Bechtel's
William Dudley is the president of two Bechtel Global Business Units:
Petroleum and Chemicals (P&C) and Pipelines. Together these two GBUs
are slated to earn the company $2.5 billion in revenues in 2003.
Essentially, it is
Dudley who is in charge of providing engineering and construction services
for the development of hydrocarbon resources around the world (Bechtel
also serves the electric power generation, telecommunications, mining
and civil infrastructure sectors).
Bechtel's hydrocarbon
development work covers the spectrum from wellhead (drilling excepted)
through end-use applications in chemical and petrochemical plants. Major
offices are in Houston (headquarters), London, Calgary and New Delhi.
About 80 percent of the revenue derives from overseas projects.
"Most of the
work outside the United States involves development of new oil and gas
fields, and in delivery systems," says Dudley from his Houston headquarters.
"The hottest commodity is natural gas.
Over the past few
years, major energy companies have been focusing a large portion of their
technical and financial resources on bringing new natural gas supplies
to market. As a result, we've become heavily involved in natural gas projects
such as liquefied natural gas (LNG) plants, gas processing plants and
pipelines. For example, Bechtel is involved in major LNG projects in Trinidad,
Egypt, northern Australia and western Africa."
At such sites, Bechtel
is usually working with a consortium specially incorporated to handle
the large development project. In most cases the consortium will include
one or more international petroleum companies and the petroleum company
of the host country. In Egypt, for example, Bechtel is building a grassroots
LNG plant for a consortium that includes British Gas, Edison Gas, the
Egyptian Gas Authority and Gaz de France.
"We are not doing
as much work in the U. S. as we've done in the past," Dudley admits.
"There haven't been many grassroots projects to pursue. Most of our
recent U. S. work has involved refinery modifications designed to help
our customers comply with environmental requirements. Examples are the
series of low sulfur gasoline and low sulfur diesel fuel projects we're
currently doing for Shell at five refineries.
"Political instability,
market uncertainties and growing environmental concerns have also combined
to reduce the level of opportunity available to Bechtel in the pipeline
business over the past few years," Dudley says. "Nevertheless,
we're watching the market closely and we're ready to pursue attractive
pipeline projects anywhere in the world."
Presently Bechtel's
biggest pipeline project is in Algeria where it is building a 470-mile
natural gas pipeline from the In Salah gas field to Hassi R'Mel, a major
gas gathering and distribution center. The pipeline runs through an astonishing
array of challenges, including hard rock, sand dunes 120 feet high, and
summer temperatures reaching 120 degrees. The developer is British Petroleum
and Sonatrach, Algeria's national oil and gas company. Bechtel expects
to contract for other work in Algeria as the country continues to exploit
gas resources located further out in its vast southern desert.
LNG is the fastest
growing segment of the energy industry. Bechtel has been involved with
LNG since its early days and has built roughly 40 percent of the world's
current LNG capacity. In 1969, Bechtel built the Kenai, Alaska, LNG plant
for Phillips Petroleum using their Cascade process for liquefying natural
gas.
The Kenai plant was the first to ship LNG to Japan and now has been a
reliable source of LNG to Japan for more than 30 years. A decade ago,
Bechtel renewed its relationship with Phillips (ConocoPhillips) and began
working closely to improve their process. This improved method, the ConocoPhillips
Optimized Cascade Process, was first put to use in the Bechtel-built Atlantic
LNG project in Trinidad in 1999.
Bechtel has been working
with ConocoPhillips to further develop the process ever since.
"LNG is more
competitive than it used to be," Dudley points out. "We believe
we had something to do with that. Before Bechtel and ConocoPhillips entered
the market with the Optimized Cascade Process, LNG was perceived to be
very expensive. In the early 1990s, the market was dominated by one technology,
and liquefaction plant costs ranged from $300 to $500 per ton of installed
capacity. When we came in, we brought the price of liquefaction plants
down to under $200 per ton, making LNG more competitive as an energy source.
The Atlantic LNG plant in Trinidad was a major factor in the revitalization
of the previously dormant LNG market in the Atlantic basin. This is a
major reason why you see a lot more LNG activity today. LNG plant sizes
are increasing also. Not long ago plant capacity was in the range of two
million tons per year but are now in the three- and four-million-ton range.
Our latest LNG train, which is in the early stages of construction, has
a capacity of about five million tons a year and we are now designing
plants with capacities of three and eight million tons a year.
"We have a good
deal to offer with the Optimized Cascade process," Dudley continues
"We believe we can build the plants more quickly and come in at a
lower price. We also believe a plant with this process offers greater
reliability than the competition. For all these reasons we are very competitive
in the marketplace. Our project in Egypt we believe is going to be the
fastest project every built - from initial planning to completion. Partly
this owes to the fact that British Gas knew our capabilities and was willing
to sole-source us for the project. This saved a good deal of time."
For more than a century
Bechtel has prided itself in completing outstanding work in difficult
terrain and under harsh conditions. Nevertheless it is always looking
to build faster, and make plants that are less expensive than projects
done before them by competitors. Bechtel tends to stress what it calls
front-end optimization, that is, putting lots of emphasis on planning
and design early on. As Dudley quickly points out, "Activities undertaken
in the early stages of a project have the greatest impact on cost and
schedule."
The Atlantic LNG project
in Trinidad certainly showed how good planning, cost cutting and front-end
optimization could help a business break away from the norm. When the
project began in the early 1990s, the hope was that Trinidad's natural
gas could be developed for shipment to the United States and Europe. At
the time, few people in the LNG world believed that such a project could
be economical Ñ it would require a major shift from the paradigm
of high-cost LNG. When Bechtel won the engineering, procurement and construction
(EPC) work and began construction in 1996, the project represented the
largest single investment ever made in the Caribbean.
"We really had
to show that we could keep costs down," says Dudley. "For the
Trinidad project, we built a three-million-ton-per-year plant for about
$600 million (EPC cost). The total cost to the owners including financing
was about $1 billion. A major factor in our success was the "two-in-one"
reliability feature built into the ConocoPhillips Optimized Cascade Process.
The plant was designed with two 50-percent gas turbine compressor trains
for each refrigerant unit. In the event that one gas turbine goes down,
the plant could be re-balanced to operate at about 70-percent capacity
until the turbine is brought back on stream. This feature, which was pioneered
in the Kenai, Alaska, plant, enabled the owners to become comfortable
with a single-train plant, thus achieving significant cost reductions.
It also has allows plants of this design to operate at availabilities
of over 95 percent, the highest in the world. The Kenai plant has not
missed a single LNG shipment to Japan in 34 years."
Bechtel also builds
LNG receiving terminals. It was responsible for the design and construction
of the first terminals to be built on the East Coast of the U.S., at Elba
Island, S.C. As Dudley points out, "Since LNG ships cannot pass through
the Panama Canal, there are two distinct markets for LNG - the Atlantic
and the Pacific. The Atlantic market has been more developed than the
Pacific market. We would like to see permits obtained for projects on
the Pacific Coast, where there are now no receiving terminals. |