Modularization in the construction of LNG plants is now seen as standard practice for developing onshore facilities.
The issue is all the more important as the biggest challenges facing new LNG projects, particularly in Australia, seen by the International Energy Agency in its latest 2011 analysis are those of project cost and schedule over-runs.
Many engineering firms use satellite construction yards, mainly in South-East Asia, to assemble huge sections of the LNG plant.
Mega-loads
Lifting and transportation systems for these mega-loads have also developed in recent years to get the equipment safely on site.
One of the first LNG engineering companies to perfect this mode of operation was Foster Wheeler. In the following article, Richard Brookfield and Jeremy Cooke, explain the modularization process.
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Figure 1: Typical impacts on cost and schedule of increasing the degree of modularization for development of a new liquefaction plant |
Their paper is based on their initial experiences and further developments seen from the first such major LNG Train built with modularization, the North West Shelf Venture Phase V LNG Expansion in Western Australia completed in 2008.
That was the first LNG plant expansion to be designed and constructed on a multiple module basis where the process Train was divided into a number of separate, pre-fabricated modules. Subsequently, several other onshore LNG developments planned in Australia and other locations have also followed, or started to follow, similar modular strategies and modularization has now become a key consideration for many prospective LNG plant projects worldwide.
In the following article Brookfield and Cooke outline the key features and drivers for modularisation of major onshore projects, and the implications that this approach has on project execution, risks and challenges:
Foster Wheeler
The traditional approach to construction of process plants is to “stick-build” the facilities entirely at the main construction site using a large construction labour workforce. Where this is not desirable or not feasible, a modular approach may be adopted in order to reduce the work required at the main construction site by use of one or more prefabrication and preassembly sites in other locations.
Pre-fabricated and pre-assembled modules are then transported usually by ship and then by land transportation to the main construction site where they are installed, connected and completed.
Modules are complete pre-assemblies of equipment, bulk materials and components which are fabricated in an offsite facility into a steel structure which can be transported and installed at the main construction site.
Modules will vary in size, typically ranging from a few tonnes up to several thousand tonnes depending on design and installation constraints.
Assessment
At its most simplistic level, modularization can be achieved by taking a stick-build design and splitting it into modules.
Alternatively, and more effectively, modularization is based on a thorough assessment of the project drivers to determine the optimum extent of modularization and specific modular designs for the project, taking account of all relevant drivers and constraints.
There are many aspects of a project that may drive a modularization strategy. The main positive drivers are generally labour (differential rates, availability and productivity) and site attributes (climate and remoteness). Schedule, safety and environmental issues may also influence modularization decisions.
Main considerations for modularization are, firstly Labour:
- Is there a lack of labour available at the project site, or local area, or is there a restriction on site labour due to access and/or available land?
- What are the relative labour rates and productivities for site and potential module yards?
There are other questions too:
Site attributes: How do the site climatic conditions impact the construction logistic requirements of the site? For example, cyclonic conditions, weather windows for shipping, cold climate, warm climate, hours of daylight, wind loading, snow and ice loading etc.
Site access: Do the available routes and lifting paths allow use of modules with the dimensions set by road, rail or sea transportation?
Schedule: Are there any significant constraints or requirements for the project schedule which would benefit from a modular approach? Is construction constrained by weather windows or periods of restricted site access?
Safety: Are there existing facility operations on the site, unusual site hazards, site risk contours and regulatory requirements? What is the expected safety performance for stick-build construction compared to work in module yards?
There are also environmental, legal and regulatory questions: Are there any significant environmental, legal and/or regulatory considerations which may constrain the project?
For example these could include a prohibition on import of animal or vegetable matter, requiring a thorough cleaning of modules prior to landing in the country, or restrictions on handling, treatment and disposal of waste streams or construction waste, which may be more easily contained at module yards rather than site.
Local content: Are there any requirements for local content for the project? Depending on the amount of local content required, this could make it difficult to remove work out of country and may reduce or eliminate any potential benefit of modularisation.
Scarcity of resources, particularly skilled labour, is a key driver which leads to higher construction costs and increases the risk of delay.
This may be the case in areas of significant construction activity, where there is a high demand for labour, as well as remote locations where insufficient local labour is available or where it is expensive to bring labour to the site.
The attributes of the main construction site are also key drivers, particularly for sites in remote locations and where climatic conditions are extreme and will constrain construction works.
These factors will have potentially significant impacts on cost and feasibility of stick-build construction.
Remote tropical location: The remote location and relative labour rates and productivities favour a modular approach. However, site access is limited which will mean either investment in upgraded infrastructure or the use of a large number of small modules.
Remote Arctic location: The remote location and relative labour rates and productivities favour a highly modular approach. The location of the module offloading facility at site means that the module sizes are only constrained by the available shipping and haul road limitations.
However in the Middle East, the situation is different: A stick-build approach is conventional in the Middle East due to highly available skilled workforce at appropriate rates and productivity for such work.
Degree and size
One of the key decisions to be made in the early stages of design is the degree of modularization that is appropriate for the project based on a detailed assessment of the various factors and drivers.
