A postcard from Ras Laffan
With Qatargas nearing completion of its first 7.8m t/y LNG mega-train and another five under construction, Alex Forbes visited Ras Laffan Industrial City to see how construction is progressing
When ExxonMobil and Qatar Petroleum decided in July 2002 to build a two-train liquefied natural gas (LNG) project to supply 15.6m tonnes a year (t/y) to the UK, a new era dawned for what was previously seen as a specialist niche in the energy industry.
Each of the 7.8m t/y production trains would be 50% larger than anything that had previously been conceived. They have become known as mega-trains. More than any other aspect of the industry, they symbolise LNG's move into the mainstream of natural gas.
Over the ensuing three-and-a-half years, Qatar and its various international oil company partners – ExxonMobil, ConocoPhillips, Shell and Total – reached final investment decision on six mega-trains, a total additional production capacity of 46.8m t/y, at a cost of tens of billions of dollars.
Top of the rich list
When all these projects are completed, around the turn of the decade, Qatargas will be the world's largest LNG-producing company, with capacity of 41.2m t/y. Its sister company, RasGas, will be a close second, with 36.3m t/y of capacity. Both companies will each be a bigger producer than the next biggest LNG-producing country: Indonesia, which exported 21.3m tonnes in 2006. As a result, the Qataris will, on a per capita basis, become the richest people on the planet.
Today I am going to see the concrete and steel that will make this possible – as the first of the six mega-trains approaches completion. The day begins early. I awake as the sun rises over the Mideast Gulf, the morning call to prayers echoing from loudspeakers on minarets all around central Doha. My driver arrives at 7am and we are soon on our way on the hour's drive north to Ras Laffan Industrial City.
Along the corniche there is a striking contrast between old and new: traditional dhows out in the bay to our right, futuristic skyscrapers to our left. There are cranes and construction workers everywhere. As I pass the Emir's Diwan, the burgundy and white Qatari flag flying from a pole rising from the centre of the palace reveals that the strong winds of recent days have yet to subside. Dust storms have been making headlines for days.
I can tell we are approaching Ras Laffan when I see several gas flares in the distance. Their jaunty angle underlines just how strong the winds are.
Having negotiated the first layer of security at the main entrance – one of several such layers I encounter on this visit – we pull up at the Qatargas headquarters. After some tea, I am asked to don orange overalls, white construction helmet and steelcapped boots – in preparation for a tour of the construction site of Qatargas 2, 3 and 4.
All four mega-trains, two at Qatargas 2 and one each at the other two projects, have been under construction for some time. So too have another two mega-trains at RasGas.
We will be touring the site in a car, and before we set off the driver knowingly zeros the odometer. It will be interesting to see how much ground we've covered by the time we've finished. We drive to one of the construction offices to pick up Eric, an engineer who will be able to answer whatever specialist technical questions may arise.
It is common knowledge that the first of these trains is several months behind schedule and as our tour begins, that doesn't come as much of a surprise. As we navigate our way around, time and again we are forced to double back and take a different route, because a track that was clear yesterday is blocked today. "Imagine," says Eric, "what it's like just trying to get a crane from one part of the site to the other."
You can get a feel for how large the site is from a few simple numbers. Each train is 1 km long, there are four of them, and there are 35,000 people working on their construction. However, within the site itself, it is hard to get a sense of scale because you can only ever see a small part of the whole – like not being able to see the forest because of all the trees.
As we wend our way around we pass a seemingly endless succession of huge steel structures, vast pressure vessels, storage tanks, complex interweavings of piping, all towered over by innumerable cranes. "This," says Eric, "is a world-scale three-dimensional jigsaw puzzle." I'm glad it's not my job to get all the pieces into the right places.
Two days earlier I had interviewed the Qatari energy minister, Abdullah bin Hamad Al Attiyah, and asked him: How concerned was he about the delays? And when did he expect Qatar to reach its target of 77m t/y of LNG production?
"I'm not concerned," he replied. "So far, we are still talking about 2010. If there is a delay of a few months, we will cope with it. We are putting a lot of pressure on our contractors to meet their commitments. We are pushing them hard for recovery planning to tackle this few months' delay.
"I am confident we will see the gas there. We are constructing six trains, bigger trains that have never been built before. So this is a big challenge. I have met the management of the contractors and they have promised they will do their best to recover some delay."
So what are the factors that have caused the delays? There are several, some familiar, others less so. The most obvious is overheating in the energy-project construction market. This has created shortages of labour, skilled people and materials. And while the engineering, procurement and construction (EPC) contracts for the megatrains were awarded mostly before the overheating began, the Qatargas expansion project (or QGX) has struggled because of today's construction environment.
There is a stark contrast with the first RasGas expansion project (RGX1), which set an enviable record for completing construction of Trains 3, 4 and 5 within budget and ahead of schedule. However, it did so well before the overheating got under way, as the overall project manager for RGX1, Ching Thye Khoo, told the LNG 15 conference in Barcelona last year.
While Qatargas and RasGas co-operate efficiently in many ways, the sibling rivalry that exists between the two groups of companies should not be underestimated. As Eric points out, such rivalry is a force for good so long as it does not get out of hand – something that any parent of more than one child will understand.
There has at times been talk of merging the two companies – to create an overarching Qatar LNG – but the existing structure is working well. What has taken place, to simplify day-to-day management of all the various joint ventures, has been the creation of two operating companies, one for the Qatargas group of projects and the other for the RasGas group.
Next on the list of challenges is the need to house, feed and transport the 35,000 people working on the projects. By contrast, during construction of the three trains that make up Qatargas 1 the workforce peaked at 8,000. These challenges are not entirely new, but now they are tougher because of the scale of the projects.
An associated and not immediately obvious management challenge is that the workforce comes from 54 countries and speaks more than 20 languages. With the safety of workers always a priority, just communicating safety messages effectively is far from straightforward.
Co-ordination between the three project companies is another issue, because the foreign partners are different in each one, as are their time-lines. It seems inevitable that at times there must be competition between them for available resources – indeed, perhaps most of the time. The official line now is that the first of the mega-trains will reach mechanical completion in June/July and that first LNG will be produced "in the third quarter".
A crucial challenge, given all the other pressures, is to ensure work is carried out to the appropriate quality standards. The approach of Faisal al-Suwaidi, chief executive officer of Qatargas – as explained to Petroleum Economist at the International Gas Summit in Paris in October – is to take enough time to get everything right.
Over the course of the day, I sensed a degree of frustration at the intense media attention on the issue of when these mega-trains will come on stream. Clearly, LNG buyers and the overall market are anxious to know when the LNG will be available in what is a very tight market. But, as the minister says, what is being done in Ras Laffan has never been done before. Is it reasonable to expect pioneering efforts such as these mega-trains to materialise to a strict and predictable timetable? Probably not.
As we head back to the staff restaurant for lunch – with the odometer now at 37 km after a tour of the port – I learn of another less obvious challenge that can lead to delays. The wind is so strong today that all heavy lifts have been cancelled.