ExxonMobil Executives Discuss Challenges, Achievements Of PNG LNG Project

January 2015, Vol. 242, No. 1

Rita Tubb, Executive Editor

Construction of ExxonMobil’s PNG LNG Project in Papua New Guinea began in 2010 and delivered its first cargo of LNG in May 2014, ahead of schedule.

The project took over 200 million work hours to complete and employed 21,000 people at its peak.

There are 700 km of pipelines connecting the LNG facilities, which include a gas conditioning plant in Hides and liquefaction and storage facilities near Port Moresby with a capacity of 6.9 million tons per year.

The investment for the project, excluding shipping costs, was almost US$19 billion. During the life of the project it is expected that over 9 Tcf of gas will be produced and sold to major customers in the Asia/Pacific region.

P&GJ talked with Peter Graham, managing director of ExxonMobil PNG Limited, and Decie Autin, project executive for the PNG LNG Project, about the challenges involved in completing a project in a region prone to flooding, with only minimal pre-existing infrastructure, and elevations along the pipeline route exceeding 2,700 meters.

P&GJ: The PNG LNG Project is the largest resource project ever undertaken in Papua New Guinea. Can you provide some background on the project?
The PNG LNG Project started production in April 2014 – several months ahead of schedule. I personally have worked on this project for almost a decade and have been thrilled to see it progress through its various phases.

The concept for the project actually started out very differently. Originally, the idea was to build a 3,000-km pipeline from the Southern Highlands to Australia that would connect with existing gas infrastructure to serve customers in Australia. But as we considered the technical challenges and the burgeoning opportunities in global markets, it became clear that for the people of Papua New Guinea and for our partner companies, there would be tremendous value to pursuing a more substantial investment and a more long-term presence.
So we changed our plans – and that decision was a game-changer.

What we have today is over 700 km of pipeline – both onshore and offshore – connecting the wellpads and a gas-conditioning plant in the Highlands of Papua New Guinea with a world-class liquefaction plant located just outside of Port Moresby.
Pipe stringing along the onshore pipeline right of way.
The pipeline in particular has been constructed in extremely challenging terrain, and we’ve been faced with wild weather conditions, steep ridges, swamps and dense forests. Importantly, the project was built with the greatest concern for safety, and respect for the environment and social aspects.

This is a project that couldn’t have been done without the support of thousands of people – our workers, the government, our co-venture partners, the banks and export credit agencies that funded the project, our suppliers and local businesses and the communities where we built our facilities. It has been a great example of teamwork and collaboration, and I have been so proud to be part of it.

P&GJ: Can you overview the work carried out during pre-construction surveys?
Pre-construction surveys were carried out across all parts of the project. These were done for a variety of reasons: to assess areas of ecological interest and weed and water quality at project worksites, while identifying potential archaeological and cultural heritage sites. Surveys were required for all worksites, and all pre-construction survey reports were submitted to the PNG Department of Environment and Conservation for acceptance before work could proceed.

P&GJ: The PNG LNG Project involves two major pipelines, one offshore and one onshore, and both presented distinct challenges. The onshore pipeline contract was awarded to Spiecapag. What can you tell us about the scope of work they carried out on this segment of the project?
The onshore pipeline is not just one pipeline – it’s actually a network of pipelines connecting various facilities: a 292-km, 32- to 34-inch natural gas line from the Hides Gas Conditioning Plant to the Omati landfall; a 109-km, 8-inch condensate line from the Conditioning Plant to Kutubu; a 19-km spineline and associated flowlines, up to 22 inches in diameter, from eight production wells; and two smaller spur lines to connect the existing oil search facilities at Kutubu and Gobe to the main onshore gas pipeline.

It took us over four years to build the pipeline and required 2,000 road, river and stream crossings, dealing with work areas rising from sea level to elevations over 2,700 meters, along with enormous amounts of rain and flooding, carrying out over 40,000 welds across swamps, flats and steep slopes, pinnacles, and karst limestone and volcanics. It was certainly the most challenging aspect of the project to construct.

Given the number of large rivers to cross, we elected to do horizontal directional drilling in some locations. We also laid a fiber-optic cable, using the same trench as the pipeline, to provide a voice and data communications link between the Hides Gas Conditioning Plant and LNG Plant.

Amazingly – and this highlights the incredible biodiversity in Papua New Guinea –along the onshore pipeline route alone we discovered 16 new plant species, and four mammal, 11 lizard, 60 frog and one bat new species.

The pipeline passes through the properties of many different landowners and communities so we spent considerable time engaging with them for access and to assist them in securing business opportunities. We also invested in those communities through education, health, agriculture, women’s empowerment and environmental initiatives.

Over 28 million hours were worked and more than 5,000 PNG citizens along the pipeline route were employed on this part of the project.

Completion of the onshore pipeline ahead of the planned date for commissioning gas into both the Hides Gas Conditioning and the LNG Plant was a key requirement for the overall project’s early startup.

