10/12 Industry Report [Q4 2017] by Baton Rouge Business Report

Q4 2017

PLUS: Diving for dollars Corralling Big Data Focus: maintenance & reliability

THE END GAME WILL LOUISIANA REMAIN A MAJOR ENERGY PLAYER WHEN OIL IS NO LONGER KING?

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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10/12 INDUSTRY REPORT â&#x20AC;¢ FOURTH QUARTER 2017

CONTENTS

Publisher: Rolfe McCollister, Jr. EDITORIAL Editorial Director: Penny Font Special Projects Editor: Jerry Martin Editor: Sam Barnes Director of Research: Sierra Crump Contributing Writers: Erin Z. Bass, Jen Bayhi-Gennaro, David Jacobs, Meredith Whitten Contributing Photographers: Lee Celano, Terri Fensel, Cheryl Gerber, Don Kadair ADVERTISING Sales Director: Jill Stokeld Account Executives: J.C. Applewhite, Angie LaPorte, Lillian McGuire, Melanie Rea Advertising Coordinator: Brittany Nieto Chief Marketing Officer: Elizabeth McCollister Marketing assistant: Katelyn Oglesby Community Liaison: Jeanne McCollister McNeil

THE END GAME WILL LOUISIANA REMAIN A MAJOR ENERGY PLAYER WHEN OIL IS NO LONGER KING?

LAUNCH

10 ICYMI

Industry briefs

14 The big picture

Shell’s hulking Appomattox hull sets sail for Texas—and the Gulf.

16 Workforce spotlight

Step inside the only commercial diving school between Texas and Florida.

18 Market forecast

What 2018 has in store for industry

21 People

Missy Rogers, president of Noble Plastics

NEWS

33 Water borne

Weeks Marine finds growth and diversification in the expanding coastal restoration and LNG markets.

36 The art of the deal

Megaprojects require complex negotiations involving multiple stakeholders—particularly when it comes to logistics.

38 Corralling Big Data

Sophisticated software and an abundance of data are allowing owners to ‘educate’ their processes.

42 Weathering the storm

The South Louisiana Economic Council stays ahead of the curve during the oil slump by shifting focus.

FOCUS

47 Managing the

turnaround From trusting contractors to losing workers at the start of hunting season, Louisiana’s top turnaround chiefs and consultants share tried and true solutions to their challenges.

50 Rx for a better

turnaround Addivant plant manager Chris Vaughn offers tangible steps to better manage a turnaround’s execution.

55 The human side of

56 Guest columnists weigh

in on industrial wage pressures, taxing energy infrastructure and investing in your people.

CLOSING NOTES

59 Executive moves 60 Company news 62 The boom at a glance Our maps of the megaprojects and medium-sized projects that are driving the industrial boom.

66 My toughest challenge

Send your ideas and company news to editor@1012industryreport.com. 6

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

ADMINISTRATION Chief Financial Officer: Sammie Robinson Senior Business Associate: Lydia Spano Business Associate: Tiffany Durocher Office Coordinator: Debbie Lamonica Courier: Jim Wainwright Receptionist: Cathy Brown AUDIENCE DEVELOPMENT Audience Development Director: Shannon Kahler Audience Development Coordinator: Kenna Maranto

INSIGHT

efficiency Addressing behavioral issues helps bridge production gaps and enhance safety.

PRODUCTION/DESIGN Production Manager: Melanie Samaha Art Director: Hoa Van Vu Graphic Designers: Melinda Gonzalez, Rachel Parker, Emily Witt

Ajay Suda of A.K. Suda Inc.

A PUBLICATION OF LOUISIANA BUSINESS INC. Chairman: Rolfe H. McCollister, Jr. President and CEO: Julio A. Melara Executive Assistant: Millie Coon SUBSCRIPTIONS/ CUSTOMER SERVICE 9029 Jefferson Highway, Suite 300 Baton Rouge, LA 70809 225-421-8157 • FAX 225-928-5019 1012industryreport.com email: circulation@businessreport.com Volume 2 - Number 4 © Copyright 2017 by Louisiana Business Incorporated. All rights reserved by LBI. 10/12 Industry Report is published quarterly by Louisiana Business Inc. Reproduction without permission is prohibited. Business address: 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809. Telephone (225) 928-1700. POSTMASTER: Send address changes to 1012 Industry Report, 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809. 10/12 Industry Report cannot be responsible for the return of unsolicited material— manuscripts or photographs, with or without the inclusion of a stamped, self-addressed return envelope. Information in this publication is gathered from sources considered to be reliable, but the accuracy and completeness of the information cannot be guaranteed. No information expressed here constitutes a solicitation for the purchase or sale of any securities.

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EDITOR’S TAKE

Looking into the future of energy

T SAM BARNES

he troublesome ripple effects that new brands of renewable energy might have on oil and gas weigh heavily on Louisiana’s younger generation, as indicated by a question lobbed at Chevron’s David Payne by a millennial attending the recent Lafayette Center for International Studies luncheon. “Ford and GM have announced plans to manufacture as many as 20 new models of all-electric vehicles within the next five years. It’s my intent to be in this industry for the next 30 years. If we lose 20% of that demand, is this industry viable?” Not skipping a beat, Payne reassured the 20-something-year-old that oil wasn’t going anywhere, and that there would always be a need for fossil fuels. In a worst-case scenario, he said, oil would sustain only minimal growth, and the blossoming worldwide need for greater amounts of energy would catalyze demand for all forms of energy. “Today, there are 3 million people in India that don’t have electricity,” said Payne, Chevron’s vice president of drilling and completions. “There are a billion people globally that don’t have access to electricity. In all the scenarios, we show slow growth in oil demand. We see significant growth in [natural] gas demand, and that’s even with an increase in renewables.” But there’s another challenge— from where will the oil come? In the last 50 years, a lot of oil has come from the shallow-water regions of the Gulf of Mexico. For a variety of political and economic reasons, that might not be the case going forward. For Chevron, at least, much of the current focus is on the Permian Basin in southwest Texas, one of the most prolific oil and natural gas geological basins in the U.S. and an engine for the country’s energy resurgence. The world is changing swiftly, and new technologies are hurtling the energy market to realms impossible

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

to fathom. The potentials of biofuels, solar and wind power are only now being realized, and are limited only by cost—something that is likely to change in coming years. In such an environment, Louisiana must be progressive enough to stay ahead of the curve and be willing to diversify into new areas to retain its status as a leading energy state. As one notable bright spot, natural gas will undoubtedly play a major role in the changing landscape, given its environmental friendliness and abundance of supply, and Louisiana is well-positioned to prosper from some rather fortunate market dynamics. Kudos to Port Fourchon for being proactive in this arena by diversifying its industry base to potentially include liquefied natural gas. This comes on the heels of the unlikely retainage of all of its tenants during the recent dramatic oil and gas slump, a feat achieved primarily by slashing its rental rates 20% across the board. TECHNOLOGY’S BIG ROLE Technology will also play a key role in shaping the industrial landscape in coming years. As reported in “Corralling Big Data,” beginning on page 38, the dawn of smart manufacturing is finding its way into the inner workings of the manufacturing and industrial markets in Louisiana, as owners strive to improve the efficiency of their work processes. The reasons behind this are a drop in cost and the availability of greater computing power, making smart manufacturing more attractive to the average owner. After all, greater visibility into their operations could potentially improve efficiency, and as a result, ROI. While many companies might encounter a bit of a learning curve, the data is already out there in most cases. It’s just a matter of learning how to gather, manipulate and analyze it, but it’s worth it in the end. Full implementation of these techniques can reduce production costs, energy

consumption and supply chain energy stream usage. In Louisiana, some companies are light years ahead of others. Already thought of as a technological leader in its field, Baton Rouge-based pipeline manufacturer Stupp Corp. is nearing full implementation of a new software-based system that will manipulate production data to make direct, quantifiable improvements to its production processes. The future of such technologies is as unpredictable as it is limitless. Some, such as LSU Vice President for Research and Economic Development Kalliat Valsaraj, believe that industrial processes could eventually be miniaturized and modularized thanks to smart manufacturing systems, leading to greater efficiencies and improved environmental stewardship. HUMANS ARE IMPORTANT, TOO None of these technologies would work, however, without the involvement of the people that invent, operate and interpret them. The unfortunate side effect of technology—of all kinds—is that it has the potential to widen the divide between people and inhibit the development of problem-solving and communications skills vital to the work environment. That’s why tools and processes should never overshadow the importance of the humans they serve. In “The human side of efficiency,” beginning on page 53, we discuss advances in “lean” methodology, which at its core is a respect- and relationship-oriented approach to project delivery. While hardly new, lean is being used with greater frequency as it seeks to eliminate the divide that can be created by modern-day technology and processes, and thereby improve jobsite efficiency. By having the right people in the same room at the same time—and at the right frequency—collaboration, accountability and problem-solving often occur naturally.

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

LAUNCH ICYMI

TULANE UNIVERSITY’S SHANTZ LAB has received a two-year grant of $110,000 from the American Chemical Society’s Petroleum Research Fund to find a solution to one of the chemical industry’s most demanding transformations, the direct conversion of benzene to phenol. Phenol is used to make numerous everyday items including plastics. The way it is made now is a complicated, energy-intensive, multistep process. The direct conversion of benzene to phenol is viewed as a “dream reaction.” The ACS hopes to find a way to take benzene, a colorless and highly flammable liquid with a sweet smell, and convert it so that it reacts with oxygen from the air and directly

makes phenol in a one-step process. The current industrial process takes three steps. “The direct conversion of benzene to phenol with molecular oxygen is a long-standing problem and hailed as one of the 10 hardest transformations in the chemical industry,” said Daniel Shantz [left], professor and the Entergy Chair of Clean Energy Engineering at Tulane. “This is a holy grail reaction. It’s a grand challenge because no one has been able to perform this chemistry under conditions that the industry would think about implementing.” According to Shantz, having one reaction versus three would make a plant smaller and less expensive to build and operate. It should also require less energy, emit less carbon

PAULA BURCH-CELENTANO, TULANE UNIVERSITY

Chasing the ‘dream reaction’

dioxide and lead to less waste. “We have three to four well-defined ideas that over the years of the grant we should be able to test. We are going to make nanomaterials, which are nearly a thousand times smaller than the diameter of a human hair. Some will be rods, cubes or spheres and the idea is that

by changing their shape, we will be able to change the number of sites on the nanomaterial that will allow us, in one step, to react oxygen and benzene to make phenol in a way no one has been able to do so far,” Shantz said.

—Tulane University

PROJECTS

READY FOR STARTUP: Dow Site Manager Eduardo Do Val, with bow, and Dow President & Chief Operating Officer Jim Fitterling, with scissors, are joined by Sen. Bill Cassidy and state and local officials to cut the ribbon on Dow’s $2 billion investment in Plaquemine.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

DON KADAIR

DOW CUTS THE RIBBON DOW CHEMICAL LEADERS were joined by Sen. Bill Cassidy and local and state officials for the dedication of $2 billion in investments at the company’s 3,000-acre site in Plaquemine Oct. 27. The expansion includes two new polyolefin plants designed to produce next-generation synthetic rubber and high-performance polyethylene and 1 million square feet of warehousing. The investments represent more than 2,500 direct Dow and contractor jobs in the Plaquemine area and created 1,200 construction jobs during the past four years. “The investments we’re celebrating today will be a tremendous part of Dow’s future, and integral to our strategy by expanding our family of high-performance polymers for flexible packaging that our customers are demanding,” said Jim Fitterling, president and chief operating officer for Dow, and chief operating officer of the Materials Science Division for DowDuPont. “We’re thankful for the support we’ve received from the community as well as from our local, state and national representatives.” —Staff report

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NOT WORTH THE RISK TRANSOCEAN LTD. IS scrapping six floating offshore drilling rigs and taking a bruising $1.4 billion write-off, Bloomberg reports. Competitors are going the same route, jettisoning more rigs in the third quarter than have ever been trashed in a 90-day stretch, according to Heikkinen Energy Advisors analyst David Smith. “Deepwater is going to be playing a much-reduced role on the global oil-supply stage relative to what the industry expected as recently as three years ago,” said Thomas Curran, an analyst at FBR Capital Markets in New York. “For all that, it could have been worse, in one way, for Transocean,” the Bloomberg article notes. “It has been the most aggressive in an unprecedented experiment with what’s called cold-stacking for big drillships. After oil prices cratered in 2014, the company didn’t send all of its unwanted rigs out to sea in the time-honored temporary holding pattern where engines keep running and a crew remains on board—something know as warm stacking, naturally, that runs up a daily bill of some $40,000. Instead, Transocean dropped anchor on nine high-tech ships 12 miles off the coast of Trinidad & Tobago and simply shut the motors off. So far the savings are in the neighborhood of $90 million.” What was unclear was whether the cold-stacked rigs could effectively be ramped up to drill again, and at what cost. Transocean declined to comment for the story.

SCRAPPING AN ICON CITING A NEED to make way for economic development opportunities, Louisiana trucking titan James Davison says he will demolish the former General Motors headlamp plant in Monroe, The USA Today Network of Louisiana reports. “We believe offering a clean site provides the best potential to find a company that will bring jobs to northern Louisiana, which has been my goal since buying the property,” Davison says. Drake Mills, chief executive of Origin Bank and Davison’s adviser on the project, agrees, saying the 425,000-square-foot building has hindered the marketing of the property. Louisiana Economic Development Secretary Don Pierson says the removal of the building “will set the stage for a client that has immediate needs for industrial construction.” LED will feature the site as a proposed location whenever qualified buyers are identified. General Motors opened the plant, which fronts Interstate 20, in 1975. In its heyday, it employed 800 Louisianans. —daily-report.com

—Bloomberg

IN SO MANY WORDS

Port Fourchon has become the leader in servicing all the deep-water activity in the U.S. Gulf. Whatever’s happening out there in the Gulf right now, especially in the deep water, is still being serviced out of Fourchon, just at a much lower rate. Most of (the tenants at the port) are hanging onto what they have now because they need to be prepared for the eventual turnaround.

COURTESY LSU AGCENTER

—CHETT CHIASSON, executive director, Greater Lafourche Port Commission

TRAIN 4 IS A ‘GO’ CHENIERE ENERGY PARTNERS announced in mid-October the “substantial completion” of Train 4 of the Sabine Pass liquefaction project in Cameron Parish. The company said commissioning was complete and Cheniere Partners’ EPC partner, Bechtel Oil, Gas and Chemicals Inc., has turned over care, custody and control of Train 4 to the owner. Under a sale and purchase agreement with GAIL (India) Limited, the first commercial delivery for Train 4 is expected to occur in March 2018. Over the last 17 months, Cheniere Partners and Bechtel have declared substantial completion on four liquefaction trains at Sabine Pass. A fifth train is under construction and a sixth is permitted and in the commercialization phase. The company reported in August it has delivered LNG from Sabine Pass to 24 of the 40 LNG-importing countries around the world through more than 160 cargoes. According to U.S. Department of Energy data, shipments have gone to Mexico, Chile, China, Japan, Jordan, India, Turkey, Spain, Portugal, Italy and the Netherlands, among others. —Staff report

$330 MILLION

Contract won by Textron Marine and Land Systems of Slidell to build mobile strike force vehicles for the U.S. Army Source: AP

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MAKING A BETTER DRILLING FLUID—USING PLANTS THIS BOTTLE HELD by LSU AgCenter scientist Qinglin Wu may hold the secret to the future of drilling fluids. It’s a sample of nanocellulosic (NC) material made from trees. Nanocellulose can also be made from other renewable biomass materials such as straw or sugarcane bagasse, which Louisiana has in profusion. Wu and a team of researchers are working on developing environmentally friendlier, smart drilling fluids containing NC material, which is very stiff and lightweight and has eight times the tensile strength of steel. Wu’s team is using surface-modified NC material to create drilling fluids that will work better at high temperatures and in drilling fields characterized by gypsum layers or salt rock. Chemicals grafted on the surface of the tiny NC material attract salt ions in the fluid, preventing them from bonding to other key components of the fluid and eliminating their negative effect on fluid properties. Wu has done previous research related to oil and gas exploration. He was one of the lead developers of a lost-circulation control material called TigerBullets, which is also a wood-based material. Major oil and oil service companies such as ExxonMobil, BP, Chevron and Schlumberger have added TigerBullets in their drilling operations, and it has been used in more than 400 wells throughout the world. —Staff report

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

1 HOUR, 40 MINS

Time it takes for Louisiana to lose one football field of land to coastal erosion (up from 1 hour several years ago) Source: Chuck Perrodin, CPRA

COURTESY PORT OF LAKE CHARLES

LAUNCH: ICYMI

KEEPING THE CHANNEL OPEN THE WATER INSTITUTE of the Gulf is embarking on a new study with the Port of Lake Charles to identify sediment sources in the Calcasieu Ship Channel and to find the best way to use dredged material to protect critical infrastructure at the port. The $360,000 contract approved by the port in late August tasks the institute with better understanding how sediment moves through the Calcasieu Ship Channel and to evaluate alternative locations to find long-term and realistic dredge disposal sites. Primarily due to the increase in liquefied natural gas in the region, it’s predicted that ship traffic in the channel will double by 2023. “With close to $120 billion in projects coming to our area, it is absolutely critical that we ensure the long-term viability of the Calcasieu Ship Channel,” said Bill Rase,

Port of Lake Charles executive director. “The Port of Lake Charles is eager to partner with the Water Institute and other area industry leaders to explore cost-effective solutions. The rising cost of dredging and more specifically the lack of necessary areas for the placement of dredged material are the two items that can strangle the development of ‘America’s Energy Corridor.’” The Calcasieu Ship Channel must be dredged yearly to ensure that it meets the 400-foot-wide and 40-footdeep federally mandated requirements. It’s estimated that the Port of Lake Charles will need to have 97 million cubic yards of disposal capacity for dredged material during the next 20 years. An additional seven to eight million cubic yards of dredged placement space will need to be found to accommodate new project construction. —Staff report

MORE JOBS FOR CALCASIEU

LAGCOE ATTENDANCE TOPS 10K

SOUTH AFRICA-BASED Sasol says it plans to hire an additional 200 employees at its $11 billion ethane cracker and derivatives project in Lake Charles over the next two years. The energy and chemical company has already hired 500 employees there. The new jobs—which pay an average salary of $80,000, would bring the total number of jobs at the plant to 700. Sasol says 93% of the current employees are Louisiana residents and 85% are from Calcasieu Parish. Sasol will begin commissioning seven new units at the facility next year.

