a one year delay. A new VA Hospital Complex in Aurora, Colorado is now forecast to cost $1.73 Billion, three (3) 6mes the original es6mate, and will have a three year delay An interna6onal survey by PricewaterhouseCoopers (1) found that the percentage of companies that claimed 100% project success based on mee6ng scope, cost, schedule and business objec6ves was????

6 The Elusive Successful Project A well known LNG project is now forecast to be 45% above the original cost es6mate of $37 Billion and will have a one year delay. A new VA Hospital Complex in Aurora, Colorado is now forecast to cost $1.73 Billion, three (3) 6mes the original es6mate, and will have a three year delay An interna6onal survey by PricewaterhouseCoopers (1) found that the percentage of companies that claimed 100% project success based on mee6ng scope, cost, schedule and business objec6ves was 2.5%.

7 False Expecta6ons

8 False Expecta6ons The larger and more complex the facility the higher the cost and longer the schedule. The cost and 6me required for proper scope defini6on and planning represent a lesser percentage of the cost and schedule for larger projects than smaller. And yet large onshore projects such as Central Processing Facili6es (CPFs), gas plants and condensate stabiliza6on plants s6ll overrun budgets and schedules. Is this due to poor project execugon?

9 False Expecta6ons Westney Consul6ng Group makes a case for How Front- End Loading Creates Overconfidence and Causes Cost Overruns (2) because it only focuses on project defini6on as the driver of risk, and not organiza6onal and external risks. In another paper False Precision and the Illusion of Accuracy (3) Westney states that management wants to believe in the precision and accuracy of the volume of data that has been collected and generated. Consequently, decisions are made that result in opgmisgc cost esgmates and impossible schedules.

10 Does size mader? It s easy to take small projects for granted: They re simple, they don t really need much planning. It s only a 3-4 week schedule. What could possibly go wrong in that short a 6me?

11 Does size mader? So, if larger projects that engage in proper front end planning s6ll fail for a variety of reasons, do the smaller projects like single or mul6- well pad facili6es have a chance at success? The answer is it depends. Some operators have developed standard designs and construct a defined quan6ty of iden6cal or similar facili6es in a planned (con6nuous) program. Other operators have not followed this path for a variety of reasons.. and every project is a one- off.

12 It s the LiDle Things That Count!

13 Engineering and Project Planning It s the LiDle Things That Count! Factors Cri.cal to the Success of One- Off Well Pad Construc.on PECC

14 Engineering and Project Planning It s the LiDle Things That Count! Factors Cri.cal to the Success of One- Off Well Pad Construc.on Planning PECC Engineering Constructability Communica6on

15 Planning Scope of Work clear? Site Condi6ons is the site prepared? Roads, stabiliza6on and civil work? Is there a surveyed reference point? Site visit and inspec6on as built condi6ons Schedule impact by unexpected interrup6ons Interference by drilling opera6ons and other vendors Pre- job kickoff mee6ng with the right people Logis6cs and supply owner furnished parts and equipment Modular or s6ck build? One or the other, but oken a hybrid Work pulled from shop to field before hydro and/or coa6ng

16 Engineering Have a fit for purpose set of engineering drawings and specs Would standardize the fabrica6on so that you can actually begin to measure produc6vity for like projects Would clearly indicate to the contractor the parameters for performing the work, and not leave it up to the personal preference of the client field rep This results in confusion and requires 6me to ask for answers before a work scope can begin Materials, tolerances, coa6ngs, and equipment and component manufacturers vary from site to site

17 Engineering Have a fit for purpose set of engineering drawings and specs Won t have to re- invent the wheel each 6me a project begins With standard specs the drawings can be less detailed Specs for NDE, Coa6ngs, Insula6on, Hydrotes6ng, etc. Marcellus operator originally, drawings were scarce, just P&ID s: now using full package of 47 detailed drawings, good specs

18 Constructability Pick an engineering company that has more than just design capability - has performed Construc6on Management Have your site construc6on rep review drawings Best case, pick a contractor and have them perform a constructability review Success starts at the bodom: level pad and proper founda6on for skids. Problems here domino throughout the site with piping, etc.

