Oldeval Argentina’s Project Manager answers us about DUPLICAR, a project that the company is developing.
Federico Guillermo Zarate Clemente is a Chemical Engineer graduated from the Universidad Nacional del Sur, has completed a Master’s Degree in Management, Administration, Finance and Business Economics from the Universidad Nacional del Comahue and an MBA from the IAE Business School Executive. He has more than 17 years of experience in Oldeval Argentina, having served as Reliability Manager, Maintenance Manager, Operations Manager, Control Center Leader, Operations Supervisor and Operations Engineer.
What does the Duplicate Project consist of?
It is the laying of pipelines from our Allen pumping station, which is on the plateau between the city of Allen and the city of Roca, about 525 kilometres long up to Puerto Rosales. Out of those 525, there are 455 of 24 inches, which are up to the area of Salitral, before Bahía Blanca, and then from Salitral to Puerto Rosales, crossing through Bahía Blanca, which is a 30-inch pipeline. There, we have a change in the route of our system, which currently passes through an area with a very high population density; therefore, the objective is to make a new route avoiding the urbanized area.
Then, what we are going to do is to upgrade the four pumping stations so that they can pump both the crude that is being transported today and the new capacity that will be generated by the Duplicate project. The genesis of this project was precisely to double the capacity from 32,000 meters to 72 thousand cubic meters per day. But later on, it was seen that the shippers, who are obviously the producers, had a greater need than those additional 36,000 meters; so, work was done to increase the capacity of this project. Finally, we are going to increase it to 50,000 cubic meters more.
In total, there will be the existing 36 plus 50, reaching in this way 86,00 cubic meters.
Is the expansion of the project being analyzed according to the volumes requested by the producers?
Because at the bid opening there was an offer for 130.000 cubic meters, which exceeded three and a half times what had been foreseen.
We were able to reach a meeting point with some capacities that some of the producers are giving up, leaving approximately 50% of what they had initially requested. At the beginning when there were 36 available and it was offered for one hundred and thirty, everyone was left with 27. Today, with this new capacity to bring it to 50, plus some capacity that some producers have given up, most of them have 50% of what they had requested. Nor we do not know how much more each operator asked for so as to ensure the highest percentage possible. If we were to make a project of 130.000, I do not know if indeed all of them would take that capacity. In principle, for the 50 they are taking them. Initially, Chevron had bid for the totality and is one of those that gave up capacity in order to reach an understanding among all of them.
What does the repowering of the stations consist of? What is the current situation?
We say “repowering” because we work more or less with five thousand hp, and we have to increase it to eight thousand. Today one turbine is working and another turbine is on standby, and we are going to have to work with two turbines in parallel. These pumping stations are going to go from seeing 36,000 metres to seeing 80,000 meters. So, we practically have to build a new pumping station on top of an old one.
We have to change the diameters of all the process pipes, the entire filtering system, the heating system, the relief systems, to put two new tanks of twenty thousand cubic meters, and to build a new electrical substation.
We started to see this project internally as a necessity by the end of last year. It should be remembered that the first step was the Vivaldi Project which was started at the end of 2021 and was put into operation in April 2022 and the next step is duplicable Nowadays, we already have 90 % of the engineering of the whole project.
On the other hand, we also detected that in Bahía Blanca area, when we reached Puerto Rosales area, it was a wetland; therefore, it is not a linear pipeline laying work, it is much more complex. And as it was going to take longer, an early start was needed although the project was not yet approved, because basically we first needed to have the extension of the concession, which we would have in August and September.
On the other hand, we had to sign the contracts we were talking about and only with them we could go out to look for the financing of the work to carry it out.
Although this was not still available, the company’s shareholders took the risk of starting with those tasks that we knew were going to be the bottleneck of the project.
That is why in the area of Puerto Rosales we have 14 kilometres plus four in the area of Bahía, which are the ones we started early. The pipes for that part have already arrived. We are opening tracks, doing topography work and next week we will be starting to weld. Approximately three months ago we also placed a purchase order with Tenaris for 300 kilometres of twenty-four kilometres, which will be arriving by the end of January, to be able to start the rest of the works.
What are the stages that have been set?
We are currently in the bidding process to see who are going to be the builders. We have divided the project so that it can be awarded to different bidders, since there is an important need for resources, whether it is machinery or human resources related to the engineering part or else direct labour in the field. In this way we lower the risk of the project by awarding it to different builders so as to generate synergy with resources from various referents.