LAGCOE 2017 welcomed more than 10,000 people from 21 countries and across the U.S. to the Cajundome & Convention Center in Lafayette Oct. 24-26. Attendees viewed exhibits, three keynote presentations and dozens of technical presentations, as well as six special events over the three-day period. Angela Cring, LAGCOE executive director, said, “We were very pleased with the number of attendees and exhibiting companies at LAGCOE 2017, given the challenges in the industry. It is evident that networking, innovation and preparing the next generation remain critical components for our industry, especially in lean times.” LAGCOE will return to Lafayette Oct. 22-24, 2019. Learn more at LAGCOE.com/expo.

—daily-report.com

—Staff report

IN SO MANY WORDS

The country can find its energy vision by not settling for the 1980s goal of energy independence. We’re seeking energy dominance. —SCOTT ANGELLE, director of the federal Bureau of Safety and Environmental Enforcement

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

BUSINESS TICKER • Edison and Venture Global Calcasieu Pass LLC have inked an LNG sales and purchase agreement for Edison to buy 1 million tpy of LNG over a 20year term. • Jacobs Engineering Group signed a master services agreement (MSA) expansion amendment with Chevron to provide elective construction management services on an as-needed basis at the company’s refineries located in El Segundo and Richmond, California, Pascagoula, Mississippi, and Salt Lake City, as well as at various terminals throughout the U.S. • ExxonMobil has acquired the Lion Copolymer Services facility adjacent to its Baton Rouge chemical plant for $5.6 million.

• BASF acquired 100% of Netherlands-based filament producer Innofil3D BV, part of an attempt to push into the business of 3-D printing materials. A purchase price was not disclosed. • Tellurian announced that its wholly owned subsidiary has reached an agreement with a private seller to acquire natural gas-producing assets and undeveloped acreage in the Haynesville shale for $85.1 million. • The Dow-Dupont merger has been completed, and the new company DowDuPont is operating as a holding company with three divisions as of Aug. 31. • Praxair announced in September that it plans to merge with Linde.

Sources: Petrochemical Update, LNG Industry, Gulf Coast Petrochemical News

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NUMBERS

+28% Surge in Caterpillar Inc. stock price for three months ended Oct. 24, best of any Dow industrial stock for that period Source: IndustryWeek

IN SO MANY WORDS

Shale is a future growth engine for Shell. We characterize it as a future growth opportunity because of its long-term growth potential, and we are on path to achieve that strategic intent of being a material, sustainable growth engine for Shell within the next decade. —GREG GUIDRY, executive vice president of Shell’s Unconventionals business

EVENTS

LONDON CALLING II GNO INC. ANNOUNCED plans to lead a second business mission and international summit in London. This second London Calling excursion will be Jan. 20-24, 2018. London Calling participants will literally get on board the new British Airways 787 Dreamliner flight between New Orleans and London, and then learn about all of the economic and cultural opportunities that connection will afford. The initiative is intended not only to celebrate the new flight, but also to foster a deeper understanding of London and the UK’s post-Brexit economic landscape, while exploring commerce opportunities for stakeholders of the Gulf Coast. GNO Inc. has engaged the London firm OCO Global to co-produce the initiative. Details are available at gnoinc.org.

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A ROBOTIC SOLUTION PHILLIPS 66 AND SQUARE ROBOT INC. are advancing into the unmanned robotics inspection market through the joint development of an autonomous robot that would have the capability to inspect petroleum product storage tank floors while product remains in the tank. The untethered robot is being designed and will be certified for use in a wide range of petroleum products. The robot is expected to enter service in mid-2018. Aboveground storage tanks are routinely removed from service to be drained, opened and cleaned at great expense in order to evaluate tank bottoms. The new robot is being developed to automatically survey and map obstacles within a tank—while the tank remains in static service—creating a specific route map allowing maximum coverage of the tank floor. Using the non-destructive testing (NDT) data gathered, a certified inspector will produce a floor thickness map allowing for a more accurate prediction of a tank floor’s remaining life. Square Robot was started by three subsea robotics professionals in May 2016 specifically to address the growing need for swimming autonomous robots for oil and gas applications. The rapidly growing Boston-based startup has recently completed a first round of fundraising and currently employs 12 engineers. The company intends to launch a tank floor inspection service business in Houston during the summer of 2018. —Staff report

INDUSTRY ON THE WEB

SITE SEARCH WEBSITE GETS HIGH-TECH REVAMP THE NEWLY ENHANCED Louisiana Site Selection Center website was launched in September to help businesses search for and secure prospective sites and buildings throughout the state. The web-based tool for attracting businesses and industries to Louisiana is sponsored by Entergy Louisiana, with Louisiana Economic Development and economic development organizations and chambers of commerce statewide as partners. Designed to meet the modern needs of various economic development allies, the Site Selection Center consists of an easy-to-use platform with enhanced search and property management tools. The revamped site uses a combination of GIS technology, business analysis and demographic data to give users information about available commercial sites. The site now features expanded GIS data tools, allowing visitors to filter for a variety of site suitability characteristics, such as proximity to rail routes, major highways, schools, ports and more. A graphic layering of those characteristics can be created for available business and industry sites. Check it out at louisianasiteselection.com/led. —Staff report

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

LAUNCH: THE BIG PICTURE

THE

GIANT OF THE

GULF HALFWAY AROUND THE WORLD In October, Ingleside, Texas, welcomed the hull of Shell’s Appomattox production platform, floating aboard a massive heavytransport vessel, after its journey from halfway around the world. Construction of the host facility for Shell’s pioneering development will be completed in Ingleside after fabrication of the hull in South Korea. Shown here is the departure from South Korea.

BEHEMOTH ON THE SEA A deepwater oil and gas development that will become Shell’s largest floating platform in the Gulf of Mexico, the sizeable host will tower 20 stories above the sea, float in 7,400 feet-deep waters (that’s five Empire State Buildings), span approximately three football fields across, and weigh more than the world’s largest naval aircraft carrier (125,000 metric tons).

PROJECT ON TRACK With the arrival of the hull in Texas, the project is more than 65% complete, and Appomattox is on track to achieve first oil by the end of the decade. The Appomattox project will consist of a semi-submersible, four-column production host platform, a subsea system featuring six drill centers, 15 producing wells, and five water injection wells.

A COMPETITIVE INVESTMENT Delivering a safe and responsible project of this magnitude on time and under budget by more than 20% maintains Appomattox’s position as an attractive and competitive project in Shell’s portfolio, the company says. Appomattox will add approximately 175,000 barrels of oil equivalent per day (Shell share) when it reaches peak production, with a breakeven price below $50 per barrel.

FINAL DESTINATION The Appomattox will work 80 miles offshore from Louisiana in the Norphlet formation of the Gulf, which has estimated resources exceeding 800 million barrels.

AP PHOTO/ARNULFO FRANCO

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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COURTESY SHELL INTERNATIONAL

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10/12 INDUSTRY REPORT â&#x20AC;¢ FOURTH QUARTER 2017

LAUNCH: WORKFORCE SPOTLIGHT

Diving for dollars

—David Jacobs

THE BASICS The program lasts about seven months. Tuition is $4,546 for students from Louisiana and $8,434 for everyone else. Most students are from outside the state—some from as far away as Nigeria, says Jerry Shepherd, one of the program’s two

DON KADAIR

obbie Champagne is the founder of C-Dive, a Houma-based commercial diving company with 100 employees serving independent oil and gas producers in the Gulf of Mexico. When he got out of the Navy, he was looking for a career, preferably one that didn’t require him to sweat too much. Commercial diving seemed like a good fit. “I liked diving, I liked the water, and, quite simply, it was the most money I could make with the amount of education that it took,” Champagne says. Champagne is a 1992 graduate of South Central Louisiana Technical College’s commercial diving program, based at Young Memorial Campus in Morgan City. It’s the only commercial diving school between Texas and Florida. Champagne is an advisor to the faculty and one of the program’s biggest boosters.

“It’s a really good program. They teach everything you need to know to get out and become a diver. I promote it as much as I can. I was very fortunate to go there.” –ROBBIE CHAMPAGNE, founder, C-Dive

full-time instructors. Typically, about 24 students graduate per term, although demand has declined along with the oil industry’s downturn. About half of recent graduates work offshore.

INDUSTRY APPROPRIATE Shepherd says he meets with an industry advisory committee twice a year. He lays out how he’s training the students and asks for feedback about what they’d like to see from his graduates. They might ask for more training on a certain piece of equipment, for example. “They tell me what they’re doing and how they’re doing it,” he says, “and I try to match my training techniques to their standards.” THE RIGHT STUFF The program requires a dive physical by a hyperbaric physician before admittance. Body weight, asthma, and certain blood pressure A student in South Central Louisiana Technical College’s commercial diving program COURTESY SOUTH CENTRAL LOUISIANA TECHNICAL COLLEGE

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

medications are among the factors that can prevent a prospective student from becoming a commercial diver. Typically, about two or three students out of 10 won’t graduate from the program, Shepherd says. The math and physics requirements often claim one person. The “dive medicine” coursework might take out another. STILL IN DEMAND Despite the offshore slowdown, there’s plenty of work for commercial divers. Pretty much anything that touches water–from dams to bridges to water towers–must be maintained by divers. “My students have no problems finding employment,” Shepherd says. “I constantly have the dive companies calling me, asking ‘When are your students graduating?’” Some have said they’d hire an entire class as soon as they’re ready, he says. 1012industryreport.com

MARINE

HEAVY CIVIL

PAVING

PILING

ASPHALT

UTILITIES

SITEWORK

VACUUM EXCAVATION

WWW.BOHBROS.COM 1012industryreport.com

10/12 INDUSTRY REPORT â&#x20AC;¢ FOURTH QUARTER 2017

LAUNCH: INTELLIGENCE

What 2018 has in store for industry

AT FIRST GLANCE, the outlook for 2018 doesn’t look so good. The oil patch is expected to remain sluggish. Large industrial projects have been completed, and delays are projected for the startup of new ones. But in his annual economic outlook for Louisiana, economic consultant Loren Scott predicts Louisiana’s emergence from a 20-month recession is expected to be bolstered by a slightly faster growing national economy, low inflation and only a slight increase in interest rates. Jobs prospects have never looked brighter: Over the next two years, the state is expected to add more than 34,000 of them, pushing Louisiana over the 2 million-job mark for the first time in history. Here’s a summary of some of the industry-relevant points in Scott’s Louisiana Economic Outlook.

CH WAT

TRENDING

2,013,600

Louisiana is expected to reach jobs in 2019—the first time it has exceeded 2 million jobs.

14 new production platforms

have moved into the Gulf of Mexico between 2015 and 2017

The rig count in Louisiana declined from in August 2014 to in August 2017

Costs to drill a well in the onshore shale plays are now

under $8 million

a well, and there is a 96% chance of hitting a profitable rock.

9 LNG export terminals remain at the FEED stage, representing a total capital spend of

$62.1 billion

. 7 of those are proposed for the Lake Charles area

INDICATORS $178 billion in industrial announcements have been made in Louisiana since 2012. Of that, $102.1 billion are LNG export projects.

LOUISIANA PER CAPITA INCOME

$23,570

$25,000 20,000

52%

are at the FEED stage

48%

are under construction or complete

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20 15

10,000

5,000

1990

2000

22.3

15,000

$15,224

ABSOLUTE JOB GROWTH RATE PROJECTIONS (in thousands)

12.0 8.0

2017

2018

2019 1012industryreport.com

INNOVATION Shell has employed “irritants”— divisional leaders who challenge the way the company has always done things. Shell is now drilling offshore 30% faster at 50% of the costs.

In 2013, the Mad Dog 2 platform was projected to cost $20 billion. By 2016, costs were pushed down to $9 billion through redesign, allowing the project to move forward.

PROJECTIONS BY REGION

A Little H a r d Wo r k Ne v e r H u r t A ny o n e .

NEW ORLEANS: The New Orleans MSA is projected to be the third fastest growing MSA in the state, adding 4,600 jobs (+0.8%) in 2018 and 7,600 jobs (+1.3%) in 2019. Huge industrial projects—especially to the west in St. James Parish—will drive this growth, with 2019 being a year of new ground-breaking that will give the economy an extra kick upwards. BATON ROUGE: Virtually all of the almost $16 billion in industrial projects in the Baton Rouge MSA are completed or drawing to an end. Vanishing construction jobs will lower this MSA’s super-heated growth rates over 2014-16 to a more modest 0.7% rate in 2018 and 0.9% in 2019. Offsetting the industrial construction job loss will be four major projects in the health care sector, the Port of Greater Baton Rouge, and the high-tech sector. LAFAYETTE: Solid performance in Lafayette’s Big Four—Stuller Settings, Acadian Ambulance, the Schumacher Group and LHC—will help lessen the bite from a still recessionary oil and gas extraction sector. Over a $60 million boost to the state road lettings budget in this region will help as well. If our oil price forecasts are near the mark, the Lafayette MSA will begin to add jobs in 2019 (+1,600 jobs) after experiencing another slight down year (-800 jobs) in 2018. HOUMA: A further hammering from Houma’s shipbuilding industry in 2018 will add to the continuing woes in the area’s oil and gas exploration and closely related industries in 2018, resulting in a further loss of 1,800 jobs. Additional hires at Gulf Island Fabricators, higher sustained oil prices, and a significant new LNG facility at Port Fourchon should be enough to get Houma back on a growth path (+700 jobs) in 2019.

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LAKE CHARLES: The Lake Charles MSA, with a remarkable $126 billion in industrial announcements since 2012 ($55.9 billion underway or completed) has been one of the fastest growing MSAs in the country for the past four years. Scott is projecting a pullback in the region’s 4-5% growth pace to about 1.6% in 2018 as construction of many projects comes to an end. However, in the latter part of 2018 or early 2019, we are expecting construction starts on 2-3 huge LNG projects to create a new spark of growth in 2019 (+4%). RURAL: Growth in Louisiana’s rural parishes is projected at 1% a year over 2018-19. Shipbuilders and fabricators in southern regions of the state have experienced significant layoffs due to problems in the oil patch, though a major outlier is Metal Shark Boats, which enjoys some nice military contracts. Two significant pipeline projects, a new energy center in Washington Parish and a major oil storage/blending facility in Port Barre will give a nice positive jolt to this region. 1012industryreport.com

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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6/8/17 11:35 AM 1012industryreport.com

LAUNCH: PEOPLE

Executive Profile: Missy Rogers

Where did your career start?

My first job out of LSU was as a rotating equipment specialist for Texaco, but side assignments in risk management and failure studies led into a consulting position with a focus on engineering forensics and custom instrumentation and simulation techniques for a variety of industrial equipment. I became the business manager for that consulting firm, learning more about payroll, insurance and contract management. What are your responsibilities at Noble Plastics?

I focus largely on business development and administrative oversight of our three business units: engineering, molding and robotic automation. As the founder, I was the first and only employee, so I literally wore every hat—machine operation, maintenance, pricing, contracts and delivery. I have managed to shed those duties to great people, just keeping the strategic planning and 1012industryreport.com

POSITION

President, Noble Plastics AGE

49 HOMETOWN

TERRI FENSEL

n LSU-educated registered mechanical engineer, Missy Rogers loves to make things. Her first job out of college was with Texaco, but Rogers found her true passion in engineering forensics and custom instrumentation. She and her husband Scott founded Noble Plastics in 2000. As the first employee of her company, Rogers was responsible for everything from machine operation to delivery. She has since added a design group for product development to her company, and in 2006 Noble Plastics moved to Grand Coteau with the acquisition of its first owned building. The company added a second building in 2014, and over 20 staff members now operate in more than 100,000 square feet. These days, Rogers focuses more on strategic planning and management. “I see my primary job as smoothing the path for Noble staff to excel,” she says.

Lafayette EDUCATION

major management tasks to myself and my leadership team. What is your favorite part about what you do?

I get most excited for clients at new product launch and for installation of new capabilities for our team. The first time a part gets made or a robot is handling a manufacturing cell without human dependency really gives you a rush. What is one thing about your job people don’t expect or don’t know and hear about?

Increasing regulations and need for certifications seems to be a consistent demand on staff time, so I spend a lot of time researching standards and specifications—not very glamorous. What are some of the biggest challenges that come with working in your industry?