P&GJ: Extreme terrain issues also resulted in construction of the Komo airfield. Can you describe these facilities and how much pipe arrived by air?
The Komo Airfield includes a 3.2-km runway built in mountainous terrain. The airfield was used to transport large pieces of equipment for the Hides Gas Conditioning Plant – these pieces were either too large or delicate to bring in along 800 km of the Highlands Highway from Lae. We’re now using this airfield to fly in our staff and for small cargo operations.

No pipe arrived by air into Komo Airfield. There were, however, occasions when sections of pipe had to be brought in by helicopter to areas where the ground wasn’t able to support heavy trucks.

P&GJ: What were some of the mitigation measures applied in environmentally sensitive or archaeological areas along the onshore pipeline route?
Papua New Guinea has 7-10% of the world’s biodiversity. By global standards, that is a huge proportion. Given this, as we constructed the PNG LNG Project, we worked very carefully to minimize any impact to the environment. We did so from day one, even before we laid a single foundation for the project.

We developed detailed Environmental and Social Management Plans (available on our website at pnglng.com), which outlined potential environmental risks and the steps required to avoid or mitigate those risks. We also developed an environmental impact statement (also available on our website) which contains over 6,000 pages of studies and plans.

Our plans were used throughout the construction phase and the Environmental and Social Plan has been refreshed to reflect our current and future production operations.

The proof of the effectiveness of this planning is in the results. Despite all the development and activity, a variety of native birds, wallabies and crabs have made the LNG Plant their home. And, as I mentioned, the number of new species found along the route of the onshore pipeline has been astounding.

P&GJ: What is the destination of the gas to be transported by the onshore pipeline? How much gas will be transported through this segment of the line?
Over the estimated 30-year life of the project, it is expected that over 9 Tcf of gas will be produced and sold to customers in Japan, Taiwan and China.

To give you an idea of how the gas gets to our customers, it begins its journey in Hides, in Hela Province in the Highlands of Papua New Guinea. Two identical drill rigs, built specially for the project, drill for gas. The gas then travels to the Hides Gas Conditioning Plant, a site that can process 960 MMscf/d. Here, the liquids are separated from the gas and treated.

Condensate is transported through an 8-inch pipeline and exported through the Oil Search-operated oil export system and Kumul Terminal, while the natural gas is transported separately through the 292-km onshore pipeline which then connects to the 407-km offshore pipeline. This pipeline ends at the LNG Plant near Port Moresby.

Once the gas arrives at the plant, the liquefaction process begins. Natural gas is converted to LNG through two parallel processing trains. From the process trains, the LNG flows into two storage tanks, each with a capacity of 160,000 cubic meters. Upon arrival of an LNG carrier, the liquefied gas is piped along a 2.4-km marine jetty and is loaded onto the ship.

P&GJ: The route of the offshore segment required pipeline installations in both shallow and deepwater. Where does each segment start and terminate and what installation method was used to install the lines?
The offshore pipeline was completed by Saipem at the end of 2012, and was laid using two barges, one for the shallow water and another which operated in the deeper water. The shallow water section, which starts at the Omati landfall, was trenched to ensure pipeline stability and to protect it from passing vessels and trawling gear. Saipem’s Castoro 10 was used for this shallow water section of the pipeline.
The offshore installation vessel installing the shallow-water portion of the offshore pipeline.
The installation method used for both the shallow water and deepwater sections is generally similar and involved S-lay construction with multiple welding, inspection and coating stations. The major difference was the size and type of pipelay vessels. The Castoro 10 is a flat bottom barge-type vessel while the Semac 1, a semi-submersible suited to deeper water, installed the pipeline in water depths that reached 112 meters.

P&GJ: Where does the deepwater section start and terminate and what installation method was used to install the pipe?
The deepwater section starts at the mouth of the Omati River where the shallow water section terminates. The deepwater section extends to the LNG Plant landfall, where it is tied into the feed gas pipeline to the LNG Plant.

P&GJ: How many kilometers of the offshore pipeline were trenched and how much relies on natural burial into the seabed over time?
Approximately 75 km was trenched in the Omati River and outside the river mouth. It was also trenched for approximately 2 km for the approach at the LNG plant landfall. The rest of the pipeline is designed to naturally bury into the seabed over time.

P&GJ: Did the pipe for the offshore section require a weight coating? If so, approximately how much did each pipe joint weigh?
The offshore pipeline is made of carbon steel with an inside diameter of 36 inches and the exterior is coated with concrete to ensure stability on the seabed. The entire pipeline was weight-coated. Each pipe joint weighed approximately 5.5 tons.

P&GJ: Where does the offshore pipeline connect to the onshore pipeline and how was the final tie-in of the two lines achieved?
The offshore pipeline was tied into the onshore pipeline at the Omati landfall. The tie-in was performed by Saipem using an open trench method with golden welds. The tie-in joined and welded the shallow water and deepwater pipeline ends to form one continuous pipeline. The single continuous pipeline was then lowered back into the water once the tie-in was complete, marking the final construction stage of the offshore pipeline.

