case study kuwait oil fields reconstruction project

T he Iraqi invasion of Kuwait took place in August of 1990 with the liberation in February 1991 following the Gulf War. Almost all of the country's oil production facilities suffered extensive damage. The Kuwait Oil Company's (KOC) oil field reconstruction project that was planned, executed, and managed by Bechtel International was actually conceived in November 1990 in London, England. Planning and organizing the reconstruction of the oil facilities continued throughout the war in London, Houston, San Francisco, Dubai, and Riyadh. This was during the occupation but prior to the liberation. No one knew at that time what the true magnitude of the work would be; however, some tasks could be identified and front-end planning and procurement for these tasks started immediately. The scope of the restoration work was obviously increased tremendously by the damage incurred from the oil field fires that started at the end of the war. Bechtel project management personnel arrived in Kuwait on March 4, 1991, three days after the allied troops had completed their initial sweep of Kuwait City. The main objective of this team was to organize and manage the fire-fighting effort, This phase of the project was named Al-Awada (Arabic for return). The vivid scenes shown by the newspaper, magazine, and television reports came alive for Bechtel project personnel. The days were dark with smoke from the fires blocking the sun, oil droplets filled the air, clean water and sanitary systems were not working, power plants were down, transportation was minimal as tires were a precious commodity, and food was very scarce. Initial accommodation was in refurbished ship quarters and in some vandalized apartment complexes without water and electricity, no more than a foam mattress on the floor, and a long hike up a darkened staircase. In addition to these problems, booby traps, land and water mines, unexploded shells and rockets, and other ordnance had littered the country. The temper- . atures in summer consistently were above 50" C in shade (seldom below 37" C at night), exposing the people in the field to temperatures of 55-58" C in many locations, and hotter nearer to the fires. Just providing drinking water was a major undertaking. John Oakland, senior vice president of Bechtel Corporation, who served as the manager of projects in Kuwait, remarked, "This campaign, which was well covered by the international news media, was one of the most complex engineering and construction efforts in history (I)." However, the following assignment, which was the reconstruction of the Kuwait oil fields, was an even bigger and more challenging task. The project management of the oil production facilities reconstruction, which was named Al-Tameer (Arabic for rebuild), is the subject of this report.

Status of the Facilities

The state of the two million bpd oil export industry in Kuwait after the completion of the fire-fighting effort was as follows: Six-hundred-forty-seven wells had burned in total, 75 1 wells were damaged. Twenty-six oil gathering, separation, and production centers were damaged or totally destroyed. One marine export facility and its related single point mooring was totally destroyed, and the second marine export facility was partially damaged and out of commission. The equivalent of ten million barrels of crude oil storage tankage had been destroyed. The Shuaiba refinery was totally destroyed. A crude unit in the Mina Al Ahrnadi Refinery was completely destroyed. The rest of the refinery was partially damaged and the refinery was out of commission. The Mina Abdullah Refinery was partially damaged and the units were not operable. All communication towers and networks were destroyed. Most of the working population had either

Al-Tammeer Project

After the successful completion of the fire-fighting effort, KOC invited Bechtel to present its plan for the reconstruction of the oil fields production and exporting facilities damaged during the war, starting work by November 1990. KOC's goal was to be able to produce 2 million bpd of oil by September 1992.

The Planning and organizing

The planning and organizing effort for the Al-Tameer project started with the Bechtel team that was already on-site as part of the Al-Awada project fire-fighting effort. An organization totally different from the Al-Awada project was required to scope, estimate, plan, execute, and turn over operational facilities to KOC. This organization had to be self sufficient and be able to fully support and service a massive work force of more than 16,000 people. The main organization was divided into five main functions. One was to support KOC's future five-year budget planning with identification, scoping, and planning future projects. This was named KOC Major Projects Group. The other four groups consisted of: manager Al-Tameer projects, responsible for all planning and project management, as well as engineering and procurement manager coordination, responsible for scheduling, cost control, estimating, project reporting, public and community relations, and other relevant functions manager services, responsible for providing all the required support services for the project team including explosive and ordnance demolition group manager operation, responsible for field execution of all the defined work. A damage assessment and scoping team consisting of engineers, planners, and estimators walked every foot of the oil fields production and exporting facilities preparing a scope of work, cost estimate, a plan and schedule of work for each facility. The planning was based on a back to front scheduling defining the dates and production goals first, working backward to see when the drilling effort and facilities reconstruction work had to start to meet this goal. This approach also determined the required manpower and helped with direct hire and subcontracting plans. The overall plan defined the sequence of the work and prioritized the resources to make sure facilities with least damage were first priority for completion. The master schedule was developed based on nine subproject organization work breakdown structures (WBS):

• oil recovery
• tankage south
• North Kuwait pipelines/flowlines
• power, buildings, cathodic protection
• marine facilities
• desalters
• South gathering centers
• West gathering centers.

