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Pacesetting Continuous ImprovementRasGas Expansion Projects

Mark W. PowellSuperintendent - MechanicalRasGas Expansion Projects

February 14, 2007

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Presentation Outline

RasGas Company Limited - History & Background

RasGas Expansion Projects - History & Background

Contracting Strategy

Project Benchmarks

Why Continuous Improvement?

The RGX Continuous Improvement Process

The Key to Success

RGX Continuous Improvement Metrics

Conclusions

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““Improvement begins with I.Improvement begins with I.””-- Arnold H. GlasowArnold H. Glasow

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RasGas Company Limited

Incorporated joint-venture of Qatar Petroleum and ExxonMobilProduces and sells hydrocarbons from Qatar’s North Field

World’s largest non-associated gas fieldProducts include liquefied natural gas (LNG), sales gas, natural gas liquids (NGLs – ethane & propane), gas condensate, liquid helium, and sulfur

Current operations include:6 offshore production platforms5 LNG trains (with helium extraction)1 natural gas processing plant (Al Khaleej Gas - “AKG”)1 helium recovery unit

Future operations include:LNG Trains 6 and 7 (“RGX-2”)2nd phase of Al Khaleej Gas (“AKG-2”)

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Overview of RasGas

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RasGas LNG Process - Typical

AGE / AGI

INLET FACILITIES

ACID GAS REMOVAL

GAS DEHYDRATION

OFFSHORE

CONDENSATESTORAGE

RICH LNG

LIQUEFACTION

Fractionation

LEAN LNG

NGL RECOVERY

LPG Storage & Loading

NGLs

LPGs

MERCURY REMOVAL

LNG Process - typical

NGL Extraction - Trains 4 & 5 only

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RasGas Expansion Projects - Background

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

ID2004 2005 2006

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1

2

5

LNG 3

LNG 4

LNG 5

AKG

Helium

Project Notes

4.7 million tons per annum

4.7 million tons per annum + NGL recovery

4.7 million tons per annum + NGL recovery

750 million standard cubic feet per day of pipelinesales gasProcess raw helium extracted from RasGas Trains 1 – 5and Qatargas Trains 1 - 3

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4

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Contracting Strategy

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

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

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“Excellent firms don't believe in excellence - only in constant improvement and constant change.”

- Tom Peters

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Benchmarks

Unit Cost of Production ($ / Mta) - relative comparison

EPC Project Schedule

RasGas LNG Train Processing Capacity

RasGas Expansion Projects - Safety Indicators

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Unit Cost of Production ($ / Mta)

1964 1972 1978 1983 1999 2004 2008Initial Start-Up Year

RasGas Trains1 & 2

RasGas Trains

3 / 4 / 5RasGas Trains6 / 7

3.3MTPA

4.7MTPA 7.8

MTPA

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EPC Project Schedule

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RasGas LNG Train Processing Capacity

0

2

4

6

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

RasGas Trains1 & 2

RasGas Trains3 / 4 / 5

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RasGas Expansion Projects - Safety Indicators

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

2000 2001 2002 2003 2004 2005 2006 2007

Recordable Incident Rate - IndustryRecordable Incident Rate - RGXLost Time Incident Rate - IndustryLost Time Incident Rate - RGX

Industry data from International Association ofOil & Gas Producers, May 2006; "Overall" datamodified to Incident Rate per 200,000 man-hours

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

Recordable Incident Rate (Industry)

Lost Time Injury Rate (Industry)

Recordable Incident Rate (RGX)

Lost Time Injury Rate (RGX)

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"If we improved any single process "If we improved any single process in our business by just 1%, or in our business by just 1%, or

even 0.1%, but we did that every even 0.1%, but we did that every single day single day -- what do you think the what do you think the effects would be in a month? In a effects would be in a month? In a

year? In five years?year? In five years?””-- UnknownUnknown

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Why Continuous Improvement at RGX?

Unique opportunitySeries of similar projectsContinuity of Contractors and Project Management TeamEnhance execution of subsequent projects

Deficiencies in earlier lessons-learned processOne-time exercise at end of jobInadequate problem definition & root-cause analysesInadequate tracking of actions to resolutionPoor documentation of resolutions“Cluttered” with low-value lessons and unjustified recommendations

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The RGX Continuous Improvement Process

Definition of the problem or issue

Analysis to determine the root cause

Recommendations to resolve the item

Gatekeeping to insure definition,

analysis, recommendations, and

justifications are sufficient for action

Actions and follow-up to implement

recommendations, with a formalized

sign-off

Status updating and reporting

Monitor performance of the CI program

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

-- Thomas A. EdisonThomas A. Edison

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Gatekeeping – The Key to Success

Gatekeeper - intermediary between the Originator and the ActionerForces rigorous screening of all incoming CI itemsEliminates unjustified items and “wishlists”Ensures quality of definition, front-end analysis, and recommendationsEnsures sufficient technical background information and documentation are provided to the Actioners

CI TeamReviews / approves / rejects all CI itemsValidates close-outIncludes representation by all key stakeholders

Dedicated clerical supportProvides ongoing assessment of progressReminders to ActionersCollates effectiveness benchmarks for program monitoring

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Continuous Improvement Metrics

Breakdown of Field Design Changes

Comparison of CI Items Across Projects

Total Punchlist Items at Mechanical Completion

Start-up Flange Leaks

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Breakdown of Field Design Changes by Discipline

0

500

1000

1500

2000

2500

Civil Electrical Engineering Equipment Instruments/ Controls

Piping PMC Telecomms All FDC's

LNG 3

LNG 4

LNG 5

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Comparison of CI Items Across Projects

0

50

100

150

200

250

300

LNG 3 LNG 4 AKG-1

Warranty ClaimsLessons LearnedTechnical QueriesOther Improvements

Deficiencies eliminatedBEFORE becoming a problem

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0

1000

2000

3000

4000

LNG 3 LNG 4 LNG 5

Total Punchlist Items at Mechanical Completion

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Start-up Flange Leaks

0

50

100

150

200

250

300

LNG 3 LNG 4 LNG 5

Dedicated “Zero-Leak”Team implemented on

LNG Train 5

Tr 3 / 4 data approximate

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Conclusions

CI program envisioned and designed to rapidly capture, assimilate, action, and feed-forward lessons-learned to future projects

Seven step process focusing on definition, analysis, gatekeeping, and tracking of items to resolution

The RGX Continuous Improvement process has added significant value to RasGas

Reduced Field Design Changes

Dramatic reduction Warranty Claims

Fewer start-up flange leaks

Learnings effectively captured andImplemented in subsequent projects in time to avoid problems

Shared with future Qatar petrochem projects

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"Continuous Improvement is not a "Continuous Improvement is not a oneone--off project or 'flavor of the off project or 'flavor of the month'... it is a constant and month'... it is a constant and

nevernever--ending commitment backed ending commitment backed up by action.up by action.””

-- UnknownUnknown

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Questions?