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CONTENTS

BRAVE NEW WORLD

Publisher: Julio Melara EDITORIAL Editorial Director: Penny Font Editor: Sam Barnes Contributing Photographers: Cheryl Gerber, Don Kadair ADVERTISING Sales Director: Kelly Lewis Senior Account Executives: Marielle Land-Howard, Mary Katherine Bernard Account Executives: , Gabi Bivins Porter, Meredith LaBorde, Angie Laporte Advertising Coordinators: Devyn MacDonald, Brittany Nieto STUDIO E Editor: Lisa Tramontana Content Strategist: Allyson Guay Multimedia Strategy Manager: Tim Coles Account executive: Judith LaDousa MARKETING Marketing & Events Assistant: Taylor Falgout Events: Abby Hamilton

How Louisiana’s industry and workforce are innovating and growing for the inevitable energy transition.

PRODUCTION/DESIGN Production Manager: Jo Glenny Art Director: Hoa Vu Senior Graphic Designer: Melinda Gonzalez Graphic Designers: Emily Witt, Ashlee Digel

ISTOCK

ADMINISTRATION Business Manager: Tiffany Durocher Business Associate: Kirsten Milano Office Coordinator: Sara Hodge Receptionist: Cathy Varnado Brown

6 In This Issue

Industry boldly steps into the environmental frontier, only to find legal roadblocks

LAUNCH

9 ICYMI 13 Executive Profile

Meet Tommy Faucheaux, the new president of the Louisiana MidContinent Oil & Gas Association

Powered by methanol A growing interest and demand for decarbonized container shipping fuels an investment surge in Louisiana.

The legal quagmire Federal and state rights in regulating environmental policy are at the heart of current courtroom battles.

CLOSING NOTES

14 Big Picture

Cameron eyes expansion

NEWS

Miracle workers Contractors and owners find creative ways to circumvent the triple threat: supply chain shortages, delays and inflation.

The natural gas state Shale plays and LNG are about to become big business for Louisiana, but there are obstacles.

FOCUS: MAINTENANCE, RELIABILITY & TURNAROUNDS

Lessons learned In this Q&A, South Louisiana plant leaders share new strategies for maintaining reliability and resiliency.

Managing the ‘data tsunami’ Staying ahead of the maintenance curve is becoming an informationdriven, immersive experience.

Small Project Maps Active Louisiana industrial projects announced or proposed with projected capital investment of $25 million to $250 million

Large Project Maps Active Louisiana industrial projects announced or proposed with projected capital investment of $250 million or more

My Toughest Challenge Phillip May, president and CEO of Entergy Louisiana, shares how the company navigated workforce shortages, supply chain issues and COVID after Hurricane Ida’s recordbreaking destruction.

AUDIENCE DEVELOPMENT Audience Development Director and Digital Manager: James Hume Audience Development Coordinator: Ivana Oubre Audience Development Associate: Jordan Kozar A PUBLICATION OF LOUISIANA BUSINESS INC. Chairman: Julio Melara Executive Assistant: Brooke Motto Vice President: Penny Font Chief Operating Officer: Guy Barone Chairman Emeritus: Rolfe H. McCollister Jr. SUBSCRIPTIONS/ CUSTOMER SERVICE 9029 Jefferson Highway, Suite 300 Baton Rouge, LA 70809 225-928-1700 • FAX 225-928-5019 1012industryreport.com email: circulation@businessreport.com Volume 7 - Number 1

© Copyright 2022 by Melara Enterprises, LLC. All rights reserved by LBI. 10/12 Industry Report is published biannually by Louisiana Business Inc. Reproduction without permission is prohibited. Business address: 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809. Telephone (225) 928-1700. POSTMASTER: Send address changes to 1012 Industry Report, 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809. 10/12 Industry Report cannot be responsible for the return of unsolicited material—manuscripts or photographs, with or without the inclusion of a stamped, self-addressed return envelope. Information in this publication is gathered from sources considered to be reliable, but the accuracy and completeness of the information cannot be guaranteed. No information expressed here constitutes a solicitation for the purchase or sale of any securities.

