keeping flng in motion...lng projects with different crane technology requirements. 69 standard...
TRANSCRIPT
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Keeping FLNG in Motion
November 2016
How far will we go in our pursuit of outstanding quality? There are not enough words in the dictionary to express this. Each project is different and unique. STAHL CraneSystems’ engineers rise to everychallenge, even one that appears to be insoluble. All around the world, we work hand in hand with a network of 9 subsidiaries and over140 partners. That’s the Art of Engineering. That ’s STAHL CraneSystems.
LNG Industry is audited by the Audit Bureau of Circulations (ABC). An audit certificate is available on request from our sales department.
CONTENTSISSN 1747-1826
ON THIS MONTH’S COVER
Copyright © Palladian Publications Ltd 2016. 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,
recording or otherwise, without the prior permission of the copyright owner. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither do the publishers
endorse any of the claims made in the articles or the advertisements. Printed in the UK.
NOVEMBER 2016
19 Mid scale LNG – a new realityBlake Roberts, Kamal Shah and Matt Reeder, IHI E&C International Corp., USA, define mid scale LNG liquefaction project development – an important area of interest in the changing global LNG industry.
23 Mid scale is scaling out!Dr Marc Schier and Maxim Schwarz, Linde Engineering Division, Linde AG, Germany, present a new mid scale LNG plant concept.
28 LNG: powering Southeast AsiaJulian Thomas, AG&P, Indonesia, explains how LNG can fulfil the energy demands of Southeast Asian nations.
35 The key to growthNiels den Nijs, Titan LNG, the Netherlands, explains why standardising procedures and improving bunkering infrastructure are central to LNG’s future as a marine fuel.
40 Proven flexibility for FLNGSara O’Dell and Shawn Hoffart, Black & Veatch, USA, explain what makes a liquefaction technology suitable for FLNG applications.
45 Tandem transfer at seaVincent Lagarrigue, Trelleborg Industrial Solutions, France, presents a floating cryogenic hose solution for FLNG transfers in extreme conditions.
50 Big decisionsJon Crutcher and Phil Redding, Shell, USA; David Wilson, Siemens, Canada; and Matthew Rickert, Siemens, USA, explain the importance of the supplier validation process when selecting a gas turbine for a liquefaction facility.
57 Control challengesMedhat Zaghloul, Compressor Controls Corp., the UAE, examines how to resolve single mixed refrigerant (SMR) compressor control challenges.
61 Save your energyDaniel Simms, Simms Machinery International, USA, explains how an expander-generator design can help to recover energy and increase process efficiencies.
65 Giving LNG a liftHermann Zink, STAHL CraneSystems, Germany, outlines two LNG projects with different crane technology requirements.
69 Standard practiceRama Challa, Matrix PDM Engineering, USA, offers an introduction to LNG storage tank systems with reference to API 625.
75 Flaring in stagesEsther Bruce and Nikki Jenlink, Zeeco Inc., USA, look at staged flare designs for LNG applications.
05 Comment
07 LNG news
14 Canadian LNG: optimism in the face of adversityMatthew Popovacki, T.A. Cook Consultants, Canada, provides a general overview of the latest developments in the Canadian LNG market, with a focus on cost-saving workforce management and efficiency.
Black & Veatch, founded in 1915, is a leading global engineering, consulting, procurement and construction company. Black & Veatch maintains its industry leadership by pioneering technologies and providing innovative solutions.
Cover image: Exmar’s CFLNG, the world’s first proven floating LNG (FLNG) facility to achieve production, utilising Black & Veatch’s liquefaction technology.
14
Canadian LNG:optimism in the face of adversity
Matthew Popovacki, T.A. Cook Consultants, Canada, provides a general overview of the latest developments in the Canadian LNG market, with a focus on cost-saving
workforce management and efficiency.
LNG_November_2016_14-18.indd 14 02/11/2016 12:43
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While Canada is home to extensive natural gas reserves, extraction, transport and employment in the area is more expensive than in other regions, mostly due to the fact that the exploration and production locations are remote. In the past, Canadian companies have offered high wages to attract and retain
skilled workers, but if oil prices remain low – as they are expected to – companies will continue to have trouble turning a profit and will need to change their approach. Energy prices and the effects of natural disasters, such as the wildfires in Alberta, may be beyond the control of a typical LNG production site, but companies do have the ability
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Keeping FLNG in Motion
November 2016
LNG_November_2016_OFC.indd 1 03/11/2016 09:41
Energy powers our world, it enriches our lives.
