With global energy demand expected to increase 50 percent in the next two decades, all eyes are on the exploration of alternative resources such as wind, water, solar and natural gas.
While most people think of natural gas in terms of heating homes and commercial buildings, it also generates electricity; provides the base ingredients for plastics, fertilizer, anti-freeze and fabrics; is consumed during the manufacturing of pulp and paper, metals, chemicals and glass; and is used for ethanol production and to power vehicles.
With all these uses and more, it’s no surprise demand for natural gas is on the rise. In fact, four years ago the Energy Information Administration (EIA) estimated demand would increase 38 percent from 2002 to 2025.
In terms of supply, a recent study by the American Clean Skies Foundation reported the United States has up to 118 years of natural gas supply at present consumption rates. And, extracting it is becoming more economical thanks to new technology.
It seems like this would spell surefire bidding opportunities for contractors, but, as with everything else now, the economy will be a determining factor.
“We probably have peaked on liquefied natural gas (LNG) import facilities in the short term, although we can expect a few more in coastal areas in the long run,” says Jeff Schrade, spokesperson for the Natural Gas Supply Association (NGSA). “Right now we expect more pipelines will be built next year because natural gas from shale is growing more than other kinds of sources, and those fields are not in areas where we now have pipelines.”
Domestic production of natural gas typically takes place in Louisiana, New Mexico, Oklahoma and Texas, but shale fields are boosting productivity in New York, Pennsylvania, West Virginia, Montana, North Dakota and Arkansas. The Rocky Mountain region is proving to be a valuable resource as well.
The government plays a role in this sector, too, as Congress showed in the fall by ending the ban on offshore drilling amid rising oil prices and a struggling economy.
“It’s a temporary lifting of the ban that could be reversed next year, but it was a stunning development for our industry. If it holds, we could see a lot more offshore drilling activity in the coming years,” Schrade says.
“We also expect that at some point Congress will enact some type of climate change legislation—probably next year. If that happens, our studies indicate the demand for natural gas will increase by 20 percent to 30 percent as utilities make a greater move to natural gas to meet the nation’s clean air demands.”
With this in mind, it’s likely natural gas projects—from pipelines to storage tanks and plant expansions—will keep qualified industrial contractors busy in the years to come. Here’s a look at the accomplishments of a few construction firms already involved in this niche market.
Big Project, Bigger Challenges
Last year, Meeker, the largest natural gas plant in the continental United States, came online in Rifle, Colo. The plant serves the Piceance Basin and other area deposits comprising the nation’s fastest-growing natural gas field, increasing export capacity and providing gas to downstream markets through four major pipelines.
Houston-based S&B Engineers and Constructors worked with Meeker’s owner, Enterprise Product Partners LLP, to complete phase one of the greenfield project. The plant is capable of extracting up to 35,000 barrels per day of natural gas liquids. (Phase two of the project is under way and will double processing capacity to 1.5 billion cubic feet per day of natural gas.)
Industrial Specialty Contractors, L.L.C. (ISC), Baton Rouge, La., was responsible for installing electrical and instrumentation systems at the plant under a $24 million contract with S&B.
ISC, which previously worked with Enterprise Product Partners on jobs in the Gulf Coast region, was brought in early to help with constructability, cost savings and scheduling.
“These types of projects are really moving more toward partnerships: Pick the best contractor for each discipline, get them all together with the engineer and come up with a cost structure. It helps speed up the project and saves money,” says Thad Rispone, ISC’s corporate business development manager.
With a familiar owner and a collaborative planning team, ISC was ready to assemble a workforce of more than 400 craft professionals. However, Hurricane Katrina depleted the local labor pool ISC planned to take to Colorado, and talent near the isolated jobsite was nonexistent. ISC established recruiting hubs throughout the Rocky Mountain region and developed an incentive package to attract traveling craft professionals with proven skills and safety records. The contractor also reassigned employees internally.
“We were very fortunate to send an experienced team up there,” Rispone says. “People in our company wanted to move up and work on a challenging project.”