Send your ideas and company news to editor@1012industryreport.com. 1012industryreport.com

10/12 INDUSTRY REPORT • SPRING 2022 5

IN THIS ISSUE

Industry boldly steps into the environmental frontier, only to find legal roadblocks

SAM BARNES

ISTOCK

The future is bright, from a supply and demand standpoint at least, for Louisiana’s liquefied natural gas industry.

6 10/12 INDUSTRY REPORT • SPRING 2022

ndustrial owners aren’t sticking their heads in the sand. That was clearly obvious during the Louisiana Oil & Gas Association’s spring Industry Annual Meeting in Lake Charles. Panel discussions took on a decidedly environmental tone—at least initially—with panelists veered away from traditional agenda items to focus on topics such as carbon capture, the energy transition and renewable energy markets. It represents a monumental shift in mindset. Many in industry have come to realize that they must make radical changes to their business models if they’re ever going to turn these new environmentally based opportunities into paying jobs. Some companies are proactively pursuing these fledgling markets, whether they be in wind power, biofuels, carbon capture or solar, and are making significant headway. In this issue, we feature a handful of companies—Keystone Engineering, Turner Industries, Enlink, Colonial Pipeline and others—that have taken purposeful steps to stay ahead of the curve. Read more in ‘Embracing change’ on page 19. They’ve created new divisions, targeted renewable energy business or utilized existing assets to tap into new opportunities created by this brave new environmentally conscious world. Their stories showcase the resil-

ience of the industrial market sector, as well as its innate ability to respond, and profit, from a rapidly changing dynamic. Unfortunately, these efforts are being stymied in some ways by a number of legal challenges. Environmental groups are more frequently using the court system to block projects—even those that could potentially reduce environmental emissions in the long run. These challenges require that additional time, expense and resources be allocated for any new investment as legal teams wade through a lengthy court review process. See ‘The legal quagmire,’ page 37. LNG’S TIME HAS COME, BUT INVESTORS HESITATE The future is bright, from a supply and demand standpoint at least, for Louisiana’s Liquefied Natural Gas industry. U.S. natural gas prices are disproportionately cheaper in the U.S., and that’s revitalized a previously lagging export market. Haynesville Shale rig counts are on the rise, too—as of March 7, there were 48 rigs drilling in the play. That’s because the shale play and LNG are inseparably linked as they move in tandem toward a future where natural gas—not oil—is the state’s big money maker. See ‘The natural gas state’ on page 43. But it’s not all good news. While the federal government’s attitude toward LNG has softened somewhat since the Russian invasion of Ukraine, with authorizations for increased exports and relaxed pipeline permitting, its ever-shifting attitude toward natural gas makes it difficult for owners to secure long-term financing. There are also some logistical hurdles to clear, namely a sorely deficient number of import degasification plants in Europe and supply chain bottlenecks in the Panama Canal. Meanwhile, McNeese State

University has its gaze fixed on the long-term as it makes moves to turn a newly funded LNG Center of Excellence into reality. The university has begun offering courses within its College of Engineering that teach the entire LNG process, from fracking through shipping, as well as added a certificate program in the College of Business that addresses the business side of things. It’s all funded by a $2.8 million CARES Act Recovery Assistance grant awarded to the McNeese State University Foundation in 2021 to build the center. Construction of the physical facility could begin later this year. BIG ANNOUNCEMENT FUELS METHANOL BUZZ Danish shipping giant Maersk announced in August that its first decarbonized ships would run on green methanol, and it immediately sent shockwaves through both the shipping and methanol industries. A methanol-powered fleet, after all, would eventually require significant increases in production at U.S. plants. As a result, methanol as a marine fuel is generating a lot of buzz. See ‘Powered by methanol,’ page 32. Methanex, with one of its largest plants located in Geismar, has already played a significant role in promoting methanol as a maritime fuel. The methanol producer currently has 11 dual-fuel 50,000-ton chemical tankers in its shipping fleet. The engines in its vessels, in fact, are manufactured by MAN Energy Solutions, the same manufacturer of the engines going into the Maersk ships. Marine applications for methanol will undoubtedly be a catalyst for growth for years to come and combined with other non-traditional uses such as bio-methanol and e-methanol, it will continue to generate considerable enthusiasm on the methanol front. 1012industryreport.com

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LAUNCH ICYMI

2022 Louisiana Petrochemical Outlook:

6 things you should know

hat will the rest of 2022 look like for the petrochem sector? We got the scoop from three leaders in the industry back in March, when 10/12 Industry Report hosted the 2022 Louisiana Petrochemical Outlook webcast. Here are key takeaways from Rhoman Hardy, senior vice president of Shell Chemicals and Products for the U.S. Gulf Coast; Martha Gilchrist Moore, chief economist and managing director of the American Chemistry Council; and David Yankovitz, principal and chemical practice leader for Deloitte and co-author of the 2022 Chemicals Industry Outlook.

