Spain-based EPC marks $800-million first contract at the Horizon upgrader *Translation: We speak oilsands

Graham Chandler

For more than half a century, Madrid, Spain–based Técnicas Reunidas S.A. (TR) has been designing and building industrial facilities around the world, but never in Alberta’s oilsands—that is, until now. Following an intensive marketing effort, the company’s Canadian arm, Tecnicas Reunidas Canada, has been awarded an $800-million contract to provide engineering, procurement and construction (EPC) services for Canadian Natural Resources Limited’s (CNRL) expansion at the Horizon upgrader.

Largely unknown in western Canada, Técnicas Reunidas is an outgrowth of the former Spanish subsidiary of the Lummus Company, Lummus Española S.A., which was founded in 1960. It got its current name in 1972 after a group of Spanish investors acquired Lummus Española. Since 1960, the firm and its predecessor have designed and built over 1,000 industrial plants. Clients have been multinational: these projects have spanned at least 50 countries spread over six continents, and it continues—international projects now account for  95 per cent of of TR’s annual turnover.

Despite the Horizon project being TR’s first venture into Canadian oilsands, the company has broad experience in the treatment of heavy crude oils worldwide, and engineering and construction of similar units in different environments, says Javier Fernandez Ruiz, the company’s Canadian business development manager.

“Recently, our group has executed many projects with synergies with the CNRL one, such as the Ourhoud field full development in Algeria, the Sahil and Shah fields developments in Abu Dhabi,” says Ruiz. Adding to that are several refineries including in Russia, Alliance Oil Company Ltd. Khavarovsk and Lukoil Volgograd; in Saudi Arabia, Total S.A. Jubail; in Peru, Petroleos del Peru Talara; and in Greece, Hellenic Petroleum Elefsina.

“TR had already obtained experience in Canada prior to the oilsands contract,” says Ruiz, explaining the company recently worked on a basic front-end engineering and design contract for Canaport LNG LP’s regasification terminal in St. John, N.B. He adds that project, which was executed in 2007, included basic and conceptual studies of vaporization alternatives, natural gas liquids separation, re- condenser selection, cryogenic energy recovery system and tank selection.

Engineering is already underway on the initial work for CNRL’s four-year upgrader expansion project. CNRL says the staged expansion will increase synthetic crude oil production capacity from the current 110,000 barrels per day to 250,000 barrels per day. The company, which declined our request for comment, has said it wants to “avoid the ‘megaproject’ approach to development and feels that breaking the overall expansion into smaller, more manageable pieces will lead to enhanced project and cost control.” Future phases of expansion are expected to eventually grow Horizon capacity to 500,000 barrels per day.

“Our project will double the capacity of the upgrader by introducing a brand new diluent recovery unit and will improve the product recovery by adding a vacuum distillation unit,” says Ruiz. “In this way, the conversion grade will rise significantly. At the same time, we will engineer, procure and construct an H2S stripper unit that will eliminate the H2S from the recovered naphtha resulting in a cleaner and safer operation of the froth treatment and diluent recovery units.”

Using a modular approach, some of the larger components will be built on site. The major component, he says, will be the vacuum column. Its wider section will measure over 14 metres in diameter, which imposes severe limits on transportation. “Therefore, this column will be completely fabricated at site,” says Ruiz. “This represents a great challenge in terms of planning and design.”

Northeastern Alberta’s winter climate isn’t expected to present many new challenges for the contractor, however. “TR has previous experience in extreme-cold conditions,” says Ruiz. “In fact, we are currently executing two projects in Russia, in which the temperatures move in a similar range as they do in northern Alberta.” The bigger challenges he sees are mainly related to risk assessment. “In a market in which the manpower is limited and consequently the price rises, the execution of an EPC [contract] requires intensive preparation and a strong look-ahead strategy.” Personnel requirements are expected to peak at over 500, so TR is fully aware of Alberta’s manpower crunch. “We are evaluating at this moment the different possibilities that the market can offer us,” he says. Maximizing Canadian content for suppliers and subcontractors will assist.

TR fully intends to stay in the oilsands market in Canada, as “we believe we are in the right market, with the right knowledge and experience and at the right time,” says Ruiz. “It is our intention to remain in Alberta as we have done in more than 20 countries worldwide.” He says this will be accomplished by combining TR’s Madrid workforce together with engineering services in its Calgary office.