Spanish artist Malena Valcarcel uses energy as an inspiration for her art.
It fuels her imagination.
RasGas provides clean, reliable energy for Qatar and the world.
Energy for Life.
“Spain is an endless supply of power and energy that fuels my creativity”Malena Valcarcel - Artist
Spain
Energy powers our world, it enriches our lives.
Spanish artist Malena Valcarcel uses energy as an inspiration for her art.
It fuels her imagination.
RasGas provides clean, reliable energy for Qatar and the world.
Energy for Life.
“Spain is an endless supply of power and energy that fuels my creativity”Malena Valcarcel - Artist
Spain
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LNG Industry (ISSN No: 1747-1826, USPS No: 006-760) is published monthly by Palladian Publications Ltd, GBR and distributed in the USA by Asendia USA, 17B S Middlesex Ave, Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and additional mailing offices. POSTMASTER: send address changes to LNG Industry, 701C Ashland Ave, Folcroft PA 19032.Uncaptioned Images courtesy of www.bigstockphoto.com and www.shutterstock.com
T he Canadian government recently made the landmark decision to approve the Pacific NorthWest LNG (PNW LNG) project. The proposed facility,
located on Lelu Island within the District of Port Edward in British Columbia (B.C.), plans to liquefy and export natural gas produced by Progress Energy Canada Ltd in northeast B.C.
Approval of the Petronas-led project was the first major energy policy decision from Prime Minster Justin Trudeau’s governing Liberal Party. And it has proven a controversial one.
While the decision was immediately welcomed by the likes of the Canadian Association of Petroleum Producers (CAPP), it has attracted criticism – and lawsuits – from environmental groups and some First Nations. The Gitanyow Hereditary Chiefs and Gitwilgyoots Tribe have launched federal court actions, arguing that the government failed to meaningfully engage with them prior to approving the project. Meanwhile, the SkeenaWild Conservation Trust alleges that there are flaws in the environmental assessment process and has raised concerns that the project would negatively impact a critical salmon habitat in the area.
These court challenges are the latest obstacle for the PNW LNG project, which was delayed approximately three years while awaiting its environmental permit (during which time LNG prices have dropped significantly). The Canadian government’s approval of the project is littered with red tape – it is subject to 190 conditions designed to minimise the terminal’s environmental impact. Petronas has said that it will consider these conditions before deciding to make a final investment decision (FID) on PNW LNG. The Malaysian oil and gas group also intends to conduct a total review of the project, as it weighs up its potential within current market conditions.
PNW LNG’s struggles are symptomatic of the problems facing proposed export projects in Canada. Earlier this year, AltaGas shelved plans to develop its Douglas Channel LNG project near Kitimat, B.C., while Shell has also put its LNG Canada project on hold. Although government approval is certainly a significant step forward for the PNW LNG project, a number of hurdles still need to be overcome.
This month’s regional report (starting on p. 14) addresses another significant challenge for LNG projects in B.C. – a lack of skilled workers. T.A. Cook Consultants contends that the labour shortage is forcing companies to compete for a limited pool of workers, which ultimately pushes up costs. The author believes that companies must look to the future of the workforce, who will need to receive adequate training from experienced staff before they set sail into retirement.
Despite all of these challenges, a new report from The Conference Board of Canada highlights that demand for LNG will expand in the long-term, opening up an opportunity for LNG exports from Canada.1 Carlos A. Murillo, Economist, The Conference Board of Canada, states: “While low prices will challenge the economics of new Canadian LNG projects, the news is not all bad for Canada’s gas extraction industry. New investment will still be needed to meet the world’s long-term demand for natural gas.”
However, Mr Murillo argues that project proponents must strive to remain cost competitive and carefully consider time of entry if they are to take advantage of this opportunity. We wait to see whether Petronas decides that the time is right to push ahead with the PNW LNG project.
1. MURILLO, C. A., ‘Canada’s Gas Extraction Industry: Industrial Outlook Summary 2016’, The Conference Board of Canada, (6 October 2016).
