Qatar is smaller than the state of Connecticut, but what it lacks in size it easily makes up for in its impact on the world liquefied natural gas (LNG) market.
"The very size of our operation sets Qatargas apart from other operators," said Robert G. Flesher, Chief Operating Officer of both the Qatargas 3 (QG3) LNG expansion project, and a Joint Asset Development Team that is working on creating QG3 together with the Qatargas 4 (QG4) expansion project. "We are building the world's largest LNG trains. With such large and secure and reliably proven quantities of natural gas, choosing LNG over other fuel options is highly attractive for customers, who see benefits to coal and liquid fuels and security of supply."
'The very size of our operation sets Qatargas apart from other operators.'
Flesher has been with Qatargas since May of this year, after being seconded to the company from ConocoPhillips, where he most recently worked out of the Houston headquarters as vice president, drilling and production. A native of McAllen, Texas, and a 32-year ConocoPhillips employee, Flesher has a bachelor's degree in geological engineering from Texas A&M University and a master's degree in engineering science from the University of Missouri-Rolla (now the Missouri University of Science and Technology).
Having been in an expansion mode for much of its 12-year operational history, the Qatargas (QG) processing facilities will ultimately comprise seven LNG trains with a total liquefaction capacity of 42 million tonnes per annum (mtpa). Together, the first and second phases (QG1 and QG2, respectively) will have the capacity to produce 25.2 mtpa of LNG from five trains. QG3 Train 6 and QG4 Train 7 will each add 7.8 mtpa of capacity and are expected to start-up around the end of 2010.
Adding the total QG output to that of Qatar's other major LNG operator, RasGas, the Gulf country is on track to export 77 mtpa of LNG to markets in Europe, Asia, and the United States. Both Qatargas and RasGas are liquefying production from the massive North Field, which holds more than 900 trillion cubic feet of proven natural gas reserves--enough to satisfy total current world demand for nearly a decade.
When Qatar does reach the 77-mtpa export milestone, the country should cement its position as the world's premier exporter of LNG, predicted Flesher. "There will be new markets for Qatar's LNG in Europe, Asia, and across the Atlantic," he said. "By 2025, natural gas is expected to account for 25 per cent of all energy used globally and Qatargas is committed to being the premier supplier in this market. The state of Qatar is politically stable and the economy is weathering current global conditions very well, which reinforces the country's reputation as a reliable and responsible LNG supplier."
Integration and learning are a key part of Qatargas' approach to ensuring that the necessary high volume gas supplies are available.
"Our sister project, QG2, is seen as being the world's first fully integrated LNG value chain project," Flesher said. As a fully integrated project, Qatargas is "running the whole operation, from wells, through pipelines, processing and transportation in our own tanker fleets, through to Qatar's own receiving terminal at Milford Haven, in Wales," he explained. QG2's first processing mega-train, Train 4, came on line earlier this year, with a capacity of 7.8 mtpa and the second train (set to begin operations by the end of this year) will double the capacity to 15.6 mtpa.
From a design standpoint, QG3 and QG4 employ an integrated scope identical to that of Q2. "If you try to split an LNG expansion project into separate boxes, it doesn't run as effectively. QG2 took an integrated approach, and I'm very pleased that we, too, are following that successful model," said Flesher.
'If you try to split an LNG expansion project into separate boxes, it doesn't run as effectively. QG2 took an integrated approach, and I'm very pleased that we, too, are following that successful model.'
QG2 serves as a virtual roadmap for the expansion projects, outlining paths to take as well as pitfalls to avoid. "We both have our own wells, three unmanned offshore platforms, offshore pipelines and two onshore LNG processing trains, plus associated facilities, such as sulphur recovery units," Flesher said of the similarities between QG2 and QG3/QG4. "This means that the things that QG2 have learned as they have gone through the design, procurement, and construction phases have a direct relevance to us, and we have already learned a great deal."
Flesher's team, including construction and operations personnel, review what has and has not worked for QG2's developers on a weekly basis via a "lessons learned" database that dedicated staff members continually update. "It's really about making sure that all parts of the project integrate and work together," Flesher said. "We bring in other personnel to give their views, as required. What we are looking for is items that will give us a real benefit in terms of construction or future operation."
