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IPA10-BC-107



PROCEEDINGS, INDONESIAN PETROLEUM ASSOCIATION
Thirty-Fourth Annual Convention & Exhibition, May 2010

A SUCCESSFUL MANAGEMENT OF A HIGH AND CONTINUOUS DEVELOPMENT ACTIVITY
BY TOTAL E&P INDONESIE PROJECT CONSTRUCTION 2005-2009

C. Placines*



ABSTRACT

In order to fulfill its gas commitments, Total E&P
Indonesie, the largest producer of gas in Indonesia
and the main contributor to the Bontang LNG Plant,
has successfully delivered 11 Projects over the last
five years, safely, within budget while promoting
local industry.

Overall, this does represent a total investment of 2.3
billion USD and 65 Million man-hours all across
Indonesia from Batam and East Kalimantan down
to Surabaya with the outstanding HSE record of
Lost Time frequency at 0.21 per Million Man-hour.
New facilities totaling 120,000 tons have been put
onstream between early 2005 and early 2010,
including 6 off-shore wellhead platforms, 7 decks
for manifolds and compression and utilities, 17
additional Gathering and Testing satellites with 8
turbo compressors, 2 turbo generators and more
than 160 km of pipelines

This achievement has been made possible through a
combination:

of a matrix type Project organization which
facilitate the optimization of human resources
and the enabling of quick promotion for the
best local engineers through a more effective
career management

and as well supports the development of
dedicated action plans towards HSE
enhancements, beyond individual projects and
across the different local industry players,

of contractual strategies implemented to
maximize the involvement of local industry,

supported by efficient control methodology to
deliver the Projects within budget and planning.

Over the next five years, a similarly ambitious
investment program is being prepared to deliver by

* Total E&P Indonesie
2015 additional wellhead and compression
platforms. Already, additional actions are being
implemented to further develop the technical and
management skills of our Indonesian staff and to
increase contributions from the local industry within
a sound and competitive environment.

INTRODUCTION

Total E&P Indonesie has started forty years ago
exploration activities in Indonesia and is now the
largest producer of gas in the country and the main
contributor to the Bontang LNG Plant. Total E&P
Indonesie is as well, within Total upstream
worldwide, the affiliate with the most important and
complex simultaneous operations whilst at the same
time considered as a role model in standards for
safety, quality and respect of targets and
commitments

In order to reach and maintain a production of up to
580 000boe/d, Total E&P Indonesie has
consistently invested into building new facilities to
develop gas fields like Tunu, Tambora, Peciko in
the PSC Mahakam (partnership with Inpex 50-50)
and like Sisi Nubi, a new field in the PSC Tengah
off East Kalimantan (partnership with Inpex 47.9-
47.9 and Pertamina 4.2).

The pace of development has significantly
accelerated over the last 5 years, with 11 different
projects put on stream within the period between
early 2005 and early 2010 representing a capital
investment of 2.3B$ achieved within budget.

Total E&P Indonesie Operation Overview

Whilst pursuing relentlessly additional opportunities
throughout Indonesia, Total E&P Indonesie
operates mainly the Mahakam PSC and the Tengah
PSC.

TEP I head offices are located in J akarta and the
main operating offices are based in Balikpapan

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supporting the various production sites scattered
across the Mahakam delta and offshore.

After producing mainly liquids during the early
years until 1990 through the Handil field onshore
and the Bekapai field offshore, Total E&P
Indonesie has become gradually mainly a gas
producer (up to 2.6 Billion SCFD, but still around
100KBD of liquids, mostly condensate associated
with gas production) with the successive discoveries
of Tambora, Tunu, Peciko and Sisi Nubi fields.