SETTING THE GLOBAL STAGE
Contact Alex Harsema [email protected]
+1 832 599 9180
LOGISTICS SERVICES Land Services Liner Services Logistics Port Agency Specialist Services
TECHNICAL SERVICES Adjusting Engineering Incident Response Marine Consultancy Marine Warranty Project Cargo
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Petrochem Offshore Sale and Purchase Specialised Tankers
SETTING THE GLOBAL STAGE
Contact Alex Harsema [email protected]
+1 832 599 9180
LOGISTICS SERVICES Land Services Liner Services Logistics Port Agency Specialist Services
TECHNICAL SERVICES Adjusting Engineering Incident Response Marine Consultancy Marine Warranty Project Cargo
www.braemar.com
SHIPBROKING SERVICES Dry Cargo LNG, LPG &
Petrochem Offshore Sale and Purchase Specialised Tankers
SETTING THE GLOBAL STAGE
Contact Alex Harsema [email protected]
+1 832 599 9180
LOGISTICS SERVICES Land Services Liner Services Logistics Port Agency Specialist Services
TECHNICAL SERVICES Adjusting Engineering Incident Response Marine Consultancy Marine Warranty Project Cargo
www.braemar.com
SHIPBROKING SERVICES Dry Cargo LNG, LPG &
Petrochem Offshore Sale and Purchase Specialised Tankers
LNGNEWS
NOVEMBER 2016 LNGINDUSTRY 7
Finland
LNG-fuelled Polaris icebreaker ready to enter service
Arctech Helsinki Shipyard Inc. has announced that the Polaris icebreaker is now ready to enter service. The
vessel is the world’s first icebreaker capable of running on both LNG and ultra-low sulfur diesel.
Arctech confirmed the delivery of Polaris to the Finnish Transport Agency in late September 2016. The Agency then handed the vessel over to Arctia Icebreaking Oy, bringing Arctia’s icebreaker fleet up to eight vessels.
Polaris is 110 m long, has a breadth of 24.4 m, and has a total output of approximately 22 MW. It complies with the
International Maritime Organization’s (IMO) Tier III emission standards, and features three Azipod propulsion units rotating 360°. It has an icebreaking capacity of 1.8 m at a speed of 3.5 kt, and was built in Helsinki by Finnish shipbuilders.
Tero Vauraste, President and CEO of Arctia Ltd, said: “Polaris represents a new generation of icebreakers. Arctia supports the proposed ban on the use of heavy fuel oil in the Arctic. The use of LNG and the vessel’s built-in oil recovery system are the future of cost-effective multipurpose icebreakers.”
ChinaCaribbean FLNG completes performance tests
The world’s first floating natural gas liquefaction unit has successfully completed performance testing in Nantong,
China.Exmar’s Caribbean FLNG (CFLNG ) project uses
Black & Veatch’s patented PRICO® technology for the single train liquefaction unit, producing 72 million ft3/d of LNG on board the non-propelled barge. The LNG is temporarily stored in on board tanks and can be subsequently offloaded to LNG carriers. Black & Veatch delivered engineering and procurement for the top side liquefaction unit, along with construction support, on site commissioning and start-up services.
With the average liquefaction process load exceeding 100% during the 72-hour performance test, the performance of the FLNG unit ensured all design requirements and production capacities were achieved for the unit’s operational effectiveness.
Both the gas trial and performance test were completed in Nantong before sail-out. All systems on the FLNG have been fully commissioned and tested without leaving the shipyard by using LNG to supply gas without connection to a pipeline. Conducting gas trials and performance testing in the shipyard shortened the time required to achieve project completion.
Nicolas Saverys, Exmar Chief Executive Officer, said: “This performance test completion is a major milestone in our company’s floating LNG liquefaction programme to help meet the growing demand for energy. It demonstrates our leadership in FLNG solutions, allowing owners of stranded gas reserves to monetise their reserves on a very fast track basis under a build, own, operate basis with Exmar.”
The PhilippinesAG&P launches small scale LNG carrier
A tlantic, Gulf and Pacific Co. (AG&P) has announced that it has launched an ultra-shallow draft 4000 – 8000 m3
LNG carrier.The vessel will serve as a ‘work horse’ for nearshore
LNG milk-run deliveries to locations with limited access, including shallow rivers and restricted harbours with low water depths.
The vessel features a hull design that reduces the waterline entrance angle and vessel resistance in waves. The carrier can also be ballasted in open water, improving both stability and speed. It does not require handling tugs, and is able to receive LNG cargoes from a floating storage unit (FSU).