19 Constructability Skid and pipe rack support varies from region to region Parking curbs fine in caliche as long as pad is reasonably level. Can dig out or shim. Gravel pads full or localized at skid piling 4 in dia. pipe driven 9-10 k. to refusal

20 Constructability Installa6on specs Depth details for trench and cover? Heat stress piping to wellhead? Not specified, but one rep wanted, another didn tl Hydrotest tanks Not in scope or on drawings - no water supply except for nearby pond No inspec6on of skids before arrival at site: inconsistent dimensions on tanks, on- skid piping, etc. Equipment 6e- ins not per drawings, resul6ng in field revisions. Concrete retainer wall required equipment loca6on and extensive piping modifica6ons.

21 Communica6on Communica6ons between humans will never be perfect, but we can only try.

22 Communica6on WriDen instruc6ons minimal Management of Change minimal Overabundance of HSE reps each one had different reqt s Other vendors coming to site with no no6ce flow meter installa6on interfering with piping between separators SIMOPS/Drilling Arrival date changed constantly. Trenched flowlines, covered, retrenched. Inexperienced or inaccessible project engineers, difficult to get answers to technical ques6ons

23 Labor ProducGvity OpGmizaGon Competence and work ethic will affect individual produc6vity. But other factors, including poor planning and unknown scope or scope changes on the fly will affect the en6re crew, resul6ng in higher labor costs. Depending on the contract model (LS or T&M) this cost will be borne by the operator and/or the contractor.

24 Labor ProducGvity OpGmizaGon Time and money wasters: Site was 2 hours away from the loca6on in the bid Crew was 2 hours late because they couldn t find the site Interference by other vendors, including drilling contractor Absence of experienced client rep to answer ques6ons Rancher got mad at all the oilfield traffic, locked a gate that resulted in a 1 hour round trip turning into a 3 hour trip

25 Labor ProducGvity OpGmizaGon Seasonal Issues : Hun6ng season started in middle of job work day was cut to 9 am to 2 pm In Marcellus, don t underes6mate the impact of weather. Should you start a project in December? In Eagle Ford and Permian, during the summer months workers will have to take more breaks when temperatures climb to extreme levels.

26 Driving ConGnuous Improvement to InstallaGon

27 Design 1, Build 2 or more

28 Design 1, Build 2 or more No doubt the improvements in efficiency and produc6vity in drilling are due to con6nuous lessons learned Lessons Learned from previous pads Understand the operators preferences in the absence of proper drawings and specs. Schedule? Are mul6ple sites being done in series or parallel? Allows contractor to stage crews from site to site Loca6on? Are the sites in the same general area? Drive 6me and housing could use rental housing or temporary man camp instead of hotel

29 Design 1, Build 2 or more Pick a contractor and s6ck with them to get past the learning curve. Example: One job with 2 pads, built first pad in 40 days and lost money on LS job. Second pad had two more tanks and more flow lines, and was built in 28 days. Confident the 3 rd pad would have taken 20 days. Any issues with drawings, specs, client furnished materials, client approved vendors, logis6cs of crew and materials, etc. will be mostly resolved on first job. Second job will then only have to deal with client rep preferences, impact of different loca6ons, and small scope differences.

30 In Summary Times are tough and may get tougher In the old days (2014) you could just throw money at the problem. Time was of the essence. Now, we need to work together. Let your Contractor help you be successful. and make a lidle bit of profit while he s at it.

31 Thank you! References (1) PricewaterhouseCoopers (PWC): Boos+ng Business Performance through Programme and Project Management. (2) Westney Consul6ng Group (3) Westney Consul6ng Group For any addi+onal ques+ons contact: Ken Caldwell MaD Oubre, COO