Martha Moore

2022 is shaping up to be a great year. Martha Moore noted the outlook for

The impact of the war in Ukraine will definitely be felt. David Yankovitz predicts the energy transition will accelerate “as we all think about being more energy secure.” Noting Russia represents about 10% of global energy production, “we believe it’s going to be a fundamental disruption to the energy system,” Hardy said. “The trade flows will be impacted by this. Nobody knows exactly how much—it’s dependent on how the sanctions go and how long the war goes. We’ll feel the implications around the world.”

Louisiana has much to gain from the energy transition. This will be

The workplace is about to look a whole lot different, thanks to digital transformation. Hardy says fewer people likely will be working inside actual

Rhoman Hardy

David Yankovitz

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chemical production “is the best we’ve seen in several years,” and Rhoman Hardy concurred, saying the industry, particularly in the U.S., is “poised for a booming year.”

largely through a new emphasis on biofuels and carbon capture and storage growth. Hardy predicts a rebirth of the Mississippi River, bringing agriculture-based products for the Midwest that will provide feedstock advantages for those in Louisiana who utilize biofuels. And the state’s geology is well-suited for carbon capture and storage . “I don’t have a customer that’s not discussing becoming more sustainable, either low carbon, or circular economy or biodegradable all these flavors of reducing carbon footprint,” he says. “Louisiana will benefit from energy transition in material ways and likely be able to separate itself from many places in the world.”

production and manufacturing facilities as “the ability to get data is easier and the ability to reach conclusions from that data speeds up.” The pandemic demonstrated that employees could continue to safely and reliably operate facilities remotely, and Shell, he says, is taking that into account as it explores reinvestment in its facilities in Louisiana. “We think this idea of offsite campuses where you potentially remotely maintain and operate facilities, which has already been deployed in other industries, will heavily impact the refining and chemical businesses.”

Cyberattacks are a real thing. Yankovitz notes that many of his clients are con-

Petrochemical sector employment has nearly returned to prepandemic levels in Louisiana, Moore notes. But recruiting and retaining workforce

sidering or hiring a chief security officer who reports directly to the CEO. “It comes down to having the right framework in place,” he says, in terms of prioritizing risks and really quantifying how to de-risk as best you can.”

is more important than ever. Yankovitz says it will be important to “build a case for the industry” and its impact on lifestyles to compete for STEM-based talent ideally as early as middle school. “Our purpose of being part of the energy transition has to be clear to get talent,” Hardy says. “People want to know they’re making things better and being able to tell that story from a transition standpoint is key to us.”

10/12 INDUSTRY REPORT • SPRING 2022 9

LAUNCH: ICYMI

No brainer

By SAM BARNES

The Water Campus ‘Smart Port’ dashboard is rapidly becoming a vital tool for data sharing of river conditions, eliminating delays and saving money.

10 10/12 INDUSTRY REPORT • SPRING 2022

TIM MUELLER

he technology behind the groundbreaking “Smart Port” initiative launched last year at The Water Campus in Baton Rouge was already out there. It was just a matter of connecting the dots, says Justin Ehrenwerth, president and CEO of The Water Institute of the Gulf. Still in its early stages of development, Smart Port will ultimately serve as a crowd-sourced technology dashboard that will gather data from tugboats and other working vessels to create an accurate real-time depiction of sediment buildup, or shoaling, in the Mississippi River. The dashboard will then provide the eight ports from north Louisiana to Venice with a real-time shoaling tool and customized resiliency strategies. It will also allow any port or stakeholder on the river to access local weather forecasts, road traffic conditions coming in and out of the port, and river traffic conditions. It’s a true multidisciplinary effort being coordinated at The Water Institute by project manager Jason Curole and lead principal investigator Mike Miner. The idea was born out of an informal meeting in 2018 between Ehrenwerth and Port NOLA’s President/ CEO Brandy Christian and then Vice President Bobby Landry. They described to him a serious recurring dilemma in tracking sediment buildup in the river. While survey vessels tracked the river depths on a periodic basis, that did little good for river pilots who needed information in real time. “In areas of sediment buildup, they didn’t have the draft they needed,” Ehrenwerth says. “They’d then have to get an emergency dredge, a process that took as long as 16 days and cost a significant amount of money.” Fortunately, the Water Institute had been studying the movement of water for years, so Ehrenwerth saw an opportunity for collaboration. Back at home, his staff began