Although mostly concentrated within and around
the delta of the Mahakam river, it is worth
mentioning few facts and figures in order to
illustrate the sheer size and complexity of these
operations:

More than 100 km from the north of Tunu
producing facilities to the most southern Peciko
offshore platforms

Three different environments to deal with, the
Mahakam delta swamp, offshore with water
depth ranging from 40 up to 70 meters, and
onshore plant at Senipah

Over the last 5 years, 9 to 10 rigs drilling
concurrently average 100 wells per year in all
the fields to maintain level of production

6 different production sites interconnected by
more than 1200 kms of pipelines

39 gas turbines running for more than 400 MWs

The map in figure 1 below provides details of the
location of the various operated fields mentioned
earlier.

Total E&P Indonesie producing fields and
typical facilities

Mahakam delta Tunu and Tambora gas fields

Tunu and Tambora gas fields are constituted by thin
layers reservoirs spreading north-east to south-west
across the Mahakam river delta

The gas is produced through Gathering and Testing
Satellites (GTSs) allowing the connection of an
average of 10 wells; these clusters are of course
positioned based on reservoirs estimated
productivity and in order to optimize drilling
operations (minimizing rig movements, allowing
batch drilling per phase); typically, they include a
combination of adjacent well-head platforms
(initially bi-slot, now four slots), a small deck and
associated platforms with all control facilities (test
separator, KO drum and cold vent, all power and
instrumentation, telecom room to allow remote
connection from the control rooms of the processing
centers) and connecting pipe collecting effluents to
the pipeline network towards the processing centers
for further separation and compression prior to main
gas feed line to Bontang LNG plant.

The photograph in figure 2 below shows the
installation on site by float-over technique of a
typical GTS deck.

Three centers of operations are located in the
Mahakam delta to control the flow of gas and
associated condensate:

CPU (Central Processing Unit) handles
effluents from Tambora field and the central
and south part of Tunu fields; from there, gas is
connected to the main gas line towards Bontang
and condensate is pumped south to Handil and
Senipah for storage prior to export through a
loading buoy located 3 km offshore,

NPU ( North Processing Unit) handles effluents
from the north part of Tunu field and likewise,
gas is connected to the main gas line towards
Bontang and condensate is pumped south to
Handil via CPU,

SPU (South Processing Unit) has been added in
2009 as part of Tunu 11 project to handle
effluents from the south part of Tunu field with
LP compression facilities and provide better
location for operating the Tunu facilities too far
from CPU together with Sisi Nubi field located
further 30km offshore.

In summary, over the last 5 years; 17 additional
GTSs have been installed and commissioned for
additional drainage of Tambora (3) and Tunu (14)
fields together with LP compression facilities at
NPU and at SPU and an additional oily water
treatment platform has been added to existing CPU
facilities.

Offshore Mahakam: Peciko and Sisi-Nubi gas
fields

Peciko, Sisi and Nubi fields are located offshore
respectively south and east of Mahakam delta,
between 45 and 75 water depths and are produced
using conventional well-head platforms with a deck
weight typically between 1,100 and 1,400tons and

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connected through infield flowlines and eventually
trunk-lines to processing facilities:

SNPS platform for Sisi Nubi effluents, a finger-
type slug catcher platform as an entry gate to
the Tunu pipeline network

Senipah gas processing plant for Peciko
effluents where gas and condensate are
separated and gas compressed towards Bontang
LNG plant

The photograph in figure 3 below shows the MWP
Nubi platform

Whilst Sisi Nubi has started producing only late
2007, two additional stages of compression have
been added to optimize recovery of Peciko gas
field.

In summary, over the last 5 years; 6 additional well-
head platforms have been installed offshore (1 for
Sisi, 2 for Nubi fields, 3 for Peciko field) together
with the associated infield and trunk pipelines, one
slug catcher platform installed in the Mahakam
delta to receive Sisi-Nubi effluents, 4 compression
trains, one additional turbo-generator and
miscellaneous additional utilities installed at
Senipah.