People often think of plastics as a low-cost manufacturing solution, so helping them understand the tremendous strength capability for metal replacement applications is a

Bachelor’s in Mechanical & Industrial Engineering, LSU

challenge, as well as the capital requirements of custom industrial machinery and tooling. What is your most satisfying professional accomplishment?

We’ve been really fortunate to be recognized at local, state and national levels with various awards, but the state Lantern Award for excellence, growth and community outreach has certainly meant the most to me personally as we were able to share it at an event with several of our staff. What is a great piece of advice you have received?

Beware the barrenness of a busy life. Socrates said this, so it’s not just technology or dual-working families that struggle in the current times. It is a reminder that we always need to integrate the industry of our lives and the beauty of life’s experiences— including school bus trips to Disney. What is an item on your “bucket list”?

Believe it or not, riding a horse. I know this is really common to a

lot of folks, but just something I’ve never managed to do. I rode an elephant, and a camel, but not a horse. What do you see for the future of your industry?

More automation and collection of data will add complexities that must be managed with focus and understanding of the technologies behind them, otherwise you can get lost in the sheer amount of data. We are working on proprietary products to aid in identification of key data streams for process control as well as compilation in a method that makes management more streamlined. If you could have any job other than your own, what would it be?

I love mentoring young people into a study they love and suggesting practical applications for those passions. I also mentor young professionals and receive great joy sharing their energy and perspective.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

COVER STORY

THE END GAME WILL LOUISIANA REMAIN A MAJOR ENERGY PLAYER WHEN OIL IS NO LONGER KING? BY SAM BARNES

10/12 INDUSTRY REPORT â&#x20AC;¢ FOURTH QUARTER 2017

1012industryreport.com

ooking to the faraway, distant economic landscape of 2035 and beyond, industry leaders are beginning to accept the likelihood of flattening or declining oil demand in the extreme long term. Already, though, they are employing various strategies to prepare. Even as current cost factors buoy oil demand, the largest oil producers are fixated on a growing long-term preference for natural gas and renewable forms of energy. While there is disagreement as to the role oil will play past the mid-century mark, economists say that the power and transportation markets will ultimately determine its future, as population increases and the

1012industryreport.com

emergence of developing countries lead to an increasing need for energy. Key is the significantly greater role that natural gas will play in that scenario, with some estimating that demand for the product will double through 2040. In the meantime, here’s the big, perhaps unanswerable, question: Will Louisiana remain a major energy player when the demand shifts? Given the increased development of shale plays and the proliferation of liquefied natural gas (LNG) facilities in the last 10 years that have propelled the U.S. and Louisiana from importer to exporter, natural gas may very well secure Louisiana’s spot at the table. Energy Institute of Louisiana Director

Mark Zappi in Lafayette says predicting where the market is going to be decades into the future is nearly impossible due to unknown political, technological and economic factors, but there is one virtual certainty: Natural gas is going to be big. Natural gas has its own environmental attributes, emitting up to 60% fewer GHGs than coal for power generation, and is an ideal source of reliable power while also supplementing intermittent renewable energy sources such as solar or wind. “I think natural gas has got a very bright future,” Zappi says. “Every new power plant is going to be natural gas or solar, with natural gas being the predominant one that you’re going to hear about over the next 20 years.”

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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CHANGING PORTFOLIOS To prepare, BP Oil is weighting its global upstream portfolio in favor of natural gas, since it feels that it will be the only fossil fuel likely to grow its share in the world energy mix in the next two decades. In the most recent January edition of BP Energy Outlook 2035, the company discusses key factors it feels will play out by 2035 and beyond. “The rapid growth in U.S. and Australia is likely to drive big structural changes in the global natural gas markets,” says Mark Finley, BP’s general manager of Global Energy Markets, “with LNG playing the role of connecting what are currently disconnected regional marketplaces through growing trade and building more of a global gas market.” ExxonMobil, one of the largest natural gas producers in the U.S., takes a similar view. Recent advances in production technologies have helped it unlock vast new supplies of the fuel in North America that previously were financially impractical to produce. “We’re looking into those technologies that are scalable; that are affordable and sustainable,” says Aaron Stryk, a spokesman for ExxonMobil, “and natural gas is one of those that checks all the boxes.” There are those who urge Louisiana to think more long-term by giving biofuels, solar and wind energy greater attention if it wants to retain its role as a major energy provider, pointing to statistics that say about 30% of automobiles will be hybrids and/or electrically powered by 2030. Power plants are relying more upon solar and wind power to meet their needs as well, although Louisiana lags behind many other states in this regard. Large refiners such as ExxonMobil, Shell and BP are heeding the call by investing heavily in renewable energy research—although there are minimal real-world applications of the research to date—and academic institutions such as the Energy Institute of Louisiana at the University of Louisiana at Lafayette are encouraging the development of solar, wind and biofuels as alternate sources of energy. Even so, the demand for oil will always be there, energy economists say. 1012industryreport.com

SAM BARNES

COVER STORY

“At the end of the day, everyone agrees that there will be an increase in energy demand worldwide.” —DAVID PAYNE, vice president of drilling and completions, Chevron

“Not like it has been historically, and certainly not as much as it is today, but it’s never going away,” says David Dismukes, executive director of the LSU Center for Energy Studies. “What’s going to happen is substitutes and alternatives are going to arise that are just as cost-effective as oil and gas, but I don’t think fossil fuels are going to go away because they’re still a relatively abundant, cost-effective and widely available resource.” Dismukes says there are other sources of demand for fossil fuels that can’t be discounted—particularly in Louisiana, as they are used as feedstock in the manufacture of chemicals and other products. “You’re always going to have a solid floor [for oil],” he adds. “Now, where that floor will be I can’t say, but there’s always going to be a floor.” Speaking at an Oct. 4 Lafayette International Center luncheon at the Petroleum Club, David Payne, vice

president of drilling and completions at Chevron, says he doesn’t think the growth in renewable energy will mean the death-knell for oil. “You hear all the talk about peak oil and that there’s going to be a decline, and all these other things are going to change things—solar, wind and renewables. At the end of the day, everyone agrees that there will be an increase in energy demand worldwide. “Today, there are 3 million people in India that don’t have electricity. There are a billion people globally that don’t have access to electricity. In all the scenarios, we show slow growth in oil demand. We see significant growth in [natural] gas demand, and that’s even with an increase in renewables.” PREPARING FOR THE SHIFT Over the last decade, a handful of companies—many already accustomed to taking risks—have proven

their willingness to prepare for a demand shift away from fossil fuels. As one of the oil and gas “big boys,” ExxonMobil has spent approximately $8 billion since 2000 to develop and deploy lower-emission energy solutions across its operations, and is currently investing about $1 billion a year in research and development. ExxonMobil’s in-house research portfolio includes biofuels, carbon capture and storage, energy-efficiency processes, natural gas technologies, advanced energy-saving materials and environmental life cycle assessments. “We pride ourselves on constancy of purpose,” says Mike Kerby, ExxonMobil’s corporate strategic research manager. “We refer to it as the dual challenge. We need to have that balance of addressing the near term needs of our business as well as the longer-term needs.” In Clinton, N.J., an ExxonMobil staff of chemists, climate scientists,

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

COVER STORY microbiologists, polymer scientists, data scientists and mathematicians are charged with performing the fundamental science for the corporation, in collaboration with more than 80 universities and other research groups worldwide. While there are some 20 to 30 legitimate transportation fuels that are considered biofuels, Kerby says there has been growing excitement about the potential of algae-based biodiesel. Algae naturally produces lipids that can be turned into a renewable, lower-emission transportation fuel. However, in a world where shareholders are more interested in the current quarter than 20 or 30 years

down the road, moving the technology from the petri dish to the fuel tank has been a difficult proposition. “Of course, this is all driven by the ability to do this at scale and affordably, and then integrate that into our existing refineries such as Baton Rouge or Baytown,” Kerby says. “We like this [algae-based fuels] because it adheres to the principles of not competing for food and water. We also think it has the promise to scale, and that we can integrate it into our existing infrastructure.” Other research is equally promising, such as converting cellulosic waste into biodiesel and developing carbon fuel cell technology to cap-

ture CO2 and generate power. EIL’s Zappi says many alternative forms of energy—particularly solar—are only one technological breakthrough away from “hitting a home run.” In 2016, the University of Louisiana at Lafayette (EIL’s sponsoring institution) and Louisiana Generating LLC, a subsidiary of NRG Energy Inc., signed an agreement for the construction and operation of a $5 million solar project on the Lafayette campus. The Photovoltaic Applied Research and Testing Laboratory is located on about 5 acres in the University Research Park. Terry Chambers, an associate professor of

mechanical engineering, is leading the project. The PART Lab will give students training in the field of alternative energy, reduce the university’s net fossil-fueled energy consumption by up to 10%, and offset air emissions such as sulfur dioxide, nitrous oxide and greenhouse gases. Zappi says the state-of-the-art PART Lab “represents how industry, university and government partnerships can be leveraged to better position Louisiana as the energy state. It will further entrench UL Lafayette as a key national player in the alternative energy development and applications arena.”

At LAGCOE, plenty of optimism for oil’s future in Louisiana

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

LNGs (FLNGs), where you have systems that will liquefy the gas offshore,” says John Pere, a retired executive from Hess Corp. in Houston. “You won’t have to bring it onshore through miles and miles of pipeline.” Panel member Mark Zappi, director of the Energy Institute of Louisiana in Lafayette, says these innovations have transformed the market, ending the “doom and gloom” forecasting about future inventories. “It has been amazing to sit back and look at how we now talk about energy, globally and in the U.S.,” Zappi adds. “We have initiated a whole new industrial revolution in North America. It has been amazing, and in a matter of about eight years we’re now talking about exporting and inventory. It’s just mind-boggling how much we’ve changed.”

SAM BARNES

AT LEAST FOR THE next 20 years, Louisiana will likely retain its energy prominence through advances in technology and innovation, according to panelists at the recent Louisiana Gulf Coast Oil Exposition in Lafayette. The panelists predict Louisiana and other oil and gas states will continue to find new ways to stay on top, much as they have for the last decade with the development of shale plays and the proliferation of LNG facilities. The panel convened Oct. 24 to discuss future challenges and opportunities facing the petroleum industry during LAGCOE, a biennial exposition showcasing onshore and offshore energy industry products and services. They add that the U.S. would be the ultimate beneficiary of new developments because of a lessening dependence upon foreign oil and gas. “I don’t think we fully understand the significance of where we are from an energy perspective in terms of security for our country,” says Bryant Chapman [right], president and CEO of Amistad Energy Partners LLC in Houston and former vice president of operations for BP America. “There’s more oil in the shales of North America than there is in Saudi Arabia. We don’t know how to get it all out yet, but I am confident we will continue on this technological trend and will be sitting here in another 20 years at the same production level as we are today.” Bryan Hanks, owner of BETA Land Services LLC in Lafayette and chairman of the Louisiana Oil & Gas Association, says technology is coming along in the nick of time for the shale plays. “We’re talking 10,000-foot laterals (wellbores) now,” Hanks adds. “We’re working for a couple of companies who are talking 15,000-foot laterals and there’s a company in Pennsylvania that’s drilled a 19,000 foot lateral. Those drillings are more efficient and cover more ground.” Technology is also a leading reason for the spread of LNG facilities, and will likely turn Louisiana into a top exporter in coming years. “We now have technology such as floating

1012industryreport.com

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“Oil and gas is always going to play a role in Louisiana, and we have to support that industry, but at the same time we have to diversify.” —JEFF CANTIN, president, Gulf States Renewable Energy Industries Association

THE POWER OF SOLAR Elsewhere, Entergy New Orleans began generating electricity at a new solar power plant in New Orleans East in August 2016. Entergy said in a press release that the plant’s more than 4,000 solar panels can produce up to one megawatt of electricity, or enough to power roughly 160 homes. In addition to solar panels, the pilot project incorporates new battery technology that will test ways to store power on cloudy days. 1012industryreport.com

The electricity is fed directly into the distribution grid to service New Orleans customers. Jeff Cantin, president of the Gulf States Renewable Energy Industries Association, warns that Louisiana could find itself behind the eight ball if it chooses to ignore the increasing popularity and cost-effectiveness of solar energy. “Oil and gas is always going to play a role in Louisiana, and we have to support that industry,” he says, “but at the same time we have

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COURTESY BIPARTISAN POLICY CENTER

COVER STORY

“The rapid growth in U.S. and Australia is likely to drive big structural changes in the global natural gas markets.” —MARK FINLEY, general manager of global energy markets, BP

to diversify, because we’ve already suffered the downsides of being dependent on an energy system that is global and very political.” While developments in solar power seem to have long-term sustainability, the big question mark surrounds energy storage. Cantin says there have been some promising advances in that arena. “You can’t have a conversation about solar today without talking about energy storage,” he says, “whether it’s utilities finding ways to store and release energy on a consistent level, or a business or residence using stored energy with renewables.” The development of the Tesla Powerwall is perhaps the most notable recent example. The Powerwall stores excess solar energy and makes it available upon demand, primarily at a residential level. “When you scale that up to a business level, that can provide additional services such as voltage stabilization and frequency stabilization. For a utility, a big battery like the Tesla Powerwall could even provide peaking power in

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

1012industryreport.com

BULLISH ON NATURAL GAS Despite the likelihood of scalable and practical applications of alternative forms of energy past the mid-century mark, those without large amounts of capital to invest in R&D—namely, the small- to medium-sized players—are keeping their eyes fixed on the next 20 years, not the next 40 or 50. For many, that means preparing for the impending natural gas boom. Even as a global overabundance of natural gas and cheap oil is dampening current LNG export expectations, many owners remain bullish on Louisiana continuing its trajectory toward becoming a major hub by 2020. There are currently $88 billion in LNG projects planned, under construction or in operation in the state. Jason French, chairman of the

1012industryreport.com

Louisiana Energy Exports Association, says satisfying long-term demand requires “a major LNG facility to be built somewhere in the world every year between now and 2035.” The optimism is fueled by significant worldwide demand, especially from U.S. allies in Europe and Asia who want a safe, stable and secure source of energy that also lessens their dependence on Russia. Also, new-build power generation continues to be led by natural gasfired power plants and renewable energy sources. Upstream, there’s little doubt that some groups and industries are diversifying their base in preparation for expected natural gas demand increases. For example, Port Fourchon, an offshore oil and gas hub south of Houma, hopes to diversify into the LNG market. Fourchon LNG plans to file an application with the U.S. Federal Energy Regulatory Commission to construct an $800 million LNG production and export facility there. Once constructed, Phase 1 of the project is expected to produce 2 million tons of LNG

TERRI FENSEL

the middle of the day,” Cantin says. In fact, New Orleans is currently considering options for handling the need for peaking power and other services—and battery storage is one of those options.

INDUSTRY INSIDER “Natural gas is clearly the best fuel out there. For the first time in history, we’re a net natural gas exporter. It is clearly predicted to be the power generator for the future. Also, renewables are going to have an impact, and that’s great because hydrocarbons won’t last forever and we need to be a multisupply country.” —CHARLES GOODSON, president and CEO, PetroQuest Energy Inc.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

COVER STORY

“Every new power plant is going to be natural gas or solar, with natural gas being the predominant one that you’re going to hear about over the next 20 years.”

TERRI FENSEL

—MARK ZAPPI, director, Energy Institute of Louisiana

global investment in transportation fuels, you’re seeing a pretty dramatic drop-off.” For the long term, economists say those dynamics will most certainly change and overall demand will continue to shift more toward renewable forms of energy. As a consequence, costs will continue to fall for biofuels and make those price points more attractive, in large part due to federal and private sector research that will either reduce the cost of making or retrieving the energy.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

“That’s why the major energy companies such as Exxon, BP, Shell and Chevron have astutely re-named themselves as energy companies,” Zappi says. “BP wants to sell you transportation fuels—they don’t care if it came from corn, algae or crude. They want to be in the driver’s seat and one of the leading providers of transportation fuels.” Still, making economic assumptions beyond the mid-century mark is a little like swinging at a piñata. “If you asked me what our primary

transportation fuel will be in 100 years, there’s no way I could answer that, or anybody else could for that matter. What cars will we be driving in the next 50 years? How much is fracking technology going to improve? What’s the price of oil going to be? What will the social and technological climate look like? “Just look at how we’ve already defied expectations. Today, we’re tapping into natural gas and oil sources that 30 years ago we would have never imagined possible.”

“The molecular makeup of a barrel of oil and the products that are made from that will keep oil and natural gas in a prominent place in our world. Even if we reach a place one day when we don’t use oil or gas for transportation, we’re still going to need oil because of what you make from it. Everything from the carpet we stand on, to heart valves, to plastics, are petroleum-based products.”

