Enabling new technology projects (part 1)
Herve Baron
Oil & Gas Engineering expert, Author of "The Oil & Gas Engineering Guide" (Editions Technip)
Project abandoned… Continuous CAPEX inflation throughout the early stage… New technologies prevented to go to the industrial scale because of high cost… Sounds familiar?
The lesson learnt? In the field of new technologies, whose profitability is very far from that of Oil & Gas, a new approach is required.
I worked for the last 30 years on Oil & Gas projects. Profitability was no issue. One example: while working for SAIPEM, we built a FPSO for Exxon Mobil for a contract value of about 700M USD. The FPSO, while in production, would have an output of 160,000 barrels per day. The barrel was worth USD 120 in those days. This meant that the revenue was 20M USD by day! The cost of the asset, 700M in this case, was not an issue.
Have you been involved in new technologies (carbon capture, circular, e-fuel, biofuel, hydrogen, etc.)?
The profitability is very different isn’it?
While focusing on CAPEX minimisation was not the focus on Oil & Gas projects, it is of utmost importance for new technologies projects.
Didn’t you experience new technologies projects that stalled because the wishful thinking CAPEX estimates during early stages went to the roof in the next stages?
领英推荐
Focus on CAPEX is the most important aspect to enable these projects. Totally different from Oil & Gas where focus was on delivery, in particular timely delivery, to get the revenue stream start as early as possible.
A complete change of mindset.
Please weigh this for a second: a complete change of mindset, habits, practices, etc. is required from all parties: Owner, Engineer, Licensor.
Easier said than done.
The goal of this series of posts is to share ideas on how to do that and… enable new technologies projects to go ahead. No less.
This is part 1. Part 2 coming soon.
Manager, Engineering and Technology at Bechtel
3 个月One thing I'm doing is to continuously remind my team that we are dealing with a first of a kind and need to be careful about skipping steps or working out of sequence during FEL. Our FEL work process is sound; only if we follow it. Keep reminding everyone that it is not about developing an estimate that supports taking the project forward. It is about developing a proper scope that can deliver on the project premise. Then independently verify that the project economics support moving forward and committing more resources. Looking forward to Part II of this post.
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3 个月Well said, Morgan!
Project Management, Project Engineering and Project Controls
3 个月It was an exciting and relevant read,?Herve! I've just submitted a master's dissertation on the challenges engineering companies face in developing new energy projects! My findings reflect the points you raise, especially?the pressing need to shift the organisational culture within our industry! One of the highlights of my interviews was the need to use design standardisation strategically to leverage the "common" pieces between new energy and traditional oil and gas projects. I'm looking forward to reading the following pieces!
Vice President - Capital Projects | Managing EPCC for Aircarbon facilities
3 个月I am living this scenario right now and have been for years. This will be the focus of my next articles/book. A contractor estimating 40k for a rain barrel!! It’s no wonder it’s difficult to move forward. And FEED has become so watered down that it’s lost value.
I hope to see soon growth of this mindset and embedding the new upgrade unites to pave the way for carbon capturing for example.