VENTURE FOCUS SIX OF THE BEST FROM SIEMENS TO RIO MONITOR THE ESSENTIALS OF CHP SPOTLIGHT INDUSTRY DAY 2004

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1 VENTURE INTO THE WORLD OF INDUSTRIAL ROTATING EQUIPMENT Power Generation s No. 1_ January 2005 FOCUS SIX OF THE BEST FROM SIEMENS TO RIO MONITOR THE ESSENTIALS OF CHP SPOTLIGHT INDUSTRY DAY 2004

2 0 2 _ E D I T O R I A L V E N T U R E _ J A N U A R Y _ E D I T I O R I A L _ I M P R I N T _ 0 3 Inside Dear Reader, The first issue of Venture magazine is on your desk. And a venture it is indeed for Siemens Power Generation Industrial Applications a new way to reveal to you the potential inherent in our world of rotating equipment solutions for the oil & gas, power generation and process industries Together with you we will venture forth into this world of technical and commercial opportunities, some of which have been realized for and with our partners, others which are still under development, ready to be mapped for deployment. Meet some of our trusted customers and suppliers in the coverage of Industry Day held at the beginning of November. Some of the 750 guests voice their opinions on the multiplicity of products and solutions presented there. Travel with us to a new cogeneration plant we are building in Belgium, and explore the economic and environmental advantages of the combined heat and power solutions we can provide for our industrial customers. And venture further afield to Brazil, where we take a close look at an FPSO (Floating Production, Storage and Offloading) vessel ready for offshore testing. The FPSO is an increasingly important segment in the world of oil & gas exploration, and naturally we are there with our compression solutions. May this be one of many ventures we undertake together! Dr. Frank Stieler, President Siemens Power Generation Industrial Applications Division NEWS FLASH Around the World Projects in Slovenia, Russia, Nigeria, and an impeller giving compressors a new lease of life 04 FOCUS Six of the Best from Siemens to Rio A total of six gas compressor-trains, the largest, most powerful and most complex of their kind, have been installed on two giant FPSO vessels in Rio de Janeiro. 06 FACES Sergio Della Libera Petrobras Turbomachinery Engineer for the Barracuda and Caratinga Project 12 Alan Ogunmuyiwa Senior Procurement and Materials Manager for Halliburton s KBR 13 MONITOR The ESSENTials of CHP With energy prices rising, there is growing interest in fuel-efficient solutions like CHP. We look at a current CHP project to see just what benefits are on offer. 14 SPOTLIGHT Industry Day 2004 A day of insight into megatrends of the global energy markets and the winning portfolio of Siemens rotating equipment solutions for up-, mid- and downstream applications 16 DATELINE Trade Shows, Conferences, Seminars February to April IMPRINT Publisher: SIEMENS AG, Power Generation Industrial Applications, Wolfgang-Reuter-Platz, Duisburg, Germany Responsible: Dr. Uwe Schütz Editorial Team: Ina Nieroda (Head), Lynne Anderson, Manfred Wegner Contact: ina.nieroda@siemens.com Contributing Editors: Colin Ashmore, Peter Cowne, Eric Jeffs Design: Formwechsel Designbüro, Düsseldorf Photography: Corbis, Oliver Helbig, SIEMENS AG Illustration: Rubén Cuellas Is Lithography: TiMe Production, Düsseldorf Printing: Heining & Müller, Mülheim a.d.r SIEMENS AG. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical photocopying, or otherwise, without prior permission in writing from the publisher.