INDUSTRY INSIDER

DON KADAIR

per year for export, with a program to increase capacity up to 5 million tons in Phase 2. No matter the politics, shifts in public opinion or groundbreaking technologies that loom on the horizon, the future of oil and gas hinges, ultimately, on price points. Muddying the water somewhat for economic forecasters, the previous decade has been one of the more dynamic in history, with oil surpassing $100 a barrel for years, then plummeting to near $20 a barrel in 2015. At oil’s high mark, there was an avalanche of interest in new secondand third-generation biofuels and natural gas. At the same time, federal and state governments were accelerating the use of alternative biofuels through policy, with the hope that prices would decline. “You saw both the private sector and the feds moving toward these bio-based transportation fluids. Of course, at the time they were banking on oil being at least $80 a barrel,” says EIL’s Zappi. “Then came 2014 and the bottom dropped out. Then we were looking at $28 and $30 oil. There’s not a single biofuel that can compete with petroleum-based gasoline and diesel fuel in that scenario. As such, if you look at U.S. and

—CHRIS JOHN, president, Mid-Continent Oil & Gas Association

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More projects, more ship calls, equals more jobs. Recent, multi-million dollar projects at the Port of Greater Baton Rouge have resulted in more ship calls, diversification of operations, and increased efficiencies. Houston-based Genesis Energy L.P., which constructed a $150 million oil storage and import/export terminal on 91 acres at the Port, has plans to expand its docking capacity. An estimated thirty-three million barrels of crude oil or other petroleum products are run annually through Genesis's Port terminal each year, which has added significantly to the increased ship calls at the Port’s Mississippi River docks. While supporting area timber farmers, Drax Biomass has invested about $150 million in each of its pellet mills and $50 million at the Port. Both mills produce about half a million tons of wood pellets, resulting in an additional 15-20 ship calls a year at the Port. Louis Dreyfus Commodities’ (LDC) $200 million modernization of the grain elevator has made it the most efficient deep draft export grain elevator on the Mississippi River. Today the company has increased annual ship calls at the grain dock from 15 to about 120.

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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COURTESY WEEKS MARINE

NEWS: COMPANY PROFILE

Water borne

BOATS FOR HIRE: From GOMESA funds to marine construction and dredging contracts for LNG facilities, Weeks Marine has found a growth market in Gulf Coast marine work.

BY SAM BARNES

Weeks Marine finds growth and diversification in the expanding coastal restoration and LNG markets.

proliferation of coastal restoration projects and LNG facilities has reinvigorated Weeks Marine Inc.’s decades-long presence along the Gulf Coast. Its strategically placed equipment yards and offices, firmly entrenched in the Louisiana marketplace, are perfectly poised to handle the load. The maritime contractor is certainly not a new kid on the block. Founded by Francis H. and Richard B. Weeks in 1919 as the Weeks Stevedoring Co., the company began operations with two floating cranes in the Port of New York, handling bunker coal and dry ballast. Today, the company’s offices are scattered

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across several states, but situated predominantly in Louisiana and Texas, where two of its divisions— dredging and construction—do business out of Covington, Bourg, Houma and Houston. As of late, Weeks Marine’s prosperity has been fueled increasingly by the Louisiana Coastal Protection and Restoration Authority and the burgeoning LNG market, which each promise to provide the company with a long-term revenue stream. The profusion of work in these two sectors has also helped buoy the workforce from the state’s struggling oil and gas market by providing new job opportunities for out-of-work craftsmen. Chris Bordelon, Week’s facility manager in Houma, says

some of his workers came directly from the oil and gas sector. To ease in the transition, the workers received on- and off-site specialized training in collaboration with educational facilities in the area. STILL HIRING Additional hiring by Weeks is likely to continue, as its Dredging Division remains in growth mode— principally through the addition of new dredges to accommodate future demand. In mid-July, the company announced that it would build a new, $60 million, 310-foot-long dredge to directly support an increase in coastal restoration projects. The JS Chatry, named for Senior Vice President J. Stephen Chatry, is

under construction at C&C Marine and Repair in Belle Chasse and is the sixth new dredge the company has ordered since 2011. Elsewhere, Weeks expects to christen a $110 million, 8,500-cubic-yard hopper dredge, the Magdalen, by year’s end in New York. “While the national coastal restoration and protection market is growing, we are especially optimistic about the market here in Louisiana,” said Weeks President Richard Weeks in a press release at the time the Chatry project was announced. The manager of the JS Chatry project, Shane Harris, says its impacts are far reaching. “Parts are being fabricated in Alabama, Europe and in Belle Chasse, and we’re bring-

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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COURTESY WEEKS MARINE

WORKING ON THE WATER: Overseen from its Houston office, the Weeks Construction Division builds docks, wharves, piers, bridges, subaqueous pipelines and other waterfront structures.

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

ing it all together here,” Harris says. “Even though the majority of what’s happening is in Belle Chasse, there will be plenty of people from the Houma facility that will take part in the process, including the management and supervision side of it.” Weeks’ Houma repair facility employs an average of 100 craftsmen and serves as a major maintenance hub for the company’s dredges and other machinery used for marsh restoration, retention dikes and flotation canals. Much of the regional dredging operation oversight is performed in Weeks’ Covington office. “We (the Houma yard) do mostly repairs, as well as scheduled maintenance and planned maintenance,” Bordelon says. The facility operates multiple slips, thereby enabling it to handle repairs simultaneously. “We also have a support shop here, which is where we do fabrication, repairs, welding, etc.” GROWTH FUELED BY PUBLIC MONEY Weeks’ workload accelerated significantly in the aftermath of Hurricane Katrina, and then again following the BP oil spill in 2010, when the respective natural and manmade disasters delivered a tsunami of federal and state money for coastal restoration projects. It all began in 2005, when the Louisiana Legislature restructured the state’s Wetland Conservation and Restoration Authority to form the CPRA. Then, following the BP oil spill, Louisiana Gov. Bobby Jindal authorized the construction of barrier

islands to protect the coastline. The passage of the Gulf of Mexico Energy Security Act in 2006 promises to funnel additional money to the oil-producing states of Alabama, Louisiana, Mississippi and Texas for the purpose of coastal restoration projects, with the money coming from new offshore oil production. Mark Sickles, Weeks’ director of corporate and government relations and a former executive director of the Dredging Contractors of America, says Weeks has the expertise, equipment and logistical ability to handle the work. “We think we’re the best at it,” he adds. “It’s our people, our experience in the physical environment and knowledge of the sediment quality challenges inherent to Louisiana.” Unfortunately, he fears the federal money could be in jeopardy. A Trump budget proposal might limit or eliminate the GOMESA funding, which would have a significant impact on the continuation of the coastal restoration work, as well as on Weeks’ bottom line. “That’s a big deal,” he adds. “That’s a source of revenue that we’re counting on, and the Weeks family is investing in equipment to accommodate that.” BUILDING FOR THE LNG WORLD Weeks Marine’s Construction Division is equally excited about the potential of the LNG market, as the dozens of planned projects across the Gulf Coast states of Texas and Louisiana will eventually require marine terminals. Overseen from its Houston office, the Construction 1012industryreport.com

Division builds docks, wharves, piers, bridges, subaqueous pipelines and other waterfront structures for both private and governmental clients. While much of the company’s industrial-related marine work in recent years has been to support the LNG industry with dock facilities and dredging services, similar services have been necessary to support LPG, ethane, crude oil, gasoline, diesel, distillates, coal and coke. In Quintana, Texas, Weeks is constructing a new shipping berth to accommodate cargo transfer facilities for the new $12.5 billion Freeport LNG development. The initial three liquefaction trains of the Freeport liquefaction project are currently under construction, and they are scheduled to commence operations between Q4 2018 and Q3 2019. Closer to home, Weeks has worked in an engineering-procurement-construction capacity to build marine facilities and perform dredging, as part of a $60 million contract, to support Cheniere Energy’s Sabine Pass LNG facility, and performed a $9 million rehabilitation and construction of marine facilities for the Cameron LNG terminal in Hackberry. Weeks also builds barge-loading facilities for the intracoastal and river transportation of energy products, constructs marine pipelines for the movement of gas and liquids, and installs ocean renewable energy systems. REBUILDING BAYOU BONFOUCA Weeks Marine’s Bayou Bonfouca Marsh Creation project near Slidell is one of the largest CPRA-funded

projects currently underway. With the assistance of the dredge G.D. Morgan, a fleet of marsh buggies and several thousand feet of pipe, the company is placing sediment hydraulically dredged from a pre-determined location in Lake Pontchartrain into open water sites to create 458 acres and nourish about 133 acres of marsh. Several historic marsh ponds are also being restored in the process, and tidal creeks will connect the ponds to facilitate water exchange and fisheries access. The project is designed to restore marshland stripped of vegetation during Hurricane Katrina. The northern lake shoreline also had several breaches that have contributed to the interior marsh converting to open water. The project will ultimately create or nourish the marsh in the open water areas and rebuild the shoreline rim where the breaks occurred. It will also add storm surge and wave protection to residential areas directly to the north and east. “The most challenging part of this job is that there are four different areas we have to work in,” says Chris Gavrity, site manager and a 13-year Weeks employee. “You’re finishing one, setting up another one, or maybe setting up all the areas at once, so it’s really spread out.” Given its size, the project requires 60 craftsmen working around the clock in two shifts. “The sole purpose of the project is to recreate productive habitat and protective value,” Sickles says. “This is an environmental restoration [and] habitat improvement project that has the benefit of providing storm protection, too.”

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PROTECT AND RESTORE: The Bayou Bonfouca project is designed to restore marshland stripped of vegetation during Hurricane Katrina.

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

COURTESY SASOL

NEWS: LOGISTICS

Sasol under construction in Lake Charles

The art of the deal

BY MEREDITH WHITTEN

Megaprojects require complex negotiations involving multiple stakeholders—particularly when it comes to logistics.

perating in a global economy involves partnerships within and across industries. This is evident with a number of large-scale, complex projects taking place across Louisiana and along the Gulf Coast. One recent example of such collaboration is the logistics services agreement developed between Houston-based energy and chemical company Sasol Chemicals (USA) LLC (a subsidiary of South Africa-based Sasol Ltd.) and Kansas City Southern Railway Company (KCS) at Sasol’s megaproject site near Lake Charles. How do such agreements come about? What steps are involved in negotiating the complexities and guiding the project to success? And how can the lessons learned be applied to other megaprojects? 36

ABOUT THE PROJECT KCSR, a subsidiary of KCS, reached an agreement with Sasol in June 2015 for the construction and long-term lease of a storage-in-transit (SIT) rail yard. The rail yard will support Sasol’s new $11 billion ethane cracker and derivatives project near Westlake. Additionally, KCS will replace and expand its rail-car classification yard in nearby Mossville. In October 2014, Sasol announced an investment of $8.1 billion on the Louisiana ethane cracker and derivatives complex, which will include six chemical manufacturing plants. The ethane cracker is designed to produce 1.5 million tons of ethylene annually, benefiting from significant economies of scale. Sasol will invest an additional $800 million in infrastructure, utility

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

improvements and land acquisition. The project is more than 65% complete, with operations scheduled to start in 2018. The agreement with KCS will help Sasol develop its location near Lakes Charles as an integrated, multi-asset site that will foster growth for decades to come. “For Sasol, the agreement secures logistics services related to the import of feedstocks and export of products to customers—a critical component of our business,” says Kim Cusimano, manager of corporate affairs for Sasol’s North American operations. The agreement benefits KCS by positioning the railway company to increase its ability to serve the growing petrochemical industry, as well as other customers, in the region, says C. Doniele Carlson, assistant vice president for corporate commu-

nications & community affairs with KCS. Chemicals and petroleum commodities make up one of KCS’s most lucrative business sectors. In KCS’s 2015 Sustainability Report, the company reported revenue of $474.2 million from 259,700 carloads of chemicals and petroleum. Sasol and KCS were well-acquainted before coming to an agreement on the rail yard project. For decades, KCS has safely and reliably delivered Sasol’s products to the company’s customers, KCS says. The agreement extends the relationship between the two companies both in time and in operations, as Sasol will increase the number and volume of products manufactured at its Lake Charles site. LESSONS LEARNED Remaining open and flexible as 1012industryreport.com

COURTESY KANSAS CITY SOUTHERN RAILWAY

negotiations on megaprojects evolve is essential for reaching an agreement that will prove sustainable for years to come, Carlson says. “The most important lesson learned is that big investments require a lot of work and flexibility,” Carlson says. “It is important that projects of this size are done correctly to ensure long-term operational success.” This includes identifying the appropriate people and expertise to be involved in negotiations and deal-making. At Sasol, senior commercial, logistics and project management personnel led the effort. Further, achieving success hinges on a strong commitment from all parties involved throughout the duration of the negotiation period, particularly if negotiations are protracted. “Sasol and KCS finalized the agreement in June 2015 after months of discussions between both parties,” Cusimano says. Adds Carlson: “Over time, the project has evolved and our relationship has evolved.” Such commitment is essential because the success of critical vendor/owner agreements often comes down to the details, which can be incredibly complex and technical, even beyond legal and financial issues. In this case, Sasol and KCS had to cover a range of issues. “This was a very complicated

The Kansas City Southern Railway storage-in-transit rail yard

agreement, which included leasing property, storage in transit, switching services with other railroads, as well as business with Kansas City Southern,” Carlson says. Cusimano echoes this. “The extensive agreement included several negotiation points, including property considerations, such as KCS needed to lease Sasol-owned property for the storage-in-transit rail yard, yard design and capacity, construction specifications, maintenance requirements and warranties,” she says. “The two entities also needed to coordinate construction activities, as KCS and Sasol planned to construct their respective expansion projects in parallel, sometimes in the same location.”

Vendor-owner arrangements such as the Sasol/KCS storage-in-transit rail yard project don’t take place in a vacuum. As such, it is critical that all stakeholders be brought into the planning phase as early as possible. Cusimano notes that external stakeholders, including the Calcasieu Parish Police Jury, the planning and zoning board, local residents, and industrial neighbors also participated in the planning process once Sasol and KCS had reached an agreement on terms. For example, Cusimano says, “The KCS railyard expansion included construction of an overpass over a state highway in order to mitigate traffic impacts as a result of additional crossings to intersect the

public roadway. This one aspect of the KCS expansion required a significant amount of coordination with local authorities and near neighbors.” “The end result is a mutually beneficial local infrastructure improvement project yielding less traffic for local residents and commuters and flexibility for Sasol/KCS logistics teams—one example of a positive ripple effect of the Sasol-KCS collaboration,” she adds. AN ONGOING PARTNERSHIP The work involved in negotiating a megaproject doesn’t end when a deal is signed. Indeed, the relationship between the parties continues to need attention throughout the life of the agreement, a reality that both Sasol and KCS acknowledge. “Both parties are very excited for the years of partnership ahead,” says Carlson. Adds Cusimano: “There are a lot of moving parts with projects the size of Sasol’s ethane cracker and derivatives project, where hundreds of commercial agreements such as the KCS-Sasol agreement must be negotiated and executed. Excellent project management and stakeholder focus must be maintained throughout, while also remaining flexible to changing dynamics over multiyear projects like this one. The KCS and Sasol teams remain in regular communication and will continue to do so.”

THE PORT OF South Louisiana, the largest tonnage port district in the Western Hemisphere, is also familiar with negotiating complex megaprojects, including rail yard-related infrastructure. The port currently has $23 billion worth of announced projects, according to Paul Aucoin, executive director of the Port of South Louisiana. A number of these required negotiating complex logistics agreements as the port seeks to attract companies to invest. “We’ve got a number of ways we can help make it more attractive to a company to locate at our port,” Aucoin says. For example, one project involved a company located on a 350-acre site at the port. “To keep them on our port and keep those jobs from going somewhere else, we agreed to build them a warehouse,” he says. “The rent for the port increases and the jobs stay there. The company tells us this is probably the most efficient operation they have in the U.S. now.” In another agreement, a company needed a dock built, which was a $25 million project. With the port’s bonding authority, the port and the company were able to come to an agreement for the port authority to issue 1012industryreport.com

bonds to construct the dock, with the company paying off the debt. “In our negotiations, this was attractive because it saved them money, as the tax-exempt bonds are the lowest interest rate you can get,” Aucoin notes. “After a prospect meets with the port’s economic development department and we find a site that suits their needs, we start addressing the specifics of what they need to operate on the site, and this often involves bringing in other stakeholders,” he explains. “For example, if a company needs a road to their site, we bring in the parish and the state, among others.” The port also recently committed $9.5 million to build a railroad for Dow St. Charles. The port is providing the property and the railroad for the project, which is in the engineering phase, Aucoin told the St. Charles Parish Council in October. Sharing resources and expertise can also help with negotiations. The port shares its consultants and their relevant expertise with prospects interested in locating at the port. For example, if a project will need approval from the U.S. Army Corps of Engineers, the port may share its consultants who specialize in navigating the Corps of Engineers’ permitting processes. Although all

COURTESY PORT OF SOUTH LOUISIANA

A MEGAPROJECT OF ANOTHER KIND

parties involved ultimately benefit from the kind of complex agreements that are often hammered out, Aucoin says patience is a virtue in negotiations for such megaprojects. “The time frame depends on each project, but it can take years from the date of the first inquiry to construction being completed,” he says. “You’ve got to have patience.” —Meredith Whitten

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

DON KADAIR

NEWS: SMART MANUFACTURING

Corralling Big Data

BY SAM BARNES

Sophisticated software and an abundance of data are allowing owners to ‘educate’ their processes.

he new era of “smart manufacturing” has arrived along Louisiana’s industrial corridor. In increasingly greater numbers, the industrial community is turning to digital processes, in concert with the Industrial Internet of Things (IIoT), to harness data and thereby facilitate machine learning and automation. The idea is that these smart techniques can more effectively capture, analyze and communicate data, enabling manufacturers to identify inefficiencies sooner and get answers faster. As a result, full implementation of these techniques has the potential to reduce production costs, energy consumption and supply

chain energy stream usage. Unfortunately, while the data is already out there, the big stumbling block for many companies is finding ways to effectively capture and analyze it for practical applications as they simultaneously deal with aging facilities and fragile ROIs. Industrial and oil and gas companies are lagging a bit behind other manufacturers in this regard. A recent survey conducted by PwC and the Manufacturers Alliance for

Productivity and Innovation found that while nearly 90% of U.S. manufacturers are embedding data-gathering, internet-connected devices into their products, only 72% of industrial companies are making “substantial investments” in smart manufacturing. JUMPING OUT IN FRONT In Louisiana, some companies are light years ahead of others. Already considered a technological leader in

“The process will help bridge the business level software and the automation floor.” CHIP MCALPIN, vice president – corporate strategy and development, Stupp Corp.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

its field, Baton Rouge-based pipe manufacturer Stupp Corp. is nearing full implementation of a new software-based system that will manipulate production data to make direct, quantifiable improvements to its production processes. The Rockwell Automation-based tool will enable Stupp to gain better granularity and visibility into its shop floor operations and tie performance outcomes back to operational parameters. As a result, the data will allow it to better understand how various operational conditions can impact the final product. From specification to implementation, the development of the $5 million system has been a two-year endeavor, but the wait will soon be 1012industryreport.com

Issue Date: Feb/Winter Ad proof #1

• Please respond by e-mail or fax with your approval or minor revisions. • AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS This ad design © Louisiana Business, Inc. 2016. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

over, says Chip McAlpin, Stupp’s vice president – corporate strategy and development. He expects the new system to “go live” before year’s end. “The process will help bridge the business level software and the automation floor,” McAlpin says. “It ties into the actual automation that controls the logic of the assets, and then relays back process data from the sensors. That will give us the ability to sort that data for operational optimization.” While some players in his industry haven’t advanced as far technologically, McAlpin feels that they’ll eventually be left with little choice. “Use of data-driven decision-making has been something we’ve increasingly turned to as our industry has progressed. In recent years, the U.S. domestic pipeline industry has become more globally sourced. One of the ways we will remain competitive is through the use of data-driven techniques and tools.” LSU Vice President for Research and Economic Development Kalliat Valsaraj says some Louisiana industrial companies are lagging behind because of aging facilities

and an inability to adequately collect, interpret and utilize data that already exists. “Chemical manufacturers have runtime data that they have gathered over the last 60 or 70 years,” Valsaraj adds. “Every minute, every second, they collect the data, but they haven’t analyzed the data to do some predictive analytics. For example, will the operation have downtime one day from now or 10 days from now? If you can estimate those things from the data that you already have, you can economize your operations quite a bit.” In some cases, Valsaraj says, LSU might be able to help. “It may be something that we can help with, simply because the university has the capability to do big data analytics and predictive analytics.”