P&GJ: You put a great deal of effort toward minimizing the project’s environmental footprint. What criteria were used to select the pipeline routes?
The onshore and offshore pipeline routes were chosen based on several key criteria.
For the onshore pipeline it was important that we sited the pipeline away from inhabited areas where possible. We placed it near existing infrastructure, including the existing Oil Search pipeline. In choosing the route, we also looked at how we could reduce the number and complexity of watercourse crossings and avoid steep, unstable slopes – although steep slopes abound in the Highlands of Papua New Guinea!

Also, critical wildlife habitat and cultural areas, such as sacred areas or archaeological sites, were avoided.

For the offshore pipeline criteria it was necessary to avoid marine fauna, coral reefs and existing oil export facilities, and find an optimal route for pipeline constructability and safe operations for the life of the pipeline.

It was also critical for both pipelines to adhere to the project’s environmental impact statement and for the design to meet all PNG regulatory requirements, project design specifications, and industry standards.

P&GJ: You report that it took four years and 28 million work hours to build the onshore pipeline for the project and 5,000 New Guinea citizens were involved in the construction. With the company emphasizing safety of the workers and public, the environment and property, what type of training did the New Guinea workers receive?
Training was a huge focus. The PNG LNG Project conducts business in a manner that protects the health and safety of the entire workforce. This is a core value and business driver, one that shapes decision-making at every level. The project provided programs and services to assist the workforce in performing their tasks in a safe, healthy and environmentally conscious manner.

The project’s safety philosophy helped to create a work environment where “nobody gets hurt.” Workers were provided with the knowledge and tools to execute each work activity safely, and strive to prevent all accidents, injuries and occupational illnesses through the active participation of every employee.
Welders heating the pipe using induction coils prior to welding.
Given the new environment and that many people working on the project had never worked on a construction site before, we had to do things differently and work hard to make sure the message was delivered in appropriate ways. We learned quickly that there was no point talking about how to do something safely if that message wouldn’t be understood. We used a lot of visual cues such as posters and also employed drama and role plays to demonstrate safe practices.

The project’s Safety Champions program also played a vital role in promoting a positive work safety culture. This identified opinion leaders and role models within the project’s fieldwork groups and encouraged them to instill a strong adherence to safe work practices within their teams. Originally, we’d planned to train a few hundred people for this program, but by the end of 2013, over 2,000 Safety Champions had attended the multi-day training course. It has been a huge success in helping to shape a positive safety culture for us.

P&GJ: You put a great deal of effort into preparing and training the New Guinea workforce for the production phase. Can you describe the training curriculum and its success?
One of the most significant contributions has been enhancing the skills of the PNG workforce that will operate and maintain the facilities that ExxonMobil has built here. The project trained over 9,000 Papua New Guineans through more than 2.17 million training hours and over 13,000 training programs and activities through the construction phase.

In addition, 140 PNG operations and maintenance trainees received basic skills training in PNG for 12 to 18 months, followed by a year of overseas training. These trainees then returned to PNG to continue their training under the guidance of experienced expatriate mentors and will ensure the integrity of the HGCP and LNG plant operations for years to come. They are at those facilities putting their classroom skills into practice onsite. We are now in the process of recruiting a third intake of trainees.

P&GJ: You were able to ship the first cargo of LNG from the PNG LNG project ahead of schedule. What do you credit this to and how difficult was it to achieve?
Sound engineering, planning, creative solutions, positive relationships with stakeholders and a dedicated and skilled workforce are why the project was delivered ahead of schedule.
Those who worked on the PNG LNG Project are incredibly proud of what was achieved in a few short years, despite the challenges, and of being able to deliver ahead of schedule. I don’t think any of us will forget the day that the first shipment departed PNG.

P&GJ: Also during this project your company name changed. What prompted the name change and how has it been received?
When the construction phase of the PNG LNG Project moved closer to its conclusion, it was decided that the company name would change from Esso Highlands Limited to ExxonMobil PNG Limited.

The rationale behind this change was to ensure that all ExxonMobil upstream operations in PNG are consistently recognized under one company name, which now includes exploration activities beyond the Southern Highlands of PNG. We also wanted a name that clearly and proudly associated our company with Papua New Guinea.
Despite our name change, it has been business as usual for us.

Peter Graham is managing director of ExxonMobil PNG Limited. He is also lead country manager for ExxonMobil’s operations in Papua New Guinea. Prior to his current assignment, Graham was project executive on the PNG LNG Project and its predecessor the PNG-Australia Gas Pipeline Project.

In 2014, Graham was honored as Commander of the British Empire (CBE) for service to the Papua New Guinea petroleum industry and the community through supporting social development initiatives. He serves on the executive committee of PNG Chamber of Mines and Petroleum and is a board member of the Port Moresby General Hospital.

Decie Autin was project executive for the PNG LNG Project until the completion of construction. She was responsible for planning, development and execution of all aspects of the project. Prior to that role, she held the position of upstream project manager and was accountable for the engineering, procurement and construction of the upstream portions of the PNG LNG Project, including the Hides Gas Conditioning Plant and 700 km of pipeline to the LNG plant.

Prior to joining PNG LNG Project, Autin was involved in providing support for projects with significant subsea and pipeline engineering components. She has been with ExxonMobil for over 30 years.

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