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Oil and Gas Work Fuels Region's Largest Projects

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With natural gas production continuing to gain momentum, the oil and gas industry is fueling major construction work in the region. The total cost of the top 25 projects that broke ground in the region in 2012 was $13.2 billion, a $1.1-billion increase over the previous year, according to ENR Texas & Louisiana's Top Starts list. Megaprojects in the oil and gas, petrochemical and energy sectors provided the big boost to this year's list. Analysts believe these projects are just the first swell of a huge wave of future work.

Courtesy of Bechtel
Gas-fired market: The Sabine Pass LNG facility in Cameron, La., is the site of a planned $4.75-billion expansion. Contractor Bechtel began work last August and is set to complete the first phase in late 2015 or early 2016.
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Liquid Gold

The massive $4.75-billion Sabine Pass Liquefaction project in Cameron, La., tops the list. Phase 1, which broke ground in August and is scheduled for a late 2015 or early 2016 completion, includes construction of two new liquefied natural gas (LNG) trains, which are used for liquefaction and purification of natural gas. Bechtel, which has built previous projects at the Sabine Pass facility, is the contractor. Two additional two-train phases are planned, but are currently unfunded.

In the Eagle Ford Shale area—the regional hub of natural gas extraction—Copano Energy, Houston, broke ground in September on a $120-million pipeline extension through McMullen, Live Oak, Bee and Karnes counties in Texas. Sprint Pipeline Services, Houston, is building 60 miles of 24-in. pipe and six miles of 16-in. pipe, with completion set for spring.

Crude and bitumen are also fueling work. TransCanada's $2.3-billion Keystone Pipeline Gulf Coast expansion from Cushing, Okla., to terminals in Nederland, Texas, landed in the second spot on this year's list. The 435-mile project is part of the larger Keystone XL pipeline, proposed by TransCanada, to transport products from Alberta to the Gulf Coast. Michels Corp., Brownsville, Wis., is building 370 miles of 36-in. pipe along the route.

The billions of dollars in work under way is the beginning of a massive surge projected in the region. Connie Fabre, executive director of the Greater Baton Rouge Industry Alliance, says she sees an uptick in activity in Louisiana in mid-2014, with work peaking in 2016. At least $80 billion in oil and gas related projects are projected in the coming years, she says.

"We see major expansions to add capacity at existing facilities as well as new greenfield projects," she says. "The low price of natural gas is definitely the key driver, and if that continues, we'll see this work continue."

With so much work in planning, Fabre says work force capacity is a significant concern among owners. She estimates that the state will need an additional 30,000 skilled craft workers to meet demand by 2016.

The Alliance is working with the state to pour resources into training more local workers to meet the demand. "The last thing we want is to have companies recruiting from Alaska to Puerto Rico for skilled crafts," she adds. "That drives up costs and doesn't help people who need work here in Louisiana."

Companies looking to capitalize on affordable natural gas are also building new facilities. Entergy is constructing a new $721-million, 550-MW natural gas unit at its existing Ninemile Point plant in Westwego, La. The Shaw Group, acquired by The Woodlands, Texas-based CB&I last year, broke ground on the project in July. When completed in 2015, Entergy expects it will be one of its most efficient power generation units.

The Lower Colorado River Authority is following a similar strategy, replacing its 40-year-old, 420-MW Thomas C. Ferguson Power Plant in Horseshoe Bay, Texas, with a $500-million, 540-MW natural gas-fired combined cycle unit that it estimates will be 35% more efficient. Fluor Corp. is leading the design-build project, which broke ground in May 2012 and is scheduled for completion in mid-2014.

Expansions of ethylene production facilities continue to roll out through the region as well. Williams Partners is building a $375-million expansion of its ethylene cracker in Geismar, La. CB&I broke ground on the project in July. When completed in the third quarter of this year, the facility is expected to increase plant production capacity by 600 million lb per year to nearly 2 billion lb per year.

Water Woes

While the region is awash with oil and gas, water is in short supply. As Texas deals with some of the worst drought conditions it has seen in 50 years, water authorities are pushing ahead with programs to develop new water sources.

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