Senior Business Development Manager
15:00 - 16:00
Thursday, 19 September 2019
T3.9 RESERVE: Custom engineering or speed to market: Pick one
The EPC industry is under growing pressure from oil and gas (O&G) clients to deliver major projects with better quality, on faster completion timelines, and at lower costs. Many factors complicate and influence the cost and execution of mega projects. Meeting the terms of clients will require EPC companies to apply a different approach in managing capital projects.
The paper discusses new strategies in project management that move capital projects faster from concept to market. The key to this advanced strategy is skipping the FEED process completely and advancing major projects from Pre-Feed to EPC stage. Such projects should be handled by an EPC company that provides standard equipment and a modular approach. Multiple case studies demonstrate that this new strategy of using standard equipment designs can deliver more value to client companies.
More importantly, this approach can be applied to large projects. The paper will discuss how using the Pre-feed to EPC method was successful in building several large cryogenic plants in less than 12 months on a lump-sum EPC contract. Another case history illustrates how this method was used to install large compressor stations and have flowing gas in as little as 6-9 months.
Background. For larger operators, the typical project execution strategy has always been to conduct a pre-FEED study, then move into FEED before signing the EPC or EPCM contract. From a strictly cash-flow viewpoint, larger companies can afford to go through the extra efforts and spend years analyzing every detail in the pre-FEED and FEED stages.
New strategy. As market conditions constantly change, smaller companies need a flexible strategy to go from concept to market. Smaller- and medium-sized companies can’t afford the extra time to pre-evaluate projects. Accordingly, these operators have adapted their execution strategies to meet schedule requirements by eliminating the FEED step and moving directly from pre-FEED to EPC contract.
By moving directly from pre-FEED to EPC, these operating companies elect not using custom engineering and embrace standard equipment design. This method provides a faster schedule and lower costs without sacrificing engineering design quality.
This strategy is successful. For example, if the client operator shares the inlet and outlet requirements with the EPC contractor at an early stage, then the EPC contractor can propose the best solution around their product offerings. By using known and proven components, the EPC contractors can develop schedules that have many parallel paths, thus allowing a true speed to market solution.