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FEWER BARRIERS TO ENTRY Perhaps the biggest reason for the surge in interest throughout the industrial landscape has been a drop in the cost of interconnected devices and the availability of greater computing power. This makes smart manufacturing more financially attractive to the average owner. After all, greater visibility into their

“Chemical manufacturers have runtime data that they have gathered over the last 60 or 70 years. Every minute, every second, they collect the data, but they haven’t analyzed the data to do some predictive analytics.” KALLIAT VALSARAJ, vice president for research and economic development, LSU

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

NEWS: SMART MANUFACTURING

SMART HELP WITH SOFTWARE The Clean Energy Smart Manufacturing Innovation Institute, based at UCLA with a regional shop at Texas A&M, was created in 2016 to provide software “architecture” to manufacturers, as well as industrial, oil and gas owners, so that they might better manage and interpret data coming from their work processes. CESMII receives $70 million in funding form the U.S. Department of Energy, leveraged with more than $70 million from industry and academia. “The concept is that data is an underutilized asset, and there is software out there that will help you figure it out. We provide the means of tying a lot of that software together,” says Dave Williams, the institute’s COO. “Ultimately, the institute provides access to what we believe is the leading, cutting-edge tool, which is our open architecture platform, and 40

influences the direction of technology development.” Williams, who previously led the implementation of smart manufacturing initiatives at Alcoa, says the institute’s fledgling regional center—one of only five in the U.S.— operates out of the Texas A&M Engineering Experiment Station and is already engaging with oil, gas and chemical companies along the Gulf Coast through a series of workshops. “Having the regional centers provides the institute with the geographical reach to understand the problems in specific areas and to structure solutions, as well as give regionalized industries the ability to influence the development of technologies,” he adds. “The workshops are intended to develop a road map and bring industrywide issues to the surface. Not only do we want the larger oil and gas companies, but we want the suppliers to that industry, as well.” Ultimately, CESMII will serve as

the “connective tissue” for industry by putting multiple software systems into a single platform, thereby providing an owner with a cohesive set of usable tools that can be adapted for their own operational systems. Additional push from academia comes from organizations such as LSU’s Industrial Assessment Center, whose director Jonathan Shi recently attended a training meeting with other IAC directors in New Orleans to, in part, discuss how assessors can best provide smart manufacturing assistance to industrial owners. LSU’s IAC provides free industrial assessments to small and medium-sized manufacturers in the areas of energy efficiency, productivity, sustainability and competitiveness. Leading the discussion, M.R. Muller of Rutgers University noted it’s sometimes difficult to convince management that smart manufacturing is beneficial, no matter how cheaply it can be implemented. Other barriers include cybersecurity

concerns, a lack of employee knowledge and a perceived workforce skills gap. Still, Muller said he’s noticed a greater awareness of the need for smart manufacturing in just the last two years. Topping the list of perceived benefits are increased productivity, reduced costs, optimized utility and an enhanced customer experience. “This year, more than half of the small- to medium-sized owners reported that they were in some stage of creating a digital, smart strategy,” a significant increase over 2015. THE NEXT GENERATION OF PROCESSES The potential for smart manufacturing technology has more far-reaching implications than the mere manipulation of data, says LSU’s Valsaraj. In fact, it could one day be instrumental in designing a new generation of smaller industrial components that require less phys-

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operations could potentially improve efficiency, and as a result, ROI. At Stupp, it’s all about the collection and correlation of data points. “The more data points you can collect and sophisticatedly correlate back to real time events, the better,” McAlpin explains. “It’s transactional-level data back to real-time process detail that can allow you to better understand the changing conditions in your manufacturing process. “If you know that a certain customer has a unique specification, you can track and trace and understand how that specification impacts the performance of your production”— with the end goal of improving the overall outcome. “Internally, it can help you make sure that you’re having fewer of those situations over time and can allow you to gain advantages that might allow you to pass along savings to the customer or create additional value.” Furthermore, the process might actually help uncover a latent or hidden need and help Stupp differentiate itself from its competitors. While the current smart manufacturing application is specific to Stupp’s pipe manufacturing company, its bridge manufacturing company in Bowling Green, Kentucky, is pursuing similar technological improvements in its processes.

FROM NASA TO THE CORRIDOR: LSU’s National Center for Advanced Manufacturing assists with the design and implementation of advanced manufacturing techniques for NASA at the Michoud Assembly Facility in eastern New Orleans. NCAM hopes to create technologies that can be easily transferred to the industrial and manufacturing sectors.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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ISTOCK

SMART MANUFACTURING 101: Smart techniques can more effectively capture, analyze and communicate data, enabling manufacturers to identify inefficiencies sooner and get answers faster. Full implementation of these techniques has the potential to reduce production costs, energy consumption and supply chain energy stream usage.

ical space. “If you look at any chemical operation, you’ll see those very large towers everywhere,” Valsaraj says. “To a large extent, a lot of that area within the tower isn’t useful, because they haven’t been optimized. If we could optimize it by actually understanding the patterns of flow of the fluids inside, then they could be made much smaller and more compact, and maybe even more efficient in the process.” Taking it a step further, small modularized units could be used interchangeably to circumvent the need for costly reconstruction projects. Some companies, he says, have already taken the step toward modularized processes, such as Velocys Inc., a biorefinery owner in Houston. Still, he admits there are some significant obstacles to overcome before it becomes a widespread reality. “There hasn’t been enough research on the front end to identify the things that industry needs to do to get there.” Valsaraj also plays a key role at LSU’s National Center for Advanced Manufacturing, which assists 1012industryreport.com

with the design and implementation of advanced manufacturing techniques for NASA at the Michoud Assembly Facility in eastern New Orleans. In the process, NCAM hopes to create technologies that can be easily transferred to the industrial and manufacturing sectors. Louisiana Economic Development Secretary Don Pierson says LED takes an active role, both monetarily and at a participatory level, in facilitating the transfer of NCAM technologies to “real-world” applications. “If you’re not performing advanced manufacturing you’re going to be left behind,” Pierson says. “The availability of all this data and our ability to actually analyze and integrate it is increasing each day, and it’s amazing to think where we’ll be 10 years from now.” “In Louisiana, we’re seeking to attract and expand industries that integrate new and innovative technologies in both products and processes to remain competitive in the marketplace and add value. We must stay strong and strive to be a market leader in the advanced manufacturing sector.” 10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

NEWS: ECONOMY

Weathering the storm

BY SAM BARNES

The South Louisiana Economic Council stays ahead of the curve during the oil slump by shifting focus.

“While our bigger businesses are taking a hit, we should also focus on our small to mid-size businesses to help them grow.” DON KADAIR

nlike a lot of economic development groups, the South Louisiana Economic Council is more about business retention than attraction these days. Given the post-2014 slump in the “bread and butter” industry of oil and gas, it was left with little choice. SLEC President/CEO Vic Lafont’s region sits squarely in the crosshairs of a vertically integrated energy corridor, so any market fluctuation that adversely impacts the oil and gas industry has a distinct ripple effect. “In the flip of a switch, all of a sudden I was in business recovery mode, triaging companies that had really been damaged by the economy,” Lafont says. By no means is it the region’s first experience with hardship. Lafont

says the cyclical nature and unpredictability of oil, along with the occasional hurricane, have produced strength and resilience in its residents. “You’re talking about people

that literally live on the water’s edge,” he adds. “They’re not afraid of anything, and they will try anything to make something work. That’s why innovation is big here. My dad al-

—CODY BLANCHARD, chairman of the board, Thibodaux Chamber of Commerce

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when entire families had to adjust to the brave new world of offshore exploration and drilling. “The people here helped the out-of-state oil companies navigate those waters and drill for that oil. You’re talking about a culture that’s very creative and has had to adapt. You’ve got to learn to survive here.” SLEC, a not-for-profit economic development agency supporting the “Bayou Region” parishes of Assumption, Lafourche, St. Mary and Terrebonne, is one of eight regional economic organizations designated as strategic partners by Louisiana Economic Development. In its current triage role, SLEC helps businesses get back on their feet by assisting them with training and attracting skilled laborers, connecting them with resources and serving as a liaison with other organizations. Along the way, SLEC leverages resources and collaborates with other groups to create a stronger regional voice. In fact, it shares space in the same building at Nicholls State University with advocacy groups such as the Gulf Economic Survival Team,

“In the flip of a switch, all of a sudden I was in business recovery mode, triaging companies that had really been damaged by the economy.” —VIC LAFONT, president/CEO, South Louisiana Economic Council

promoting Gulf of Mexico energy production; Restore or Retreat Inc., promoting coastal restoration projects; and the LA 1 Coalition, promoting the completion of the LA

1 Improvement Project. “They’re all housed here, so we leverage our resources together,” Lafont says. “They’re part of what we call the SLEC family of operations,

because at one time or another those initiatives sprang from SLEC. They just got bigger to where they needed their own space.” SLEC was borne out of the ashes of the significantly more dismal downturn of the mid- 1980s, when a handful of concerned industry leaders came together to look for ways to diversify and lessen their dependence upon oil and gas. Since those early days, SLEC has evolved to meet the overall economic needs of the region, including but not limited to supporting startup companies, providing key data and economic statistics, disseminating building and site information, and building coalitions across parishes and organizations. Cody Blanchard, chairman of the board for the Thibodaux Chamber of Commerce, says SLEC works directly with the chamber in providing resources for small to medium-sized businesses as one of its services. “Vic understands that while our bigger businesses are taking a hit, we should also focus on our small to mid-size businesses to help them

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

grow,” Blanchard says. SLEC works to connect these businesses with the Louisiana Small Business Development Center and encourages participation in the local chapter of the SCORE Association, a nonprofit group dedicated to educating entrepreneurs and helping small businesses start, grow and succeed. DIVERSIFICATION IS KEY Given its roots, SLEC’s central desire is to facilitate diversification so that area businesses can better weather undulating oil and gas cycles. Some high-profile examples provide proof of its success over the years—nearby Bollinger Shipyards has landed government contracts to build ships for the Coast Guard, and Edison Chouest Offshore has built seismic vessels for exploration in the Antarctic. “Instead of going completely away from what we do, we found a way to keep doing what we do but in different markets,” Lafont says. “The key is technology; that’s what’s going to get us out of this thing.”

He is particularly optimistic about the propagation of LNG (liquefied natural gas) plants in Louisiana, which could help change the face of the area’s energy industry in coming years. In August, the Greater Lafourche Port Commission announced that Fourchon LNG LLC planned to file an application with the U.S. Federal Energy Regulatory Commission to construct an $800 million LNG production and export facility at Port Fourchon. Once constructed, Phase 1 of the project is expected to produce 2 million tons of LNG per year for export, with a program to increase capacity up to 5 million tons in Phase 2. Fourchon LNG also plans to reserve up to half a million tons of LNG per year for domestic use, with the intent of providing fuel for the next generation of offshore supply vessels (OSVs). Chett Chiasson, executive director of the Greater Lafourche Port Commission, expects completion of the regulatory process to take about two years, followed by another two years of construction. In the mean-

DON KADAIR

NEWS: ECONOMY

“They’re all still there. No one’s left. The bottom line is that what we’ve done and the action we’ve taken has allowed us to retain our customer base.” —CHETT CHIASSON, executive director, Greater Lafourche Port Commission, noting that Port Fourchon hasn’t lost a single tenant since reducing its land rental rates in April 2015 by 20% across the board

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time, SLEC will serve as a liaison between the owner of the proposed plant, Energy World Corp., and area businesses, principally through an LED web-based platform called Louisiana Business Connection. “Any company interested in working the project can go to the website and enter their company information,” Chiasson adds, “thereby enabling Energy World to go through a list rather than having to field phone calls and emails.” A REGIONAL APPROACH Chiasson is most proud of the port commission’s ability to retain business, despite the undeniable economic impact of the oil and gas decline. In fact, Port Fourchon hasn’t lost a single tenant, with much of the credit going to the commission’s decision in April 2015 to reduce its land rental rates by 20% across the board. “They’re all still there. No one’s left,” Chiasson says. “The bottom line is that what we’ve done and the action we’ve taken has allowed us to retain our customer base.”

Along the way, SLEC has also assisted port tenants. “While a lot of other economic groups focus on the front end, sometimes they forget that you have to continue to work with these businesses on the back end,” Chiasson says. Looking ahead, he plans to work closely with SLEC in the development of a regionalized port system concept that he hopes will attract new business. The system would seek to tap into the collective strengths of all ports stretching from the Port of Iberia eastward to Port Fourchon. Additionally, Lafont hopes to leverage the Bayou Region’s strengths with other economic development agencies as a participant in the Southeast Super-Region Committee (SRC). Founded in 2009, the partnership between the Baton Rouge Area Chamber, Greater New Orleans Inc. and SLEC seeks to foster cooperation for mutual economic benefit across southeast Louisiana. The SRC focuses on issues that are super-regional in nature and more effectively addressed together,

such as improving transportation infrastructure, developing the water sector, developing the biosciences and health care sector, and branding and marketing the super-region as a major metro area that is economically competitive on a global scale. “My competition is not New Orleans and Baton Rouge,” Lafont says. “We have different bases. It’s Gulfport and Mobile. That’s our competition. We’re trying to market a region of the state to the rest of the world. We don’t want to reinvent the wheel.” DEALING WITH A LOSS OF TALENT While it’s true that certain industries—primarily oil and gas, agriculture and seafood—will likely remain in the Bayou Region, in some capacity, no matter the economic conditions or occurrences of natural disasters, SLEC’s challenge in coming years will be accommodating their manpower needs. When the oil market nosedived in 2014 and 2015, many workers fled the region looking for other work. “We lost a tremendous amount

of talent … pipefitters, welders, offshore hands, seasoned captains,” Lafont explains. “You can’t replace people like that very easily, so I’m in the mode of rebuilding the workforce right now. My job is to find ready, able, trained workers to meet that growth.” The key, he says, is to stay out in front of the problem, which means training now for expected future upticks in demand. Some say that’s already happening—according to recent statistics, jobs are becoming more plentiful across the region, with an increase of 785 new jobs in Q2 2017. And in a May-over-January comparison, there was a 1,131job increase. “Some of them left for good, and some of them are coming back. One thing I know, you can’t find this anywhere else,” Lafont says. “It’s the people; the lifestyle. You can’t replace that. Every generation that’s lived through all of this [hardships] has proven that they can make it out. We made it then; we can make it now.”

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FOCUS MAINTENANCE & RELIABILITY

Managing the turnaround

BY DAVID JACOBS

From trusting contractors to losing workers at the start of hunting season, Louisiana’s top turnaround chiefs and consultants share tried and true solutions to their challenges.