GET SMART: In the wheelhouse of Crescent Towing tugboat Mardi Gras, Water Institute of the Gulf CEO Justin Ehrenwerth, center, Jeff Guilott with Cooper T. Smith, left, and Water Institute of the Gulf Field Geologist Andrew Courtois discuss how sensors measuring the Mississippi River depth are integrated into the tugboat’s systems.

working on a unique idea: Why not develop a crowd-sourcing application similar to those used for road traffic? The problem, he says, boiled down to a lack of data and analytics. “All of the tugs, barges and working vessels were constantly beaming a signal to the bottom of the river and getting a reading,” he says. “But no one was doing anything with that data, so we built an application and used the tugs around Port NOLA to get a ‘crowd-source’ view of the river bottom.” Port NOLA sponsored a $250,000 pilot project and recruited 12 vessels from Crescent Towing of New Orleans to participate. “We put the app on those vessels and it was overwhelmingly successful,” Ehrenwerth says. “In the process, they continuously harvested time, location and depth. We just wanted to know what the bottom of the river looks

like as that boat is going over it.” As a next step, the Water Institute began “cleansing the data” by using machine learning and artificial intelligence methodologies. “We basically took the survey vessel data and compared that to the data from the tugs and over time the AI was able to ‘train’ the model,” he adds. “The result is cleaner data that gives us a bathometric math product that shows us what the bottom of the river looks like in real time.” The Smart Port initiative has two essential areas of focus: a real-time shoaling forecast development and the creation of resiliency strategies for the eight ports. The Water Campus has since been approved for a $3 million grant from the U.S. Department of Commerce’s Economic Development Administration that will significantly expand the scope of the project to include the entirety of

the river from the Arkansas-Louisiana border to the Gulf of Mexico. And there’s no reason for the shoaling tool be limited to a particular geography, Ehrenwerth adds, as similar problems are experienced on every major waterway in the world. “We’re already receiving phone calls from other countries where they’ve read about this initiative.” Smart Port’s physical center will be at 1200 Brickyard Lane within The Water Campus and will allow the eight ports to collaborate, creating a space for the Water Institute to improve the dashboard’s analytics and data and serving as a backup emergency operations center. The estimated completion date of the project is summer 2023. The physical space will yield other benefits, as other partners at the Water Campus will likely capitalize off the arrangement. 1012industryreport.com

Will LSU emerge as a cyber military powerhouse? THERE’S A NEW initiative underway to position at LSU as a leading cyber and defense institution. It will involve all eight LSU campuses as well as partnerships with private industry, the U.S. military, and federal and state law enforcement. As a first step, the university has designated a new cyber military corridor on its Baton Rouge campus. LSU President William Tate is referring to it as the university system’s “Sputnik moment.” The university is doubling down on two specific initiatives to grow its expertise in cybersecurity: coordinating space and assets, and collaborating to explore the intersection between cybersecurity and military studies. “With these initiatives, LSU is expediting the expansion of cybersecurity research and talent development for all, and we’ll do it in exciting ways for our students and faculty,” Tate said in making the announcement earlier this spring. “The winners will be the overwhelming demand for this education and firms who need this talent.” This past year, LSU was the only university in the country invited by the National Security Agency to apply for its prestigious Center for Academic Excellence in Cyber Operations, or CAE-CO, which is a deeply technical, interdisciplinary, higher education program grounded in computer science, computer engineering, and electrical engineering. Just 22 institutions nationwide hold the distinction, and LSU anticipates it will be the next university desig-

THEY SAID IT

nated by NSA as a CAE-CO institution. The Alignment for the Pursuit of Excellence in Cyber Security, or APECS, initiative will serve as the university’s strategic plan for investment in cybersecurity. APECS reimagines how existing and new expertise, space, programs, and partners across all eight LSU campuses can be oriented for cyber talent and technology development. LSU is adding new faculty and cyber programs as part of this initiative. The Institute for Advanced Military and Defense Studies will serve as the programmatic intersection of cyber and ROTC, creating a leadership development opportunity, with the goal of reestablishing LSU as a national leader in military, defense, and security studies.