Development plan 2005-2009

All the above additional facilities have been of
course delivered in successive phases. This
ambitious development plan has been structured
into 11 different projects, with each project defined
on a field basis and along a scope coherent with the
typology of facilities; hence, the 17 GTSs
mentioned earlier were the main scope of the
Tambora 2, Tunu 9, Tunu 10, Tunu 12 and Tunu 13
projects, whilst the Tunu 11 project consist in
adding LP compression facilities on NPU and SPU;
likewise, Peciko 5 and Sisi Nubi projects delivered
offshore platforms whilst the Peciko 6 project added
LP compression facilities at Senipah; only the
Peciko 4 project scope included offshore platforms
and pipelines and significant onshore facilities ( MP
compression at Senipah).

For every single project, the relevant POD, AFE,
Tender plans, contract and/or POs
recommendations to award have been of course
approved by BPMIGAS in accordance with PTK07
regulations. The summary schedule in figure 4
below shows the overall time frame for each project
from end of pre-project until project last milestone.
It is worth highlighting that during 24 months
between early 2007 until late 2008, 6 projects had to
be managed at different stage of progress, which
required more than 650 persons to be mobilized and
integrated into the various project management
teams working, at peak, on 12 different sites, be it
contractors yard, suppliers workshops, installation
sites or offshore work-barges.

These 11 projects represent:

a total investment of 2.3 Billion USD achieved
within budget,
120,000 tons of new facilities including steel
and equipment,
more than 100MW installed ,
more than 160 Km of pipelines
65 Million Man-hours worked all across
Indonesia from Batam down to Surabaya,
representing at peak 6,000 workers involved on
our various sites

And foremost, this has been achieved with an
outstanding safety record over the period as
illustrated by a Lost Time rate of 0,21 per Million
Man-hours.

We will develop below what we believe are some
key factors behind the above achievement:

A matrix-type project organization which not
only bring a lot of synergy across projects, but
as well favor the implementation of coherent
policies, in critical areas such as HSE
enhancements and in human resource
development

A coherent project implementation
methodology supporting aggressive contract
strategies which in turn favor local industry
development.

Project matrix type organization

This development plan has been undertaken by a
dedicated Division within Total E&P Indonesie, the
Project Construction Division, headed by a VP
reporting directly to the Managing Director.

Its mission is to deliver new production facilities
safely, on time and within the budget and in line
with the Statement of Requirements (S.O.R.) as
issued at the end of pre-project and in accordance
with Total group upstream referential..

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Overview of Project Division organization

A key success factor in the above achievement can
be found in the matrix-type organization of the
Project Construction Division; as summarizes in the
figure 5 chart below.

Indeed, five transverse departments are supporting
as well as controlling the implementation and
execution of the various projects, each one under
the authority of a dedicated project manager
heading a reduced project team and reporting
directly to the Division Vice President; this type of
organization has been built over the years and has
proven its efficiency which has been further
demonstrated during peak load periods like the last
5 years with the size and the number of the different
projects to be managed simultaneously

Project team organization typical

First, a typical project organization will be
structured along the break-down into the various
key commitment (EPC contracts, Company Pos,..)
with individuals clearly nominated in charge of
managing and controlling until delivery of the
relevant scope of work; each person in charge
(Contract manager, or Project Engineer in charge of
POs) will report to the project manager and will
mobilize and manage his team, as necessary during
the various phases of execution (detailed design and
procurement, fabrication, installation and
commissioning).

Each project manager is responsible to the VP for
project HSE performance, delivery as per the
S.O.R, in line with budget and schedule and with
the required quality.

It may be that, depending of the size of the project
with complex interfaces and several contracts,
dedicated position is assigned reporting to the
project manager, such as Project control coordinator
and/or Design/interface coordinator and/or Lead
commissioning.

Below as per figure 6, a typical project organization
chart during fabrication stage is developed with full
supervision team mobilized under a single contract.
This chart might be multiplied in accordance with
the number of different contracts.

