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Interview

with Phil Brown, Director & Performance Team Leader, J P Kenny Perth

26.08.2010 / Energyboardroom

By many accounts Australia is J P Kenny’s forte. When it comes to the superlatives – the “biggest” and “largest” projects – in subsea engineering and pipelines, most of the major operators know who to call. How would you describe J P Kenny’s role in servicing the Australian oil and gas industry and subsea market?

We are the largest provider of a particular type of specialist resources in the region. Wood Group Kenny comprises the four sister companies J P Kenny, MSi Kenny, MCS Kenny and Wood Group Integrity Management (WGIM). Within Australia, Wood Group Kenny has approximately 375 personnel available based in Perth and Melbourne. We have a very wide range of subsea marine, pipeline engineering, systems engineering and project management disciplines. What we provide our clients is a capability that starts with conceptual/feasibility engineering. Our main strength and the bulk of our work is performed on subsea and pipeline front-end engineering and design (FEED). But we also transcend the capital expenditure (CAPEX) phase and continue right into the operating expenditure (OPEX) phase of the business. We provide our clients with a value-driven cradle-to-grave package of services.

We are very focused on three things as far as our clients are concerned:

First are the CAPEX and OPEX numbers, and we are always looking to optimize and reduce costs by clever engineering, whilst maintaining fit for purpose solutions and delivering life cycle value.

Secondly, we are acutely aware of the schedule restraints and delivery requirements of our clients. They need to get their projects completed on time and we help them do that; so one of our key drivers is to avoid delays. Delivery by July 2013 means 2013, not 2014. The net present value (NPV) impact of being a year late is massive.

Thirdly, as well as getting the cost number right and the schedule right, most importantly it must be done safely. Over the last 10 years we have had no lost time injuries or accidents and in the process we have won the IFAP Safety gold award – four times in a row. No amount of pressure to reduce CAPEX and OPEX or schedule, can be allowed to compromise safety. You have to keep your people safe.

There are many more dynamics to the business, but if you get those three main areas right, then by and large you are on the right track. We rely a lot on repeat business. The aim is to come through a project and create a mindset in which the client believes you have completed a journey together, is happy with the result, and would be pleased to come back to J P Kenny for more work. That means a lot to us because it demonstrates confidence and shows we’ve won the client’s trust a second or third time.

Who have been your key repeat clients that have allowed J P Kenny to grow its business here in Australia?

Our key repeat clients here have been Woodside, Apache, and Chevron. We are also presently working on one very large project with INPEX for Ichthys. The industry in this region is hot and a lot of people are really focused on the liquefied natural gas (LNG) business, especially in Western Australia. There are a lot of other international operators looking to enter this market and we are very aware of the likes of Hess, BHP Billiton, Shell, Total, ExxonMobil, and many other majors who want to continue to grow their presence here.

While the region is hot now for the upcoming wave of LNG projects, J P Kenny has been in Australia for close to 30 years. What was the company like pre-boom and how has it evolved in its knowledge and expertise to comprise its current capabilities?

Up until 1996 the company had about 20-30 people. Things started to escalate quite significantly when Woodside Laminaria project came along and the company moved from 30 to 70 people. It has been a gradual increase since then as new projects came along. We have evolved from being known just as a pipeline design company to a broader and wider ranging entity that also offers project management, offshore construction supervision, procurement, and offshore inspection for pipelines and subsea systems. We are much broader in scope than we were 10-15 years ago.

J P Kenny partnered with Technip in a joint venture for the FEED, procurement, and construction management of the Greater Gorgon Project’s upstream facilities. What were the main technical challenges you encountered with a project as a large and unprecedented in scope as Gorgon?

Gorgon is a massive development. Its subsea systems face combinations of high pressure, high temperature, and corrosive product. One of the biggest challenges is the deep water element, and especially the continental shelf which is effectively a subsea cliff that exists 100km offshore, across which you need to install a pipeline. The environmental conditions there are quite unique and extremely challenging, possibly more challenging than in any other place in the world. It is also a cyclonic region and the further north you go, the more seismically active the seabed becomes. The cyclones generated in the area are extremely powerful. You have a number of other interesting features like the solitons – giant subsea rolling waves that are within the water column which you would not encounter in many other parts of the world. When you add the extreme tides, currents, and cyclones all together, it is a tremendous metocean design challenge. Most of the time the sea conditions are quite calm; but when it gets rough, watch out, because is the forces are extremely powerful.

The seabed is quite unique as well. By comparison deepwater West Africa, for example, is relatively benign with its soft silty sediments. The North Sea and Gulf of Mexico are reasonably well formed sands and clays. However, the seabed here can be much more difficult. It is characterized by unconsolidated, broken limestone materials on the top, and hard rock beneath, which makes it very difficult to install foundations on big platforms, or to trench pipelines.

Then there is the remoteness factor. If you want to install a pipeline you are a long way from any logistical centre. You will see some very long trunk lines being built here partly because of the distance between the reserves and the landing points.