Derek Thomas, Head of AG&P’s Advanced Research Unit, said: “LNG can be break-bulked [...] and transported in small volumes over short distances using coastal tankers, specialised trucks and trains to a variety of customers. The availability of a smaller scale delivery network through break-building has enabled both distributed power generation and a variety of industrial applications in various manufacturing and processing facilities. Our new scalable LNG carrier is a plug-and-play customisable supply solution that requires lower capital cost making LNG more accessible and economically viable for small or developing LNG import markets.”
The company will finance and construct the vessel at its manufacturing facility in the Philippines. It will be built in 16 months, and will be made available for sale or lease.
LNGNEWS
NEWS HIGHLIGHTSNews Highlights
Visit our website for more news: www.lngindustry.com
X GTT signs license agreement with Matrix PDM Engineering
X Wheatstone LNG project costs escalate
X Qatar Petroleum establishes LNG marketing entity
QatarNakilat and Shell agree on LNG carrier management transition
Nakilat has announced that it has taken over management of the Q-Max LNG carrier Mozah from Shell International
Trading and Shipping Co. Ltd (Shell). This is the first LNG carrier to be transitioned as part of a phased management transition.
Nakilat Shipping Qatar Ltd (NSQL), a wholly owned subsidiary of Nakilat, recently signed an agreement with Shell to begin the planned phased transition of the management of Nakilat’s LNG fleet from Shell to NSQL.
This will be the world’s largest transition of an LNG fleet operation.
Shell has provided a range of shipping services to Nakilat’s LNG fleet since it was established in 2006, including the ship management of 14 Q-Max and 11 Q-Flex LNG carriers, as well as the sharing of Shell’s shipping and maritime expertise. Starting this year, the vessels will be transitioned in three phases and will be managed by NSQL, which currently manages four large LPG carriers and four Q-Flex LNG carriers.
To date, the 25 vessels have delivered over 320 million m3 of Qatar’s LNG to over 20 countries.
Mozah is the world’s largest LNG carrier in operation with a cargo carrying capacity of 266 000 m3.
AustraliaAPLNG satisfies Train 1 project finance tests
Australia Pacific LNG (APLNG) has announced that it has satisfied all of the tests set forth in its project
financing completion agreements relating to the first of two processing trains at its LNG facility on Curtis Island, near Gladstone, Queensland, Australia.
APLNG executed a US$8.5 billion project finance facility in May 2012 comprising loans from US EXIM, China EXIM and a consortium of Australian and international banks. This provided funding for the LNG facility component of the project.
APLNG Chief Executive Officer, Page Maxson, said: “With the achievement of this milestone, US$5.1 billion, or 60%, of the completion guarantees provided by Australia Pacific LNG shareholders ConocoPhillips, Origin and Sinopec is released.”
APLNG said that project finance lenders’ tests relating to Train 2 are on track to be met in 2017, at which time the remainder of the shareholder completion guarantees will be released.
On 10 October 2016, APLNG confirmed that it had started production from the second train at its LNG facility. The train produced 150 000 m3 of LNG, equivalent to the volume required to fill an LNG carrier.
A World of SolutionsVisit www.CBI.com
A COLLABORATIVE APPROACH CB&I understands our customers’ needs for economical projects that compete in today’s competitive, global marketplace. Our collaborative approach provides a safe, environmentally responsible and cost-efficient design and execution strategy that assures certainty of outcome and a financeable project.
From engineering and construction to commissioning, initial operations and ongoing maintenance, CB&I helps customers get their gas to market – delivering consistent results regardless of the project location. Contact CB&I to learn how our complete solutions can benefit your next LNG project.
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LNGNEWS
10 LNGINDUSTRY NOVEMBER 2016
DIARY DATES
28 - 29 November 2016International Gas SummitNice, Francewww.gassummit.org
12 - 15 December 2016CWC 17th World LNG SummitBarcelona, Spainworld.cwclng.com
22 - 24 February 2017Australasian Oil & Gas (AOG)Perth, Australiawww.aogexpo.com.au
04 - 07 April 2017GastechChiba, Tokyo, Japanwww.gastechevent.com
23 - 25 January 2017European Gas Conference 2017Vienna, Austriawww.europeangas-conference.com
14 - 16 February 2017CWC Iran LNG & Gas Partnerships SummitFrankfurt, Germanywww.iranlngandgas.com
WorldwideSEA\LNG welcomes decision to implement marine fuel sulfur cap
SEA\LNG has released a statement applauding the action taken by the International Maritime
Organization (IMO) at the 70th meeting of its Marine Environment Protection Committee (MEPC 70), confirming that the global 0.5% cap on the sulfur content of marine fuel will come into effect in 2020. Member states must now implement this decision.