Transverse Departments

Supporting and controlling every project, the 5
transverse Departments, with their respective
Managers reporting to the Division VP, are listed
below with a summary of their respective missions:
The Project Control & Support department
(PJ C/SER) provides the following services to the
various projects:

planning & reporting,
budget & cost control, cost estimating,
contract engineering from the large EPC
construction contracts to the various smaller
services contracts and control of the tendering
process in line with PTK 07,
various miscellaneous support from logistics for
material and personnel, to assistance for
certification, and customs clearance and
permitting; in that respect, a reduced team is
available in Balikpapan to provide this support
to project teams when fabrication is carried out
in some of the construction yards close to the
Mahakam river

This Department controls that the HQ referential in
terms of contract orthodoxy is strictly adhered by
project teams and will consolidate the various
change orders during the execution of the contracts.

The Quality & Risk Management department
(PJ C/QRM) assists the VP in defining the Quality
Assurance policy of the Division across all projects
and departments and will control its
implementation, through several and regular audits;
this team will assist:

all project teams in running proper risk analysis
and management and will monitor the
implementation of the corresponding mitigation
actions;

all project teams in ensuring that contractors
develops a proper quality assurance plan
throughout the execution in accordance with
contractual requirements

The Project Engineering Department (PJ C/ENG)
concatenates all the technical expertise as
necessary, with most disciplines represented such as
process & safety engineering, structural, piping and
vessels, electrical, instrumentation & control,
telecom, corrosion, pipeline.

This team will have to review and approve design
documents, technical queries issued by various
contractors across the different projects, in
accordance with the Total technical referential, and
may have to analyze and approve any request for
derogation submitted by project teams, if necessary
in liaison with their peers based in HQ technical
division.

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This team will as well directly manage the
execution of Basic Engineering contracts, as
explained further below.

The Project Commissioning Department (PJ C/
CMS) will assist the project in defining the
organization, resource necessary to perform the
commissioning of the project and will ensure their
mobilization; it will as well control that the correct
methodology and tools are used in accordance with
the HQ commissioning referential, and if necessary,
will organize adequate training of Company and
contractor personnel., Lastly, the commissioning
will organize the hand-over of facilities to
Operations organization.

The Project Methods and Procedures Department
(PJ C/MTH) will assist the VP in:

Defining the HSE objectives for the Division on
a yearly basis

Defining the HSE objectives for each project

It will prepare and control the implementation
methods and procedures necessary to achieve the
above in line with corporate HSE management
system (MAESTRO); these may include various
standards and policy, audits plan, training policy
and schedule, lifting and working at heights
procedures, and so on.

It will define the organization and resource
necessary to achieve these objectives, vet all
relevant personnel and organize their mobilization,
plan and implement various training and induction
sessions.

HSE enhancements

It is worth highlighting that this transverse
responsibility has been a key success factor in the
achievement of these remarkable HSE results over
the years allowing:

building and ensuring coherence in demanding
standards

ensuring and re-enforcing the network of
competences in our supervision team, not only
for dedicated HSE but as well for all discipline
supervisors and superintendents,

Driving the fundamental continuous
improvement process, which is critical to
maintain and improve HSE results.
In particular, a policy has been developed to
encourage contractors to invest in HSE
enhancements above our minimum specifications
and implemented with great success; this approach
triggers indeed a new partnership where contractor
management becomes the initiator for new ideas in
favor of HSE enhancements in a more long term
view, i.e. beyond the mere time frame of the actual
contract relationship.

This has led to various ameliorations implemented
across several construction yards in Indonesia such
as revamping of yard clinic, enhancing average
quality of critical equipment such as lifting gear or
scaffoldings, to name a few.

Human resource development
In a more general note, this type of matrix
organization provides numerous opportunities to
accelerate the development of the skills and
experience of young engineers and to promote
quicker the best performers.