3 0 4 _ N E W S F L A S H V E N T U R E _ J A N U A R Y _ N E W S F L A S H _ 0 5 3D impeller 2D impeller Around the World *1 *3 *2 *4 *1 SLOVENIA BOOSTING POWER, REDUCING CO 2 *3 IMPELLED TO THINK INNOVATIVELY GIVING COMPRESSORS A NEW LEASE OF LIFE With a fleet of some three thousand first and second-generation geartype compressors in service around the world, originally manufactured as long ago as the seventies and eighties, it was in the joint interests of Siemens and its customers to provide an upgrade solution which would avoid the cost of replacement with new, customized equipment. Based on vast expertise and extensive field testing, a 3-D impeller solution is now available to replace 2-D impellers, allowing customers to adjust the flow capacities of their compressors in order to meet changing requirements. Advantages have proved to be manifold: capacity and pressure can be increased or decreased while maintaining constant rotation speed. Moreover, efficiency can be significantly improved without any loss of reliability. The goal of the revamp is to achieve the new specifications by replacing the impeller only, with no other component modifications, such as volute, inlet guide vane and intermediate cooling stages. *1 Sostanj power plant: beefing up capacities for the new Slovenia. *2 Linking East and West: the Yamal pipline. *3 Adjusting compressor flow capacities to meet changing requirements: Siemens innovative 3-D impeller. *4 Boosting LNG capacities in Nigeria: end-flash compressor train for the Bonny Island Liquid Natural Gas Plant. *2 Having become a member of the EU, Slovenia continues to invest in an ongoing modernization program to beef up power generation capacities while at the same time striving to implement EU directives aiming at a reduction of CO 2 emissions. As a latest step, TES (Termoelektrarna Sostanj d.o.o), an affiliate of the state-owned HSE (Holding of Slovenian power producers) selected Siemens to supply two SGT-800 gensets for block 5 of their Sostanj power plant in central Slovenia, a major power center consisting of five coal power blocks and generating almost 30% of Slovenia s total electricity. The SGT-800 gas turbines will increase the 345 megawatt (MW) power output of block 5 by some 84 MW directly dispatched to the grid. In addition, their exhaust will provide preheating for the plant feedwater, boosting the output of the existing steam plant while decreasing extractions from the steam turbines normally used in the process. All steam is henceforth being used solely for the production of electricity, requiring less boiler heat to achieve full power. As a result, less primary energy will be needed to operate the plant, translating into improved efficiency and a substantial reduction of CO 2 emissions. TES is a major customer for Siemens, who has already supplied the two largest steam plant blocks 4 and 5. The gensets for block 5 are scheduled for delivery in February and November FROM RUSSIA TO GERMANY FITTING THE YAMAL GAS PIPELINE Designed to distribute gas from the Siberian Yamal peninsula to Europe, via Belorussia, Poland and Germany, the Yamal pipeline is an enormous project predominantly undertaken on the initiative of Gazprom, the Russian state-owned utility company. In September 2004, Siemens received an order for three turbocompressors for the Vuktylkskaya compressor station in Russia. The compressor trains each consist of a STC-SV compressor driven by a SGT-600 turbine. The order is a repeat of an order for nearby Ukhtinskaya, the next station down the line, taken in A further 16 SGT-600 gas turbine drivers have been ordered for the Polish section of the Yamal pipeline since Two full compressor trains based on the slightly larger SGT-700 gas turbine are also under delivery to a gas pumping station at the German end of the Yamal pipeline, at Eischleben. The more recent of these orders reflect Siemens capacity to provide full train compressor solutions with industrial gas turbines, delivered by a single supplier in a single package seamlessly. *4 NIGERIA GAS PLANT WILL BE HOME TO SIEMENS COMPRESSOR TRAIN Repeating an identical order placed in 2002, Siemens has won a contract to supply an electric motor driven compressor train to the Bonny Island Liquid Natural Gas (LNG) Plant in Nigeria. The end-user is the Nigeria LNG, a joint venture consisting of the Nigerian National Petroleum Corporation (NNPC), Shell, Elf and AGIP. The engineering will be carried out by a consortium including Technip, Snamprogetti, Kellogg and JGC. This end-flash gas compressor train is a two-casing design with low and high-pressure bodies employing STC-SV machines driven by a 15 MW Siemens asynchronous electric motor. The compressor train is due for delivery in October It will be part of a huge gas plant, supplied from the onshore concession areas of the eastern part of the Niger Delta, where about 50% of Nigeria s proven and probable gas reserves, estimated in excess of 2,800 billion standard cubic meters, are located.