SEA\LNG was founded by Carnival Corp. & plc, DNV GL, Engie, GE, Gaztransport & Technigaz (GTT), Lloyd’s Register, Mitsubishi Corp., NYK Line, Port of Rotterdam, Qatargas, Shell, TOTE Inc., and Wärtsilä, to address and overcome the challenges of widespread LNG adoption. The coalition has since welcomed Eagle LNG Partners, Keppel Gas Technology and ABS.
The Chairman of SEA\LNG, Peter Keller, said: “In light of MEPC 70’s approval of the global sulfur cap in 2020, there is now new impetus to resolve the structural and commercial obstacles hindering the widespread adoption of LNG as marine fuel.
“We anticipate increased and significant investments across the shipping value chain as a result of this decision and the certainty it provides. LNG is an economic, clean and safe marine fuel with increasing global availability, offering ship owners a real opportunity to improve the environmental performance of the industry.”
NorwayBomin Linde LNG signs LOI with Furetank Rederi
Bomin Linde LNG has announced that it has signed a letter of intent (LOI) with Furetank Rederi to establish
a long-term cooperation regarding the supply of LNG in the Baltic Sea region.
Furetank Rederi began retrofitting the Fure West product tanker in 2015, pioneering the use of LNG as marine fuel in Europe. Skangas recently announced that the tanker has been bunkered with LNG for the first time since its conversion to a triple fuel system. The LNG bunkering operation took place at the Skangas LNG terminal in the Port of Risavika near Stavanger, Norway.
In cooperation with the partners in the Gothia Tanker Alliance, four LNG-fuelled newbuildings have been ordered and are currently under construction. These newbuildings are planned for commissioning in late 2018 and early 2019.
According to the LOI, Bomin Linde LNG will supply the Furetank Rederi vessels ship-to-ship with a new LNG bunker supply vessel both in ports and potentially offshore using DP2 equipment. The commissioning of this vessel is scheduled for late 2018.
Sonja Nesshoever, Director LNG Portfolio of Bomin Linde LNG, said: “We are looking forward to develop[ing] a safe and flexible LNG supply chain in cooperation with a frontrunner like Furetank Rederi. As an important step forward to reduce costs for our clients and to optimise shipping routes we will also jointly explore the possibility of introducing LNG in Lightering Areas of the Baltic Sea.”
Chart is pioneering the adoption of LNG as a clean-burning, safe and economical fuel alternative for energy, transportation and industry.
www.ChartLNG.com
SHIPFUELING
RAILFUELING APPLICATIONS EXPLORATION
S O LU T I O N S
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LNGNEWS
12 LNGINDUSTRY NOVEMBER 2016
SingaporeEngie and Sembcorp Marine sign MoU to develop Gravifloat
Sembcorp Marine Ltd’s subsidiary, Sembcorp Marine Rigs & Floaters Pte Ltd, and Engie have signed a memorandum
of understanding (MoU) to cooperate in the development and deployment of Sembcorp Marine’s Gravifloat technology for LNG-to-power nearshore terminals.
Gravifloat focuses on small LNG power businesses with 10 – 300 MW capacities. Its solutions are steel-based, modularised and floatable structures fixed to the seabed at site. These structures are re-floatable and can be redeployed to another location.
The solutions can be flexibly configured with various proven land-based plants and equipment.
Gravifloat modules are constructed and tested at Sembcorp Marine’s shipyards. Since 2015, Sembcorp Marine and Engie have been discussing a Gravifloat three-in-one integrated solution for nearshore receiving, storage and regasification of LNG, as well as power generation. The parties intend to develop and promote this solution to meet the needs of emerging markets. They will be working together on targeted projects.
Didier Holleaux, Engie Executive Vice President, said: “This agreement with Sembcorp Marine will enrich Engie’s offerings to its customers with an additional innovative LNG-to-power solution particularly well suited for harsh weather conditions and with a short time to market.”
