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OTC panel explores ups and downs of oil and gas megaprojects

BY JOHN BETZ, Associate Editor

HOUSTON – Moderated by IHS Vice President Bob Fryklund, the 9:30 a.m. technical panel “Megaprojects – Exploring the Opportunities and Challenges” gathered together a group of industry heavyweights to discuss the unique difficulties posed by megaprojects and their importance in satisfying energy needs of the global economy.

Cost of labor was a common challenge panelists cited in completing massive projects, especially those constructed abroad. For example, ConocoPhillips Sr. Vice President, Luc Messier, said that labor costs threatened the budget of their Australia LNG megaproject on Curtis Island. The company addressed the problem using modularization: Or producing some large parts off-site, and having them shipped to the project. Messier said that ConocoPhillips built some of the more expensive pieces of the Curtis Island facility in Indonesia, where labor is far cheaper.

As a general aside, Petrobras Pre-Salt Executive Manager, Carlos Tadeu da Costa Fraga, offered that megaprojects, in addition to any special problems they pose, also magnify the existing problems inherent in even normal-sized projects. In particular, Fraga said the growth in scale increases financial problems like overruns, logistical issues and increases the expectations of stakeholders. This last one, (stakeholder/community expectations), is especially relevant for Brazil, given the country’s plentiful deepwater reserves and the still-lingering specter of the 2010 Macondo blowout.

While most of the panelists focused on assessing and overcoming challenges, only one focused squarely on the opportunities. Lee Tillman, ExxonMobil vice president of engineering, used a graph to show attendees the shocking amount of reserves that lie in arctic regions of the world. According to Tillman, around 20% of the world’s estimated remaining reserves are locked in the arctic, and 80% of those are found offshore. This means that it will be more than necessary, to extract hydrocarbons from the region, in order to satisfy future demand. Because of a general lack of infrastructure and extreme environments, a large percentage of arctic projects necessarily must be megaprojects, tying the future of oil and gas inextricably, in at least some ways, to megaprojects.

OTC 2013 will continue through Thursday, featuring a number of other technical panels and speakers.



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