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MATRIC No
0703621
SURNAME
McAndrew
FIRST NAME(S)
Greig
COURSE TITLE
ASSIGNMENT TITLE
LECTURER ISSUING
COURSEWORK
Mohammed Kishk
I confirm: (a) the inclusion of my signature below (electronic or otherwise) certifies that the work
undertaken for this assignment is entirely my own and that I have not made use of
any unauthorised assistance.*
(b) that the sources of all reference material have been properly acknowledged.*
(c) that I accept that the School will dispose of uncollected coursework at the end of term
via the paper recycling service.
(d) that I will retain a copy of all coursework until the end of my studies.
* For
information
on
Academic
Misconduct,
refer
http://www.rgu.ac.uk/about/academic-affairs/quality-assurance-andregulations/academic-regulations-student-forms]
Signed
Greig McAndrew
Date
Marker
Grade
to
Project Management
Trans-Saharan Gas Pipeline
Mohammed Kishk
Abstract
This report discusses the project management aspect for the construction of the
Trans-Saharan Gas Pipeline. Included are detailed lists of project objectives, along
with a project scope and project deliverables. Multiple situations have been
considered with a final solution to complete the project outlined including risk
assessments and which risk management scheme has been used to mitigate these
problems.
II
Declaration
I hereby declare that the project work entitled Trans-Saharan Gas Pipeline, is a
record of an original work piece done by myself, Greig McAndrew, for Mr
Mohammed Kishk and that this project work is submitted in the partial fulfilment of
the requirement for the award in the degree of MSc Oil and Gas Engineering. The
discussions in this report have not been submitted to any other University or Institute
for the award of any degree or diploma.
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Contents
I
Abstract......................................................................................i
II
Declaration..................................................................................i
Table of Figures..............................................................................iv
Figures.......................................................................................iv
Tables........................................................................................iv
1.
Executive Summary.................................................................1
2.
Introduction...........................................................................2
2.1.
Background......................................................................2
2.2.
Project Rationale...............................................................2
3.
Project Definition....................................................................4
3.1.
Purpose............................................................................4
3.2.
Project Scope....................................................................4
3.3.
Objectives........................................................................4
3.4.
Project Deliverables...........................................................5
3.5.
3.6.
Considerations..................................................................6
3.7.
Constraints.......................................................................6
3.8.
Assumptions.....................................................................6
4.
4.2.
Project Schedule................................................................8
4.3.
Stakeholders.....................................................................8
4.4.
Cost Analysis...................................................................10
4.5.
Strengths, Weaknesses, Opportunities and Threats (SWOT)
Analysis.....................................................................................12
4.6.
4.6.1.
Implementation............................................................12
4.6.2.
4.6.3.
Gantt Chart..................................................................14
5.
6.
5.2.
5.3.
Responsibility Matrix........................................................18
5.4.
Controls.........................................................................19
5.5.
Communication...............................................................19
Potential Risks and Management.............................................20
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6.1.
Risk Analysis...................................................................20
6.2.
Risk Management............................................................22
7.
Conclusion............................................................................24
7.1.
Recommendations...........................................................24
8.
References...........................................................................25
9.
Appendices...........................................................................26
9.1.
9.2.
9.3.
9.4.
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Table of Figures
Figures
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
1
2
3
4
5
6
7
8
Tables
Table
Table
Table
Table
Table
Table
Table
Table
1
2
3
4
5
6
7
8
Sontrachs Objectives..........................................................4
Key Project Deliverables......................................................5
Key Performance Indicators.................................................6
Yearly Expenditure............................................................10
Time Estimations..............................................................13
Roles and Responsibilities..................................................17
Responsibility Matrix.........................................................18
Main Risk Considerations...................................................21
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1. Executive Summary
This report shows Sontrachs evaluation and analysis for the Algerian
section of the Trans-Saharan Gas Pipeline (TSGP) project. The project has
been halted recently due to issues with Nigerian militant opposition
groups and financing difficulties.
Information presented revalidates the importance of the TSGP and proves
its capability to not only provide profit but to also aid areas in dire need
of development.