ChinaMOL delivers CESI Gladstone LNG carrier for SINOPEC LNG project
M itsui O.S.K. Lines Ltd (MOL) has announced that the CESI Gladstone LNG carrier has been delivered to
Hudong-Zhonghua Shipbuilding (Group) Co. Ltd.The LNG carrier was ordered by the joint venture of China
COSCO Shipping Corp. Ltd (China COSCO Shipping) and China Petroleum & Chemical Corp. (SINOPEC).
Prior to delivery, a naming ceremony was held for the LNG carrier at Hudong. The vessel will sail under a long-term charter contract to transport LNG that SINOPEC will purchase from the Australia Pacific LNG Project.
The CESI Gladstone is the first of six newbuild LNG carriers that will be built in China from this year through 2018.
WorldwideKBR awarded several contracts
KBR Inc. has announced that it will proceed with front end engineering design (FEED) for the Woodfibre LNG
Project, located in the District of Squamish near Vancouver, British Columbia (B.C.), Canada.
This continues the second phase of the contract announced in March 2016 for KBR to perform multi-phased FEED services for the 2.1 million tpy liquefaction export facility.
KBR has successfully completed the first phase, focused on cost optimisation for the LNG project. The company will now provide FEED services for the Woodfibre LNG export facility from its operating centres in Houston, Texas, US, and Edmonton, Canada, culminating in a lump-sum turnkey (LSTK) price for an engineering, procurement and construction (EPC) contract.
In October 2016, KBR also confirmed that it has been awarded a pre-FEED study for PT Australasia LNG Indonesia’s (AALNG) proposed LNG Hub terminal in Probolinggo, East Java, Indonesia. Under the terms of this contract, KBR will provide a pre-FEED study for the onshore LNG regasification and truck loading distribution facilities of AALNG’s proposed LNG Hub Terminal.
KBR has also recently been awarded a high level feasibility study that includes exploring the possible expansion of the Singapore LNG terminal, located on Jurong Island, which is owned and operated by Singapore LNG Corp. Pte Ltd (SLNG).
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14
Canadian LNG:optimism in the face of adversity
Matthew Popovacki, T.A. Cook Consultants, Canada, provides a general overview of the latest developments in the Canadian LNG market, with a focus on cost-saving
workforce management and efficiency.
15
While Canada is home to extensive natural gas reserves, extraction, transport and employment in the area is more expensive than in other regions, mostly due to the fact that the exploration and production locations are remote. In the past, Canadian companies have offered high wages to attract and retain
skilled workers, but if oil prices remain low – as they are expected to – companies will continue to have trouble turning a profit and will need to change their approach. Energy prices and the effects of natural disasters, such as the wildfires in Alberta, may be beyond the control of a typical LNG production site, but companies do have the ability
16 LNGINDUSTRY NOVEMBER 2016
to influence the skills and efficiency of their personnel. This article highlights the challenges that Canadian LNG producers face in guaranteeing a dependable workforce, and explains how to be resilient within the framework of low commodity prices.
The labour challengeCanada is the fourth largest producer of LNG in the world. During the past decade, foreign and domestic investors have made bullish investments in oil sand equities, but especially since the oil crash, these ventures have not yielded the anticipated returns. This is not only due to the decreased value of oil. Many oil sands capital projects have exceeded their budgets and investors have become more hesitant about funding new upstream endeavours. Earlier this year, financiers postponed their final investment decision (FID) for the development of the eagerly anticipated LNG facility in Kitimat, British Columbia (B.C.), Canada. While the project would export 24 million tpy of LNG upon completion, the estimated CAN$50 billion construction cost proved too expensive for the Shell-led consortium. The proposal originally appeared very attractive, especially considering that the facility would not require a new transportation pipeline to be commissioned, but uncertain returns have prompted further delays.
The industry is not only facing difficulties getting new projects off the ground, but downsizing in current work is also a challenge. According to the Canadian Association of Petroleum Producers (CAPP) and the Canadian Association of Oilwell Drilling Contractors (CAODC), an estimated 110 000 direct and indirect industry jobs have been lost since 2014.1 Combined, these factors have contributed to widespread layoffs in the industry. These measures have helped reduce company expenditures, but they will likely have serious consequences for long-term talent retention. Canadian energy fields have always struggled with attracting skilled labour to their geographically isolated sites and, without the extra cash available to sweeten
employment contracts, filling highly skilled positions will be extremely difficult. Companies will have to compete for a limited pool of qualified professionals, pushing up costs and stretching budgets further.