4 V E N T U R E _ J A N U A R Y _ F O C U S _ 0 7 WEDNESDAY SEPTEMBER 29TH _ WINDY, SLIGHT OVERCAST, 24ºC. MEETING AT SIEMENS OFFICES AT MAUA-JURONG SHIPYARD, NITEROI. SAFETY BRIEFING FROM KBR. ISSUED WITH HELMET, SAFETY GLASSES, OVERALLS, BOOTS. FIRST VISIT TO P43. THURSDAY SEPTEMBER 30TH _ LOW CLOUD, MIST, INTERMITTENT LIGHT RAIN, OCCASIONAL HEAVY SHOWERS, 18ºC. AT SHIPYARD CHANGE INTO FULL SAFETY GEAR, CLIMB 20 METER ACCESS GANTRY WITH ALL PHOTOGRAPHIC EQUIPMENT TO MAIN DECK OF P43. FRIDAY OCTOBER 1ST _ LOW CLOUD, MIST, INTERMITTENT LIGHT RAIN IN PM, 22ºC. MEETINGS WITH SIEMENS STAFF ON-SITE; INTERVIEWS WITH SERGIO DELLA LIBERA, TURBOMACHINERY ENGINEER, PETROBRAS. AND ALAN OGUNMUYIWA, KBR MATERIALS & PROCUREMENT MANAGER. Six of the Best from Siemens to Rio Making it big in Brazil, a total of six gas compressor-trains, the largest, most powerful and most complex of their kind, have been installed on two giant FPSO Floating Production, Storage and Offloading vessels in Rio de Janeiro. Designed and built at Siemens Duisburg plant and due shortly to enter service in Brazil s newest offshore deepwater oilfields, the compressor modules are a vital component of the huge and technically-challenging US$2.6 billion project for state-owned oil major Petrobras. As traditional global reserves of oil and gas become increasingly exploited, the offshore industry has begun to move more and more to the development of less accessible fields. These include deepwater and even ultra-deepwater reservoirs where water depths can be in excess of 1,500 meters. Where mature technologies for drilling and production have hitherto provided cost-effective and economically viable solutions, a relatively select band of specialist companies is now at the forefront of technological development. Innovative systems are now being employed which allow a new generation of equipment suppliers and oilfield operators to exploit recent and frequently far smaller discoveries at greater subsea depths, the final frontier for offshore hydrocarbon exploration and development. MEETING THE CHALLENGE Since the late 1990s, nearly 12 billion barrels of oil equivalent have been brought into production from some 79 deepwater fields by Petrobras and other major international companies specializing in deepwater operations. The principal areas of activity are located in offshore West Africa, the Niger Delta, Asia Pacific, the Gulf of Mexico and offshore Brazil. As interests first began to be focused on smaller and less accessible reserves, only the largest and most experienced oil majors, such as BP, Exxon, Shell and Petrobras had the innovative technical, managerial and financial resources to recover oil and gas from deep and ultra-deepwater reservoirs. The part-privatized company Petrobras is Brazil s largest oil and natural gas producer, ranking among the heavy-hitters capable of pioneering exploration and production technologies allowing commercial operation in such challenging conditions as those encountered in the newest fields on the Brazilian continental shelf. These new technologies not only include innovative systems for drilling and well completion, subsea flowlines and risers, but also for complex floating structures and anchoring systems. FLOATING SOLUTION Among the many spectacular engineering solutions developed by the industry, giant floating ship-shaped vessels have become the system of choice for the development of an increasing number of smaller, deepwater oil and gas fields. These Floating Production, Storage, and Offloading vessels or FPSOs replace the fixed production platforms and pipeline

5 0 8 _ F O C U S V E N T U R E _ J A N U A R Y _ F O C U S _ 0 9 systems which are used to produce and export oil and gas from shallower fields and which are not technically or commercially viable for smaller, deepwater applications. FPSOs on the other hand, either in the form of ship-conversions using existing hulls, or increasingly as new-build vessels, can be towed out and anchored at the location of the offshore reservoir to form a hub for the producing wells in the field. Oil and gas is piped from the wells to the vessel through subsea flowlines connected to the FPSO through flexible risers, allowing the vessel to separate the gas, process the recovered crude oil and act as a central storage facility. Oil is subsequently exported to overseas markets or domestic onshore refineries by shuttle tankers, providing a highly flexible system which can be moved to a new field when production finally becomes uneconomic and which is able to meet the needs of a changing market. The gas can either be re-injected to enhance oil recovery or exported to local markets onshore. OIL BRAZIL S BURNING ISSUE Brazil is the tenth largest energy consumer in the world and the third largest in the western hemisphere, behind the United States and Canada. The country s total energy consumption has increased significantly in recent years, growing at an annual rate of 3% between 1992 and As a consequence, the Brazilian government has sought to boost domestic oil production as part of its longterm energy strategy. Although production levels are increasing, imported oil is still needed to meet domestic demand, in spite of the fact that the country has the second largest oil reserves in South America, with 8.5 billion barrels as of January Recent discoveries reported by