Are all the bidders for these works already submitted?
We are close to the awarding stage, although we have not yet defined everything and negotiations are still going on. We should be closer to awarding if we want to start welding those new pipes that will be arriving at the end of January. Four months ago, we placed the purchase orders for all the valves, the scrapper traps, for all the flow meters, internal pumps for the pumping stations. We have already launched all the purchase orders for all the materials that we call LLI, which are those that have a long delivery time. All this was done with the objective of starting the works by the end of January., beginning of February, and in the first quarter of the year 2024 to be able to start the first stage that would give us already 19,000 additional meters, -we would finish the 86,000 meters in the first quarter of 2025.
Have you been able to involve local and national SMEs?
Yes. We have allowed local companies to participate. Obviously, they need to have the structure and size for a project of this type. But we have some companies in the area that are up to the task of carrying out this project and they have been invited.
Can they also participate in the supply of valves?
Yes, we do not have 30-inch or 24-inch valves here in the area, but we are looking for many local suppliers for the rest of the supplies.
How much labour is involved in the entire project?
We estimate that there will be a peak of approximately 1,500 people working on the project and then an average over 1,000 people.
Has there been any difficulty in obtaining qualified labour?
In terms of engineering and later the entire part of construction control, it has been difficult for us to obtain qualified resources. Obviously, then there is the challenge of the construction companies themselves in obtaining them.
At the moment, we have our own team of approximately 40 people plus another 50 employed to manage the project, and it is becoming hard for us to complete this team.
What is the investment required for the whole project?
Now with the expansion of the project we are estimating a value of one thousand one hundred and eighty million dollars, For the financing the clients themselves have the option of paying according to the percentage assigned to them, but they also have the option of paying 50%. Obviously the one who pays 100% and the one who pays 50% have different rates. To make up for that difference what we do is to go to the CNV to look for money.
What is or what has been the main inconvenience or difficulty you have had since the project and now the realization?
The main problem is the time and a little bit of what happens to us at a national level which is the lack of planning. I am not blaming anyone in particular but it is our nature because we often have to take risks when planning and taking long-term risks without knowing what is going to happen makes it hard to make decisions.
We have been thinking about this project since 2018 and that is why we have been asking for the extension of the concession. But evidently, as they thought it was a necessary project for 2024 or 2025 and it was very far away nobody wanted to take the risk of investing so much money when later on some macroeconomic conditions could change, or the price of the barrel. It is only now that they are asking us for this capacity, which is already a necessity. -Some time ago we used to ask producers to know how much they were going to produce in order to know how much we were going to sell and to prepare our budget. Now it is the other way round, producers come to ask us how much we can transport to know how much they are going to invest and drill. If there is something that is a difficulty for these projects, it is time. We are working with a project methodology that is different from those that occur naturally. Normally the engineering is put together, then a budget is drawn up, approved and then the contractor is hired. Once you have the contract, the same contractor is the one who buys all the materials. We had to start doing an accelerated engineering to be able to buy the materials and we went out to bid without having all the engineering. Obviously, it implies another risk, but it improves the time.
Is there any other information that Oldelval would like to share with the industry?
I think that as an industry we have managed to get a head start today. Oldeval has the extension of the concession for ten years, and by having that, the fact of knowing how to go out to sell has already been implemented.
We have a firm capacity, which until a few months ago had never been done and until some time ago it was not regulated. Today we have the extension of the concession, it is regulated and we have the experience of having gone through this process., so we understand that we should not have to be in this situation again. This allows us to work with our customers and to be able to generate predictability in terms of capacity availability.
Is the construction being done with any foresight related to transport safety?
We do our engineering with what we believe is the best technologist in the country, even among the best in the world, which is Techint. We developed it with them and they are under all the regulations, norms and best practices that exist at present. When you are designing at this stage that we are at, you know what capacity you have to reach, but then everything is based on process safety and this is the basis for all these design conditions.
Is there a lot of technology available today related to the detection of punctures in the pipeline’s approaches, or ground work in the vicinity to ensure normal flow?
We are going to install an end-to-end fiber optic cable with the technology that allows you to have all the benefits of the system. To be able to see vibrations at any point knowing that heavy vehicles are crossing or that they are drilling.
