The explosion of opportunities globally has left pipeline construction owners scratching their heads and wondering where their next experienced project manager or foreman will come from. This is all in an environment where safety and environmental protection are important all around the globe. Operators need work performed — lots of work. But in order to achieve this, subcontractors must be available, as must the suppliers who provide vital machinery and materials.

It is not surprising, therefore, that the major pipeline construction companies — members of IPLOCA — are anxious to address these challenges and are looking to their industry association to help.

IPLOCA has recently celebrated its 40th anniversary. In 1966, when companies active in the international pipeline construction industry gathered in Paris and founded IPLOCA, the world was a different place. Now Geneva-based IPLOCA is already well known in the industry for its annual networking convention (held in Barcelona, Spain, in 2006 and in Sydney, Australia, in 2007) where the key industry players gather each year. In addition, the association is in the midst of making some significant changes and is reviewing and modifying its services and outreach to members and transforming the role that it plays in supporting them.

Global reach

Among the members of IPLOCA are the major international pipeline and offshore contractors, as well as their subcontractors. Additionally, there are associate members who represent the suppliers of products, equipment and services offered to the pipeline industry and three academic members.

Truly international, the association’s membership base includes companies in Algeria, Argentina, Australia, Austria, Belarus, Belgium, Brazil, China, Czech Republic, Denmark, Ecuador, Egypt, France, Germany, Greece, Hungary, India, Iran, Italy, Japan, Lebanon, Malaysia, Mexico, Netherlands, Panama, Qatar, Romania, Russia, Saudi Arabia, Spain, Switzerland, Turkey, United Arab Emirates, United Kingdom and the United States.

Current IPLOCA initiatives include a research and development program, risk-sharing guidelines and initiatives and working committees with major pipeline owners and developers.

Changing technology

There have been significant technological achievements made over the years in the way that onshore and offshore pipelines are designed and constructed. Examples include high-strength and high-toughness pipe, better coatings, automatic welding, massive offshore lay barges, pipe reeling, double jointing, rock saws, padding equipment and horizontal directional drilling.

Around the world, major pipeline owners and developers are seeking ideas from contractors and suppliers to achieve greater certainty of result in terms of project time and cost, cheaper pipelines through better specifications and innovative technology and high levels of safety along with low environmental impact.

Owner-contractor relationships

IPLOCA sees the relationship with the pipeline owners as key. Its member contractors are saying that the goals sought by the owners can be achieved through better contracting strategies by the owners, particularly through getting contractors involved at an earlier stage of the project.

The size and importance of some of the pipeline projects are such that the owners are most focused in the result, rather than the process of getting there. The emphasis of the pipeline owners is on getting the projects built on time and to budget (and of course without harm to anyone or anything) rather than on the contractual games that have plagued many projects for too many years. The contractors would say that the owner sets the mood of any contract and it is the owner who has the opportunity to improve contracting relationships. Many owners are doing this and IPLOCA is promoting this shift from the parties seeing themselves as adversaries to working together as partners in the process of achieving the result.

The contractors, in turn, want a more equal approach to risk sharing, encouragement of more technological innovations, a sensible approach by owners’ field personnel and sharing of the savings obtained from construction cost and construction time reduction.

A different approach to contracting

The appropriate allocation of risk to the party best equipped to manage and mitigate that risk is of great importance in this relationship and there is a realisation that the construction partner needs to be brought into major projects during the Front End Engineering Design (FEED). This is a radical shift in thinking and not all owners, engineers and contractors can comprehend how this can work contractually. It requires a different behavioural approach between the pipeline owner/developer and the contractors. It requires considerably more dialogue, not just for the construction phase but already upfront with the route selection. IPLOCA is working to facilitate that dialogue.

A key component of IPLOCA’s new agenda is the fostering of that dialogue with the major customers of its members. IPLOCA is working hard to get closer to its members’ major customer base with particular focus on those companies planning mega projects.

In particular, IPLOCA seeks to:

* Elevate dialogue with major pipeline owners on contracting strategy for mega projects. * Establish guidelines on risk sharing principles with major owners. * Widen R&D subcommittee to include other major owners and original equipment manufacturers. * Establish more working committees not just of contractors, but also including owners, engineers and suppliers. * Secure recognition from the World Bank and major agencies of IPLOCA Guidelines. * Establish a level playing field for health, safety and environment management.

Health and safety

One of the most significant changes in recent years has been the realisation of successful strategies for health, safety and environment that are fundamental to the conduct of any business, but particularly one in which men and machines work so closely together.

IPLOCA believes that safety, health and environment are not proprietary and that greater cooperation between pipeline owners, engineers and the contractors will lead to better results — and after all, it is the result that is the fundamental in this.

In seeking to bring the pipeline owners, engineers and contractors together to establish standard safety plans and procedures, IPLOCA is seeking that the whole industry — from the workforce up — should work under common standards. The greater the familiarity with these standards, the greater the likelihood that they will become part of every day practice, a reflex reaction.

Environmental management

Environmental management is inevitably more complicated than safety management because the physical circumstances of projects vary so much. Nevertheless, standardisation of the process will make for better familiarity and greater application and, therefore, better results.

IPLOCA and the World Bank

Mega projects through developing countries are being partly funded by the World Bank and similar agencies. These organisations are tagging the projects with certain social and environmental considerations.

IPLOCA has commenced discussions with the World Bank to make sure these tags are firstly put into context, and secondly, to ensure that those who bid for the work are fully aware of the requirements so that they can be appropriately priced – contractors hate surprises.

Manpower Challenges

Mega pipeline projects on the drawing boards such as moving gas from Alaska to Chicago and moving gas from Siberia to the United Kingdom may soon become a reality. Lack of manpower is already a huge challenge for the industry. Add to that an apparent lack of interest in pipeline construction as a career among the new generation of engineers, the pressing need for workers to renovate existing oil pipelines that have been in place for 25 or 30 years and the manpower situation and its inherent challenges become even more frustrating. This is a severe resource problem that currently has no solution. IPLOCA is discussing the training and human resource issues and seeking solutions to this most fundamental of problems and a training portal has been added to its new website which was launched in mid-2007.

Onshore and offshore, the pipeline industry nevertheless has an enviable record of achievement. IPLOCA is proud to represent the many international companies that are part of its membership base. The challenges for the industry moving forward are substantial, but continued consumer demand, improved technologies and new contractor-owner relationships built on frequent dialogue and collaboration through the industry association herald a new era of progress in the delivery of oil, water and gas.