Petrobras, including an estimated 2.95 billion barrels of heavy oil, are also certain to increase proved reserves over the next few years. Now, under the presidency of Luiz Inacio Lula da Silva, elected in October 2002, the government has set a target for self-sufficiency in oil production by 2006 and has its future sights set on joining other oil exporting countries, with output eventually reaching 2.3 million barrels per day by The government s plans to become self-sufficient are being led by Petrobras, which has demonstrated its commitment by issuing a revised strategic plan for , in which the company pledges to spend US$7.7 billion per year, most of the funding aimed at boosting domestic oil output. Two of Brazil s offshore oil and gas fields, the Barracuda and the Caratinga, due shortly to enter full production, are located in the Campos Basin some 180 km northeast of Rio de Janeiro. Discovered in 1989 and 1994 respectively and named after two common species of South American fish, the two fields cover a combined area of 230 square kilometers and will boost the current pilot output of one million barrels per day by around 30%, providing around 20% of the country s total production. Recoverable reserves for Barracuda are estimated at 867 million barrels of oil and 10.7 billion cubic meters of gas, while the more southerly Caratinga field has estimated reserves of 362 million barrels of oil and 4 billion cubic meters of natural gas. EPIC UNDERTAKING To enable the Barracuda and Caratinga fields to achieve full production, Petrobras entered into an agreement with USbased Halliburton Co s KBR formerly Kellogg Brown & Root and Halliburton Energy Services (HES) business units to develop the two fields. Under the US$2.6 billion EPIC (Engineering, Procurement, Installation and Construction) contract, the largest ever awarded for an offshore project, Halliburton, the largest oilfield services company in the world, constructed a total of 55 wells, fabricated and installed flowlines and risers and undertook the construction and installation of the two FPSOs, which form the hubs on which the entire gas and oilfield development is based. As well as receiving oil from the 22 producing wells, large volumes of natural gas also flow from the subsea reservoirs. Specialist process equipment based on three very large compressor-trains designed, engineered, supplied and installed by Siemens, is employed on each FPSO to cool the gas, remove all traces of seawater and oil and increase gas pressure. Around 80% of the compressed and dried gas is re-injected back into the oilfield reservoirs as gas-lift to push more gas and the viscous, heavy crude oil about API 21 out of the producing wells. The remaining 20% is fed from the Siemens process modules through gas export risers and an undersea pipeline to a remote fixed platform, PNA-1, where it joins the main gas transportation pipeline and is piped onshore to join the Brazilian gas network. FROM CRUDE CARRIER TO SOPHISTICATED SYSTEM The Barracuda field will use the Petrobras P43, an ex-supertanker or VLCC (Very Large Crude Carrier) formerly owned by the Stena shipping line and originally named the Stena Continent. Her sistership, the Petrobras P48, an almost identical vessel previously operating as the Stena Concordia, will form a similar hub for the Caratinga field. Converted at the Jurong shipyard in Singapore, the two enormous vessels, minus all their original machinery including engines, rudders, steering gear and topsides, were reduced to a series of huge oil storage tanks with a capacity of 2 million barrels within a modern double-hull construction. In an epic 4-week voyage, the gutted vessels were towed from Singapore 10,000 nautical miles to the outskirts of Rio de Janeiro. Work on the P43 was carried out at the Maua Jurong yard at Niteroi, and the P48 was constructed at the BrasFels yard at Angra dos Reis. The mainly locally-recruited KBR workforce, together with a large number of specialist sub-contractors and suppliers, totaling around 4,700 people, subsequently undertook the massive construction and conversion program, fitting out the two vessels. Complex prefabricated modules creating the on-board production facility on each vessel were lifted into position and integrated with the hundreds of kilometers of piping, pressure-vessels, pumps, valves and the mass of vital supporting structural steelwork, ancillary systems and controls to form the completed topsides. TOWERING ACHIEVEMENT This massive, 18,000 tonne, multistory, deck-mounted construction is in effect a large factory with its own independent power plant providing a generating capacity of nearly 90 megawatt (MW), enough for a small city, together with accommodation and recreation facilities for 150 people. And it towers at least as high again as the 22-meter height of the deck from the waterline. The flare stack at the stern of each FPSO soars 100 meters above the deck and in the far distance, 337 meters away at the bow, a helideck provides a view encompassing the 55-meter width across the deck. The American Bureau of Shipping-certified double hulls of the vessels themselves, each the size of an entire city block and housing the cavernous oil storage tanks, plunge another 21 meters below water, but even before a drop of oil is pumped aboard, these leviathans each tip the scales at more than 70,000 tonnes.