To show the TSGPs capability, an analysis into the overall cost has been
carried out, along with a risk analysis to show potential problems with the
current project plan. The main risks are security and financial but all of
them have been presented with mitigation options. Through the use of
the Monti Carlo Simulation and other techniques, Sontrach will be able to
produce an updated project plan, which can work around these issues
and prove the viability of the TSGP.
Results of the cost analysis showed that the end of project profit was
circa $50 billion, with a maximum exposure of $15.1 billion. The
mitigation options have reduced the impact of the risks but all of them
will still require careful monitoring.
With stakeholder management plans in place and communication
strategies implemented, following the project plan will lead to each
deliverable being carried out and a successful construction and
commissioning of the TSGP by June 2022.
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2. Introduction
2.1.
Background
2.2.
Project Rationale
The reasons for the project to continue have been listed below:
-
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Algeria and then distributing it into the EU would not only produce
more revenue for the three countries but also help in the fight
-
EU.
European gas fields are depleting. It is projected that by 2025,
80% of gas consumed by the EU is to be imported [2]. To fulfil the
yearly gas requirements, the EU must source their gas from other
countries, meaning for the foreseeable future, demand is likely to
remain high and the profitable forecast will not be put at risk.
As the TSGP runs through Nigeria, Niger and Algeria, it has the
additional advantage of supplying gas to these countries, as well as
Mali and Burkina Faso [2].
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3. Project Definition
3.1.
Purpose
3.2.
Project Scope
3.3.
Objectives
The following table lists the main objectives Sontrach aims to complete
across the 6 years it will be involved in the TSGP project:
Objectiv
Description
e
To deliver the construction of the Trans-Saharan Gas Pipeline for
1.
2.
3.
4.
5.
6.
7.
The objectives listed above show the potential that the TSGP can bring
not only to stakeholders but to certain areas which are seriously
underdeveloped.
Trans-Saharan Gas Pipeline
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3.4.
Project Deliverables
The table below shows the key deliverables for the project and links each
deliverable to its corresponding objective:
Objective
Deliverable
Deliver Algerias 2310km section of the Trans-Saharan Gas Pipeline
which is to have the following specifications:
1.
2.
3.
4.
5.
6.
7.
56 Diameter.
The ability to transport 30 billion cubic metres of natural gas
per year.
3 Metering stations, 6 compressor stations, 131 valves and
4 SCADA systems.
Produce revenue of approximately $2.38 billion per year.
Successful cooperation with Niger and Nigeria to get the pipeline
commissioned for June 2022.
Geopolitical benefits which will come from the diversification of
European gas suppliers.
Tap in points for the towns surrounding the TSGP.
Tie in with existing storage facility at Hassi RMel.
Employ roughly ~1000 members of the local population who may
be low on work due to the ongoing oil crisis.
Table 2 - Key Project Deliverables
3.5.
Description
A detailed Gantt chart listing key milestones has been designed
Schedule
Cost
Customer
budget.
The handover will only take place once all concerns of the
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Satisfactio
n
HSE
customer have been met. This will mostly come down to quality
of work and how Sontrach handled any problematic situations.
Safety is a major KPI. This covers all employees involved with
any area of the project but also towards stakeholders and the
environment.
Table 3 - Key Performance Indicators
3.6.
Considerations
3.7.
Constraints
Sontrach have very few constraints, but the ones that do exist could pose
a serious risk to the project:
1. Limited by budget. This constraint will not be as serious as others as a
detailed cost layout can be seen within this report.
2. Due to an unstable political situation in Algeria there are huge
constraints to security from terrorists.
3. Due to the oil crisis there has been almost no investment into the
industry.
4. There is very little infrastructure along the chosen route. New roads,
worker facilities and electrical lines will need to be constructed.
5. MEND plan to stop any production of the pipeline from happening,
stating they would thwart the project by sabotaging the construction
works [5].
3.8.
Assumptions
1. The full budget for the TSGP is estimated to be $16.1 billion CAPEX
and $3.1 billion OPEX after taking into consideration inflation over the
past 10 years.
