Paragon Engineering Services takes frontier experience to Camisea project in Peru
Pluspetrol Peru selects Paragon for its project management capability, technical and logistical know-how, willingness to protect indigenous culture of the Peruvian rain forest
A consortium led by Pluspetrol Perú Corporation S.A has selected Paragon Engineering Services, Inc. of Houston as "Owner's Engineer" for development of its Camisea Upstream Facilities Project located in the jungles of Peru, east of the Andes Mountains on the Urubamba River. The remote Camisea project—a cornerstone of Peru's economic development plan—promises several engineering and logistical challenges as part of Paragon's full-team commitment to protect the indigenous civilization of the Peruvian rain forest, says Tom Glagola, Paragon's project director.
"Paragon is committed to the delivery of safe, reliable operating facilities for the people of Peru, with minimum disruption to the region and the indigenous tribes along the Urubamba River," said Glagola.
Owner's Engineer
As "owner's engineer," Paragon is acting on behalf of the operator, supporting Pluspetrol in every aspect of a fast-track project that will bring a better life for the people of Peru with the ready supply of gas and liquids. Production is scheduled to begin December 2003.
The Camisea project, representing a contract value for Paragon of approximately $14 million, is the company's most challenging, and certainly the largest, onshore project since Paragon was founded in 1980, says Jim Gattis, president of Paragon.
"Paragon is providing extensive project management for the development of a three-year international project that includes a lot of strategic and logistical issues in the midst of a very aggressive schedule," said Gattis.
Glagola adds that Pluspetrol is relying on Paragon to understand its perspective as an owner, and to act in Pluspetrol's best interest in analyzing the issues and making decisions.
"We believe our culture of working honestly and ethically has instilled in Pluspetrol a high level of confidence in Paragon," said Glagola.
Project Management
Selected for its project management and engineering capability and frontier experience in handling logistical challenges in remote locations, including the grassroots development of the Conoco Ardalin project in the Russian Arctic, Paragon is committed to the on-time delivery of the Camisea production facilities, says Skip Mick, Paragon's project director.
"The Camisea development is an outstanding opportunity for the Peruvian people, and Paragon is pleased support Pluspetrol in a development that will bring so much value to so many families and businesses," said Mick.
While many energy developments in North America are currently focused on gas production, Peru's more limited in-country gas system infrastructure makes immediate production of natural gas liquids—butane and propane—from the Camisea development important for the country's continued economic growth. For many of the people of Peru, butane and propane provide the most readily available fuel for driving cars, cooking food, generating electricity and running factories.
At present, Peru imports some 1,000 metric tons per year of butane. But with a projected 20,000 barrels per day of liquefied petroleum gas and condensate to be produced from the initial Phase I facilities, the Camisea Upstream Project has become a key driver in the Peruvian government's plan to reduce imports and spur economic growth, says Mick.
Underscoring the aggressive nature of the Camisea project schedule and the scope of Paragon's execution task, upon contract award in late May, the project team tackled several activities concurrently. This concerted effort jump-started engineering, procurement and construction programs for facilities for both the Camisea site and the proposed Pampa Clarita site on Peru's Pacific Coast.
Paragon's project management role includes: the development of a total execution strategy; review and confirmation of Pluspetrol's basic facilities design; preparation of bid packages for detailed design, procurement and construction; logistics strategy coordination; assistance in the selection of equipment providers and in-country construction contractors; construction management and the commissioning of facilities both at the Camisea field site and at Pampa Clarita.
Paragon also is responsible for managing the design and construction of two in-field gas gathering pipeline systems from the development wells to the Camisea site processing plant and two gas injection pipelines. Paragon also is slated to manage the design and construction of a natural gas liquids (NGL) fractionation facility and marine terminal at Pampa Clarita.
Separate contractors will design and build two trans-Andes gas and liquid pipelines to the Pacific Coast. Plans call for an initial production of 400-million cubic feet/day of gas in the first phase of development. Part of the Camisea NGL plant residue gas will be transported via a 28-inch diameter, 680-kilometer pipeline to Lima, the capital of Peru, for domestic power generation and eventually for commercial and home use. Over the next 11 years, total gas sales to Lima is projected to increase to more than 700- million cubic feet/day. The liquid pipeline from Camisea to Pampa Clarita will be 540 kilometers of eight-inch diameter pipe with a capacity of 35,000 barrels of liquid per day.
Amazon Rain Forest
The Camisea Project, however, presents numerous development challenges as both the plant facilities and the wells are located in remote regions of the Peruvian Amazon rain forest—home to an indigenous ancient tribe known as the Machiguenga, a sheltered civilization which dates to the time of the Incas.
A project commitment—and a government mandate—to protect the Machiguenga culture and habitat has resulted in a decision to place the development facilities about 40 kilometers east of the Camisea well locations at Malvinas. The project site is on the Urubamba River to receive equipment transports for building the plant facilities and gathering and gas injection pipelines.
Originally discovered in the mid-1980s, the Camisea Field has recoverable gas reserves estimated at 8.7 trillion cubic feet. The Camisea development is headed by a consortium that includes Pluspetrol, an Argentine company and Peru's biggest oil producer; Hunt Oil Company of Peru LLC; SK Corporation of Korea; and Hidrocarburos Andinos, also an Argentine company. The consortium aims to maximize recovery of liquids from the Camisea produced gas while also supplying natural gas for the domestic market.