6 V E N T U R E _ J A N U A R Y _ F O C U S _ 1 1 SIEMENS MAGNIFICENT MINIS The US$60 million contract awarded in January 2001 to Demag Delaval, immediately prior to its incorporation into Siemens, for a total of six gas process modules was the highest value ever won by the company, exceeding previous typical awards by a factor of six. In engineering terms the very large custom-designed systems were by far the largest, highestpowered and most complex of their kind ever built by the company. Powered by variable speed electric drives, the multistage turbo-compressor trains were fabricated and tested at Siemens Duisburg plant in Germany, shipped to the Niteroi shipyard in Rio and integrated with piping, coolers, gasscrubbers, associated equipment and control systems as skidmounted mini-modules. They were lifted by one of the world s biggest floating cranes and mounted one on top of another on bearing-pads within a massive steel framework, each the size of a large commercial building, standing 25 meters high, 26 meters long and 9 meters wide and weighing in at a massive 450 tonnes apiece. It was rather exciting, seeing the finished product being swung out over the harbor and into its final position on the deck. One slip and 60 million dollars and more than three years work could have ended up in the sea! said project manager Hans-Ulrich Keil. I needn t have worried, he continued, it all went perfectly first time exactly as planned. TYING IT DOWN Slated to be in full production by the end of 2004, the FPSOs will be moored some 12.7 kilometers apart in the Barracuda and Caratinga fields, each vessel using state-of-the-art DICAS (Differentiated Compliance Anchoring System) taut leg spread mooring technology developed by KBR's specialist mooring team. Believed to be the strongest of its kind in the world, it consists of no fewer than eighteen individual anchor-lines, five lines radiating either side of the bow and two groups of four at the stern, comprising 210 mm diameter polyester ropes and chains up to 1,800 meters long with a total weight of 1,200 tonnes. These are secured to computer-controlled winches, which enable the vessels to remain on station, without undue strain on either the vessels or the anchor lines, no matter what sea-states are encountered. WE WERE ABLE TO MANAGE THE PROJECT, INCLUDING ALL LOCAL CONTENT, WITH VIRTUALLY NO DELAYS AT ALL. ALTHOUGH IT HAS BEEN BY FAR THE BIGGEST CONTRACT WE HAVE EVER HANDLED, OUR WORKFORCE ON BOTH SIDES OF THE ATLANTIC HAS BEEN TOTALLY MOTIVATED, NOT LEAST THROUGH THE EFFORTS OF OUR MANAGEMENT TEAM HERE IN BRAZIL, ALLOWING US TO DELIVER THE COMPLETE PACKAGE WITHIN THE SHORTEST POSSIBLE PERIOD OF TIME AND WITHIN BUDGET. As project manager for the largest single engineering undertaking ever handled by Siemens Duisburg-based business unit, Hans-Ulrich Keil has had an awesome responsibility for the Barracuda/Caratinga project. This has included leading a small team of engineering managers and senior staff, based 6,000 miles from their production center in Germany, who Keeping the Faith Delivering the Goods have had to supervise a locally-recruited workforce of up to 600 people during construction of the mini-modules. First visiting the Niteroi site in March 2001, Keil has so far made more than 20 separate week-long trips, clocking-up a distance in the air equivalent to the distance between the earth and the moon! In addition to creating a specialist team of Siemens engineering managers to oversee the project to completion, there has also been the special need to form a close working relationship with local Brazilian partners in order to complete vital elements of the total system-build, such as the main steel fabrication and integration of the coolers and scrubbers on each gas process mini-module. Yet despite the vast size, scope and complexity of this technically-groundbreaking project, Hans-Ulrich Keil and his team, including Site Manager Michael Jungnitz, Carlos Schneider, Compressors Director, Oil & Gas and Service Manager Stephan Rosenast, have steered their part of the giant Petrobras project to a highly successful conclusion for their customer, Halliburton s KBR division.

7 1 2 _ F A C E S V E N T U R E _ J A N U A R Y _ F A C E S _ 1 3 Sergio Della Libera, Petrobras Turbomachinery Engineer for the Barracuda and Caratinga Project Alan Ogunmuyiwa, Senior Procurement and Materials Manager for Halliburton s KBR Dependable solutions As the ultimate customer and enduser, the requirements of Petrobras are of course paramount. We have been working with Siemens for very many years and have developed a high degree of trust, says Sergio Della Libera, Petrobras Turbomachinery Engineer for the Barracuda and Caratinga Project. For a critical project like this, it is vital that the equipment has the highest possible levels of both reliability and availability. It is simply not possible to shut the operation down for unscheduled maintenance. Equipment and systems supplied by Siemens over many years, including plant in operation on many of our older offshore platforms, has given excellent performance and is still performing well, so we have every confidence that the latest process units will be a complete success. Which has to be a fairly resounding vote of confidence, in anyone s terms. Perfect interfacing Despite their size, the compressor trains and equipment have not sprung any unpleasant surprises during extensive shore-based functional testing of the complex plant and systems, or its installation on board the FPSOs. Alan Ogunmuyiwa, Senior Procurement and Materials Manager for Siemens customer, Halliburton s KBR is not slow to comment that We have had absolutely no internal problems interfacing with the company. Back at the start of the project Demag Delaval already had a great reputation and we have of course had dealings with Siemens for more than 25 years. He continued: We regard their products as having really good quality. Our only complaint is that when it comes to the nitty-gritty of negotiations, they are among the toughest people that we have to deal with, although after all, that s exactly how it should be! I also have to say that, yes, we ve had some significant problems with both quality and delivery, particularly from some locally-based suppliers, but Siemens have been one of the very few companies who have delivered compressors on time and to our full specifications.