2. 55% of the total budget, amounting to a CAPEX of $8.85 billion, is to
be allocated to Algeria based on pipe length.
3. To produce future cost estimations, a constant inflation rate is
assumed at 3.0%.
4. A constant gas price of $0.177/cubic metre.
5. Beneficial land compensation schemes exist in Algeria.
6. There will be no issues navigating around the Hoggar mountains.
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The project is broken down into sections with multiple tasks forming
under each. A full work breakdown outline (WBO) can be seen in
Appendix 2. To simplify matters, a work breakdown schedule has been
designed. This lists the five main sections of the WBO and shows some of
the key tasks required to complete each section:
Trans-Saharan
Gas Pipeline
1.
Develop
Project Charter
1.1
Plan Project
1.2
Execute
Project
1.3
Control
1.4
Close Project
1.5
Project Scope
1.1.1
Develop Work
Plan
1.2.1
Design
1.3.1
Project
Management
1.4.1
Client
Satisfaction
Review
1.5.1
Assign Roles
1.1.2
Work
Breakdown
Structure
1.2.2
Pipeline
Manufacture
1.3.2
Status Meeting
1.4.2
Handover
1.5.2
Revise and
Approve
Charter
1.1.3
Risk Analysis
1.2.3
Pipeline
Testing
1.3.3
Risk
Management
1.4.3
Post-Product
Review
1.5.3
Develop
Control Plan
1.2.4
Implement
Pipeline
1.3.4
Update Project
Plan
1.4.4
Pipeline
Construction
1.3.5
4.2.
Project Schedule
As shown in the Gantt chart (Appendix 1), the project is set to begin 4 th
of April 2016 with project handover finishing 24 th of June 2022 if the
construction is up to the Clients standards.
The pipeline life expectancy will range from 20 25 years assuming good
maintenance is carried out and any repairs are seen to immediately.
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4.3.
Stakeholders
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4.4.
Cost Analysis
The Algerian Government has a 45% stake in the TSGP project, with
Niger having 10% and Nigeria having the remaining 45%. The initial
budget in 2006 was $13.7 billion. Taking into consideration inflation a
2016 budget is estimated at $16.1 billion.
The Algerian section of the TSGP is the longest and therefore requires
55% of the total budget based on total length. Using this budget, the
financial manager must allocate which tasks require the most capital. A
summary of the forecasted cost breakdown can be seen in table 4 below,
detailing how much is spent each year:
Planning
(5%)
Manufacturin
g (70%)
Construction
(20%)
Miscellaneous
(5%)
2016
2017
2018
Year
2019
0.433
4.015
2.167
0.266
0.641
0.531
0.354
0.443
2020
2021
2022
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4.5.
The diagram shown above lists some of the most important strengths,
weaknesses, opportunities and threats of the project. Each has one item
highlighted which are considered the most important aspects.
One area which must be monitored closely throughout the entire length
of the project is the plans EU has set, which aim to reduce emissions
30% by 2025. The estimated profit for the TSGP will drastically fall if EU
begins to purchase less gas.
4.6.
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4.6.1. Implementation
To produce an accurate Gantt chart and Critical Path Analysis, an
evaluation to calculate expected times for each task must be carried out.
The methodology to calculate these times can be seen below:
T e=
a+ 4 m+b
T e=Expected Time a=Most Optimistic Time
6
b=Most Pessimistic Time m=Most Likely Time
For each task this equation must be applied. A sample calculation for
Activity C is shown along with a table of values for the remaining tasks:
T e=
12+ ( 4 x 13 ) +18
6
T e=13.66
T e=14.0 weeks
Expected
Time Estimates
Activity
Predecessor
A
B
C
D
E
F
G
H
I
-A
A
B, C
D
D
E, F
G
H
Time
Optimisti
Likely
Pessimisti
c (a)
7
9
12
7
80
48
6
156
2
(m)
8
14
13
12
85
52
8
184
5
c (b)
15
28
18
19
145
80
13
190
7
9
16
14
12
94
56
9
180
5
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Each task is given a resource which lists who is responsible for the tasks
completion. A fully detailed Gantt chart for the TSGP can be seen in
Annex 1.