“Any large-scale energy storage project is a big deal in Louisiana. Any kind of innovation like this is an important step, because Louisiana has a real opportunity for the growth of renewable energy.” LOGAN BURKE, executive director, Alliance for Affordable Energy, of the partnership Swedish renewable power company Azelio AB has with MMR Group in Baton Rouge to bring its solar energy storage system to the domestic market

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10/12 INDUSTRY REPORT • SPRING 2022 11

LAUNCH: ICYMI

IN BRIEF ments with them when they left,” attorney Christine Keenan says. “Many of those documents are proprietary, trade secret documents.” Attorney Preston Castille, who represents the defendants, says the files weren’t of any consequence, but that the pair are happy to return them. “Their position is, ‘You’re working for the company, therefore it all belongs to the company,’” he says. “Our guys said, ‘We disagree, but if you want them back, fine.’”

What the Polaris patent means

Carbon capture partnership

Occidental Petroleum’s Oxy Low Carbon Ventures subsidiary and Weyerhaeuser will evaluate the potential development of a carbon capture and sequestration project in Louisiana. The companies say their lease agreement provides exclusive rights to develop and operate a CCS hub on more than 30,000 acres of subsurface pore space controlled by Weyerhaeuser, which Oxy Low Carbon would use to permanently sequester industrial carbon dioxide in underground geologic formations not associated with oil and gas production. Weyerhaeuser would continue to manage the aboveground acreage as a working forest.

Brown and Root v. CSRS

Bernhard Capital’s Brown and Root Industrial Services and CSRS’s Fides Consulting continue to face off in court over alleged theft of trade secrets. BRIS filed lawsuits in the 19th Judicial District Court against its own former CEO Anthony Farris, former engineering division president Kevin Steed, and Fides, which CSRS formed in late 2020. Another case with similar underlying facts is pending in federal court. BRIS initially sued Farris and Steed for allegedly violating contracts by recruiting other BRIS employees when they left to join the new firm. “We discovered that, not only did they leave, they left and took hundreds of thousands of docu-

BY THE NUMBERS

$165 MILLION Amount of sales tax revenue a study from national banking and consulting firm Energy and Industrial Advisory Partners says a delay in the federal government’s five-year Gulf of Mexico leasing program could cost Louisiana, as well as up to 14,000 jobs. The study was prepared for the American Petroleum Institute and the National Ocean Industries Association.

12 10/12 INDUSTRY REPORT • SPRING 2022

Polaris EPC in Lake Charles has been awarded a patent that might significantly reduce the local dependence on oil imports. The technology could resolve a long-standing problem: Domestic refineries can only process imported impure oil. “We’ve developed a process where we can refine ideal crude efficiently and at the same time apply new technology to reducing the carbon footprint of the refining process,” says Mike Nodier, CEO and co-founder of Polaris.By doing so, they believe that they can reduce a refinery’s carbon footprint by more than 95%.

PSC Group acquires Dequincy Thermoplastics Services Inc. Baton Rouge-based PSC Group has acquired DeQuincy-based Thermoplastics Services Inc., a plastics custom compounding and pelletizing business. The acquisition will provide PSC with the capabilities and critical mass needed to establish the company as a comprehensive sustainability solutions provider, says PSC Group CEO Joel Dickerson.The acquisition of Thermoplastics Services will reinforce the work PSC does in post-industrial recycling. This acquisition is PSC’s second recent deal, following its acquisition in December of Akrotex Extrusion and Recycling, a plastics custom compounding and pelletizing business based in Orange, Texas.

THEY SAID IT

“It’s not just turning a switch like they think.” MIKE MONCLA, president, Louisiana Oil & Gas Association and co-owner of Moncla Workover & Drilling, on pressure to increase U.S. oil production in the wake of Russia’s invasion into Ukraine.

