Productivity a Growing Challenge for New Wave PetChem Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Developers of the second wave of U.S. Gulf Coast petrochemical projects are facing more productivity challenges due to the retirement of experienced workers and other issues, company executives said Thursday at the Downstream Engineering, Construction & Maintenance (DECM) conference.

Speaking during the keynote panel discussion entitled "Delivering on the 1st Wave and Preparing for the 2nd," Cheniere Energy Incorporated (NYSE:LNG) (Houston, Texas) Senior Vice President Ed Lehotsky said that workplace productivity on the Gulf Coast used to be regarded as a global benchmark. He said he does not think that is the case anymore.

The rate at which welding work was rejected because of sub-par quality used to be 2% on the Gulf Coast, Lehotsky said, but that rate is now 6%. By and large, welders are less experienced and need more training, which had led to productivity issues, he said. Cheniere and engineering firm Bechtel have helped train 80-90 welders for its capital projects so they are qualified to weld stainless steel.

As such, the U.S. industry must work to develop a more productive work force, Lehotsky said. Cheniere built three liquefied natural gas (LNG) production lines in 10 months at its Sabine Pass site in Louisiana, he noted, and plans to complete a fourth line there by the end of this year. It is also building two LNG lines in Corpus Christi, Texas. For related information, see April 3, 2017, article - Cheniere Looks to Future After Sabine Pass LNG 3 Completion.

Manav Lahoti, business director of U.S. olefins for Dow Chemical Corporation (NYSE: DOW) (Midland, Michigan), was also part of the panel discussion. He noted the company recently finished mechanical completion on its world-scale, 1.5-million-ton-per-year ethane cracker in Freeport, Texas, within a week of the project's schedule. He said Dow was benefitting from the experience it gained while building a large propane dehydrogenation unit in Texas a couple of years earlier. Dow plans to expand the ethane cracker to 2 million tons per year capacity, which will make it the world's largest cracker when it comes online 2020, he said.

Lahoti said that in order to improve or maintain labor productivity, engineering firms should work to improve middle management.

Lahoti said he doesn't expect that the second wave of chemical investments in the U.S. will be as large as the first wave. Dow spent $6 billion to $8 billion on first-wave projects and now is concentrating on new incremental projects. For related information, see April 28, 2017, article - Dow Chemical Turns Focus to Incrementals in Wake of Gulf Coast, Saudi Build-Ups.

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