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Admin office
Support
Group
Equipment
Supportive
Project
Management
Eng. Design
& Execution
Project
Sponsor
PM Office
Steering
Group
HSE
QA/QC
Inspectors
Engineering
Design
Testing &
Handover
SubContractors
Junior Design
Engineers
Project
Managers
Senior Design
Engineers
Project
Engineers
Health/Motio
n Supportive
Review Group
Testing
Engineers
Technicians
As the Algerian Government are the Client, they will have to be informed
about the structure. Clients often dont give much input into how
companies carry out their projects but any changes they require must be
taken into consideration. Some of the project requirements will need to
be sub-contracted out to other Algerian companies such as the pipe
manufacturing.
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5.2.
Included in the OBS and Gantt chart is a list of people who are
responsible for different tasks during each section of the project. The
roles and responsibilities of the lead and additional team members can be
seen below:
Roles
Managing Director
Project Manager
Responsibilities
Responsible for all areas of the project. Makes sure the
correct person is hired for the correct position.
Oversees and controls the entire project from initiation
to handover. The project manager will monitor each
employees daily activities against the Gantt chart to
make sure they are not falling behind.
Tasked by the project manager to carry out set tasks by
Project Engineer
Environmental
Engineer
Operations Manager
Financial Manager
Testing and
Commissioning
Engineer
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5.3.
Responsibility Matrix
Project Team Members
WBS Element
Admin
Offices
Project Charter:
SubContractor
Review &
Testing
Plan Project:
Execute Project:
S
Control:
C, A
Project Management
Close Project:
R
S
Risk Analysis
Handover
Design
Engineers
Project Scope
Design
PM
Office
Other
Stakeholders
Sponsor Steering
Group
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N = Must Be Notified;
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The sample above details the major milestones and who is responsible.
Tasks often require additional support or approval before they can be
checked off. A full list of tasks and the team members responsible for
each can be seen in Appendix 3.
5.4.
Controls
5.5.
Communication
Stakeholders
Manufacturers
Local communities
Contractors
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Risk Analysis
With a project this large, a risk analysis is required. The risks mentioned
below can either cause serious damage to both the pipeline and
environment or will cause issues with the timeline, leading to delays and
inevitable project failure:
Type of Risk
Description
Mitigation
Continual risk
management and
Environmental
surveys completed by
the environmental
engineers team will be
carried out.
Budget plans are set at
the beginning of the
Financial
--
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depending on the
severity of the disaster it
may be unavoidable.
Regular contact and
Loss of Partnership
Organizational
Separate teams in each country
not communicating enough
in person or through
video conferencing will
keep all teams up to
date.
This is an uncertainty
Political
Security
an emergency.
Defence contractors will
Terrorism or war
Technological
manufacturing process to
correct any issues before
it is too late.
6.2.
Risk Management
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[6]
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7. Conclusion
This report focuses on the benefits and possibilities that are created by
the construction of the Trans-Saharan Gas Pipeline, along with current
setbacks and recommendations to ensure project survivability. The main
conclusion from this report is that the increasing demand of gas required
from the EU will produce a large profit margin for the three Governments
involved with the project.
Under developed areas are also set to benefit from the installation as
tap-in points will be made available to distribute natural gas to
neighbouring towns as well as countries such as Mali and Burkina Faso.
With many employees currently out of work due to the on-going oil crisis,
this project will help provide local employment opportunities. In order to
proceed to construction, it is recommended that a representative of
Nigeria reasons with MEND in order to halt their future plans of
destroying the pipeline. It is then possible to begin construction and by
2022 have the pipeline continuously flowing 30 billion cubic metres of gas
each year for the next 20 years.
7.1.
Recommendations
1. The feasibility study concluded in 2006 that the TSGP is not only
financially beneficial but will also lead to more opportunities,
improving much of Nigeria, Niger and Algeria. This will only be the
case if the militant opposition group MEND can be brought into an
agreement not to interfere with future construction. It is
recommended that a meeting is held to discuss changes they suggest
to the project to allow construction to continue without interference.
