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Risk Managementfor

Mega Air Separation Projects

David R EdmondsonVice President, Engineering

Air Products

November 2004

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Risk Management

Why Risk management is important

Air Products experience

ORYX Approach

Options for the future

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Risk Management

Why is Risk Management so Important? Oxygen is an integral part of the GTL process

Significant proportion of overall project costs

Oxygen is on the critical path for GTL projects

Need to manage any perceived technology risk

Important to manage the project financial risk

Maintains site safety performance

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Basic Air Separation Process

AirFilter

Compression Train

SteamTurbine

BoosterAir Compressor

(BAC)

Air Pre-treatment Cold Box Storage

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Air Products Rotterdam - 3250 TPD O2

Supplying Shell PER + Project Owned and operated by

AP since 1997

Execution Strategy

Side by Side HP/LP

columns

Site built cold box

Site assembledcompression system

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Air Products Trinidad - 3000 TPD O2

Supplying MethanexMethanol Project Owned and operated by AP

since 2003

Execution Strategy

Stacked HP/LP columns

Site built cold box

Site constructed double

ended steam turbinedriving compression

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Risk Management - Construction Strategy

Site built machinery & Cold Box Effective for single train plants

Issues for multiple trains

Increased site activities challenge

safety performance

Suitability/availability of local

contractors for extended period

Managing site through periods of

extreme weather

Significant logistics and material

handling

Plot area increased to allow for

construction access

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Risk Management

ORYX Construction StrategyPre-fabrication/packaging of specialist skills areas

Focus on Cold Box & compression train Built in Quality

Improved control over quality & cleanliness

Improves construction sequencing

Reduces schedule risk

Reduces site manning

Fewer specialist skills on site

Reduced plot requirements

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ORYX Cold Box Strategy

ORYX plant for 7000 TPD in two trainsbeing loaded in UK

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ORYX Cold Box Strategy

Cleaned assembled and tested in controlledenvironment

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ORYX Cold Box Strategy

Utilises construction principles used for yearsin many smaller Air Separation Units

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ORYX Machinery Train Solution

Complete

train run and

shop tested

Simpler

foundations Reduced site

construction

and start-up

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Does Size Matter?

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Does Size Matter?

Single vs. Multiple trains Impact of increased equipment size needs to be

fully understood:

Equipment sourcing Reliability & operability

Consider impact of steam balance on oxygenrequirements at different points of facil ity

operating map Optimum plant size and unit cost of oxygen

dependent on owner design and operatingphilosophy

Advantages to project risk profile by usingexisting demonstrated Air Separation Unitcomponents and proven construction strategy

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Risk Management

Further reducing unit cost of Oxygen Need to incorporate innovation in process cycle

and plant concepts

Need to accept increased compression train size

Need to accept change in equipment configuration

Need to consider optimisation of each key area of

the Air Separation Unit rather being focused on

discrete trains

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Summary Points

Managing project risk includes: Client/supplier investment

Employee/supplier safety

Project risk profile reduced by using demonstratedequipment and project concepts

Air Products have a broad experience of site built andpackaged approach

ORYX project demonstrates packaged approach:

Product competitiveness

Greater schedule certainty

Reduced safety risks in difficult construction locations

Could go further on packaging other plant areas

Further cost benefits can be realised by goodco-operation in the project development phase