Outsourced construction management enhances offshore projects

Nov. 8, 1999
Effective integration of a construction management team (CMT) can enhance an operator's ability to achieve on-time, on-budget completion of an offshore project.

Effective integration of a construction management team (CMT) can enhance an operator's ability to achieve on-time, on-budget completion of an offshore project.

A construction-support barge with a crane works behind two platforms in the Benchamas field complex (Fig. 1).
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This integration begins at the conceptual stage and runs through to production start-up.

The Tantawan and Benchamas fields, offshore Thailand, are examples of two projects that benefited from the CMT concept. In these projects, the CMT assumed a high level of authority and responsibility, while ensuring frequent and productive communications among team members.


The industry's increasing need for cost and time efficiency is encouraging exploration and production companies to outsource construction management services from conceptual design through production start-up. Careful selection of a CMT can enhance an operator's capabilities through successful integration of key expertise into the operator's decision-making loop.

The CMT can develop an understanding of the operator's objectives, and the operator can then rely on the integrated team to act in its best interest and make purposeful, proactive decisions on behalf of the project. Importantly, the CMT can use front-end planning to define project requirements properly, initiate a competent execution plan, and implement an effective contracting strategy.

Upon project completion, the operator has a successful project and access to a highly experienced, close-knit team that is available for assignment to a new project anywhere in the world.

Pogo Producing Co., a Houston-based independent oil and gas company, relied on Paragon Engineering Services Inc.'s construction management capability successfully to complete two Gulf of Thailand projects.

Pogo does not maintain a large, dedicated facilities-engineering staff because it prefers to focus on its core strengths of reservoir and geophysical interpretation, drilling, and production. The operator contracts with qualified US Gulf Coast service providers for facilities engineering and construction services.

Pogo relied on Paragon to create a construction-management team that would bring cohesiveness and accountability to a diverse group of project participants. Key areas in which Paragon had significant impact through the development of a CMT included:

  • Effective, competent, and timely decision-making from a small team with a high level of authority.
  • Good decisions resulting from open discussions and consideration of all project participants, including the operating company, process engineering, fabricators, installation contractor, and operating staff.
  • Effective management of the interfaces between the various contractors.

Pogo first contracted with Paragon to help it meet cost control and schedule objectives on its Tantawan field development. This development included a floating production, storage, and offloading (FPSO) vessel with tie-ins from two remote wellhead platforms.

Pogo became operator of Block B8/32 in 1995 and commenced gas and condensate production from the block's Tantawan field in January 1997. The gas is consumed in Thailand.

Pogo and Paragon then immediately began work on the Gulf of Thailand Benchamas field development, also in Block B8/32, through the creation of the Benchamas construction management team. The seamless integration of the CMT into the full project infrastructure facilitated Pogo's June 1999 start-up of the Benchamas field (Fig. 1).

The associated facilities are the culmination of extensive planning, design, and construction efforts. The facilities are designed to process 180 MMscfd, 35,000 bo/d, and 25,000 bw/d.

Development of the Benchamas field commenced in December 1996. The Benchamas field was designed as a gas field with associated oil production.

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Facilities were constructed using a standard Southeast Asia design that includes remote wellhead platforms tied back to a large processing complex. A floating storage and offloading (FSO) vessel was installed to provide storage for anticipated oil production (Fig. 2).

CMT's role

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Paragon formed a construction-management team (Fig. 3) consisting of experienced, direct employees of Paragon and Southeast Asian inspection contractors who participated on the previous Tantawan field project. Paragon's CMT then managed Benchamas facilities construction from conceptual design through production start-up and first gas sales.

Given the levels of responsibility and authority involved, team members committed to international travel on short notice and working on the project through commissioning and start-up. This continuity of team members and their willingness to travel played a key role in the successful completion of the Benchamas project.

The CMT approach thus eliminated transition problems as the project progressed from design through fabrication to installation.

Paragon's CMT reported to Pogo's vice-president of operations and had considerable authority over technical decisions; however, the team did not have financial authority.

The CMT worked closely with Pogo's Houston office and Thaipo Ltd., Pogo's 100%-owned subsidiary based in Bangkok. The CMT supported Pogo in discussions and facility-related negotiations with working interest owners, contractors, and vendors. The CMT was in effect an extension of Pogo, and its members acted in Pogo's best interest.

The project was divided into four sequential phases:

  1. Conceptual engineering.
  2. Bidding and contracting.
  3. Detailed engineering and fabrication.
  4. Installation, commissioning, and start-up.
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Fig. 4 shows the project schedule.

Companies involved

The CMT dedicated 4 months to development of a conceptual design that accommodated the needs of Pogo's drilling and reservoir staff, facilities process equipment, fabrication, and installation.