2. Due to the EU lowering emissions 30% by 2025, there is a possibility
that once construction is complete, the estimated profit and amount of
gas being sold will be dated. It is recommended that whilst
construction is carried out, additional plans are designed to sell gas to
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8. References
(1) - Fabi R. Nigeria, Algeria Agree to Build Sahara Gas Link.
[Homepage on the Internet]. Reuters; 2009 [updated 2009 July
3rd; cited 2016 March 9th]. Available from:
http://uk.reuters.com/article/nigeria-algeria-pipelineidUKL345766620090703?sp=true
(2) - Nigeria - Algeria Pipeline Feasibility/Needs Assessment
(3) - Awhotu E. Nigerian, Algerian Officials Discuss Saharan Gas
Pipeline. [Homepage on the Internet]. 2009 [updated 2009
February 20th; cited 2016 March 09]. Available from:
http://downstreamtoday.com/
(X(1)S(cd4vcf55luw30xvsgcx00w45))/news/article.aspx?
a_id=15259&AspxAutoDetectCookieSupport=1
(4) - Watkins E. Nigerian Militants Threaten Proposed Trans-Sahara
Gas Line. [Homepage on the Internet]. Oil & Gas Journal; 2007
[updated 2007 July 7th; cited 2015 March 11th]. Available from:
http://www.ogj.com/articles/2009/07/nigerian-militants.html
(5) - Conan L. The Trans-Saharan Gas Pipeline: An Overview of the
Threats to its Success and the Means to Prevent its Failure. 2011;
(6) - Mubin S, Mubin G. Risk Analysis for Construction and Operation
of Gas Pipeline Projects in Pakistan. 2008
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9. Appendices
9.1.
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9.2.
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9.3.
WBS Element
Other
Stakeholders
Sponsor Steering
Group
Admin
Offices
PM
Office
Design
Engineers
SubContractor
Review &
Testing
1. Initiation
1.1.
Project Charter:
Identify
Objectives
Identify
Deliverables
1.1.1.3.
WBS
1.1.1.4.
Feasibility
Study
1.1.1.5.
Assign Roles
2.
Plan Project:
2.1.
Develop Work
Plan
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Design
C, A
2.1.6. Geotechnical
Survey
2.1.7. Environmental
Survey
2.1.8. Permits
Acquisition
2.1.9. Land
Acquisition
2.1.10.
Infrastru
cture Setup
2.1.11.
Identify
Manpower
Deployment
2.2.
Control Plan
Execute Project:
3.1.
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3.1.3. Develop
Prototype
3.2.
3.2.2. Schedule
3.2.3. Tendering
3.2.4. Ordering
3.2.6. Manufacturing
3.2.7. Inspection
3.3.
Testing
3.4.
Implementatio
n
3.4.1. Transport
3.5.
Manufacturing
Construction
3.5.1. Monitor
Equipment
3.5.2. Assign
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Manpower
3.5.3. Construction
3.5.4. Testing
3.5.5. Commissioning
4.
Control:
4.1.
4.2.
4.3.
5.
Project
Management
Risk
Management
Update Project
Plan
Close Project:
5.1.
Satisfaction
Review
5.2.
Handover
9.4.
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Type of Risk
Probability
Impact
Rating
Description
35
Mitigation
Continual risk
New Rating
management and
surveys completed by
the environmental
18
Financial
28
project. Additional
funds should be set
14
48
manufacturer to agree
a fixed price should
changes be required to
18
--
--
--
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during costing.
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21
carried out
immediately to avoid
future delays.
Very difficult to
Natural disasters could delay
Natural
8-10
8-10
mitigate. Depending on
project
disaster it may be
--
unavoidable.
Regular contact and
updates are required
2
16
Loss of Partnership
occasional conceding to
other ideas.
Regular meetings
Organizational
Separate teams in each
6
Political
24
21
either in person or
through video
enough
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25
Accidents during
construction
accidents. A medical
team will be on call at l
10
times in case of an
Security
emergency.
Defence contractors
will be required to
6
36
Terrorism or war
20
18
manufacturing process
to correct any issues
before it is too late.
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