Watson Millican & Company’s technical experts were retained by the owner for the commissioning and operation of a greenfield natural gas processing complex in Central Asia. Shortly after the start-up of the facility, on a related but separate matter, Watson Millican was tasked with performing an analysis of the impact of the termination of an Operations and Maintenance Agreement entered into between the owner and a third-party contractor.
Background
The owner contracted with a domestic contractor for the engineering, procurement and construction (EPC) of a two-train, 150 MMscfd natural gas and condensate processing plant in Central Asia. The Contractor hired a subcontractor to provide the design and fabrication of the major gas processing components within the plant. Complete startup of the plant was to occur in 33 months. The Contractor/Subcontractor were unable to meet the completion dates and did not achieve initial production until 45 months. The plant experienced operating problems for additional months after initial production.
In anticipation of startup, the owner entered into a 3-year Operations and Maintenance Agreement (OMA) with the subcontractor, a worldwide engineering and operations services company with natural gas processing expertise. Due to delays completing construction and startup of the plant, the subcontractor was not receiving payments under the OMA and subsequently terminated the OMA.
Watson Millican & Company Scope
The owner engaged Watson Millican during plant construction to provide technical expertise to assist in advancing the startup of the facility. Watson Millican provided on-site technical assistance leading to initial production. Watson Millican developed startup and performance test procedures, trouble-shot operating problems, and assisted in achieving optimum operating conditions.
Additionally, Watson Millican was requested to conduct an independent assessment of the cost impact to the owner resulting from the termination of the OMA. The owner claimed it was incurring significant costs to operate and maintain the plant above what it anticipated it would have incurred under the OMA.
Gas Plant Startup and Performance Test
Under the terms of the EPC agreement, the contractor was required to verify the performance capability of the plant by means of a performance test. The specifics on how to execute the performance test was absent from the EPC agreement. At the request of the owner, Watson Millican developed a detailed performance test procedure. This involved the identification of key process variables for pressure, temperature, and flow that would need to be recorded by the plant electronic control system. Watson Millican also identified process streams that would need to be sampled, the frequency of the sampling, the chemical components that would need to be evaluated, and that the required sample extraction systems were either in-place or needed to be installed.
Watson Millican provided technical assistance for the startup and operation of the amine system. Watson Millican evaluated the commissioning procedure for the amine system. During the start-up, the amine system was capacity limited, which restricted the amount of residue gas that could be sent to the pipeline. Watson Millican provided technical assistance to address the limitations.
During the start-up of the facility, Watson Millican advised the operators on how to operate the plant as per its design and achieve the desired product flow rates and specifications. Watson Millican provided technical assistance for various operating problems, including the inability to operate the cold separator at the required temperature and the underperformance of the distillation system. Watson Millican identified the causes of the problems and advised on how to improve the plant operation.
As various wells were added to the feed to increase the plant feed to design conditions, the inlet condensate separation and stabilization system began to experience problems. It was determined that the inlet feed to the plant contained higher amounts of paraffin wax and salts than anticipated. Watson Millican identified some immediate potential solutions to address the problem.
Impact of Termination of the OMA
As the owner claimed it was and would continue to incur significant costs over and above what it was anticipating under the OMA, Watson Millican was requested to conduct an independent assessment of the cost impact to the owner as a result of the termination of the OMA by the subcontractor and their subsequent leaving from the site.
The methodology used to determine the economic impact to the owner resulting from the termination was to establish a baseline expenditure schedule that the owner anticipated with the OMA in place. The owner’s actual costs incurred and projected costs for these same services without the OMA were then identified. The difference was the economic impact to the owner resulting from the termination.
Over the term of the OMA, Watson Millican calculated that the owner would have spent approximately $51 million dollars (US) had the subcontractor continued under the OMA. Watson Millican estimated that the owner would incur costs of approximately $98 million, resulting in an estimated $47 million in additional costs by the owner.
Project Scope:
Value: US $47 Million
Services: Design; Construction; Commissioning; Chemical and Mechanical Engineering; Natural Gas Processing Plant Operations
Sectors: Natural gas and Condensate processing; NGLs