Calling the Rocky Mountain environment “challenging” is a bit of an understatement, Rispone adds. Workers were onsite from September 2005 to June 2007—enduring unstable terrain 6,600 feet above sea level, high winds, lightning storms and temperatures ranging from 100 degrees to 30 degrees below zero. Plus, the nearest major highway was 50 miles from the plant and no significant industrial development existed within 120 miles—leaving vendors and materials out of reach.
“We have worked on gas facilities before, but never in that climate,” Rispone says. “We were really fish out of water.”
Thanks to rigorous safety policies and orientations on topics such as lightning protection and cold weather hazards, ISC completed work with zero lost-time accidents and zero recordable safety incidents.
The schedule was equally brutal, requiring 350,000 manhours during 20 months of work. (Studies show similarly sized facilities require an average of 36 months to complete.) Routine tasks like setting up temporary power and perimeter security were complicated by the lack of infrastructure in the area. Yet, crews saved time and money by installing aluminum direct-burial cable instead of copper, and simplifying demolition and removal processes.
Additional time- and cost-saving measures included using alternative close nipples and bug screens for low-point conduit drains; eliminating purge air in junction boxes; installing cable tray and conduit on scaffolding so wire could be pulled before the structural steel was ready; and pre-building all power, control and instrument junction boxes before process buildings and major equipment were installed.
Within 77 weeks of mobilizing on the jobsite, ISC installed more than 1 million feet of wire and cable, 30,000 feet of cable tray, 250,000 feet of conduit, 1,000 lights, 1,000 electrical panels and 50 transformers.
With the Meeker plant on the books, ISC is looking to get involved in other natural gas projects in the western United States.
“That region has a lot of natural gas, so you’re seeing a lot of the major players in the oil and gas market moving up there. Companies are looking to expand and want to build faster than their competitors,” Rispone says. “At one time, natural gas was more costly to remove, but now it’s getting to the point that the technology is there to extract it at a competitive price.”
ISC is adjusting along with the industry.
“When we were founded in 1989, we wanted to be the best industrial electrical contractor in the Gulf Coast area. Now we’re the largest in our area, but we had never really worked around the rest of the country,” Rispone says. “[Meeker] was the first major opportunity to do that, and it was a success. Now we have craft professionals and supervisors who are interested in other opportunities like this.
In Pursuit of Perfection
Another landmark natural gas project completed in fall 2007 was the $750 million Cameron LNG Terminal located in the remote wetlands of Hackberry, La. The terminal, which delivers 1.5 billion cubic feet per day of imported LNG, includes the first concrete full-containment storage tanks built in the United States in nearly 30 years.
“We’re a strong believer that natural gas will be a big part of our future,” says Bob Nussmeier, director of business development for Houston-based Baker Concrete Construction, a subcontractor for the Cameron LNG Terminal. “We don’t import from Canada, nor drill or pull out of the ground, nearly enough natural gas for what we need in the future. That’s where bringing in LNG is probable.”
LNG is cooled to 260 degrees below zero, which reduces the volume of the gas and allows for efficient shipping. Once it reaches the United States, LNG is stored as a liquid until being converted back to natural gas and distributed through pipelines. It’s odorless, non-toxic and non-corrosive, and if spilled with no ignition source, LNG evaporates quickly and leaves no residue.
With considerable experience in the power and wastewater treatment sectors, Baker Concrete Construction was prepared to provide structural concrete services on the Cameron LNG Terminal (owned by Sempra Energy LNG Corporation). Under a $67.4 million contract with the engineering, procurement and construction contractor—a joint venture between Aker Solutions and IHI (AK/IHI)—Baker was charged with building three circular full-containment tanks measuring 254 feet at the inside diameter and 185 feet at the peak of the steel dome.
“Building LNG tank containments in-volves very rigid tolerances—not only with verticality, but also with roundness,” Nussmeier says. “Everything had to be dead on for the Federal Energy Regulatory Commission to approve the structure.”