8 1 4 _ M O N I T O R V E N T U R E _ J A N U A R Y M O N I T O R _ 1 5 The ESSENTials of CHP With energy prices rising, there is growing interest in fuel-efficient solutions like CHP. But what s in it for the customer? A field in the middle of a petrochemical facility near Antwerp, Belgium, is the footprint for one of Siemens latest power projects, involving the construction of a combined heat and power (CHP) plant powered by two SGT-800 gas turbines. Project customer is the Dutch-based utility, Essent, market leader in the supply of sustainable energy in the Netherlands. For environmental and business reasons, it is company policy to utilize high-efficiency energy technologies wherever possible, says Mr. Aad Atteveld, General Manager, Projects, at Essent Energie. CHP, which currently accounts for around a quarter of Essent s electrical generating capacity, was the obvious choice for this plant also. SELECTING THE SITE Co-generation of heat and power achieves a number of economic and ecological goals. Since heat, unlike power, cannot be transported economically over long distances, an essential factor for Essent developing a CHP project was to find a local, long-term customer for the heat. This heat customer would be INEOS Oxide, a subsidiary of INEOS, a global manufacturer of specialty and intermediate chemicals. Located in the world s second largest petrochemical zone, on the left bank of the River Scheldt, just across the river from Antwerp s historic city center, the INEOS Oxide plant is claimed to be the largest and most cost-efficient ethylene oxide plant in Europe. The site also hosts eight third-party chemical manufacturers, around half of which are supplied with steam by INEOS. FOUR ESSENTIAL FACTORS When selecting their CHP plant, Essent based their decision on four essential success factors. Firstly, the plant s life-cycle costs (capital cost, fuel cost and maintenance cost) must be low to ensure the economic viability of the project. Secondly, since the CHP plant was to supply all the heat required by INEOS, a high level of plant availability was critical. Thirdly, the plant must be sufficiently operationally flexible to respond to Essent s changing needs for steam and, more particularly, power. Finally, it must have low atmospheric emissions. An industrial plant from Siemens was the solution. COMBINED CYCLE GIVES RELIABILITY The chosen plant is powered by two natural-gas fired 43.6 megawatt (MW) SGT-800 gas turbines, the largest model in the Siemens industrial gas turbine range. Exhaust heat from the gas turbines will be fed into heat recovery steam generators to produce steam to satisfy INEOS requirement, the surplus passing through a steam turbine to generate additional power, if required. This combined cycle arrangement gives the benefit of additional plant flexibility and a higher powerto-heat ratio. The solution is ingenious. The SGT-800 has been optimized for CHP and combined-cycle duty and can be started up in only a few minutes. It is designed for high reliability, with a focus on simplicity and robustness. Choosing two mid-range gas turbines instead of one larger turbine automatically heightens availability, since it reduces the likelihood of the whole plant being rendered unavailable. To secure steam availability, Essent has also taken over two of INEOS existing boilers at the site for emergency back-up. MINIMIZING ENVIRONMENTAL IMPACT Two heat recovery steam generators (HRSG s) retrieve heat from the exhaust gases to produce steam for the single-casing axial SST MW steam turbine, also of Siemens manufacture. The main heat input comes from the gas turbine exhaust, but each HRSG is also equipped with a 40 MW supplementary firing system to increase steam production and plant flexibility. The fuel burned will be a mixture of natural gas and waste gases from the petrochemical site, thus enabling INEOS to minimize its environmental impact. For combustion air, exhaust gas from the gas turbine will be used. Since the exhaust gas is very hot, combustion efficiency is improved and the risk of material stresses in the HRSG is reduced. The SGT-800 gas turbine in itself is equipped with a 3rd generation DLE (Dry Low Emissions) combustion system, which, by eliminating the need for water injection, reduces emissions without reducing efficiency. MAXIMIZING FLEXIBILITY When the CHP plant is taken into service, Essent will supply steam to INEOS, along with demineralized water. All the power will be sold by Essent into the grid. The maximum net electrical output will be 132 MW, at least twice the level of demand expected from the petrochemical site. The possibility of making power sales into the Belgian grid was a major factor in our decision to develop this project, says Mr. Atteveld. The possibility of exporting power to the grid opens up another income stream for the plant operator, and strengthens the economics of the project. It also means that the electrical output of the CHP plant need not be restricted to local site needs. With its two gas turbines, steam turbine with full condensing or steam extraction capability and supplementary firing of the HRSG s, plus a rapid start-up/shutdown capability, the Essent CHP plant has maximum operational flexibility. Steam and power output will be controlled separately. Steam output will be set locally according to site demand. Power output will be determined from Essent s offices in s-hertogenbosch, the Netherlands, enabling Essent to adjust the electrical output as prices change on the Belgian power market. This flexible plant will be able to run at near full electrical output with very little process steam production i.e., as a combined-cycle power plant, should this operation mode be required. EMPHASIZING SAFETY Since the plant is being built in the middle of a petrochemical site, the construction project has to be carried out to the most rigorous standards of safety. The high level of integration of the CHP plant with the chemical production process, as well as the location of the power plant in the center of an established petrochemical site, mean that there are a number of stringent requirements to be met with regard to safety in this construction project, says Mr. Atteveld. The large number of production facilities on site also has an impact on project management, since it is imperative, that certain works be carried out at particular times to prevent unplanned shutdowns of the manufacturing processes on site. WIN-WIN The engineers are not letting the grass grow under their feet. Civil works began on site in August 2004, and the completed plant is scheduled for handover at the end of Essent will then be the proud owner of a highly efficient CHP plant capable of meeting its requirements for low-cost energy production, high availability, operational flexibility and low emissions and have a long-term customer for the plant s heat output. INEOS in turn will have a reliable, on-site source of heat and power without major capital investment, as well as a productive outlet for some of its waste gases. It s a win-win situation from the word go. What more could Siemens want for its customers and its customers customers?

