Technip Claremont

Cracking on┬áA year after our first article on Technip Claremont, Martin Ashcroft finds Jeroen Snijder, vice president of operations, very happy about the companyÔÇÖs growth, its ventures into new technologies and the consolidation of its reputation for safety. Since I first spoke to Jeroen Snijder, vice president of operations for Technip Claremont, the company has enjoyed a period of solid growth. ÔÇ£WeÔÇÖve almost reached 500 employees now,ÔÇØ says Snijder. ÔÇ£I think when we talked a year ago it was around 450, so IÔÇÖm very happy about that.ÔÇØ Technip Claremont is the California technology center of the French-owned Technip Group, one of the worldÔÇÖs top five companies in oil, gas and petrochemical engineering, construction and services. Headquartered in Paris, the group has European business units in France, Italy, Germany, the UK, Norway, Finland, and the Netherlands, and others as far afield as the United States, Brazil, Abu-Dhabi, China, India, Malaysia and Australia. Technip Claremont designs and builds hydrocarbon processing facilities (as well as retrofitting existing plants) for the production of ethylene, synthesis gas, hydrogen, ammonia and nitric acid; gas processing and transmission facilities; refining and petrochemical production; and combustion, solids processing and incineration applications. In the field of refining and petrochemical production, Technip ClaremontÔÇÖs experience extends to projects ranging from single process units to industrial complexes with multiple, integrated units. Hydrogen is the most widely used industrial gas in the refining, chemical and petrochemical industries, and Technip Claremont is recognized as the market leader, having designed and built the two largest single train hydrogen plants in the world, not to mention over 220 others. Claremont is also the ethylene technology center within the Technip Group (you could call it the cracking center), involved in the design and supply of state-of-the-art cracking furnaces using the latest coil designs and boasting low life cycle cost and the lowest NOx emissions. It also offers extensive expertise in the modernization of existing cracking furnaces of different makes to increase capacity and selectivity while also meeting stringent environmental emission constraints.Cracking (also known as pyrolysis) is the process of breaking down heavy hydrocarbons into simpler molecules. The rate of cracking and the resulting products depend on the temperature of the process and the presence of catalysts. Another weapon in its powerful armory is Dorr-Oliver fluidized bed technology, used in roasters and incinerators for the mining industry and industries that burn sludges and solid wastes. This technology is used in a wide range of metallurgical and chemical processes, including metals extraction, zinc sulfide roasting, pyrite roasting, limestone and phosphate rock calcination, and many other applications. With around 1,000 units designed and constructed worldwide, Technip is also the market leader in fluidized bed systems and facilities, despite Claremont being the only Technip facility with this technology.So, having established Technip ClaremontÔÇÖs credentials, where has the growth come that so excites Jeroen Snijder? ÔÇ£ThereÔÇÖs a lot of work in the Middle East,ÔÇØ he says, ÔÇ£and it continues to grow. Ethylene continues to grow and we have a number or projects in the Middle East at the moment. Hydrogen is also continuing to grow and weÔÇÖve also made a big effort in renewables.ÔÇØThatÔÇÖs interesting, as when we spoke a year ago, Technip Claremont had started to flirt with renewables, but Snijder was unsure about the future of the bio sector. ÔÇ£There has been a big change in renewables,ÔÇØ he says. ÔÇ£In the past the country was focused on food based renewables; there was a boom in ethanol and biodiesels in the US. But we are looking at renewables out of biomass. I see that picking up.ÔÇØAlthough we shall know who the next US president is by the time readers see this magazine, Snijder has been encouraged that both presidential candidates have endorsed biomass as a fuel source. Rising food prices are another factor in its favor. ÔÇ£I think people are starting to realize that maybe the food based ethanol is not the long term solution, but that renewable from biomass might be. So weÔÇÖre looking at creating energy out of specialty grasses and wood chips, etc. and weÔÇÖve had some good communication and development in that arena. The feeling is that in a couple of yearsÔÇÖ time itÔÇÖs going to be big for us.ÔÇØ The technology is there, he says, but commercial development is still some way off. ÔÇ£Because everything is so new, you really need to go through pilot plants before you spend a lot of money on commercial plants. ItÔÇÖs got to be proven first.ÔÇØ Nevertheless, he says, he is hoping that Technip Claremont might start the engineering of its first commercial plant next year, if the current financial crisis does not hold things up. ÔÇ£If the situation can stabilize we could be starting our first commercial unit next year and then itÔÇÖs probably about 36 months before you start producing anything on a large scale. I think itÔÇÖs going to take about four years before thereÔÇÖs much of this on a commercial scale.ÔÇØBut four years is not a long time in this industry, and Technip Claremont has some clear advantages. ÔÇ£The fortunate thing for us is that we are experts in pyrolysis and weÔÇÖre experts with fluid beds, and a combination of those is at the heart of this technology.ÔÇ£I think thereÔÇÖs still a future for the food based side of the industry,ÔÇØ he continues, ÔÇ£but I think the way food prices have gone up that itÔÇÖs reached its peak and is on a downturn.