Tremendous Investment, Astute Project Management Needed for US Shale

Morgan Stanley Research forecasts North America EPC spending to grow from $24 billion in 2012 to almost $30 billion by 2020. Upstream spending, which rose 35 percent worldwide from $447 billion in 2010 to $604 billion in 2012, has played a key role in the backlog of orders for EPC companies.

“Although the growth in orders is generally good for EPC company balance sheets, backlogged EPC companies, like the operators who employ them, face their own hiring challenges,” Deloitte noted.

These companies may find their technical capabilities stretched thin as they try to make the most of their best workers.

The number of EPC firms available globally that can carry out an oil and gas megaproject has been affected by two consolidations within the EPC sector – including Chicago Bridge & Iron’s acquisition of Shaw Group, which closed in February 2013 – caused concern among operators and independents about fewer EPC companies being available for oil and gas megaproject work, Richard told Rigzone.

A joint venture of two to three EPC companies typically carry out an oil and gas megaproject, sometimes organized around the company’s skill sets or multiple legs in different baskets. Because of the size of oil and gas projects, operators prefer to be able to spread projects across a number of different EPC company portfolios, Richard noted. The entrance of some Asian EPC players into the U.S. marketplace, particularly Korean companies, has caused some concern among some companies about having fewer people they use on a frequent basis.

Field workers on megaprojects, including subsea work, tend to be fairly specialized positions; Richard noted that Deloitte believes oil and gas companies will see limitations on this capacity, particularly in their ability to project manage. Facilities such as liquefied natural gas terminals and offshore platforms tend to involve construction type work. 

While oil and gas companies tend to want workers with previous experience – which presents limitations as well – “craft workers tend to be much more transmutable at the facilities level versus the field level,” Richard noted. “People laying subsea lines or doing completions in shale plays tend to be specialists, but pipe work is pipe work and is fairly transmutable across the industry.”