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LAUNCH: PEOPLE

Executive Profile:

Tommy Faucheux

What do you feel have been the important milestones, or high points, of your career?

Joining Dow in 2007 was a big moment because I was joining this large company doing the work I loved to do, and I was able to do it in a community that was mine. It now has even greater significance, because that is what propelled me to all of the successes I’ve had. While at Dow, I developed some 15 years of relationships, and many of my former co-workers are like family. I worked for tremendous people, met people from around the world, and learned about the industry. All these big companies are constantly evolving, so I also learned a lot about leadership, both good and bad.

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POSITION

President COMPANY

Louisiana Mid-Continent Oil & Gas Association HOMETOWN

Luling

EDUCATION

Bachelor’s degree in Communications, Loyola University in New Orleans

I can’t overstate how much Dow has prepared me, professionally, for this position. They allowed me to be very active around the state and we were very involved in Greater New Orleans Inc. I was on the GNO Inc. board for many years and chair of the board a few years ago. That’s where I got my first real look into what a successful organization looks like. Any significant low points you’d like to share?

I feel the low points are when we go through tough situations, like we did recently with Hurricane Ida. I live in Luling and we got hit pretty hard. Our community was devastated, and in talking with those impacted by the hurricanes in Lake Charles, and hearing what they’re still going through, I wonder what will happen if we have another storm this season. What will be the lasting impacts?

What are the biggest challenges ahead for industry, and for LMOGA?

As an industry, we’re in unknown, uncharted waters. The oil and gas industry is changing. There is a transition underway and a lot of companies are exploring what other opportunities are out there for them, other than their traditional oil and gas businesses. Everyone is looking at what’s next and responding to pressures from the U.S. government and around the world to reduce carbon emissions. The expectations are high for our industry, so the challenge for

DON KADAIR

t feels good for St. Charles Parish native Tommy Faucheux to be working in the industry that has supported his family for generations. That’s why jumped at the chance to intern at Dow Chemical Co. while attending Loyola University. He was also attracted by the stability of a large corporation, and he knew the industrial market offered him one of the best opportunities for advancement. A few years after graduation, he found his way back to Dow in a communications and community relations role. From there, his responsibilities grew until he ultimately transitioned into a regional government affairs position for the southeastern U.S. in 2012. He also provided strategic public affairs support to Dow Louisiana facilities. That’s where he stayed until January, when the Louisiana Mid-Continent Oil and Gas Association appointed him as its next president. Faucheux looks forward to the challenges of his new role. “I truly believe in the value that industry provides, because multiple generations of my family have benefitted from that work,” he says. “That makes it a lot easier to get up and fight for industry, when you feel you have a huge stake in that industry.”

LMOGA is how do we best support them? How do we create an environment in Louisiana that allows them to be creative and achieve their company’s goals so that the work can take place here? What are your goals for the future of LMOGA?

The organization has undergone a lot of transition this last year. But the talent on our staff is strong, and we will definitely be making some additions in the future to round out the team. Looking ahead, we’re getting ready for the next political season, which will have some long-lasting impacts on our industry—we hope for the good. I want to make sure that the organization stays ahead of the issues and is more vocal in celebrating the industry, but at the same time I think we should also advocate for the industry in some of the smaller towns outside of Baton Rouge.

I’m passionate about getting more engaged outside of Baton Rouge, because I think there’s a lot we can do. I’m really pushing my team to understand all those communities that might be a neighbor to a LMOGA member, and let’s go talk to them and understand what their needs are. What are your passions outside of work?

My wife, kids and family, in general, are my first passions. My faith is very important, too. I have two small kids—an 11-yearold and a 9-year-old—so that takes up a lot of my spare time. I love being on the soccer field with my son. We’re out three or four days a week, and I carpool my daughter to dance class. We’re also big NASCAR fans— this is the first year in a while we haven’t been to the Daytona 500. And we’re huge Saints fans, too. There’s not much time for anything else.