Each tank’s base slab sits on a grid of 1,100 precast piles, and the concrete walls encircling the tanks taper in thickness from 3 feet to 2 feet. Each containment’s circular walls were assembled in nine, 15-foot-high consecutive lifts—each requiring 25,600 square feet of formwork—in just two weeks per lift.
A convex steel roof covered with a 16-inch layer of reinforced concrete caps off each structure. The sloped roofs required rigorous spreading and vibration, and the 56,000-square-foot roof surface had to be finished by hand.
“AK/IHI built the structural steel dome roof on the floor of the concrete slab, and after the walls were constructed they airlifted the roof to the top before we placed the concrete cap over the roof,” Nussmeier says. “The tank had to be perfectly round for the roof airlift to work.”
Baker Concrete Construction self-performed 80 percent of the work, as well as coordinated the work of three subcontractors and three suppliers. In total, the project team placed more than 63,000 cubic yards of concrete and nearly 8,200 tons of rebar.
To ensure quality and maximize efficiency, all project leaders began work on the first tank and then were reassigned to the two subsequent tanks, each starting a month apart, to transfer knowledge and lessons learned to their coworkers.
Like the Meeker Gas Plant, the Cameron LNG project began after hurricanes Katrina and Rita devastated the Gulf Coast workforce. Baker Concrete Construction tapped into local recruitment efforts after the storms, as well as pooled resources from its Houston office.
Though challenging, the hurricanes also presented an opportunity to give back to Hackberry, which suffered considerable damage. Baker Concrete Construction, Sempra LNG and AK/IHI joined together to support the rebuilding of two churches and a high school gymnasium.
“Volunteers pitched in after work and on the weekends,” Nussmeier says. “We told them, ‘keep your tool belt on and come on down.’ The community was very grateful.”
While the project as a whole was successful, Nussmeier says the company’s biggest benefit stemmed from quality control with the massive concrete structures and compliance with the tight tolerances.
“It allows us to do more LNG concrete containments and positions us to do more upcoming nuclear work,” he explains. “Concrete for nuclear projects has zero tolerance for errors. It has to be perfect on each and every nuclear concrete placement. The Cameron LNG terminal gives us additional experience and confidence to do that.”
Natural gas facility retrofits are a viable option when additional capacity is needed quickly. Such was the case in Houston in September 2006. With natural gas prices rising and new state and federal standards demanding fewer emissions, Targa Midstream Services called on Ref-Chem LP of Pasadena, Texas, to rebuild its Mt. Belvieu plant.
Under the $4.5 million industrial mechanical contract, Ref-Chem converted an existing isomerization unit that had been shut down for 13 years into a low sulfur natural gasoline (LSNG) hydrotreater unit.
Engineering and construction work was performed simultaneously. And despite a labor shortage, inclement weather and not having as-built drawings of the original plant, the team finished work in just 29 weeks with no recordable injuries or lost-time accidents.
Upon completion, the capacity of the unit increased from 15,000 barrels of gasoline per day to 28,000 barrels of LSNG per day.
- The United States is the second largest producer and the largest consumer of natural gas.
- Approximately 82 percent of America’s natural gas comes from domestic supplies. (Another 15 percent is imported from Canada.)
- Americans use about 62 billion cubic feet of natural gas per day.
- Natural gas represents 22 percent of total energy consumed in the United States.
- Uses for natural gas in the United States: industrial (32 percent), electric generators (24 percent), residential (22 percent), commercial (14 percent), other (8 percent).
- Between May 2007 and May 2008, the price of natural gas in the United States increased approximately 45 percent—from about $7.60 per million BTUs to roughly $11 per million BTUs.
- Liquefied natural gas constitutes approximately 2 percent of the natural gas supply in the United States.
- During the next decade, about half of the nation’s natural gas supply will come from shale deposits. (The United States has approximately 22 shale basins in 20 states.)
- Current U.S. government policies restrict access to approximately 250 trillion cubic feet of recoverable natural gas.
- Fifty-nine percent of undiscovered gas resources are on federal lands and offshore waters.
Sources: Natural Gas Supply Association, Energy Information Administration, American Clean Skies Foundation.