For many projects, some modularization will be desirable and in some cases it will be advantageous to maximise the amount of work that can be removed from the main construction site.
However, it is not possible to achieve total modularization as there will always be work at the main construction site such as site preparation, excavation, tank erection and final installation of the modules themselves.
Another key factor for every modular project is the maximum module size that can be fabricated, shipped and transported to the main construction site.
Onshore modules typically range up to 5,000 tonnes although the maximum practicable size and weight will vary from project to project, often depending on the physical limitations of the transportation route to the main site location and the available capacity of heavy lift and transportation equipment.
Impacts
The graph in Figure 1 indicates typical impacts on cost and schedule of increasing the degree of modularization.
The graph is heavily dependent on the relative labour rates and productivities at the module yard and at the main construction site. Where labour rate and productivity is the main driver for modularization, the overall labour cost should reduce as modularization increases.
However, any savings should be offset against the cost of additional module steelwork and by the increased costs of shipping and transportation of modules to site.
Adopting a high degree of modularization has implications for all aspects of project execution.
Complexity
The use of large-scale module fabrication yards introduces multiple construction locations for the project and consequently increases the complexity of execution planning and the requirement for experienced management resources to achieve safe and successful outcomes.
Constructability issues for modular projects are complex and need to be considered from t e outset as t ey will influence early strategic decisions taken during feasibility and conceptual p ases.
Modularization decisions made during later project phases can result in considerable re-work, and potentially, significant impacts on schedule. Plant layout is a prime consideration and must be configured from the outset to suit the degree of modularization, site location and constraints, operational and maintenance requirements and the strategy for module installation and sequencing.
- A summary of some of the specific implications associated with large-scale modularization is as follows:
- Engineering and design needs to be completed earlier
- Increased steelwork
- Additional design to be undertaken (temporary facilities in module yard, more steelwork detailing, ship grillage design, more pipe supports)
- Bulk materials are required at module yard earlier to meet overall schedule
- Significant shipping requirements and schedule constraints
- More complex logistics (delivering materials to the yard and to the site and additional shipping) _ Multiple “construction sites” to manage
- Increased number of interfaces
- Overall planning and control is more complex and must be more rigorous, with less opportunity to adjust plans for unforeseen circumstances, and construction contract planning needs to be more prescriptive
- Import of modules may not be fully compatible with schemes for duty concessions or capital allowances, or may require specific discussion with the customs authorities;
- More complex transport and lifting studies to be undertaken. All capital projects involve significant levels of cost and schedule risk, and the process of project development is focused on reducing risk (along with maximising the return of investment).
Under certain circumstances modular construction can provide mitigation to risks associated with plant construction and provide greater assurance around cost and schedule.
Main risks
One of the main risks to be managed is that of late project completion which results in increased project costs (timerelated costs) and delay in the production of the revenue streams.
Modularization can give schedule security, but (depending on the specific circumstances) may not allow a shorter overall project schedule because of the additional logistical steps required.
The security comes from moving work away from the location of most risk - the site. But it does not just happen, it takes a lot of planning and experience to realise the planned benefits.
Constraints
Where the project site constraints impose an exceptionally long construction schedule, then modularization could achieve a shorter schedule by substantially reducing the amount of work at site.
However, modularization requires additional effort in planning and coordinating the supply of equipment items and materials to the fabrication yard, and arranging the shipment of modules from the yard to site, with more limited scope for rescheduling of activities to overcome delays or unforeseen events.
This makes it difficult to shorten the overall project schedule in many cases. The most significant schedule benefit of modularization is likely to be the greater certainty achieved by reducing the site construction scope, which is often the element with the highest risk of delays.
Large modules carry a higher degree of risk due to there being fewer yards capable of undertaking their fabrication, availability of large carriers is reduced, and there is a greater chance of overrun in fabrication schedule meaning that modules will be incomplete prior to shipping, resulting in additional work at site.
A small number of larger modules will in general require less hook-up work at site compared with a large number of smaller modules, but larger modules need significantly more steelwork and are harder to transport.
However, for projects where significant land transportation of the modules is required, then the module size will be limited by the restrictions in the transportation road and carriers.
Large modules are best suited where ship transportation to a coastal site is required.
Opportunities
Modularization is a complex subject with many variables to consider. The drivers for modularization are different and specific for each individual project and the answers are invariably not the same.
It is not a “silver bullet” and, in many cases, is not an appropriate solution. However, there are some circumstances where modularization offers significant benefits and realisation of these requires decisions to be made early in the project life-cycle to ensure the appropriate execution strategy is embedded through all project phases.
The successful completion of the first modular LNG plants has prompted a significant number of further LNG liquefaction projects to adopt modularization strategies.
Many of these projects are being planned for construction in Australia where scarce and highcost labour resources are key drivers for modularization.
Other LNG projects planned for extreme Arctic locations are also likely to consider modular strategies, driven mainly by climatic constraints on construction operations. Modularization is proving to be a highly relevant strategy for LNG plants that are currently being planned in various remote locations.
As LNG project locations become increasingly remote and modular capabilities increase throughout the industry, further modularisation seems likely to be adopted as an established alternative to stick-build construction.