9 1 6 _ S P O T L I G H T Moving Ahead Siemens Industry Day 2004 session. The last three years has seen a sevenfold growth in our business, and with the acquisition of the Alstom industrial turbine operations we now have an all-round product portfolio for the oil and gas industries. The new trade in LNG and clean gas-derived liquid fuels is demanding larger process trains. To go from a train of 4 million t/year to one of 8 million t/year requires much larger compressors and drivers. The SGT6-2000E gas turbine, with an output of 110 megawatt (MW), is now being adapted as a mechanical drive unit for an LNG process train. Meanwhile, last year the world s largest process compressor was supplied for an extension of the SASOL coal-to-liquid fuels project in South Africa. STRENGTHENING RELATIONSHIPS Responding to the candid questions of Tim Sebastian, talk master of the BBC s Hard Talk, Dr. Frank Stieler, President of Siemens Power Generation Industrial Applications division, frankly conceded that yes, there had been some side effects to the rapid growth of Siemens Industrial Applications division, with a bearing on customer satisfaction. However, he assured Sebastian, and with him an audience including a great number of key customers, we have identified the issues, and we re working on them. The implementation of a corporate-wide customer satisfaction program has just been launched to achieve an uncompromising goal: do it right the first time, every time. FPSO Developing the Generic Approach Contrasting with the custom-designed project engineering by Halliburton subsidiary KBR for the Barracuda and Caratinga Floating Production, Storage and Offloading vessels in Brazil (see page 6), another specialist company, Single Buoy Moorings Inc. (SBM), is taking a generic approach to the construction of FPSOs, as outlined by Dick van der Zee, Chief Operating Officer of Monaco-based Single Buoy Moorings Inc., during the Oil & Gas Seminar. Two years have passed since Siemens staged its first Industry Day. In the intervening time the new Industrial Applications division of Siemens Power Generation has moved from strength to strength. Not only have company earnings climbed from 200 million euro to 2 billion euro per year, but the product portfolio has significantly widened with the acquisition of the Alstom industrial turbine operations. Hosting some 750 people, including clients, suppliers and market experts, Industry Day 2004 gave ample evidence of Siemens Moving Ahead. A CHANGING BUSINESS ENVIRONMENT While the company has been building, it has done so against a background of rising energy costs. This is generally attributed to rising energy demand, particularly in China and India, and a lack of investment in refining capacity in the rest of the world. Is this an inevitable rising price trend, or will it suddenly collapse? This was the question posed by David Hobbs of Cambridge Energy Research Associates. Currently, world oil reserves are put at 1,696 billion barrels, with natural gas at 312 billion cubic meters. Hobbs basic question was how the oil price would move and how it would influence energy policy in years to come. Already changes are appearing in the global market. Gas is the preferred fuel for power generation, on grounds of greater efficiency and lower emissions, and the challenge is to bring the gas to market. New markets are emerging for Liquefied Natural Gas, if it can be delivered at a competitive price. SCALING UP FOR TOMORROW S NEEDS Klaus Voges, President of Siemens Power Generation activities, is in no doubt the company has the solutions to achieve this. Deregulation and global competition are squeezing costs, he said in his opening address to the morning plenary Based on either new-build or existing-refurbished VLCC hulls, generic vessels are constructed using modular, pre-engineered and ABS-certified systems. This methodology, explained van de Zee, is designed to produce FPSOs of between 260,000 and 310,000 tonnes with oil processing capacity up to 120,000 barrels per day and between 1.8 and 3.3 million cubic meters per day of gas. Standard mooring systems can provide for either 15 or 45 risers and are designed for 350,000 tonne tandem offloads. The highly standardized vessels are claimed to meet operators specific requirements, but on a fast-track, cost-saving basis. Van de Zee emphasized that all design and engineering of hull, topsides and mooring systems is handled in-house by a single team, operating through long-term relationships with key suppliers such as Siemens. Validating its standardized modular concept, SBM has to-date supplied a total of 6 FPSOs which are currently operating in deepwater fields in Brazil, the Gulf of Mexico and Nigeria, giving a combined capacity of 500,000 barrels per day. Not only fit-for-purpose and meeting their customers operational requirements, these latest-generation generic vessels were completed by SBM in average time of just 16 months from receipt of order to sail-away, a remarkable achievement saving time, materials and money.

