At Koshekhablskoye, some 1,500km south of Moscow, we are building a gas plant which has major implications for our four CSR pillars: health and safety, employment, community and the environment. A top priority for us is to deliver the project to its full potential – while also ensuring that it provides benefits to the local people and their community.
The nearest town, Maikop, is the capital of the Adygea Republic and is recognised as one of the most attractive cities in the Northern Caucasus. However, it is also an area of above average unemployment. The local people need jobs – but they also need them to be good, long-term and well-paid jobs provided within an effective HSEC framework.
Our goal is to be a net contributor to the local community and to build a reputation as an important and positive influence. We can help drive social and economic development in local communities through the use of our resources and through our supply chain network. We used extensive consultation, which included hosting a public meeting, to gather opinions and provide the community with information on the project. In particular, we explained how we can contribute to initiatives and events which support local companies and employment, develop skills and encourage entrepreneurship.
We also carried out an Environmental Impact Assessment (EIA) with the Volgograd Design Institute. Our activities will result in higher-risk environmental challenges, particularly in terms of water use and waste management. To address this, we are implementing systems to ensure minimal water use, minimal waste generation and that we have a clear baseline against which to measure our performance. An Oil Spill Contingency Plan (OSCP) has been prepared to ensure rapid and appropriate action in the event of a spill. Oil spill contingency training is planned for 2011 for YGE employees.
Construction at Koshekhablskoye is continuing at pace, with first commercial gas production on target for 2011. YGE, our operating company, currently employs 155 people, with this set to rise to over 250. The number of contractors and supply chain vendors will vary but we expect it to peak at up to 600 support and associated personnel.
Their health and safety at work is very important to us. The Koshekhablskoye project poses a number of HSEC challenges, notably through the presence of Hydrogen Sulphide (H2S), an extremely dangerous substance which can cause fatalities if not addressed correctly. Although H2S controls were already in place to meet legal requirements, the JKX Technical Director and the YGE Managing Director demanded greater protection for the workforce. We have now carried out a full review and introduced enhanced precautions covering such issues as training, additional H2S monitoring, enhanced drills and evacuation plans, and emergency response plans.
We will never compromise the safety of our people. The project poses significant challenges to our workforce, including the presence of Hydrogen Sulphide (H2S). We enhanced the level of protection from H2S during 2010 and worked more than 1 million man-hours without a Lost Time Injury.
Waste management is a challenge in an area that has limited infrastructure for safe waste disposal. In addition to introducing a ‘reduce, reuse, recycle’ scheme at the project, we are utilising temporary options such as storage while working with local industry to create a permanent solution to the issue of waste.
We are bringing valuable jobs to the region. The current number of YGE employees is 155, which is expected to peak at over 250. The project is also generating employment for contractors and supply chain vendors: the number varies but could be up to 600 support and associated personnel.
We are keen to be good neighbours and to play our part in the local community whenever possible. In 2010, we were pleased to provide financial and practical support to the town of Maikop’s Harvest Festival celebration, which is an important event in the lives of the community.
Why LPG? Liquefied petroleum gas (LPG) is a flammable mixture of hydrocarbon gases used as a fuel in vehicles and heating appliances. When specifically used as a vehicle fuel it is often referred to as autogas. It is much cheaper to buy than either petrol or diesel. Far less tax is added to the pump price because it creates less pollution. European governments encourage the use of LPG to help meet environmental targets.
 production commenced at our Poltava plant on 4 July 2011 and the first commercial cargoes were dispatched on 5 July.</p>
<p>Dr Paul Davies, JKX’s Chief Executive said, “The facilities came in on schedule and on budget and we achieved pay-back on the incremental investment in approximately six months. The added value of this product stream has enhanced the economic performance of our Ukraine operation and effectively increased gas realisations by approximately 10%.”</p>
<p><strong>The project</strong><br />
Oilfield projects are always a challenge, particularly in areas of the world with limited infrastructure and experience in completing such projects.</p>
<p>The PPC LPG Project from concept to first production was completed with an excellent safety and environmental record, on budget, ahead of schedule, exceeded its goals for national training and content and has been able to produce as planned.</p>
<p>On the first major project that PPC completed in 1997 we engaged a Ukraine design institute and it became obvious that if PPC were to actually make any progress we needed to be in control of engineering and construction activities.</p>
<p>PPC were awarded Ukraine licenses for engineering and construction activities in 1998/9 which have been vital to the speed at which we can complete projects at the PPC Production Site. The licences mean we are self sufficient and avoid the necessity of utilising Ukraine institutes or contractors and therefore can control schedules and costs.</p>
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What worked well
By most project standards, milestones were met in a very short time. Such speed in development can be attributed to the following fundamentals:
- Ukraine licenses (1998/9) to perform most engineering and construction activities
- highly motivated team made up mostly of Ukrainian nationals
- project team was led by PPC in-house staff with minimum involvement from contractors
- experienced Project Leaders were used who regularly work in Ukraine
- PPC management’s foresight and willingness to place a high priority on the project
- atmosphere of trust amongst the project team and project management to deliver
- stakeholders were aligned
- the project was self-financed through PPC’s operating cash flow
- ample feed gas supply was already available on site from existing wells
- we had significant prior experience of highly technical projects in the oil and gas industry.
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| Planning |
- Significant LPG market analysis took place for many months before a business plan was developed
- A detailed annual Business Plan was developed in advance to organize and focus its commercial activities
- The preparation of a high quality engineering design at the conceptual design stage
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| Health and safety |
- The project was executed with an HSEC Plan which was agreed with senior management and implemented rigorously at site – a very strong site safety culture was embedded within the team
- We used proven technology – the process plant was purchased as a packaged unit from an existing vendor who has already supplied many similar units to many customers throughout the world
- Proven suppliers – the chosen supplier had intimate knowledge of our existing plant from previous work completed enabling the very best performance from interface with the existing process
- Deviations from the suppliers standard design were kept to an absolute minimum
- The LPG Project Management Team resided in the field at the job site
- No Lost Time Incidents Environment
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| Environment |
- The planning process included a detailed Environmental Impact Assessment
- The project team approved an Environmental Management Plan which was adhered to throughout construction
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| Community |
- We worked hard on community relations which ensured local communities were well informed
- We focused on purchasing from local and national Ukrainian companies where possible
- Proven local sub-contractors were used, who brought with them lessons learned from previous projects
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Rigorous control of cost and schedule was exercised throughout the duration of the LPG project with project schedule and cost reports updated weekly. Communication throughout the project was frequent, rapid and clear.
Conclusion
The LPG Project is another benchmark of what is possible within PPC when talented and motivated people work together towards common goals of safety, quality, cost, national content and schedule.