On 10 May, 2018, the combination of McDermott and Chicago Bridge & Iron Company (CB&I) brought together a global upstream and subsea engineering, procurement, and construction (EPC) company with an established downstream provider of petrochemical, refining, power, gasification, and gas processing technologies. This led to the creation of an organisation that spans the value chain from concept to commissioning.
Now, the combined firm – known as McDermott – has the integrated technology, engineering expertise, construction experience, and global reach to design and build the energy infrastructure of the future. Linh Austin, senior vice president for the Middle East and North Africa (Mena) operation of McDermott, explains the advantages the combination brings for the new entity.
Previously, the McDermott legacy offshore was “geographically based”, and the legacy CB&I onshore was “product-line driven”, Austin explains. “For the combined McDermott, it is important that both the onshore and offshore businesses are client-focused,” he adds.
“We want to make sure that our teams are closer to the clients – that is a major transformational change in the way we run our business. Being closer to the client allows us to serve them better in terms of understanding and fulfilling their needs. Also, our technology business is more integrated today than it was [previously].”
Austin says the merger has allowed the combined firm to facilitate projects that have both onshore and offshore elements: “A prime example for this is a project that we recently won in the US. It is an onshore project, but we incorporated offshore elements by using modularisation concepts. It will lower the cost for the client, because the footprint was reduced by 30%, which is something that is very applicable to the offshore market.
“We are opting for modularisation wherever it makes sense, like in liquefied natural gas and ethylene facilities. We apply modularisation to reduce safety issues and costs, and to be consistent in quality. When we build a module at a fabrication facility, it is like building anything in a factory. We have much tighter control on quality compared to stick-building at a project site.
“Wherever it makes sense, we are trying to push the boundaries for the modularisation concept. At petrochemical facilities, when you do site work, you may sometimes run into issues that extend the schedules. Modularisation gives the client more certainty about schedules, as well as additional safety and quality assurance.”
Modular construction, including the adoption of prefabricated and 3D-printed structures, is rapidly gaining traction in the Middle East, with the UAE proving to be the largest regional market for these technologies. McDermott’s investments in modularisation make sense in the Middle East, but they are not the company’s only priority going into 2019.
Another area of focus for McDermott is the crude oil-to-chemicals (COTC) space. In January 2018, Saudi Aramco, through its wholly owned subsidiary Saudi Aramco Technologies, signed a three-party joint development agreement with CB&I and Chevron Lummus Global to scale up and commercialise its Thermal Crude to Chemicals (TC2C) technology.
Commenting on the status of the TC2C agreement, Austin says: “Our early trials suggest that the technology is going very well. McDermott Offshore had no play, or footprint, in the COTC technology, [but it] is with us after the combination of McDermott and CB&I.
“With our portfolio of technologies and capability to integrate those technologies, the early trials have been very positive. I think it is fair to say that COTC is in fact a watershed technology, and we are really excited about it.
“We have signed on in a number of projects for COTC technology. In-house, we have most of the COTC technologies that are based on refining and petrochemical integration. We can ensure that, by integration, all those technologies pass through a common platform.”
But in a region that still prefers traditional structures for critical infrastructure assets, where does McDermott hope to be in the next decade? As it turns out, the answer lies in the regional track record of both legacy businesses, Austin explains: “When we look at the Middle East, the onshore market is actually bigger than the offshore market here. We have to be quite selective because there are so many projects going on in the region in the onshore business.
“It is a massive market, but we will be selective based on our technological capabilities,” he continues.
Austin says the firm will choose to participate in schemes for which it has technology that provides “a differential value to the client”, adding: “Going forward, the combination of the onshore and offshore business in the Middle East should be our biggest market. The major onshore projects that we are working on right now are Liwa Plastics Industries Complex for Orpic in Oman, the refinery revamp project of Satorp in Saudi Arabia, the Clean Fuels Project by KNPC in Kuwait, and the crude flexibility project for Adnoc in the UAE. We also have the Duqm Refinery storage project [in the pipeline].”