Few examples to highlight these types of successive
movements within a 4 years period are listed below:

Young project engineer (under 30 years)
assigned as construction engineer during Sisi
Nubi project pipe-laying offshore during 5
months, then assigned interface engineer during
design development for Peciko 6 LP
compression project, then assigned on site as
commissioning process superintendent for the
same project, then assigned as coordinator pre-
project for offshore platforms ,

Young maintenance electrical engineer (early
30s) assigned to commissioning electrical
superintendent, for Tunu 11 North compression
project, then promoted as Commissioning
leader for new camp facilities, then to be
transferred as senior electrical engineer in
Engineering department,

Young engineer (under 30 years) recruited as
QRM engineer, moved to project engineer in
charge of Company POs on Tunu 12 GTSs
project, then assigned as tie-in engineer on the
same project, then moved to international
assignment as project engineer in Paris HQ.

These various quick and successive movements
bring significant value to all the stakeholders:

To the individuals through exposure to different
situation and enhanced responsibilities thereby
enhancing motivation and resilience.

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To the management in facilitating their
evaluation in view of their eagerness to learn,
their responsiveness to these different situations
and in identifying, early on, the potential for
quick promotion of the best,

To the organization in general in fostering
emulation among the population of young
engineers and in preparing for the future a
reservoir of versatile engineers with various
experiences

Project methodology and contract strategies

Based on years of experience internationally across
the four continents but as well in Indonesia, Total
E&P has developed a project development
methodology which has been translated into a
Company Rule to be applied by all project teams
across the world.

In Indonesia, this methodology is of course
implemented by the Project Division and can be
summarized as follows:

After successive screening studies and a conceptual
stage, a pre-project is undertaken, usually at HQ,
to reach a preliminary definition of the future
facilities which is captured through a S.O.R
(Statement of Requirements) which list all their key
features with some non-fixed items for further
optimization during the next stage; a cost estimate
and a preliminary schedule would be as well
developed with appropriate level of contingency in
order to seek a formal sanction of the project based
on detailed economic calculations. Typically, at the
end of this phase, we would have submitted a POD
to BPMIGAS for their formal sanction as well.

This pre-project dossier is then handed over to a
project team which is going through what is called a
basic engineering phase (after relevant AFE is
approved by BPMIGAS) to further define the
facilities with enough details as to:

Obtain detailed material take-offs in order to
launch the procurement for critical material the
delivery of which is on the critical path of the
project, typically main steel, valves, large
pressure vessels, pipeline,

Have main equipment data sheets issued as well
to launch the procurement process for long lead
delivery main equipment, typically large
rotating machinery,

Achieve enough definition throughout as to
build comprehensive tender documents and
scope definition for the future bidders to quote
against a lump-sum price the future EPC works
(Engineering, Procurement, Construction)

The scope breakdown and the number of different
EPCs packages to be issued would then carefully
be debated and the pros and cons thoroughly
analyze taking account the following:

The typology of the future facilities,

The intrinsic capacity of all the contractors to
build and deliver these facilities and with a
particular attention to medium size local
contractors, not only to promote local content,
but as well to encourage them to invest and
progress towards acceptable international
construction standards,

The current and anticipated workload of the
construction market in Indonesia over the time
frame of the forthcoming project,

The balance between additional interface costs
within Company team and the actual saving
from enhanced competition

The resulting anticipated level of competition
we can expect from the various contractors

This latter point, i.e sound competition is we believe
a critical element in any successful project
management, and from both sides, client and
contractors. This strategy has been as well a
cornerstone in our ability to accompany the
development of local Indonesian contractors, such
as PT Gunanusa in the past, and more recently PT
Meindo Elang and PT Kaliraya Sari to name a few.

The above analysis is made possible by regular
survey of the market, say every 12/18 months, in
order to gather market intelligence on the latest
development plans and recent awarded new jobs
with construction contractors, engineering offices
and the like.

The rsulting contract strategy is formalized into a
Tender plan to be submitted for approval by
BPMIGAS.

At time of busy or overloaded market, it may not be
possible to foster enough competition as to contain
any undue price increase, which may lead to tender
fail and consequent loss of time and additional
costs.