10 V E N T U R E _ J A N U A R Y _ D A T E L I N E _ 1 9 CHP The Buzzword of Industrial Power Generation The big change in Siemens Power Generation interests has been the acquisition of the Alstom industrial turbine business. Not only has it extended the gas turbine range to include models with a strong history of application to mechanical drive in the oil and gas industries; but has also extended the steam turbine range with models designed mainly for power generation as applied in industrial CHP schemes, strengthening both product lines. The Power Generation Seminar focused on two examples of these technologies at work, preceded by a presentation of current European thinking on Cogeneration and Environmental Policy by Peter Loeffler, Head of Public Affairs, COGEN Europe. The European Union CHP directive is aimed to promote a wider application of combined heat and power technology throughout the 25 countries as a way of reducing emissions and helping to meet Kyoto targets. In January the European emission trading regime starts, and in February 2006 the CHP Directive is due to be issued. Electricity demand in Europe is expected to grow at 3% per year with a potential for up to 150 gigwatt (GW) of CHP capacity across the European Union, but some countries will be more active than others. Rene Bodewitz, Senior Project Manager of Essent Energie described the development of the CHP scheme at Zwijndrecht in Belgium and the company s interaction with Siemens to achieve satisfaction in the project (described in more detail on page 14). A totally different CHP scheme, involving the largest steam turbine built so far at Siemens Görlitz works, was for a rebuild of the energy recovery system at the UPM Kymmene pulp and paper mill at Pietersaari, Finland. The mill has a single paper machine and produces 800,000 t/year of pulp and 180 t/year of Kraft paper. Director Bjarne Jåfs described the new energy recovery system at the mill which is built around a new boiler, burning bark and black liquor, and the 125 MW Görlitz steam turbine. The new plant has been running for about a year. These are examples of the larger industrial CHP schemes, but acquisition of the smaller gas turbines of the former Alstom range gives Siemens the ability to engineer the smaller process schemes of 10 MW or less which have the potential to increase energy efficiency across a wide spread of industry. Tailor Made for Optimum Integration Two projects involving substantial scaling-up of petrochemical production lines were discussed in the Process Industries Seminar. In both cases, Siemens has supplied compressor trains that are highly integrated with the production process. This has placed great demands on the trains, which are required to be both robust and operationally flexible. Dr. Harald Carrick of INVISTA, the world s largest integrated intermediates, resins and fiber company, presented his company s latest plant for manufacturing PTA, the raw material for polyester. The process air compressor, which includes a high-temperature expander, plays a critical role in the manufacturing process, supplying air to the oxidation reactor. Carlos Lange and Gerhard Königstein of Lurgi discussed their company s new MegaMethanol process, which is taking the scale of methanol production to radically new levels. It is anticipated that the much lower production costs of this technology will open up new markets for methanol. Siemens supplied a combined synthesis gas and recycle compressor train for the world s first plant of this type, recently commissioned in Trinidad. Both these projects involved close co-operation between Siemens and the customer to develop solutions that met the key requirements for high reliability and efficiency, as well as low capital costs, within tight project timetables. BARING THE CHEST Summarizing the events of the day, Dr. Frank Stieler admitted his feeling of vulnerability at the hands of the redoubtable Tim Sebastian, but reaffirmed his conviction that Siemens is taking the right step to get nearer to the customers and get a better understanding of their needs. The afternoon seminar presentations from the customers were a clear confirmation that they too appreciate the way in which Siemens is moving ahead. For further details, please visit Dateline 1 3 February 2005 POWER-GEN INDIA & CENTRAL ASIA 2005, PRAGATI MAIDAN, NEW DELHI, INDIA, March 2005 OGJ RUSSIA PETROLEUM TECHNOLOGY FORUM, Moscow, Russia, March 2005 RUSSIA POWER, Moscow, Russia, March 2005 GASTECH, Bilbao, Spain, March 2005 OFFSHORE WEST AFRICA, Abuja, Nigeria, April 2005 IRAN OIL & GAS SHOW, Teheran, Iran, April 2005 VGB CONFERENCE: POWER PLANTS IN COMPETITION, Potsdam, Germany,

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