1012industryreport.com

DON KADAIR

obert Chandler, Turner Industries’ senior vice president for maintenance and specialty services, says the 3,200 or so turnaround workers he oversees are “a different breed.” “They want to go hit an event, work three or four weeks, work 12 hours a day, seven days a week, go back home for a week, then go to the next one,” adds Operations Manager Rodney Landry. “They’re road warriors. That’s all they want to do.” Last spring, Turner reorganized its turnaround group to offer a range of services needed for turnarounds, such as specialty welding, under one management team and one point of contact. Chandler prefers to plan, manage and execute a turnaround project and select his own subcontractors. “That way we’re responsible and in control of everything,” he says—although increasingly he’s finding plant owners want to be more hands-on. Major turnarounds often bring together multiple groups of contractors and subcontractors, along with the plant or refinery’s direct employees, and the lines of authority between the various teams aren’t always clear. The hours are long, the pressure is high, and workers are dealing with unfamiliar colleagues and performing unfamiliar duties. The potential for chaos–and expensive delays–is high. But while strategies may differ, experts agree potential issues can be mitigated with careful planning and training. And in the heat of a high-stress project, some workers will demonstrate new talents and leadership abilities that can serve a

“Leadership is the key on any turnaround.” —ROBERT CHANDLER, senior vice president for maintenance and specialty services, Turner Industries

company well after the turnaround is over. Chandler says keeping everyone working safely is the biggest challenge, and the longer a turnaround lasts, the more challenging it can be. “Toward the end, people start getting tired,” Landry says. “When you start sliding into hunting season, people tend to say, ‘I’ve made enough money this year, I’m going hunting,’ so you start losing key people.” Chandler and Landry say the best way to avoid problems onsite is to make sure workers are properly trained before they ever get to the

site. Chandler says frontline supervisors spend “countless hours” learning how to manage the workforce, identify at-risk employees, and keep everyone focused. “Leadership is the key on any turnaround,” he says. A BIG YEAR Axel Altmann, maintenance and reliability director for Dow’s St. Charles Operations, launched his first turnaround of 2017 in February, and was planning for a big turnaround year. Dow normally has about 300 or 400 maintenance

workers on site, and a large turnaround project might bring an additional 1,200 or more contractors to his facility. Dow sets the technical guidelines for the work, Altmann says, but doesn’t dictate how the workers are managed. Once they walk through the gates, contractors have the same rights and responsibilities as Dow employees, he says. Before a turnaround, the contractors are in the same safety meetings. When the project starts, daily morning “tent meetings” are held to reflect on the last 24 hours and look forward to the day to come.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

And when it’s over, contractors are included in the lunches held to recognize a job well done. “It’s really a partnering approach between Dow and the contractors,” Altmann says. Dale Logan, executive director of the Southwest Louisiana Construction Users Council, was a maintenance manager with ConocoPhillips for almost six years, overseeing routine maintenance, turnaround maintenance and capital projects. Logan says early in his career he did all the planning for a turnaround. Later, he found giving a major contractor more leeway to manage the daily details was more efficient, although as owner his employer still approved the subs. “It really just got down to, how much do you want to let go?” he says. “Because at the end of the day, in the position I was in, the buck stops right here.” Logan usually preferred having workers on 10-hour shifts rather than 12-hour-shifts. The last two hours at the end of a long day might not be as safe and productive, and

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FOCUS: MAINTENANCE & RELIABILITY

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having a break between shifts avoids causing a traffic jam in the parking lot. “We very seldom tried to work 24 hours around the clock, seven days a week, because people just needed a little time off,” he says. A LEARNING EXPERIENCE Logan says turnarounds were “an awesome development opportunity” for his workers. Managers have a pretty good idea who the leaders are among their craft men and women, he says. Turnarounds can confirm those beliefs and allow those people to step up. Turnarounds can be a great learning experience, agrees Connie Fabré, executive director of the Greater Baton Rouge Industry Alliance. An engineer might take on a new shift, or a crafts person might become a crew leader. New skills are developed, and new leaders may emerge. “When a plant has their large turnaround, it affects almost everyone in the plant,” she says. “Almost everyone in the plant gets to play a little different role.”

Every step of a turnaround is “planned out in excruciating detail,” Fabré says. But when glitches do happen, that’s when teamwork and problem-solving ability comes into play. “That’s a lot of what makes the job fun for a lot of folks,” she says. Devin Lemoine, owner and president of Success Labs, does a lot of consulting work with manufacturing plants, helping them use turnarounds to engage and develop emerging leaders. She suggests supervisors talk with their employees about what they want them to get out of the turnaround, beyond simply doing their jobs. “It’s a great learning opportunity, because people are doing things they don’t typically do,” she says. “They’re out of the typical routine, and they’re working with new people.” HOME LIFE Aside from the technical side of things, Lemoine says, it’s on the “people side” where a project can turn ugly. Longer hours, different shifts, and altered sleep and eating

patterns can lead to cranky and clumsy employees, who quickly can become unsafe and rude employees, she says. Working long hours on a turnaround means less time at home, so it can be helpful to prepare for that, she adds. Who will take the kids to school? Who will walk the dog? Can employees prepare meals ahead of time and pare down other routines to get extra sleep? Anything that helps workers maintain a work-life balance might help them be more alert, happier and safer. Communication easily can break down when workers are stressed and interacting with people they don’t know well. Ideally, Lemoine says, communication protocols and expectations about what to do when things go wrong are set ahead of time. Darrel Zweigle, turnaround and construction department head for ExxonMobil’s Baton Rouge complex, is very familiar with the skills and capabilities of each of his contractors, which dictates how much leeway they’ll have on a particular

job and how they will be compensated. Planning for a turnaround might take three or four years, he says, and developing teamwork and communication is an important part of that process. “You can’t just put people in a room and expect them to be a team,” he adds. “You have to learn to trust.” Even with a detailed plan, “discoverables” will pop up during the course of the project, and the teams needs to be able to react and stay on schedule. “You can’t be working in silos, because answers are needed within hours or days,” he says. When staffing a turnaround, ExxonMobil assesses and scores each worker’s skills, providing additional training as needed. In some cases, a trusted welder, for example, might be brought into a turnaround to supervise scaffolding, because sometimes technical expertise is less important than intangibles like leadership ability. “You’re not going to have all the best,” Zweigle says. “You’re going to have to grow people.”

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FOCUS: MAINTENANCE & RELIABILITY

Rx for a better turnaround DESIGNATE RELIABLE PLANNERS AND SCHEDULERS

THIEPET

INVOLVE EVERYONE EARLY

hile adequate planning and scheduling are essential to the success of a maintenance turnaround, most get tripped up during the execution phase. As a result, turnarounds frequently fall short of business objectives, with more than 50% of them suffering from cost overruns or missed deadlines, according to a survey by Independent Project Analysis Inc. And since the financial impact of downtime can be significant, a missed turnaround goal can spell disaster for an owner. Speaking at the Downstream Engineering, Construction & Maintenance Conference in New Orleans last summer, Addivant plant manager Chris Vaughn, above, offered some tangible steps that project teams can take to better manage a turnaround’s execution and thereby circumvent potential financial losses. Previously a turnaround manager for DuPont, Vaughn currently manages Addivant’s 500-acre styrene and styrene derivatives plant in Bay Minette, Alabama. The facility is located 35 miles northeast of Mobile. —Sam Barnes

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

PRE-TURNAROUND risk assessments should be performed once the scope of work has been established and with the full involvement of the MIQA (Mechanical Integrity and Quality Assurance) department, inspectors, and electrical and mechanical engineers. As part of the process, high-risk inspections or activities should be identified and contractors properly vetted for both planned and unplanned work. “After identifying the scope of work and performing inspections, review the equipment history, rank the high-risk areas and identify the areas of focus, then build your contractor strategy and contingency plan,” Vaughn says. “It’s critical to build those resources within the integrated schedule early.”

EXPECT ‘DISCOVERY WORK’ REGARDLESS OF HOW detailed a project plan might be, the “discovery” of new work is inevitable. Therefore, a single contractor strategy should address both the original scope of work and any potential found work. “Developing your contractor strategy for both, and merging them together, is an important step,” Vaughn says. “During our turnarounds, we were often impacted by the discovery of repairs that required specialized work. While no one onsite was qualified to make the repairs, we had companies lined up and vetted through the contractor administration process, so it only took a quick call to get them out there.” Vaughn encourages managers to build potential “discovery work” into the schedule, as well as to provide for any resources that might be necessary. He also suggests conducting an MIQA Discovery Work Meeting. During such meetings, MIQA inspectors, engineers, operations, maintenance managers, planners and schedulers are engaged to better align themselves to the scope of work and better plan for discovery work.

WHILE AN IMPACTFUL, collaborative project team plays a significant role in a turnaround’s success, Vaughn suggests that a reliable team of planners and schedulers is equally important. “When things happen in the day-to-day activities—say, a pump goes down—the first call is not to the maintenance engineer or mechanical engineer. It’s to the planner. They know how best to respond, in terms of available resources and the schedule. Having dedicated turnaround planners and schedulers has to be at the top of the list, because the day-to-day activities will always supersede longterm strategy and planning.”

CUT THROUGH THE DRAMA THE PROPER execution of daily and/or weekly “check-in” and “check-out” meetings are vital to ensuring improved accountability and decisionmaking. They can also help sidestep the typical jobsite drama and drill down to what Vaughn calls a “single source of truth.” “In terms of visibility and accountability, the meetings help manage a turnaround that has a lot of complexity and a lot of people doing multiple things at once,” he adds. “These aren’t problem-solving sessions; they are 30-minute meetings for a quick update of all the activities going on throughout the day. We have all groups represented there.” The meetings encourage accountability throughout the team. “There’s a lot of drama in a turnaround, so there’s a lot of people talking. Operations can’t prep stuff, permits are late, etc., but having this space and time where everyone can talk about what the real challenges are, and not get mired in personality conflicts, is crucial.” The meetings proved essential during one of Vaughn’s turnarounds that had three critical paths lasting six weeks. “We would have a Monday morning check-in and they would all go to the board and write their weekly agendas for each of the tasks that they were going to do,” he adds. “Then, at the end of the week, they would come back and report on how they did against what they said they would do on Monday. It was a very effective meeting and very transparent.”

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USE A VISUAL BOARD DURING MEETINGS, a visual board provides an effective visual representation and record of a turnaround’s progress. On the board, updates can be tracked in key areas—such as safety, operations, minor capital projects, MIQA inspections, recognition, maintenance, major capital projects, discovery work, problem-solving, action items and announcements. “Most importantly, team members update their overall status in regards to the critical path,” he adds. “When there are special circumstances where we need to get people together offline and talk about things, we table the discussion but still track that we have an issue and identify the responsible person. They report back the next day, or once they resolve the issue. It is still on the visual board and very clear to the steering team where we are lagging in certain areas and where assistance is needed.”

INCORPORATE LESSONS LEARNED AT THE CONCLUSION of the turnaround, an anonymous survey completed by the steering and core teams can help identify best practices and areas for improvement. Vaughn suggests providing the team with a pre-established list of 20 multiple choice questions, as well as areas for written suggestions. Focus groups can then discuss survey results and suggest corrective actions. At Addivant, the surveys have produced several beneficial changes over the years. “Before, our meetings would consist mostly of various groups fighting against each other. It was just some people getting really frustrated at each other and walking out with a bunch of things on white paper and nothing getting accomplished.” Other changes have directly benefited turnaround execution. “One of the areas that we addressed was improving our ERT (Emergency Response Team) staffing, such as how many incident commanders we needed, how many rescue leaders we needed, and how many other ERT members we needed to support the safe execution of turnarounds.”

ENJOY ‘FATIGUE DAYS’ VAUGHN SAYS managing the sometimes exasperating challenges of a turnaround requires that workers and supervisors maintain a proper work-life balance. “Over the past few years, I’ve gone through challenges and learned some things, some good and some not so good,” he says. Through it all, he has learned the importance of taking what he calls a “fatigue day.” “A turnaround might be scheduled to be 30 days, but in reality it starts in August and doesn’t end until Thanksgiving. Being a salaried guy, not being able to see your family, see your friends and not being able to fish or anything, it can cause you to not be in the best of moods. I would say that maintaining a work-life balance for turnarounds is key. Enjoy life on your fatigue day; that would be my recommendation.”

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COVERING INDUSTRY IN LOUISIANA

REACH Your Top Customers! 10/12 Industry Report covers the latest developments in the corridor as the industrial growth continues. We will take a close look at the people and the projects making all the news in industry and construction.

To reserve your space email jill@1012industryreport.com or call us at 225.928.1700.

A publication of

10/12 INDUSTRY REPORT â&#x20AC;¢ FOURTH QUARTER 2017

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FOCUS: MAINTENANCE & RELIABILITY

The human side of efficiency

BY SAM BARNES

CHERYL GERBER

Addressing behavioral issues helps bridge production gaps and enhance safety.

“At Appomattox, we had a lot of strong egos in the room. We were able to bring them together collaboratively and say, ‘OK, we have this process. We need to meet the same goal. What’s the best way?’” —STEVE MILLET, project manager, Broadmoor LLC (center), referring to the recently completed buildout of living quarters atop Shell’s Appomattox deepwater offshore platform. Pictured with him are, from left, senior superintendent Sal Palmisano and Greg Lusignan, the company’s vice president of project management. 1012industryreport.com

here are a variety of high-tech tools on the market for corralling a project’s schedule, managing cost and ensuring quality, but these days industrial owners are paying more attention to the human side of the equation. Petrochemical and oil and gas owners, as well as the companies that support them, are turning to “lean” methodology and other approaches that focus on building communications skills and interconnecting employees at critical stages for maximum project success. Lean is a respect- and relationship-oriented approach to project delivery consisting of numerous tools and techniques meant to improve productivity.

For Broadmoor LLC in Metairie, which just completed the buildout of the new 150-bed living quarters atop Shell’s Appomattox deepwater offshore platform, the implementation of lean allowed it to meet important schedule milestones by cutting through the interpersonal drama that often accompanies large jobs. “At Appomattox, we had a lot of strong egos in the room,” says Broadmoor project manager Steve Millet. “We were able to bring them together collaboratively and say, ‘OK, we have this process. We need to meet the same goal. What’s the best way? By having them all see the bigger picture, the egos were thrown out the window and everyone realized that this was really a team concept.” The co-location of the team in a single space, 10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

DON KADAIR

FOCUS: MAINTENANCE & RELIABILITY

“Human error is only about 30% of the problem.” —DAVID SOWERS, manager of human performance improvement, Knowledge Vine

along with weekly meetings, “visual boards” and other lean tools, significantly curtailed problems caused by miscommunication. By having the right people in the same room at the same time—and at the right frequency—collaboration, accountability and problem-solving occurred naturally. “It calmed all that testosterone that was flowing at that time,” Millet says. “It was everyone coming together and being able to see the big picture.” Elsewhere, lean methods are used by large operators such as Suncor, Shell and ExxonMobil to get through turnarounds and projects. They’ve seen documented improvements in schedule accuracy and attainment by more than 15%, improvements in work order quality by more than 20% and reductions in contractor needs by more than 15%, according to Argo Consulting, a lean proponent and national operations improvement consulting firm. ADVANCED SUSTAINMENT “Technology can provide extensive asset reports and craft efficiency 54

data; however, if the information is overwhelming and does not communicate succinctly a clear ‘real-time’ message to supervisors and craftsmen, they won’t be able to find the root cause of problems, correct actions and improve the efficiency of their work,” says Jorge Mastellari, Argo’s senior vice president and its oil and gas industry practice leader. Lately, Argo has collaborated with the MIT Sloan School of Management in researching the behavioral side of production as it relates to lean. Following the 2005 explosion of BP’s Texas City oil refinery, MIT developed the Dynamic Work Design (DWD) theory in an attempt to address the behavioral and communications gaps. “What technology misses is the effective human interactions that are critical for proper problem-solving and decision-making,” Mastellari says. “DWD provides the principles and framework for wiring the work together in a dynamic way.” Argo and MIT are finding ways to marry lean methodology with jobsite behaviors to make the practice more

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

sustainable, which they refer to as “advanced sustainment.” “That is where the tools come together with the behaviors and the habits,” Mastellari says. “It’s anchoring the right behaviors and the right supervisors and superintendents, or the behaviors around the lean techniques or waste elimination techniques, in order to make the process sustainable.” Greg Lusignan, Broadmoor’s vice president of project management, agrees that lean won’t work without the buy-in of site supervisors. “The most critical thing is to have the right superintendent who has the right cultural mindset to be open to these ideas.” The lean concept has been a natural fit for Broadmoor, since it already had a reputation for continuous improvement and an emphasis on the respect concept. Since implementing the practice three years ago, Lusignan has become somewhat of a lean champion, and was recently a guest speaker at the Lean Construction Institute’s Annual Congress in October. Four Broadmoor managers, including President

Ryan Mouledous, attended the week-long conference in Anaheim, California. “Our industry has been broken for a long time because we are working in silos,” Lusignan says. “The traditional method of design-bid-build sets you up for failure, because the designers are off in a silo designing, and then you’ve got to bid in a silo and build in a silo.” At the Appomattox site, the uniquely collaborative atmosphere gave Broadmoor the ability to integrate best practices from previous projects. “Lean is a lot about planning, pre-planning and just challenging the plan in general,” says Sal Palmisano, Broadmoor’s senior superintendent on the job. “The teams got together in collaboration and based on past experiences finetuned the plan, then went out there and followed the process.” In the end, Broadmoor has reached milestones that would have otherwise been unattainable. “We’ve always finished jobs on time, but too often we’d find ourselves doing three months of work in the last month. 1012industryreport.com