ÔÇØ Most of the ethanol and biodiesel plants also need some kind of government incentive, he points out, and itÔÇÖs not at all clear how long these will continue.The financial crisis has not hit Technip Claremont yet, says Snijder, but heÔÇÖs wary of it. ÔÇ£Obviously the stock of the company has gone down, like everybodyÔÇÖs stock. For us itÔÇÖs what happens to our clients, and thatÔÇÖs still a wait and see. WeÔÇÖre in the middle of a lot of projects and theyÔÇÖll just continue, but 2009 could be a challenge.ÔÇØ The most likely challenge, he explains, is that some of the small independents might postpone or even cancel projects if they are unable to secure loans from banks. ÔÇ£WeÔÇÖre looking very closely at the budgets for next year and the order intakes, because they could be affected by whatÔÇÖs going on.ÔÇØ Renewables could well fill some of that gap, but another technology for the future is also being expanded at Technip Claremont. Despite all the hype around renewables, itÔÇÖs unlikely that coal will go out of fashion anytime soon, with demand for energy continuing to rise and the US sitting on huge coal resources, so there is a move in the industry to clean up coal fired power stations. Technip is looking into gasification projects to retrofit coal fired power plants to reduce greenhouse gas emissions. ÔÇ£These are very large projects and I think there will be a lot of it going on in a few yearsÔÇÖ time, but not in the very near future,ÔÇØ says Snijder. ÔÇ£They are expensive projects and we are talking to a couple of companies about gasification projects. These are very early stage projects, but in four or five yearsÔÇÖ time I definitely think itÔÇÖs going to happen because the US has an abundance of coal.ÔÇØAnother challenge Technip has faced in the last few years is rising commodity prices, which have knock-on effects throughout the supply chain. ÔÇ£Since the beginning of 2005, prices have gone up tremendously,ÔÇØ says Snijder. As a result Technip Claremont has reduced the number of projects it carries out on a lump sum basis, in favor of more reimbursable work. ÔÇ£Technip is trying to mitigate risk. We still do some lump sum work, but we try to pinpoint all of the costs with the suppliers before we go into the contract with the client. Prices have skyrocketed so a plant today is so much more expensive than it was four years ago.ÔÇØ Availability of supply can also be an issue. ÔÇ£The market has been so incredibly busy. Compressors take twice as long to get out of the shop today as they did five years ago,ÔÇØ he says by way of example. ÔÇ£The difficulty of getting shop space with suppliers delays delivery of a lot of things that we used to get much quicker.ÔÇØ The lesson Technip Claremont learned from this was to get involved with suppliers earlier to ensure that everything gets delivered on schedule. ÔÇ£The old schedules donÔÇÖt work anymore. ItÔÇÖs about engaging the supplier at a very early stage of the project so he can give himself space for assurance that it can be delivered when it needs to be delivered.ÔÇØTechnip mitigates supply chain issues as much as possible with a sophisticated global procurement system, which works hard to support local operations, wherever they might be. ÔÇ£We have a global supply chain and global procurement,ÔÇØ explains Volker Kratzat, director of procurement at Technip Claremont. ÔÇ£We have global commodity family managers (CFMs) who understand our global purchasing needs, and we have global frame agreements with suppliers, which are handled by the CFMs, covering things like unit prices and volume discounts.ÔÇØ The major items Kratzat purchases are mechanical equipment, rotating equipment, and electrical equipment, as well as steel, pipes, and cast tubes. ÔÇ£We prepare a bid list at the start of a project, usually in conjunction with the client,ÔÇØ he says. ÔÇ£We then go out to enquiry to all the bidders who have been selected, so we have direct contact with the supplier base. We then conduct the buying of the equipment, the expediting of it, and the inspection of it up to installation.ÔÇØThe global commodity family manager, who might be based at headquarters in Paris or at another Technip office, monitors purchases made by all Technip facilities in his or her product specialty. ÔÇ£We have a web-based program called EPC Business which we use to post our enquiries to our bidders. That information is visible to our commodity family managers who develop discount programs with the various vendors.ÔÇØ The volume purchased through some Technip global frame agreements might include $15 million from Technip Claremont, and another $20 million from Technip Houston, Kratzat explains, but by the time you figure in the quantities ordered by facilities in Europe and elsewhere, they might consolidate into $150 million or more. ÔÇ£Over the last few years we at Claremont have benefited from volume discounts by $100,000 to $300,000 on a yearly basis on some projects.ÔÇØ Technip Claremont has a few preferred suppliers, he says, ÔÇ£but our approach is pretty much to let the competition decide the best source of supply.ÔÇØOne thing that intrigued me, with projects going on all around the world, and procurement being equally global, was how the equipment gets to the job site. Whose responsibility is that? ÔÇ£It depends on the contract,ÔÇØ says Kratzat. ÔÇ£Some of our contracts are FAS (free alongside ship) at the port of export, so we ship only to the port of the country where itÔÇÖs manufactured. We also have contracts on a CIF basis (cost, insurance and freight) to the country of destination, or the client might take care of the whole of the shipping themselves. Our preferred way, to minimize risk, is to have it on an FAS port of exit basis.