Pacesetting Continuous Improvement RasGas Expansion Projects Mark W.

Powell Superintendent - Mechanical RasGas Expansion Projects February 14, 2007

Presentation Outline
6 RasGas Company Limited - History & Background 6 RasGas Expansion Projects - History & Background 6 Contracting Strategy 6 Project Benchmarks 6 Why Continuous Improvement? 6 The RGX Continuous Improvement Process 6 The Key to Success 6 RGX Continuous Improvement Metrics 6 Conclusions
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Improvement begins with I.

- Arnold H. Glasow

RasGas Company Limited

6 Incorporated joint-venture of Qatar Petroleum and ExxonMobil 6 Produces and sells hydrocarbons from Qatars North Field
6 Worlds largest non-associated gas field 6 Products include liquefied natural gas (LNG), sales gas, natural gas liquids (NGLs ethane & propane), gas condensate, liquid helium, and sulfur

6 Current operations include:

6 6 6 6 6 offshore production platforms 5 LNG trains (with helium extraction) 1 natural gas processing plant (Al Khaleej Gas - AKG) 1 helium recovery unit

6 Future operations include:

6 LNG Trains 6 and 7 (RGX-2) 6 2nd phase of Al Khaleej Gas (AKG-2)

Overview of RasGas

RasGas LNG Process - Typical

OFFSHORE RICH LNG

INLET FACILITIES

ACID GAS REMOVAL

GAS DEHYDRATION

MERCURY REMOVAL

LIQUEFACTION

AGE / AGI CONDENSATE STORAGE LEAN LNG

Fractionation

NGLs

NGL RECOVERY

LPG Storage & Loading

LPGs

LNG Process - typical NGL Extraction - Trains 4 & 5 only

RasGas Expansion Projects - Background

6 Charged with design and construction of:
6 6 6 6 6 LNG Train 3 LNG Train 4 LNG Train 5 Al Khaleej Gas (AKG) Helium Recovery Unit
2004

2005

2006

ID

Project
Q1

Notes
Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

LNG 3 LNG 4 AKG Helium LNG 5

4.7 million tons per annum 4.7 million tons per annum + NGL recovery 750 million standard cubic feet per day of pipeline sales gas Process raw helium extracted from RasGas Trains 1 5 and Qatargas Trains 1 - 3 4.7 million tons per annum + NGL recovery

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5

Contracting Strategy
6 Competitively bid lump sum EPC contract for one LNG Train (Train 3)
6 Option for one additional identical train (exercised in 2002) 6 Option for similarly-designed sales gas trains

6 Change Orders to include NGL extraction in Train 4 6 Al Khaleej Gas Phase 1 negotiated based on Option for gas sales trains 6 Train 5 negotiated based on replication of Train 4 design

Excellent firms don't believe in excellence - only in constant improvement and constant change.
- Tom Peters

Benchmarks
6 Unit Cost of Production ($ / Mta) - relative comparison 6 EPC Project Schedule 6 RasGas LNG Train Processing Capacity 6 RasGas Expansion Projects - Safety Indicators

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Unit Cost of Production ($ / Mta)

3.3 MTPA RasGas Trains 1&2

4.7 MTPA RasGas Trains 3/4/5

7.8 MTPA RasGas Trains 6/7

1964

1972

1978

1983 Initial Start-Up Year

1999

2004

2008

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EPC Project Schedule

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RasGas LNG Train Processing Capacity

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RasGas Trains 3/4/5 RasGas Trains 1&2

0 1964 1970 1978 1983 1989 1997 1999 Initial Start-Up Year 2004 2005 2006 2008 2009

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RasGas Expansion Projects - Safety Indicators

1.0 Recordable Incident Rate - Industry 0.9 Recordable Incident Rate - RGX Lost Time Incident Rate - Industry Lost Time Incident Rate - RGX 0.8

0.7

Recordable Incident Rate (Industry)

0.6

0.5

0.4

Recordable Incident Rate (RGX)

0.3

0.2 Industry data from International Association of Oil & Gas Producers, May 2006; "Overall" data modified to Incident Rate per 200,000 man-hours

Lost Time Injury Rate (Industry)

0.1

Lost Time Injury Rate (RGX)

0.0 2000 2001 2002 2003 2004 2005 2006 2007

Note: Incident rates are per 200,000 man-hours worked

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"If we improved any single process in our business by just 1%, or even 0.1%, but we did that every single day - what do you think the effects would be in a month? In a year? In five years?
- Unknown

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Why Continuous Improvement at RGX?

6 Unique opportunity
6 Series of similar projects 6 Continuity of Contractors and Project Management Team 6 Enhance execution of subsequent projects

6 Deficiencies in earlier lessons-learned process

6 6 6 6 6 One-time exercise at end of job Inadequate problem definition & root-cause analyses Inadequate tracking of actions to resolution Poor documentation of resolutions Cluttered with low-value lessons and unjustified recommendations

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The RGX Continuous Improvement Process

6Definition of the problem or issue 6Analysis to determine the root cause 6Recommendations to resolve the item 6Gatekeeping to insure definition, analysis, recommendations, and justifications are sufficient for action 6Actions and follow-up to implement recommendations, with a formalized sign-off 6Status updating and reporting 6Monitor performance of the CI program

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There is a better way to do it. Find it.

- Thomas A. Edison

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Gatekeeping The Key to Success

6 Gatekeeper - intermediary between the Originator and the Actioner
6 6 6 6 Forces rigorous screening of all incoming CI items Eliminates unjustified items and wishlists Ensures quality of definition, front-end analysis, and recommendations Ensures sufficient technical background information and documentation are provided to the Actioners

6 CI Team
6 Reviews / approves / rejects all CI items 6 Validates close-out 6 Includes representation by all key stakeholders

6 Dedicated clerical support

6 Provides ongoing assessment of progress 6 Reminders to Actioners 6 Collates effectiveness benchmarks for program monitoring
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Continuous Improvement Metrics

6 Breakdown of Field Design Changes 6 Comparison of CI Items Across Projects 6 Total Punchlist Items at Mechanical Completion 6 Start-up Flange Leaks

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Breakdown of Field Design Changes by Discipline

2500 LNG 3 LNG 4 LNG 5 2000

1500

1000

500

0 Civil Electrical Engineering Equipment Instruments / Controls Piping PMC Telecomms All FDC's

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Comparison of CI Items Across Projects

300 Warranty Claims Lessons Learned Technical Queries Other Improvements

250

200

150

Deficiencies eliminated BEFORE becoming a problem

100

50

0 LNG 3 LNG 4 AKG-1

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Total Punchlist Items at Mechanical Completion

4000

3000

2000

1000

0 LNG 3 LNG 4 LNG 5

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Start-up Flange Leaks

Tr 3 / 4 data approximate
300

250

200

150

100

50

Dedicated Zero-Leak Team implemented on LNG Train 5

0 LNG 3 LNG 4 LNG 5

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Conclusions
6 CI program envisioned and designed to rapidly capture, assimilate, action, and feed-forward lessons-learned to future projects 6 Seven step process focusing on definition, analysis, gatekeeping, and tracking of items to resolution 6 The RGX Continuous Improvement process has added significant value to RasGas
6 Reduced Field Design Changes 6 Dramatic reduction Warranty Claims 6 Fewer start-up flange leaks 6 Learnings effectively captured and
6 Implemented in subsequent projects in time to avoid problems 6 Shared with future Qatar petrochem projects

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"Continuous Improvement is not a one-off project or 'flavor of the month'... it is a constant and never-ending commitment backed up by action.
- Unknown

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Questions?

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