Field Development Scheme
The development plan calls for the directional drilling of some 16 wells to capture natural gas from the San Martin and Cashiriari Fields, which make up the Camisea discovery. The two gas gathering lines from four wellhead clusters will deliver production to a liquid separation/NGL recovery/gas compression plant at Malvinas.
The Malvinas facilities include two cryogenic gas plants, each capable of handling 200 million cubic feet per day, to recover natural gas liquids, and two compression trains, one for each cryogenic plant. Turbo expanders in the cryogenic plants will drop the gas temperature to minus 100 degrees Fahrenheit to recover 90 percent of the propane liquids and all of the heavier liquids, which then will be transported through the liquid pipeline to Pampa Clarita.
A gas fractionation plant at Pampa Clarita will further split the liquids for commercial distribution via truck for sale at local markets. Heavier liquids will be transported by truck or loaded onto ships from a marine terminal for sale on the international market.
Each compression train at Malvinas will handle exit or residue gas with a sales pressure of 2,100 psi for pipeline transport to Lima. Gas for injection into the Camisea reserviors—to recover additional liquids—will have a pressure of 4,000 psi.
Logistics
But the logistics of making this development plan a reality will be quite a feat, advises John Williams, Paragon's logistics manager.
"We have a significant challenge ahead of us. We're about to mount a construction project in a remote jungle with limited land access, minimal air strip landing capability and a limited weather window for moving equipment and supplies up the Urubamba River.
"At peak construction, we'll have 2,000 people at the Malvinas job site. But because of the limited avenues for getting even consumables to the site, it will be like filling up a bath tub with a teaspoon to supply the project," said Williams.
With an estimated 74,000 tons of material to be transported to the Malvinas site in 2001 to begin construction in 2002, Paragon is working with Pluspetrol to evaluate how best to optimize the logistics chain safely, says Williams.
He adds that the project team is challenged to effectively plan delivery routes, the sizes and weights of equipment packages, the cost per pound for shipments and procurement and delivery schedules, with full consideration of local environmental conditions. The project team is managing these issues while also placing the welfare of the indigenous people and the safety of all project participants at a priority.
Pluspetrol plans call for using a variety of transportation methods to ship all the materials in varying package sizes, making the challenge equally significant for the design team. Some equipment and goods can be flown in. However, a planned 1,800-meter landing strip for construction at Malvinas—as part of the project activity—
limits aircraft to a Hercules C130 class, with a loading capability of approximately 45 metric tons. There are no opportunities to expand the runway because of the nearby mountains.
Helicopters with sling loads may be used to ship some materials, but again, the largest helicopter that the environment will tolerate can carry only 40,000 pounds, rather than a more economic shipment of 40 tons.
The project team plans to float the bulk of material up the Amazon River to Iquitos, and eventually move materials by barge on the Urubamba River to the Malvinas construction site. But the Urubamba River is only navigable four months of the year—from about December to March—when the floods come from the melting snow in the Andes Mountains. The Urubamba River is about 3 meters deep at its lowest stage and about 17 meters deep at flood stage.
Using this mode of transportation, one trip from the United States to the site could take almost three months, compared to a two-week trip from Houston to Lima through the Panama Canal. But negotiating the Andes Mountains would present perhaps even greater challenges.
Williams estimates that three barges can move up the Urubamba at one time but cargo utilization factors will vary due to navigability of the river at different locations and because more bulky materials, such as pipe, consume more space than weight. A single trip on the Urubamba could take two weeks, making the four-month weather window critical to the success of the project, says Williams.
"The logistical constraints will make constructing the Malvinas plant similar to building a ship in a bottle but I look forward to the challenge," said Williams.
Working closely with the Pluspetrol logistics personnel, Williams anticipates the following river transportation scheme and loading capacities: along the Amazon River to Iquitos, an oceangoing freighter with an approximately 12,000-metric ton capacity is anticipated; from Iquitos to Pucallpa, the Urubamba River can accommodate barges with 2,000-metric ton capacity; from Pucallpa to Nuevo Mundo, barges with capacity of up to 800 metric tons can move up river, but beyond there to Malvinas, barges navigating the river are limited to a 350-metric ton capacity.
Bid Packages
Glagola reports that Paragon is completing the total execution plan, defining the work in manageable pieces, and is under way with preliminary studies, including gathering system hydraulics, environmental and social impact and basic engineering and design review.
Two engineering and procurement bid packages are being let this summer for the Malvinas site facilities, one for the compressor plant and one for the cryogenic gas plant. As originally planned, an engineering, procurement and construction contract for the entire Malvinas site development is expected to be awarded in November, with shipments to Peru to begin in December. Some alteration to that contracting plan may be necessary, however, due to schedule constraints. The development of Pampa Clarita equipment packages is currently on hold, pending Pluspetrol's marketing optimization.
Paragon Engineering Services, Inc. provides project management, engineering, design/drafting, procurement, construction management, inspection and training services to the oil and gas and pipeline industries.
Paragon's expertise encompasses oil and gas production and treating, gas compression, onshore and offshore pipelines, onshore and offshore facilities and safety and environmental management programs. Paragon employs about 700 people worldwide; 400 people at its West Houston facility and another 300 people at its Paragon-Litwin offices near Paris. Paragon is active in the United States, South America, Europe, Asia, Africa and the Middle East.
Source: Paragon Engineering Services, Inc.