ÔÇØ Damage is not a big risk, he explains, but the cost of shipping has risen rapidly in recent years, and there is also the risk of delay.Another thing central to the Technip philosophy is safetyÔÇöso much so that it aims to be the reference point for safety in the industry. The latest initiative to emanate from Paris is a special training course in safety awareness for managers. ÔÇ£I very much appreciate working for a company where the CEO in Paris says that safety is of the utmost importance, his No. 1 focus,ÔÇØ says Snijder. ÔÇ£All of the managers of the Technip Group, about 250 of us, have gone through mandated safety training. ItÔÇÖs a different type of training from the usual safety training; itÔÇÖs about how you represent your company in safety and how we can change our safety culture, so that the culture of Technip is seen by the outside world as honoring and respecting safety.ÔÇØ┬á Technip is a large organization with many locations and people working in a variety of different conditions and environments. Some work in offices, while others are out in the field on construction sites, offshore facilities or even subsea installations. There are different safety considerations for all of those environments, ÔÇ£but even for us as office workers thereÔÇÖs a big focus on safety and on health, because health is part of the whole safety culture. WeÔÇÖre really promoting it inside the organization so that the people understand that they are number one, we care about them, and we really want to have an environment where people can feel safe.ÔÇØThe office approach to safety is less to do with avoiding damage to your finger by the careless use of a stapler, and more about adopting a culture of safety with regard to internal and external customers in the supply chain. ÔÇ£We design refining plants and petrochemical plants that other people have to operate,ÔÇØ says Snijder. ÔÇ£We want the designers to be conscious that what theyÔÇÖre designing meets all the safety standards. It is crucial that we do all the right safety checks on the plant so we can deliver it to our clients and know that we have given them a safe plant. ItÔÇÖs getting the message to people so they recognize that our products are safe for our clients, and for our own people who travel and visit jobsites. So far itÔÇÖs been going very well.ÔÇØThereÔÇÖs a health aspect to this program, too. A health fair was held recently at Technip Claremont where medical professionals took blood pressure readings and cholesterol levels, and gave advice where results were outside the norm. A fitness program is also in place for people who might prefer to exercise together in groups rather than go to a health club on their own. ÔÇ£As we are in California and we have earthquakes, we have also had advice from people on how to prepare yourself for an earthquake.ÔÇØTraining is another central focus for Technip Claremont, especially with graduates and younger engineers now coming in to boost staff numbers. In a mature industry like this, few companies were hiring young graduates until recently, says Snijder. ÔÇ£When that happens, your experience gets better, but the average age also goes up. WeÔÇÖve put in a lot of effort to lower that. WeÔÇÖve got some great young people.ÔÇØBut these people need to be trained, and Technip does this through its Technip University, which has two main training programs. One is specific mandatory training for new entrants, etc, but there is also a voluntary program which has enjoyed encouraging support. ÔÇ£We have a project management training class, we have a class on our different technologiesÔÇöthe hydrogen, the ethylene, the fluosolids, and we had a class on contracts and contractual legal terms.ÔÇØ This kind of training can be done in-house by senior management, but where necessary, outside consultants are also brought in. ÔÇ£We had people in to talk about how to make presentations, and how to manage conflicts,ÔÇØ says Snijder. ÔÇ£We also use outside consultants to teach people how to use different types of software, because we use a lot of different software. We even did CPR training, which about 20 percent of the company signed up for.ÔÇØOne or two classes are held every month, and they have all been full, says Snijder. Even though staff attend in their own time, itÔÇÖs made as convenient as possible for them by holding the shorter courses during the lunch hour, and others on ÔÇ£off-Fridays.ÔÇØ Technip Claremont works the 9/80s system, which means every second Friday is off. ÔÇ£We use those Fridays as training days, so people donÔÇÖt have to give up evenings or weekends. If they want to attend the training class they can come in and do it on the Friday morning. ItÔÇÖs been a big success so far. I was surprised to see how enthusiastic people were to enroll and be part of these courses.ÔÇØThere is also a less formal system of ongoing training which forms part and parcel of everyday lifeÔÇölessons learned sessions. ÔÇ£We do lessons learned on every project,ÔÇØ says Snijder. ÔÇ£At the end of each project weÔÇÖll analyze things that went well and things that didnÔÇÖt go so well, so we can see how we can improve. Two things come out of it. One is procedural in how we can improve the execution of projects, and the other is technicalÔÇöis there anything that came up technically that we can use to improve our product line?ÔÇØOn technical side, he says, there have been opportunities to change design slightly from a metallurgy standpoint to make plants run a little more robust. ÔÇ£With a lot of new staff everywhere, the more robust they are the better.ÔÇØ┬á