Now, we’re striving to hit every milestone along the way,” Lusignan says. AN ONGOING PROCESS To help bridge the behavioral gap, Argo actively engages with its clients at the corporate and jobsite level, simultaneously implementing lean tools and coaching the behaviors necessary to support them. While petrochemical, oil and gas companies spend significant sums of money in training and development, the techniques are not being applied effectively at the jobsite. Therefore, Argo utilizes the “idle learning” method by observing behaviors and coaching managers on how to handle particular situations. The use of visual boards during daily and/or weekly standup meetings is a critical part of the process. As such, Argo observes how effectively a team uses the tool. “We want to see how the craftsmen are actually presenting their issues. Are they being open about them or are they being selective about the way that they present the issues? Communication has to be very open, honest and transparent.” Argo also looks for common behaviors that might get in the way of effective communication, such as conflict avoidance, evasiveness or a victim mentality. Lusignan says the implementation of lean has been an evolving process at Broadmoor. “In stressful situations, the guys who have been in the business for a long period can still resort back to old habits. My job is to go around to the jobs and try to coach, and make sure we try and stay in alignment with those priorities.” Even though Broadmoor is not one of its clients, Argo must often address similar legacy behaviors before moving forward with the integration of lean into a company’s processes. That’s when management support is crucial. “One of the things that we do in every project is give everyone a chance,” Mastellari says. “Whether it is a mechanical supervisor, superintendent, general maintenance, etc., if there is someone that doesn’t believe in it or that is openly being a barrier, we’re not going to write them up immediately. What we do is confront the issue directly and invite those people to participate and be part of the effort. After experienc1012industryreport.com

ing the work and seeing how people become more engaged, they usually convert quickly.” A VITAL PART OF SAFETY On the jobsite, lean methodology has also become a critical part of Broadmoor’s safety culture. “That means building an environment of respect and trust, and not being the safety police out there,” Lusignan says. “The lean concept is leadership from the bottom up, and truly getting the idea to the guys out there in the field on how we can be safer and more efficient.” David Sowers, manager of human performance improvement at Knowledge Vine, an organizational alignment consultant in Baton Rouge, says failures in safety can usually be traced to one of several “human performance traps,” such as time pressures, distractions, overconfidence, mental stress and vague guidance. Lean’s emphasis on communication and collaboration can be a vital tool for circumventing these traps. “Human error is only about 30% of the problem,” he said, addressing a group at the Louisiana Governor’s Safety & Health Conference in New Orleans in August. “Most of the time, there are also some latent organizational weaknesses that contribute to it. Sure, everyone says, ‘Safety First,’ but then you start driving that schedule, right? Production, production, production is what really matters.” While rules and protocols—personal protection equipment, safety training, safety oversight, well-maintained equipment and overall work environment—are intended to produce a safe work environment, there is often a failure to address certain hidden factors that contribute to human error. Sowers says there are both individual and team behavioral approaches that an owner can implement to minimize safety failures, most of which involve the enforcement of procedures, thorough self- and team-checking of tasks, and effective communications. “Stop. Think. Act. Review,” he says. “Before you do the task, stop everything else you’re doing. Stop thinking about all those other tasks. Think about what you’re going to do and make sure the communication is clear.”

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

INSIGHT Industrial wage pressures after the 2017 hurricanes

CONNIE FABRÉ

he storms of late summer 2017 were reminiscent of the year 2005. For those of us who remember that year, and many of us do, it seemed as though our world shifted dramatically into a new era. An era of key lessons learned where a great infusion of new ideas, new policies and new ways of doing things all emerged out of great hardship. For Baton Rouge, we “dodged the bullet” this year but can so painfully empathize with our neighbors both to the east and west Gulf Coast. Naturally, many may be thinking that workforce effects this year may be similar to 2005. Just prior to Hurricane Katrina (indeed it was Aug. 18, just 11 days before the hurricane’s landfall), the GBRIA board of directors made an action plan to prepare for a predicted labor shortage. Managers were still rather wary of an impending shift because the economy was lackluster, but several forces were at play that all pointed to what was coming. A few weeks later, again just days before Hurricane Rita hit, a joint meeting was held in Lake Charles with members of GBRIA and the

Lake Area Industry Alliance, also to address forecasted labor shortages. There, too, we made a “to-do” list of actions to boost enrollment in training and attract more skilled workers to industry. When the storms hit on Aug. 29 and Sept. 24, 2005, it gave a reason for the pentup pressure on wages to grow. After the storms, workers were busy rebuilding their lives, but the plants had sustained damage as well and needed repair. This doubled the impact on the labor force, and quickly a “bidding war” broke out for skilled people to rebuild and operate industrial facilities. The forces at work created a 39% escalation of base wage rates in Houston’s industrial skilled labor market over the next three years. The greater Baton Rouge area saw a similar increase of 34%. The base wage for skilled craft labor

Puerto Rico and more to meet the demand. The hurricane rebuild was only a coincidental co-factor in why labor rates increased. The feeling in the industry at the time was that a shortage was at hand, in large part, because skilled crafts had fallen out of favor as a career. Schools no longer taught “shop,” and brand new welding labs lay idle and carpentry lathes had gathered dust. In the years that followed, Louisiana embarked on a “High School Redesign” project and implemented a technical track diploma. GBRIA and its partners joined hands in the redesign and lauded the progress. Now, industry-based credentials earn as much weight for schools as do Advanced Placement exams, and welding shops and lathes are once again humming with busy students who enjoy creating things as much as they do writing about them.

“Currently, it is estimated that industrial skilled crafts people at the top of the pay scale earn over $31/hour for their base pay. ... Today many believe industry offers a competitive wage.” had hovered around $18/hour for years and it shot up to over $25/ hour. The draw for labor came not only from industrial competitors but also from FEMA, which was offering generous wages to help with the rebuild of badly damaged New Orleans neighborhoods and public infrastructure. But our region is resilient and solutions were found. Labor came from Texas, Alaska, the Philippines,

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

In 2016, the Baton Rouge area suffered through the “Great Storm” and industrial plants felt the pinch when workers were missing due to rebuilding their homes, but the plants themselves did not sustain much damage and wages did not escalate. From what we can tell presently, Hurricane Harvey was similar. Most plants are back up and running in the Houston area.

Only time will tell, but I believe the landscape is different today for us in the Capital Region. It is true that employment is nationally high, and it is true that the oil and gas sector is gaining new momentum with a forecasted $200 billion of expansion on the horizon; however, the types of skilled labor required in Baton Rouge area plants is slightly outside of that bubble. Currently, it is estimated that industrial skilled crafts people at the top of the pay scale earn over $31/hour for their base pay. Whereas in 2005 a market shift in wages was foreseen by many before the storms, today many believe industry offers a competitive wage. The workforce has grown, many in Louisiana have been training over the last 12 years and major improvements in our high school offerings have opened up the eyes of students and their parents to the career options available in industry. A robust pipeline of talent is seeking entry. Currently in the Capital Region, an expansionary time has slowed slightly, which points to stable wages. More large investments are forecasted in the timeframe 2018-2024, although at a slower pace because raw material prices, especially natural gas, are predicted to remain low. Maintenance and turnaround activities are also forecasted to be robust in coming years, so, at present, a win-win scenario seems to be in play, which is stable wages for employers at a rate that attracts new talent and retains the mature workforce. Connie P. Fabré is the executive director of the Greater Baton Rouge Industry Alliance Inc. Jessica Pranjic, the manager of communications and workforce development for the alliance, also contributed to this column. 1012industryreport.com

Taxing energy infrastructure

DAVID DISMUKES

mendment 1 was recently passed by the voters to remove what was becoming a very real opportunity for entrepreneurial tax assessors to tax energy infrastructure that was under development and construction around the state. Historically, and usually, taxes are assessed once public property of any type has been constructed and is being used and useful. The announced billions in liquefied natural gas (LNG) facility development, which can have long development time periods, appears to have been too tempting for some tax assessors, leading to the recent constitutional amendment effort. Had this amendment not passed, it would have led to numerous long-run negative impacts on the Louisiana economy. First, Louisiana is a net energy consuming state—we have been, and will continue to be for the foreseeable future. Louisiana consumes far more energy than it produces within the four corners of the state, exclusively in its manufacturing activities. This trend is becoming more pervasive as Louisiana’s energy economy re-tools. In-state crude oil production falls just about every year, with Haynesville’s natural gas production being the only in-state area pulling Louisiana’s exploration and production sector out of irrelevancy. What crude oil production does occur is far offshore in federal waters, and most of Louisiana’s

1012industryreport.com

contribution to that crude oil production is on the support side of the business, not the bulk of the business development, engineering, construction, drilling and production activities. Large energy-consuming industries are exceptionally capital-intensive since they are based upon a range of advanced technologies that reform a variety of hydrocarbons into commodity and intermediate chemicals and refined products. The investment necessary to support these types of manufacturing activities starts at a low of around a few hundred million and can expand up to $25 billion per project—an amount comparable to the ExxonMobil ethane cracker that rejected Louisiana as an investment location, purportedly, because of these types of political and taxing uncertainties. Louisiana has seen over $60 billion in energy infrastructure investment since 2011, all associated with energy-consuming industries, with another $50 billion to $60 billion in investment potentially to be developed.

Second, Louisiana is transforming itself into an energy export economy. While we may not be the direct beneficiaries of the boom in unconventional crude oil and liquids production, we are the indirect beneficiaries in terms of the increasing midstream (transportation, processing and storage) and refining investments. In 2011, the U.S. became a net exporter of refined product—largely due to recent refinery capacity investments that focus on processing “distillates” that include diesel, jet fuel and heating oils used extensively in Western Europe and Latin America. These relatively newer refinery investments, and the new export activity facilitated by them, are heavily supported by facilities on the Gulf Coast, including in Louisiana. Further, net crude oil exports have been increasing from the Gulf Coast at a rate of about 40% per year, and while most of this activity has been from the Houston and Corpus Christi area, the Louisiana Offshore Oil Port (LOOP) has announced

“Make no mistake: Amendment 1 was not an issue restricted to a handful of speculative LNG facilities. The precedent that would have been set by allowing practices like this to be sustained would have been unparalleled.” If assessors were allowed to pursue their proposed “taxation before development” actions, more corporate suites in the energy business would question the merits of locating their investments and infrastructure in Louisiana. This is no idle threat given the challenges of developing in this part of the world, particularly given the last tropical season. Louisiana and Texas both face competition from the upper Midwest and Appalachia regions of the country for these new investments.

plans to turn its historic import facility into one that can facilitate crude oil trade in both directions (both imports and exports). Lastly, what about consumers and everyday households? Ignore for the moment the very real possibility that a taxing practice like the one removed by Amendment 1 could be applied to new residential construction. While this could happen, that’s likely not what got the tax assessors’ attention: Instead, it was the billions upon billions of energy infrastruc-

ture development projects that go far beyond LNG export facilities. Consider, instead, another very important component of the energy value chain: electric and natural gas utilities and how changes in their cost structure ripple down to every industry, business and household in Louisiana. Electric and natural gas utilities are capital-intensive sectors and because they are monopoly service providers, are typically regulated by state public service commissions, like the one we have in Louisiana. These utility regulators set utility rates based upon each utility’s costs: So as a utility’s costs increase, so too do its rates. Consider that, right now, Entergy Louisiana is investing billions in new and refurbished power generation facilities to meet its customer needs over the next several decades. These are very likely the same types of multibillion-dollar, multiyear projects that would have been eligible for the new levies envisioned by local property tax assessors under their potential “taxation under development” scheme. Make no mistake: Amendment 1 was not an issue restricted to a handful of speculative LNG facilities. The precedent that would have been set by allowing practices like this to be sustained would have been unparalleled and not limited to a “few” isolated projects, but would have applied to multiple billions of dollars in projects all around the state. Policymakers, businesses and households need to be aware that allowing these types of opportunistic taxing practices to take hold threaten not only future economic development opportunities, but everyday household energy bills, and should be avoided. David E. Dismukes is a professor and the executive director of the Center for Energy Studies at Louisiana State University. He holds a joint academic appointment in the department of environmental sciences, where he regularly teaches a course on energy and the environment.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

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ach year companies invest countless dollars in maintaining and upgrading their equipment, technology, products and services. Yet many fail to invest in their employees’ personal, professional and leadership development. These investments strengthen employees’ affinity (and loyalty) for the organization, maximize productivity and performance, and create a stronger company culture. Furthermore, high-achieving professionals seek out and thrive in organizations that prioritize growth and development. Before diving into specific development opportunities, it’s important to understand guiding philosophies: • Tailor your approach. Different employees have different needs. Build individual professional development plans tailored to the employee’s job responsibilities and career goals. • Seek their input. Involve each team member in the creation of their personal plan. Soliciting feedback will increase buy-in and commitment. • Leverage experts. Hire professional trainers or seek external training led by subject-matter experts to ensure quality instruction. • Think ahead. Align development opportunities with company strategy and offer training on topics and skillsets that can be used to advance the future goals of the organization. • Make professional development a team sport. Use this opportunity to develop relationships, improve morale and strengthen company culture. • Measure progress. Tie completion of the professional development plan to job performance. Discuss it during performance appraisals and

align it with incentive compensation metrics. Specific development opportunities include: • Conduct leadership and personality assessments such as the Hogan Leadership Assessment or DiSC and use the results to coach and help employees better understand themselves and their team members. • Establish mentoring programs matching younger employees with more experienced team members. Don’t be afraid to identify mentors outside of your company from whom employees can learn. • Offer “soft skills” training during lunch or existing team meetings that improve communication, leadership, coaching and management skills. • Provide opportunities for employees to attend professional conferences that help them refine their skillsets and expand their knowledge of the industry. • Encourage team members to apply for community programs such as Leadership Louisiana (or local leadership programs) and attend networking events to build relationships outside of the office and expand their knowledge of the community. • Create a training program for rising leaders that will accelerate their growth and increase their commitment to your company. • Host team-building events for employees to build relationships and work alongside each other solving problems and learning new skillsets. If your company is spread across several locations, it’s important to bring everyone together when possible. Can implementing such a program be overwhelming and expensive? You bet. But think about the cost of not doing so. Don’t know where to start? As Edwin Lewis Cole said, “You don’t drown by falling in the water; you drown by staying there.” Start small and scale. Even a small investment in your team’s growth and development will pay dividends over time. Invest in your most important assets: your people. Your company’s culture, retention, performance and future are depending on it. Nick Speyrer is the founder and president of Emergent Method. 1012industryreport.com

CLOSING NOTES EXECUTIVE MOVES

HELVESTON

CHANDLER

ASSOCIATED BUILDERS AND CONTRACTORS The Pelican Chapter, Associated Builders and Contractors, has appointed David Helveston as its new president and chief executive officer, effective Oct. 30. “In true ABC fashion, David comes to us through a very competitive search process with a deep pool of talented individuals,” says Chairman of the Board Andrew Lopez. “This is an absolute testament to his character, talents, work ethic and leadership abilities. His passion and deep understanding of workforce development issues in the state will help the Chapter ascend to the apex of craft-training nationally.” Helveston was previously the chief external affairs officer for the Louisiana Community and Technical College System, where he led various workforce development and governmental relations efforts. He is a graduate of LSU’s Paul M. Hebert Law Center and holds both a bachelor’s and MBA from LSU. The Pelican Chapter of ABC represents more than 500 member companies across 52 parishes and trains thousands of students each year. GPA MIDSTREAM ASSOCIATION GPA Midstream Association announced the hire of Laura Chandler as manager of state government affairs. In this role, Chandler will focus on midstream advocacy efforts in Louisiana, Oklahoma, New Mexico and Texas. Chandler holds an MBA from St. Edward’s University and two bachelor’s degrees from the University of North Texas. Prior to joining GPA Midstream, she worked as a lobbyist on midstream and energy issues for the Texas Energy Lobby in Austin. 1012industryreport.com

HUGHES

LUECKE

INTERMARINE LLC Al Stanley has stepped down as President and CEO of Houston-based Intermarine LLC to pursue other opportunities. Throughout the past five years, Stanley led positive change throughout the organization and played a major role in helping the company to achieve several strategic goals, Intermarine said in a statement. Andre Grikitis will assume the role of president & CEO of Intermarine LLC and Industrial Maritime Carriers LLC and be responsible for the international flag services. Will Terrill will assume the role of president & CEO of US Ocean LLC and be responsible for the company’s U.S. flag services. Mike Dumas will assume the role of president of Maritime Holdings (Delaware) LLC (the parent company), CFO of Intermarine LLC, and president of Industrial Terminals. NEXTDECADE NextDecade, a liquefied natural gas development company focused on LNG export projects in Texas, appointed Patrick Hughes vice president, corporate strategy. In this position, Hughes will be responsible for corporate strategy and business development activities including acquisitions, divestitures, joint ventures and strategic partnerships. In addition, Hughes will oversee investor relations. Prior to joining NextDecade, Hughes was a partner in the Investment Banking and Advisory group at Height Securities LLC, a Washington, D.C.-based broker-dealer. During his tenure at Height, Hughes focused exclusively on the energy and industrials sectors.