Pogo's significant investment provided a solid basis for bidding along with a preliminary design that could be completed by the available engineering, procurement, and construction (EPC) contractors.

The team issued bid documents, evaluated proposals, and negotiated construction contracts for Pogo's approval. Over the life of the contracts, the team resolved both technical and commercial issues with contractors.

It reviewed all invoices and negotiated change orders and made approval recommendations to Pogo as needed. It also generated monthly cash call estimates and status reports for Pogo and its partners.

Pogo relied on numerous EPC contractors with extensive experience in Southeast Asia to construct the facilities for the Benchamas field. The facilities were divided into several large, lump-sum EPC contracts, as follows:

  • Compression modules-Dresser-Rand.
  • Generation module-Solar Turbines.
  • Quarters module-Hyundai Heavy Industries/Southport.
  • Wellhead platforms-Nippon Steel.
  • Process and quarters platforms-Hyundai Heavy Industries.
  • Infield pipelines-Nippon Steel.
  • Floating storage and offloading vessel-Tanker Pacific.
  • Sales gas pipeline-Nippon Steel.

Project interface

Each of the contractors selected and subcontracted detailed engineering to complete the design and create construction drawings. CMT members were stationed on-site in the engineering companies' offices to expedite the decision-making process. The team participated in the review process with the engineering subcontractors.

A key function of the CMT was effective management of the interfaces between contractors. Daily, direct participation also ensured thorough review of construction drawings. These were normally studied two or three times prior to issue for construction.

Importantly, the team handled drawing reviews in a timely manner, with turnarounds usually completed in less than 48 hr. It tracked progress of the overall project based on individual contract milestones, focusing on the contracts that threatened to fall behind schedule. The team also maintained complete project records files with correspondence and progress reports from all contractors.

The CMT created and issued a start-up, commissioning, and operating manual to integrate the operation of the facilities throughout all contracts. Continuity of the team provided a high degree of insight regarding details of the process and utility operations.

Close coordination among the CMT, Pogo, and Thaipo allowed direct participation in development plans of the Benchamas field and surrounding fields.


The construction philosophy for the Benchamas facilities held personnel safety and care for the environment paramount. To meet cost-control requirements and gas-delivery schedules, the construction philosophy for the Benchamas field facilities hinged on off-the-shelf industry design standards.

Pogo's delivery date for designated contract gas quantities to Thailand was fixed, and well-test data were limited. In addition, flexibility was key because platform locations were not finalized. The CMT proposed and obtained Pogo approval of facilities to meet all requirements of the overall field development plans.

Along with flexibility, Pogo desired ease of operations. This requirement led to the extensive use of manufacturers' standard packaged equipment, which was certified by an independent third party to meet project specifications and industry standards.

While many utility packages had small programmable logic controllers (PLCs), local pneumatic control was used on all process equipment except for the more sophisticated turbine-driven compressors and generators.

A number of elements led to the success of these projects. These are listed in the box.

Opportunities for improvement

While hindsight is 20/20, the CMT learned a number of lessons that could be applied in future projects.

To facilitate efficiency, future projects should ensure that contractors select subcontractors prior to contract execution. Also, early in a project, all contractor and subcontractor electronic data systems should be reviewed to ensure compatibility. Most importantly, electronic drawing file format conversion accuracy between engineering and fabrication contractors should be verified.

The CMT was initially hesitant to use overseas fabrication shops for vessels and major equipment. But because US fabricators selected by overseas contractors experienced major delays, the CMT eventually allowed overseas contractors to use their more familiar overseas fabricators.

Other good ideas worth considering on future projects include:

  • Indexed electronic files for all drawings and all available calculations on compact computer disks (CDs) for final documentation.
  • General specifications issued on CDs.
  • Digital cameras in fabrication yard.
  • Free, web-based e-mail accounts, such as Hotmail, for overseas team members.

The Authors

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Matthew Hill is a project manager with Paragon Engineering Services Inc., Houston. Prior to joining Paragon, he worked for Fountain Oil Inc. and BP Exploration. Hill holds a BS and an MS in petroleum engineering from the New Mexico Institute of Mining & Technology and the University of Houston, respectively.

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Stephen Brunner is Pogo Producing Co.'s vice-president-operations, in Houston. He was formerly Thaipo Ltd's resident manager in Thailand. Brunner holds a BS in petroleum engineering from Louisiana Tech University.

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Harold Walling is a senior project manager with Paragon Engineering Services Inc. Prior to joining Paragon, he was offshore engineering manager with Maxus Energy Co. in Jakarta from 1981 to 1991. Walling holds a BS and an MS in mechanical engineering from the University of Texas and Southern Methodist University, respectively.