With fewer seasoned experts to recruit, companies need to become more attractive to potential workers, ideally by offering non-financial benefits. Issuing more vacation time, flexible working hours, family support initiatives, further training and less shift work have all proved to be attractive to new recruits and younger employees. Apprenticeships and scholarships for prospective students hoping to enter the profession can also help build a sense of loyalty to companies over time. In order to avoid long-lasting labour difficulties, managers need to look towards the future of the workforce.
The future of the workforceEven if the price of oil recovers slightly in the next year, overall employment is not expected to return to peak levels. Therefore, incorporating new hires and contractors into organisations will be crucial to maintaining high standards. As the baby boomers begin to retire, workforce demographics will change dramatically, and companies must take steps to ensure that the specialised knowledge these seniors have does not leave with them. Managers will need to provide proper training, define roles and responsibilities and provide more detailed expectations to prepare remaining staff to take over.
One way to ensure that special skills are efficiently transferred is by creating an atmosphere that supports intergenerational, organic networking. For a select few, natural connections can lead to formal mentoring. The trick is for the mentor to be capable and the mentee to be worthy of the one-on-one instruction, and to have a genuine respect for one another as the relationship cannot be forced. Once mentors and company HR have agreed upon the skills and content that the coaching should focus on, new recruits can begin to learn the role and glean
specialised knowledge from their mentors.
Not everyone should participate in a formal mentor/mentee programme or be trained to do all tasks, but cross-training select staff can offer valuable benefits. This could be done through further education courses, though some caution should be exercised as specialised vocational training is not easy and can be unnecessarily costly if not done properly. Managers will have to allot a reasonable amount of time for those approved for such training to complete their programmes and to benefit from their mentor relationship.
Most sites have prepared for this wave of retirement to some extent. Many have written checklists and instructions may already be in place for reference in an effort to ensure tasks are completed uniformly, regardless of who is on site. However, the documented Figure 1. The Kitimat and Bear Head project sites.
processes may not be enough to maintain standards in every situation. While operating procedures and work packages can provide detailed directions, they cannot fully replace experience and the intimate knowledge gained from working with the same equipment day in and day out. Companies need to take the time to re-examine the work lists they have in place.
A site’s objectives should be to create a useable, sustainable process that staff will follow consistently. The particulars should be limited to the critical aspects – managers can clarify the purpose of a job with key elements without bogging workers down with erroneous extras. The various elements should be simple and customised to fit the specific technology, environment and parameters as they develop in a plant. Frequently revisiting and updating the process list is a good habit for a site to have in order to continuously improve workforce efficiency. A reliable process cannot be left to stagnate. Tailoring work methods to the current staff environment is a necessary aspect of keeping up with the Canadian workforce and matching company goals to achieve financial targets.
Moving forwardEven though some Canadian LNG mega-projects are deemed too expensive for the current energy marketplace, the industry is growing. For instance, Australia’s Bear Head LNG Corp., a wholly owned subsidiary of Liquefied Natural Gas Ltd (LNG Ltd), recently secured government approval to import and export natural gas
from the US at its prospective terminal in the Strait of Canso, Nova Scotia, Canada. The company has also obtained a permit to construct the 62.5 km Bear Paw pipeline. Company leaders have expressed optimism that they will be able to get investors on board for the CAN$2.2 billion project.
Particularly noteworthy is the Pacific NorthWest (PNW) LNG project, which is expected to be one of the largest Canadian investment projects ever. The CAN$36 billion Petronas-led project was recently approved to export LNG to Asia Pacific over the next 30 years from a Lelu Island, B.C. terminal. Although construction has not begun, PNW LNG expects to produce 20.5 million tpy of LNG as early as 2020.
Ultimately, LNG projects require large investment sums and commodity pricing is beyond the control of producers. Nonetheless, companies have a much better chance of controlling costs if they can evaluate and optimise training and development processes, maintain an expert staff and retain their highly specialised knowledge. The future is always unpredictable, but if companies are willing to invest time and energy while prices are low, they will improve their appeal to investors and reap the rewards when markets improve.
Reference1. ‘Capital investment in Canada’s oil and gas industry
down 62% in 2 years’, Canadian Association of Petroleum Producers, http://www.capp.ca/media/news-releases/capital-investment-in-canada-oil-and-gas-industry-down-62-per-cent-in-2-years
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