DIRESTO

SMITH

EXXONMOBIL BATON ROUGE CHEMICAL Effective Aug. 1, ExxonMobil Baton Rouge Chemical Plant Manager Bob Johnston was named ExxonMobil Singapore Chemical Plant Manager, Global Operations. Dave Luecke replaced Johnston as Baton Rouge Chemical Plant Manager. While in Baton Rouge, Johnston served on the board of directors for the Louisiana Chemical Association and Capital Area United Way. He also supported the Louisiana Association of Business and Industry and the ExxonMobil Community Dialogue Group and championed the North Baton Rouge Industrial Training Initiative. Luecke, a native of Michigan, began his career with ExxonMobil in 1985 at the Baton Rouge Plastics Plant. He has held a series of leadership positions at petrochemical operations in Texas, Canada and Baton Rouge, most recently serving as chemical plant manager for Imperial Oil in Canada. FRANK’S INTERNATIONAL Frank’s International N.V. has named Michael C. Kearney as president and chief executive officer effective immediately, in addition to his ongoing role as chairman. Kearney has served on Frank’s board of supervisory directors since 2013 and has over 25 years of upstream energy executive and board experience, principally in the oil services sector. Kearney replaces Douglas G. Stephens, who left the company to pursue other interests. Kearney was appointed to the company’s supervisory board in 2013 and was lead supervisory director from May 2014 until December 2015, when he was named chairman. He previously

BERTUS

served as president and CEO of DeepFlex Inc., a privately held oil service company. BATON ROUGE AREA CHAMBER Michael DiResto, former senior vice president of economic competitiveness, was promoted to the role of executive vice president for the Baton Rouge Area Chamber, and Liz Smith, former director of economic competitiveness, was promoted to the role of senior vice president of economic competitiveness. In the executive vice president role, DiResto will oversee the execution of BRAC’s five-year strategic plan, Think Bigger, and the organization’s day to day operations. Smith assumes the role of senior vice president of economic competitiveness following nearly five years of service leading BRAC’s public education and workforce development efforts. ST. TAMMANY EDF After more than 15 years at the helm of an ever-expanding organization, St. Tammany Economic Development Foundation CEO Brenda Bertus has announced her plans to retire effective Dec. 31. Bertus’ leadership at STEDF since 2002 saw almost 140 companies committed to locate or grow their operations within St. Tammany Parish. These companies agreed to invest over $980 million, retaining almost 4,800 jobs and committing to create over 5,900 new jobs. Submit items for Executive Moves by emailing a press release and a highresolution headshot to editor@ 1012industryreport.com. Executive Moves is limited to senior management and board positions only.

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

CLOSING NOTES: COMPANY NEWS LANDBROS ACQUIRED BY HOUSTON FIRM LandBros Aerial, the Baton Rouge-based company launched in 2014 to provide drone-based services to commercial and industrial clients, has been acquired by Premium Inspection & Testing Group, of Houston, for an undisclosed amount. The company will be integrated as a specialized department within Capitol Ultrasonics, a division of Premium Inspection & Testing Group. The current leadership team will remain, but the LandBros Aerial name will change to Capital Unmanned. SCOTT MWD BUSINESS WINS NEW INVESTMENT Pelican Energy Partners of Houston has made what it calls a “significant” investment in Gordon Technologies LLC, an independent provider of Measurement-While-Drilling (MWD) technology to the oil and gas industry. Headquartered in Scott, Louisiana, with a service facility in Midland, Texas, Gordon was founded in 2014

by Terry Frith, a veteran of the MWD sector. Frith holds several key patents and has developed or helped develop eight different MWD systems throughout his career. Gordon’s product offering, including its Heat Miser™ and Shock Miser™ tools, were designed to specifically address needs in today’s challenging drilling environments, namely MWD failures due to high shock and vibration, as well as high temperature environments.

ALLIED WINS NUCLEAR CONTRACT Allied Power has been awarded a five-year contract to provide maintenance and modification services for 14 Exelon Corp. nuclear plant sites in five states as well as fleetwide staff augmentation services. Under the contract, which provides a five-year initial term with the potential for a five-year extension, Allied’s services are designed to support Exelon’s objectives for safe, event-free outage and operational

performance at Exelon’s sites in Illinois, Maryland, New York, New Jersey and Pennsylvania. Based in Baton Rouge, Allied Power provides a broad suite of diversified services for power plants across the asset life cycle.

DANOS BOLSTERS PERMIAN ASSETS Houma-based Danos has acquired the civil construction assets and transitioned several skilled craftsmen from Renegade Backhoe Services, located in Levelland, Texas. With this acquisition, Danos takes over RBS’s fleet of backhoes, heavy-haul trailers, dump trucks and associated construction services equipment. “We are committed to investing and growing our Permian operations to better serve existing and prospective clients,” said Jeremy Adkins, general manager of U.S. land operations for Danos. The company has also relocated its Lubbock office to a larger facility in Levelland with shop space and a lay-down yard for equipment and materials.

GATE ACQUIRES LAFAYETTE’S PATRIOT RENTALS GATE Energy acquired Patriot Rentals’ filtration business unit headquartered in Lafayette. Patriot will join forces with BlueFin, a GATE Energy Company, expanding BlueFin’s project management bench strength and expertise in water filtration and flowback solutions and bolstering BlueFin’s expertise for turnkey pipeline management and flowback services. BlueFin, a GATE Energy company, is a Louisiana-based, leading independent service company specializing in EXXONMOBIL MAKES BATON pipeline and process services, meROUGE EDUCATION GRANTS chanical and joint integrity services, ExxonMobil is allocating umbilical services, and multiline $300,000 in community grant fundspooling services4Q for2017 downhole Issue Date: Ad proof #1 • Please respond by e-mail or fax with your approval or minor revisions. ing to Baton Rouge educational and completions. • AD WILL RUN AS IS unless approval or final revisions workforce development programs in are received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

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2017. The community grant allocation process is part of more than $4 million donated annually to the area through company donations, employee grants, matching gifts and Volunteer Involvement Program grants. Among the grants are $75,000 for the East Baton Rouge School System’s STEM Learning Network through the Foundation for EBR Schools. To help strengthen the pipeline for craft job opportunities, ExxonMobil is contributing to Baton Rouge Community College for the collaborative North Baton Rouge Industrial Training Initiative, which expects to graduate 44 students in pipefitting, welding and electrical crafts this year. Baton Rouge Youth Coalition and HOPE Ministries will also receive grants to support college and work-readiness programs.

list ranks the top environmental services companies worldwide based on the previous year’s percentage of gross revenue for environmental services. ATC is ranked No. 62 on this year’s list, highest of the four Louisiana companies included. In addition, the company earned a No. 9 ranking in the Environmental Management sector, with a reported revenue of $103 million. ATC has more than 1,900 employees nationwide, making it one of the largest companies headquartered in Lafayette.

DANOS AND PETROFAC FORM ALLIANCE Houma-based Danos and Petrofac, a London-based provider of oilfield services to the international oil and gas industry, have signed an agreement that will enable the formation of a joint venture. The alliance will pursue joint opportuniATC MAKES TOP ‘ENR’ LIST ties to deliver services across the oil ATC Group Services, headquarand gas asset life cycle, with a focus tered in Lafayette, has been named on supporting operations and asset to Engineering list #1 of management solutions in the Gulf Issue Date: News-Record’s 2nd Qtr proof • Please by e-mail or fax with your approval or minor revisions. and U.S. shale plays. Sethe Toprespond 200 Environmental Firms. of Mexico • AD WILL RUN AS IS unless approval or final revisions Published annually in August, the nior Vice President for Petrofac Enare received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

gineering and Production Services Dave Blackburn noted, “The ‘lower for longer’ operating environment requires a different approach to be taken, and we see this as an ideal time for our two companies to come together in this alliance.” BATON ROUGE SUPPLIER UPS MANUFACTURING CAPABILITIES Lightning Bolt & Supply Inc. completed its latest capital investment at its Baton Rouge headquarters. The enhancements include a significant increase in manufacturing capabilities, including additional threading, bending and tapping machines, and a PTFE/ Xylan®/Teflon® line designed for fasteners. Lightning Bolt & Supply’s headquarters boasts nearly 100,000 square feet and a stock of 150,000plus unique items.

of commissioners, officially opened the first transient hangar at Port of South Louisiana Executive Regional Airport, expanding services at the aero center in Reserve, Louisiana. Designed by NY Associates Inc. and constructed by Justin J. Reeves LLC, the 6,363-square-foot hangar has the capacity to accommodate a variety of large corporate and business aircraft, which are utilizing the Executive Regional Airport in Reserve on a more frequent basis. “The commemoration of the new hangar demonstrates Port of South Louisiana’s commitment to making the Executive Regional Airport a full-service airport,” said Aucoin. “The new hangar, along with our other improvements, allows us to be very competitive, and we will continue to make additional improvements to attract more aircraft.”

RESERVE AIPORT, PORT OF SOUTH LOUISIANA OPEN NEW HANGAR Port of South Louisiana Executive Director Paul Aucoin and Airport Director Vincent Caire, along with members of the port’s board

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10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

CLAIBORNE

CLOSING NOTES: PROJECT MAPS

Project by project

BOSSIER

WEBSTER

CADDO

($25M-$250M)

BIENVILLE

Louisiana industrial projects announced or proposed since Jan.1, 2014, with projected capital investment of $25 million-$250 million. Second line shows projected capital investment and direct new jobs. List is representative, not complete; project statuses change frequently. 1 First Bauxite $200M | 100 jobs Location: St. John the Baptist Parish Status: announced June 2015 2 Diamond Green Diesel $190M | N/A Status: engineering underway; major equipment ordered 3 Entergy $187M | N/A Location: Cameron, Calcasieu parishes Status: permitting 4 Indorama Ventures $175M | 125 jobs Location: Calcasieu Parish Status: commercial startup projected before end of 2017

11 Advanced Refining 20 Virdia $60M | 81 jobs Technologies Location: Lafourche Parish $135M | 325 jobs Status: complete Location: Calcasieu Parish Status: project has been placed 21 Epic Piping on hold, but is not canceled $45.3M | 566 jobs Location: Livingston Parish 12 Matheson Gas Status: complete $130M | 40 jobs Location: Calcasieu Parish 22 Boise Cascade Status: under construction $43M | 400 jobs 13 Praxair $100M+ | N/A Location: Ascension Parish Status: completion expected second half of 2018

14 Cleco/Cabot Corp. $80M | 20 jobs Location: St. Mary Parish Status: broke ground October 2016

5 Tennessee Gas Pipeline Co. (Kinder Morgan) 15 Florida Fuel Connection, LLC $170M | N/A $75M | 50 jobs Location: Northeast Louisiana Location: Orleans Parish to southwest Louisiana Status: moved from East Status: Construction began Feliciana Parish; pursuing March 2017; expect completion opportunities at Port of New Feb. 2018 Orleans 6 NOLA Oil Terminal $162M | 54 jobs Location: Plaquemines Parish Status: under construction 7 Kinder Morgan La. Pipeline expansion $151M | 0 jobs Location: Southwest La. Status: permitting

16 Southwest Louisiana Bioenergy $69.3M | 41 jobs Location: Allen Parish Status: under construction 17 Momentive Specialty Chemicals, Inc. $66M | 68 jobs Location: St. Charles Parish and Ascension Parish Status: expected to begin construction in 2016

8 Occidental Chemical $145M | 12 jobs Location: Ascension Parish Status: construction May 2016- 18 Hunting Energy Services late 2017 $62M | 123 jobs Location: Terrebonne Parish 9 Regency Energy Services Status: complete $144M | 6 jobs Location: Webster Parish Status: under construction

10 Bunge North America $140M | N/A Location: St.Charles Parish Status: under construction

19 Stepan Company $60M | 33 jobs Location: Ascension Parish Status: hiring to begin as early as 2017

10/12 INDUSTRY REPORT â&#x20AC;¢ FOURTH QUARTER 2017

RED RIVER

DESOTO

NATCHITOCHES SABINE

Location: Sabine Parish Status: completion projected for 2017

23 Graphic Packaging International $41.5M | 1,340 jobs Location: Ouachita Parish Status: under construction

VERNON

24 Balchem and Taminco $40M | 110 jobs Location: Iberville Parish Status: expected to begin construction in 2015 25 PCS Nitrogen $40M | 0 jobs Location: Ascension Parish Status: permitting

BEAUREGARD

26 Bayou Cos. $39M | 15-20 jobs Location: Iberia Parish Status: complete 27 TCI Plastics $36.5M | 280 jobs Direct jobs: 280 Location: Orleans Parish Status: under construction

30 Huntsman/Rubicon 400K mt production expansion for MDI Location: Ascension Parish Status: On hold awaiting construction

CALCASIEU

28 Noranda Alumina $35M | 65 jobs Location: St. James Parish Status: announced May 2017 29 SB International $32.5M | 134 jobs Location: Bossier Parish Status: under construction, completion projected for 2017

3 CAMERON

BLUE = NEW PROJECT

1012industryreport.com

UNION

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

OUACHITA

RICHLAND

MADISON

JACKSON

FRANKLIN

CALDWELL

TENSAS WINN

CATAHOULA LASALLE GRANT

CONCORDIA

RAPIDES

AVOYELLES WEST FELICIANA

WASHINGTON

EAST FELICIANA

ST. HELENA

EVANGELINE ALLEN

POINTE COUPEE

TANGIPAHOA

ST. LANDRY WEST BATON ROUGE

ACADIA

ST. TAMMANY LIVINGSTON

8 13 19 30

ION NS

LAFAYETTE

IBERVILLE

ST. MARTIN

CE AS

JEFFERSON DAVIS

EAST BATON ROUGE

ST. JOHN THE BAPTIST

28 ST. JAMES

17 2 ST. CHARLES

IBERIA ASSUMPTION

26 VERMILION

ORLEANS

27 JEFFERSON ST. BERNARD

ST. MARTIN ST. MARY

20 18

IBERIA

LAFOURCHE

PLAQUEMINES

TERREBONNE

Sources: LED, La. Economic Outlook, 10/12 research

1012industryreport.com

10/12 INDUSTRY REPORT â&#x20AC;¢ FOURTH QUARTER 2017

CLAIBORNE

CLOSING NOTES: PROJECT MAPS BOSSIER

Project by project

CADDO

WEBSTER

($250M and up)

BIENVILLE

Louisiana industrial projects announced or proposed since 2009 with projected capital investment of $250 million or more. Second line shows projected capital investment and direct new jobs. List is representative, not complete; project statuses change frequently. (LNG = liquefied natural gas export project) 1 Sasol Ltd. $21.2B-$24.2B | 1,253 jobs

19 Marathon Petroleum $2.35B | 65 jobs

2 Sabine Pass LNG (Cheniere Energy) $20B | 400 jobs

20 CF Industries Nitrogen, LLC $2.1B | 93 jobs

3 Driftwood LNG $13B-$16B | 400 jobs 4 G2 LNG $11B | 250 jobs 5 Sempra Energy/Cameron LNG $10B | 190 jobs 6 Formosa (St. James Parish) $9.4B | 1,200 jobs 7 Lake Charles LNG (aka Trunkline LNG; BG Group and Energy Transfer Partners) $9B | 250 jobs 8 Monkey Island LNG (Southern California Telephone & Energy) $9B | 200 jobs 9 Venture Global LNG (Plaquemines) $8.5B | 250 jobs 10 Cambridge Energy FLNG $8B | N/A 11 Delfin LNG $7B | 400 jobs 12 Magnolia LNG $4.35B | 50 jobs 13 Venture Global LNG (Calcasieu Pass) $4.25B | 100 jobs 14 Lake Charles Methanol, LLC $3.8B | 200 jobs 15 Nucor Steel Up to $3.4B | 1,250 jobs 16 Axiall/Lotte Chemical $3B | 250 jobs 17 Lake Charles Clean Energy (Leucadia Corp.) $2.5B | 215 jobs

$1.85B | 400 jobs

38 Entergy (St. Charles) $865M | 27 jobs

NATCHITOCHES SABINE

41 Petroplex $800M | N/A 42 Shell Chemical $717M | 20 jobs 43 Valero Refining – New Orleans, LLC $700M | 24 jobs VERNON

44 Bayou Bridge Pipeline $670M | 12 jobs 45 Louisiana LNG Energy, LLC $646.6M | 44 jobs 46 Pin Oak Terminals $600M | 70 jobs

28 AM Agrigen Industries $1.2B | 150 jobs

47 Southern Cross Transmission Project $600M | N/A

29 Wanhua Chemical Group $1.12B | 170 jobs

48 Methanex Corp., Methanex 1 $570M | 35 jobs

30 Castleton Commodities International $1.2B | 50 jobs

49 Methanex Corp., Methanex 2 $570M | 120 jobs

10/12 INDUSTRY REPORT • FOURTH QUARTER 2017

RED RIVER

DESOTO

39 Lake Charles Cogeneration, LLC $820M | 210 jobs 21 Live Oak LNG (Parallax Energy) $2B | 100 jobs 40 Energy World USA $800M | N/A 22 Yuhuang Chemical, Inc.

18 Revolution Aluminum $2.4B | 1,450 jobs 64

50 BASF (Geismar) $500M | 100 jobs

CALCASIEU

66 1 37 7 16 17 60 12 23 39 14 21

51 Sundrop Fuels $450M | 150 jobs 52 Westlake Chemical (Geismar) $425M | 70 jobs

53 SE Tylose (Shintech) $420M | 88 jobs 54 Shintech (ethylene expansion) $400M | N/A 55 Hazelwood Energy Hub $400M | 120 jobs

BEAUREGARD

5 CAMERON

4 2

13 11

8 23

56 Williams Olefins $400M | 5 jobs 57 NuStar Energy $365M | 32 jobs

RED = PROJECT KILLED BLUE = NEW PROJECT

1012industryreport.com

UNION

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

58 Syngas Energy $360M | 86 jobs