Feed Opportunities for International ExpertsTue, 01/22/2013 - 12:18
The success of a large-scale oil and gas project often depends on the amount of time and money spent in the planning phase, otherwise known as front-end engineering and development (FEED). CH2MHill tries to reduce the expenses of its clients by advising them in the FEED stage. “We basically work in the high value range conceptual services by assisting our clients in making their projects happen,” says Carlo Orsenigo, Country Manager Mexico of CH2MHill. “We are engineers who understand all construction details and specifications, so we apply that knowledge into designing the most efficient FEED systems to help our clients succeed in their projects.”
“Companies working in Mexico spend a lot of time and money on the definition of a project and the acquisition of the relevant permits to operate,” Orsenigo explains. “You can have a very detailed evaluation of the right of way required for a pipeline investment, but if you do not make the adjustments required by Mexican law, as well as pay attention to the social and environmental conditions, the process gets stalled.” Even detailed planning might end up being insufficient with all the modifications that a project undergoes during the FEED stage. This is what happened with the Morelos pipeline project, which continues to be on standby.
According to Orsenigo, the most difficult stage of a project is during the front-end design. “Getting the pipe in the ground and obtaining the acquisition and right of way permits, and the environmental and social impact statements is the real task,” he argues. “The challenges that the market is facing depend on the execution and construction of projects, rather than in the operation.” Both planning deficiencies and inefficient operation could affect hydrocarbon distribution in the country, presenting similar challenges to what Pemex is already facing today.
The main barrier that stands in the way of achieving an optimal planning stage is cultural and it has to do with the way investors tend to think. “Usually, investors want an immediate return on their investment to be able to cover their costs,” Orsenigo explains. “This encourages them to reduce their investment in the FEED stage, which in the end may have unpleasant consequences. An unwillingness to spend a large sum at the beginning of a project might result in greater costs in the form of adjustment and make- up costs.”