According to Flesher, the database and ongoing staff review provide valuable practical and mechanical lessons. "On construction, this can be as basic as making sure that we keep our work areas free from debris and make sure that we maintain quality on things like welds and flanges," he said. "On operations, we're learning much about how mega-trains run in practice: when you're operating a 7.8 mtpa mega-train, it's not simply a matter of thinking about how you'd work with two smaller trains and factoring it up. You have to consider things like the additional time it might take for the actual process to respond to changes made at the control panel. The analogy of turning round a supertanker is overused, but it's appropriate."
The hindsight that Q2 is providing for QG3 and QG4 is particularly invaluable as the two latter projects advance toward completion, noted Flesher. "For example, we have been able to hand over our well data to the Operations arm of Qatargas ahead of schedule, and in the exact format needed," he said. "With the Onshore side of the project, where we are constructing our two LNG mega-trains, we have learned that integrating everything effectively is the key to success, and we have a great example in QG2, which brought its Train 4 and Train 5 into operation earlier this year."
Flesher stressed that having a single project team responsible for all phases of a project is paramount. "There needs to be a seamless transition from construction, to mechanical completion and acceptance, to start-up and operation," he said. "To help achieve this, we've run the project as one team from the outset. For example, our Operations personnel--the actual staff that will be controlling things when we are producing LNG--have been part of the project team from day one and co-located with out Onshore Construction team at Ras Laffan since 2007. This has helped greatly in building a common understanding."
Another insight that Flesher and his colleagues have gained from QG2 is that it is essential to get the right people to work as operators. "The QG2 team did a great job of bringing Train 4 into operation, and on QG3 and QG4, we're aiming to have a team that will be able to deliver a smooth, uninterrupted start-up and run the train and offshore facilities safely and efficiently," he said. "We have put a lot of time and thought into indentifying and then finding the people who have the right mix of skills to operate the world's biggest LNG trains. In total, we'll have around 230 Operations and Maintenance personnel and our recruitment is well advanced."
Unique Corporate Structure
Flesher said that Qatargas' unique corporate structure also helps the company to maximize its human capital by exposing project personnel to a very broad range of expertise. Each expansion project has its own set of shareholders. "Each of the shareholders brings their own staff expertise and business working experience to the company, and we believe that this level of teamwork further enhances our business," said Flesher.
In terms of ownership of the separate ventures, ConocoPhillips owns a 30% stake in QG 3 while Qatar Petroleum (QP) and Mitsui & Co. Ltd. own 68.5% and 1.5% interests, respectively, in this phase. QP owns 70% of QG4 and Shell owns the remaining 30% stake. In QG1, QP (65%) is partnering with ExxonMobil (10%), Total (10%), Mitsui (7.5%), and Marubeni (7.5%). QG2 is a joint venture of QP (70%) and ExxonMobil (30%).
"This collaborative way of working is proving particularly valuable in the planning and construction of our assets," continued Flesher. "The QG3 and QG4 Joint Asset Development Team that I lead is made up of secondees from our shareholder companies, as well as personnel from qatargas Operating Company and people hired directly to work on the project. This gives us a very wide range of skills and experience to draw on, blending the best of what's out there to build the best possible systems and find the best possible ways to operate them safely and effectively."
Developing QG3 and QG4 in tandem also presents numerous other synergies, particularly in terms of procurement and resourcing, noted Flesher. "There's a great deal of sharing and cross-fertilization of technical and operational best practices among the expansion projects," he said. "Trains 6 and 7 utilize the same Air Products proprietary APX process technology as trains 4 and 5, helping to achieve economies of scale and integration which were not previously possible in the LNG industry and put Qatargas ahead of its competitors."
'There's a great deal of sharing and cross-fertilization of technical and operational best practices among the expansion projects.'
"The Qatargas approach to bringing the major oil and gas companies on board as active shareholders and partners in the business was very important to getting both QG3 and QG4's business structures in place," concluded Flesher. "This is very much the Qatargas business philosophy, so it's not really a lesson learned, so much as a fundamental approach to how the company works, whether on QG1, QG2, QG3 or QG4, or elsewhere in our business. More directly, QG2 is providing us with a wealth of information and practical approaches that we're building in to QG3 and QG 4 as work progresses."
EDITOR'S NOTE: This is the first of two articles about the Qatargas project. The second article, which will run next Tuesday, will feature Mr. Flesher's insights about the future of Qatargas and the LNG industry in general.
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