Jun 27, 2016 -- Being a major leader in the global oil market, Middle East holds over 48% of global oil reserves as well as 40% of global gas reserves. However, the region’s refining and petrochemical sector is struggling to compete globally due to changes in feedstock and uncertainty of oil and gas prices. Optimizing the operations in this scenario is no longer an alternative but a necessity. While several projects are in the process of construction and commissioning, the region is already suffering from a shortage of skilled and experienced engineers across all areas of the industry. To survive in these conditions, Middle East companies must encourage the use of modular design approach or standardize designs to address the operational challenges, bridge the skill gap and preserve their global market share.
Modular standardization approach is all about designing and pre-fabricating the plant structures and equipment in modules that are standardized and then used multiple times. Standardizing helps in utilizing equipment and structures that are common for different project applications. Using common modules further reduces the cost and speeds up the project delivery, as engineers do not require reinventing the design for every new project. Also, due to commonality, the safety performance can be improved by sharing information about failure modes.
As a matter of fact, the modular standardization approach is already being appreciated by other large scale industries with high complexities such as turbine manufacturing and steel-mill construction. Samsung Heavy Industries also demonstrated that by using this approach for FLNG projects, EPCs can reduce the front-end engineering (FEED) costs by 50% and the project delivery can be expedited significantly.
The most effective way for oil and gas companies in Middle East to adopt modular architecture is to focus on upstream and midstream area, and break up the work into modules to determine the appropriate level of standardization based on frequency of use, complexity and nature of the module. These standard modules can then be re-used from project to project for repeatable process units such as dehydration, separation and gas purification to minimize project risks. Large repeated equipment modules such as compressor systems, acid gas removal strippers and subsea modules can also be standardized in most cases as same equipment design and layout can be reused in various settings. With the modular design approach, it is possible to standardize at least one-third or two-third of all modules or sub-modules for even the most complex equipment.
Few Roadblocks to Overcome
Despite few benefits, there are two major issues that these companies need to take care of. First is the natural response from project managers who think that their project is unique and are resistant to common approaches. And secondly, convincing project design engineers that standardization brings benefits more than compensating the limited design choice.
These issues can be resolved by first bringing a change in engineering and design activities. Companies utilizing modular standardization approach have common design specifications and guidelines for each project and have a library of modules built with cross-functional input from engineering, sales and procurement teams. Hiring a partner to develop design for creating a module library can be strategically beneficial in this case, as in-house team can focus on adding value to the project by identifying and standardizing the modules.
Secondly, making changes to staffing is also essential. Creating a project team centrally ensures that the same team works together for subsequent related projects. Designating members as “module owners” responsible for using the standard modules across the portfolio and incentivizing engineers for reusing the modules can help in building a culture of standardization within the organization.
As business leaders and EPCs in Middle East focus on reducing the total CAPEX for petrochemical plant designing and commissioning, while still driving towards business growth, standardized designs and modularization are the only two engineering strategies that respond to these business pressures. Modular standardization helps in reducing the project risks, improves project management efficiency and brings down cost significantly. It is the right time for EPCs and owner companies to realize the benefits of this approach and make necessary changes in the designing and staffing areas, to survive the squeezing market and maintain the strategic global position and market share.
Kashyap Vyas is an Engineer at Hi-Tech CADD Services and holds a Master’s degree in Thermal Engineering with several research papers to his credit. He covers CAD and CAE topics for the engineering industry. His contributions are primarily focused on encouraging manufacturers and suppliers to adopt virtual product development tools to build efficient products with reduced time-to-market.