One of the world’s longer pipeline projects and J P Kenny’s largest ever FEED contract is INPEX’s Ichthys project. Final investment decision for Ichthys has been pushed back to next year on accounts of, amongst other reasons, FEED delays. You stressed earlier the importance of meeting schedules and delivery dates. To what extent does accountability in delays lie with J P Kenny?

A lot of it comes down to the ongoing reservoir evaluation, new information that comes to light, and exactly what type of facility you would like to have in place, for example as far as floating production is concerned. To some extent the subsea system is dictated by what the host vessel looks like – and many of those decisions around evaluation of development options are out of our control.

Because projects such as Gorgon or Apache’s Julimar are mainly subsea, a lot of the design development remains within our control. It is much easier when there are fewer outside influences to impact your own focus area.

The speed with which Pluto was completed may well become a precedent for future development. Being owned 100% by Woodside meant that there was less discussion, debate, and review of approvals from partners – hence the decision chains were very short.

By every account that we have come across Pluto does set the precedent for the speed and swiftness of its development from discovery to first gas early next year. What drove J P Kenny’s speed and efficiency in its work for Pluto?

The way that our team integrated with the Woodside team was excellent. We were together in the same location and had a number of teambuilding sessions right from the beginning. The objectives for everyone involved were clear. There was no silo mentality that can often occur on big projects. Everything was very cohesive, team oriented, and, ultimately, very successful for us and for Woodside. It was one of the better projects that we have been involved in.

As a multinational company that can leverage know-how and experience from one country and export it globally across operations, what are some of the learnings and “firsts” acquired here in Australia that can be of benefit to the rest of J P Kenny worldwide?

In terms of technical expertise, I would say pipeline stability. Within the Wood Group Kenny companies, J P Kenny Perth has become an emerging center of excellence as far as subsea pipeline stability is concerned. Because pipelines are subject to such challenging environmental loadings and because pipeline stability costs so much (especially if you get it wrong), reducing that part of the budget by 10%, saves a lot of money. We have always had a focus on trying to optimize and eliminate the layers of design conservatism that have historically existed. Of course you need sensible margins of safety, so you cannot strip away too much. But there are a number of techniques and new analytical methods to assess subsea pipeline stability. We have also expanded that philosophy into other design features such as lateral buckling, for example.

The Perth office has certainly become a center of excellence for stability within J P Kenny, keeping in mind that Wood Group Kenny consists of over 1,600 people and is by far the biggest specialist of its kind in the world. Of course, other Wood Group Kenny offices have their own areas of expertise. But within the subsea and pipeline group, the Perth office is starting to “accept the mantle” as the center of excellence for those key technical matters.

In addition to Perth, J P Kenny has major offices in London, Aberdeen, and Houston. We also have offices in Melbourne, Jakarta, Kuala Lampur, Stavanger, Paris, Abu Dhabi, Delhi, plus Moscow which we have recently opened.

What are some of our main R&D priorities as you look ahead to the growth and development of the subsea industry here in Australia?

We have a joint industry project in place for pipeline stability which is a global development program that will involve a number of the majors. The project looks at stability related issues specifically concerning the Northwest Shelf.

J P Kenny has a number of patents in place including horizontal and vertical strategic anchoring. We have a significant internal budget for R&D and we carry out a realistic and focused annual programme on technology and innovation, but it is never technology for technology sake. It invariably has to be aimed at the three areas mentioned before: CAPEX and OPEX costs, schedule, and safety. If the innovation or technological improvements are not aimed at one of those three areas, then why are you doing it? This is not a technology house with no objectives. It has to have a business focus and a real impact somewhere down the road.

What would be your final message to our readers about the competencies, capabilities, achievements, and future ambitions of J P Kenny in Australia?

We have been here the longest, we are the biggest, and are the most successful having engineered the vast majority of trunk lines and pipelines that breach the shore of Australia – so we know the most about it. And we are the nicest guys as well!

Also this company has never been a male dominated province. We have quite a few female engineers including our engineering manager along with many other very talented female staff. The gender balance is important for the harmony of the office.

We also get most of our graduates from the Universities here in Western Australia. Perth has a very good feeder system and is developing a lot of real talent here. That is great for the future of Western Australia and the entire country. We do not want to be going back to Europe or the US to get our graduates. We want to grow our own Australian product so that in 10 years time we can be exporting Australian talent. We are developing a skills base here which over time should expand internationally.

As Australia itself is a multicultural country, we too have recruited from all around the world. The last time I did a count we had 33 nationalities present in this office. If you check that with some of our other offices around the world you might find five or six nationalities present, but certainly not 33. If you walk around this office you would find Chinese, Japanese, Russians, Kazakhs, Indonesians, Indians, Egyptians, Algerians, Namibians, Americans, French, Portuguese, and the list goes on. We are very actively searching the international centres to look for the very best talent.

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