Each subproject having its task force, budget, schedule, and its priority on resources identified was headed by a project manager. The Al-Tameer project organization chart is shown in Figure 1. The teams were integrated with available KOC personnel who performed some of the project functions. Each subproject team was supported by local functional managers to provide them with staff and resources to execute the work. The key driver behind the plan was meeting the schedule and the production capacity.

Execution

The project execution consisted of three main functions: detail engineering, procurement, and construction management

Detail Engineering

Engineering and construction teams worked very closely during the planning phase to determine the best and most expedient way of rebuilding some of the facilities. This close collaboration continued until construction was complete. More than 200 designers and engineers worked in the makeshift project offices at various sites, with strong central support from a base that was set up in an old war-damaged girl's school. This was later transferred ta a newly constructed KOC engineering building. Additionally, a team of more than

200 engineers from various Bechtel regional offices worldwide provided continuous support and specialized expertise. The main deliverables of the engineering teams were construction drawings, construction packages, and material requisitions and technical bid tabs. This effort was not limited to oil production and exporting facilities; it included some of the necessary infrastructure required for the day-to-day operation of KOC. Offices, warehouses, guest houses, employees housing, roads, power, water, etc., were all part of the scope of the work. Because most of the original drawings and specifications were destroyed during the war, field sketches and measurements had to be used. A total engineering effort of 450,000 hours resulted in 4,500 major drawings. One totally new and fully modularized gathering facility (GC-17) was designed and built in Houston, Texas, and shipped to the sites. Other facilities were designed for rebuild based on their original concept, but modernized wherever possible. Some of the units were very old and were upgraded with the more modern versions of the equipment available. A more extensive use of distributed control systems and automation was one of the key areas that was upgraded.

Procurement

The project procurement group was established in full force during the firefighting phase of the project to provide resources for that very important effort. In the Al-Tameer phase the team was further expanded to support the massive procurement and contracting effort that was required to meet the target schedule. In addition, inventory control and warehousing material were also part of the procurement team's area of responsibility

• material management
• contracts management
• warehouse management.

Material management included purchasing, inspection, expediting, and traffic and logistics. Contracting included formation and administration. Warehouse management included central warehouses and satellite warehouses. The procurement team had three main goals within the project's overall objective

• ensure the right material and resources were available in time to meet the schedule
• maximize the use of available local resources to assist in rebuilding the local economy
• ensure sure final warehouse inventory met KOC's material coding and identification system

The size and the particular nature of the project required that the procurement team be divided between material management-reporting to the manager of projects-and contracts management-reporting to the manager of construction. This arrangement facilitated the communication and management of site contractors' work with Bechtel's direct hire construction work.

Key milestone

Some of the more notable milestones in the program were:

• The last fire was extinguished and the well was capped on November 6, 199 1, eight months after the arrival of the first Bechtel team on-site.
• The first postwar oil was pumped from two of the original gathering centers on May 26, 199 1.
• By December 1991, more than 400,000 barrels of oil per day were being produced from the rehabilitated facilities.
• By April 1993, more than 11,000,000 barrels of weathered crude had been reclaimed from oil pits and lakes, and process

1. Summarize the case (2)

2. project was a major undertaking. The challenges it faced ranged from providing the basics for being able to live in the desert (water and shelter) to finding creative methods for getting imports into the country through non-traditional routes. From the author's point of view, the project went rather smoothly. To which factors do you attribute the success of this project?

3. This case describes an enormous undertaking made up of many different projects. Which of these projects can be considered the most important? Why?

4. One of the regular outputs of the development of the project plan is the work breakdown structure. Define the work breakdown structure and its benefits.

5. How were the multinational relationships handled in this project?

6. This project was handled by the Bechtel Corporation, a private company, and not the Kuwaiti government. List some of the advantages to this project being handled privately and not publicly.