However, the combination of this methodology and
associated contract strategies has allowed us to

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award successfully a large number of EPCs
contracts across various projects to Indonesian
contractors during a very busy period for the
construction market, i.e between late 2006 until
early 2007and to secure the actual implementation
of our projects; this has required in some instances
like for Tunu 11 project a significant re-
enforcement of our management team in order to
cope and successfully manage the high number of
interfaces between 10 different EPCs contracts, 7
for the South LP Compression site and 3 for the
North..

CONCLUSION

We do not plan to stop there and bask into some self
congratulatory mood. We have identified already
some rooms for improvement; one of them will be
to be more pro-active to directly assist in the
development of local industry for the supply of
material and equipment.

Indeed, in too many instances, it is impossible to
find a local supplier with the capacity and ability to
deliver goods as per our standards, which lead us or



our EPCs contractors to purchase the goods abroad
with impact on schedule and price and as well
sometimes with some quality issue.

Consequently, we are starting a formal and
structured approach over the next two to three years
to try and qualify additional local vendors for the
benefits of all stakeholders.

We are looking forward and getting prepared for the
next phase of development which will bring on
stream 3 new fields under the name of South
Mahakam located in the southern part of the
concession and to deliver additional facilities to all
existing producing fields well into 2014/2015.

It is our commitment to maintain and improve our
safety performance, to deliver on time and within
budget and to promote local industry within a sound
competitive environment.

Our ability to deliver large and diverse projects
safely, on time and within budget is and will remain
a key contributor to the success of Total E&P
Indonesie in the future.
































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BALIKPAPAN
0 20 km 10
SOUTH MHK
SWAMP
OFFSHORE
SENIPAH
PECIKO
ONSHORE
SISI
BEKAPAI
NUBI
HANDIL
TAMBORA
TUNU
BALIKPAPAN
0 20 km 10 0 20 km 10
SOUTH MHK
SWAMP
OFFSHORE
SENIPAH
PECIKO PECIKO
ONSHORE
SISI
BEKAPAI
NUBI
HANDIL
TAMBORA TAMBORA
TUNU TUNU


Figure 1 - The map provides details of the location of the various operated fields mentioned earlier.













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Figure 2 - The Installation on site by float-over technique of a typical GTS deck.




Figure 3 - The MWP Nubi Platform



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TOTAL E & P I NDONESI E FI ELD DEVELOPMENT
PJ C Del i ver y Pr ogram bet w een 2005 and 2010
PROJECTS UNDER DEVELOPMENT
T U N U
TUNU PHASE 9 - 3 new GTS + 2 GTS Extensions + Pi pel ines
TUNU PHASE 10 - 4 GTS Extensions
TUNU PHASE 11 - TUNU 11 ( South LP + North LP)
TATUN OWT - 1 Oil y Water treatment platform
TUNU PHASE 12 - 3 GTSs Extensions
TUNU PHASE 13A - 2 GTS Extensi on and additi onal WHPs
T A MB O R A
TAMBORA PHASE 2 - GTS 2x, 3, 4 + 24" LINE
P E C I K O
PECIKO PHASE 4 - SWP K & E (Ph. IV Offshore)
- MP COMPRESSION
(Ph. IV Onshore + Offshore)
PECIKO PHASE 5 - SWP-F + 1 SEALINE
PECIKO PHASE 6 - LP Compression
S I S I N U B I
SISI NUBI PHASE 1 - PLATFORMS (3) + SNPS + PIPELINES
2007 2006 2005 2010 2008 2009 DESCRIPTION
Completion
dditi l
Compl etion
RFSU
North
RFSU
South
RFSU
Compl eti on
RFD/Compl eti on
Compl eti on
Completion
RFSU
RFSU
Completion
RFSU


Figure 4 - The overall time frame for each project from end of pre-project until project last milestone.












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Figure 5 - Organization of the Project Construction Division




























Figure 6 - Typical Project Organization Chart