10/12 INDUSTRY REPORT • SPRING 2022 13

THE BIG PICTURE

14 10/12 INDUSTRY REPORT • SPRING 2022

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FOURTH TRAIN IN EARLY APRIL, Sempra Infrastructure announced the next phase for Louisiana’s liquefied natural gas export terminal called Cameron. The company has entered into an agreement with affiliates of TotalEnergies, Mitsui & Co. and Japan LNG Investment jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha to develop the Hackberry facility’s fourth train. The announcement came days after the European Union and the United States unveiled a deal to supply Europe with more LNG to curb its reliance on Russian fossil fuels in the wake of the Ukrainian invasion. “We are excited to continue advancing Cameron LNG Phase 2 with our partners,” Sempra Infrastructure CEO Justin Bird said in making the announcement. “[This] represents the shared focus of the Cameron LNG partners to increase the supply of cleaner U.S. natural gas to global markets, while also facilitating the energy security of our allies.” The agreement provides the commercial framework for the expansion of the Cameron LNG facility by adding a fourth LNG train and increasing the production capacity of the three operating trains through debottlenecking activities.

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Sempra Infrastructure gets 50.2% of the projected fourth train production capacity and 25% of projected debottlenecking capacity under tolling agreements, with the remaining capacity allocated equally to the existing Cameron LNG Phase 1 customers. Sempra Infrastructure plans to sell the LNG corresponding to its capacity under long-term sale and purchase agreements prior to making a final investment decision. Front-End Engineering Design contracts were awarded to Bechtel Energy Inc. and a joint venture between JGC America Inc. and Zachry Industrial Inc. Once complete, one contractor is expected to be handed the engineering, procurement and construction contract. Initial plans for the new LNG train call for a maximum production capacity of 6.75 million tonnes per annum of LNG, as well as debottlenecking of the existing three LNG trains. The project includes certain design enhancements resulting in a more cost-effective and efficient facility, while also reducing overall greenhouse gas emissions. The first liquefaction train at the $10 billion export terminal began producing LNG in 2019.

10/12 INDUSTRY REPORT • SPRING 2022 15

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PRODUCTS MADE FROM OIL

FAR MORE THAN JUST GASOLINE IS MADE FROM OIL

While approximately 40% of a barrel of oil is used to produce gasoline, the rest is used to produce a host of other products.

MEDICINE

COSMETICS

PLASTICS

Most over-thecounter medications, homeopathic products and vitamins are derived from benzine, a petroleum product.

Makeup and shampoo that has oils, perfumes, waxes and color all produced with the help of petrochemicals.

Almost all plastics are made from petrochemicals. from your iPhone to that bottle of water. It is 4-5% of the total petroleum consumption.

SYNTHETIC RUBBER

Thousands of products rely on rubber such as shoes, tires, wet suits, breast implants, gloves, etc.

CLEANING PRODUCTS

All those ingredients you can’t pronounce in the ingredients list of cleaning products being used to keep us safe from COVID-19.

ASPHALT There are over 11 million miles of paved road in the world. Asphalt is the glue that binds the minerals together.

RENEWABLE ENERGY PRODUCTS

Oil is necessary to produce components used to create renewable energy, from wind turbine parts and solar panels to batteries for electric cars.

OTHER PRODUCTS MADE FROM OIL

Clothing, Ink, Heart Valves, Crayons, Parachutes, Telephones, Antiseptics, Deodorant, Pantyhose, Rubbing Alcohol, Carpets, Hearing Aids, Motorcycle Helmets, Pillows, Shoes, Electrical Tape, Safety Glass, Nylon Rope, Fertilizers, Hair Coloring, Toilet Seats, Candles, Credit Cards, Aspirin, Golf Balls, Detergents, Sunglasses, Glue, Fishing Rods, Linoleum, Soft Contact Lenses, Trash Bags, Hand Lotion, Shampoo, Shaving Cream, Footballs, Paint Brushes, Balloons, Fan Belts, Umbrellas, Luggage, Antifreeze, Tires, Dishwashing Liquids, Toothbrushes, Toothpaste, Combs, Tents, Lipstick, Tennis Rackets, House Paint, Guitar Strings, Ammonia, Eyeglasses, Ice Chests, Life Jackets, Cameras, Artificial Turf, Artificial Limbs, Bandages, Dentures, Ballpoint Pens, Nail Polish, Caulking, Skis, Fishing Lures, Perfumes, Shoe Polish, Antihistamines, Cortisone, Dyes, Roofing, Jet Fuel, Heating Oil, etc.

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SOURCES: HUFFINGTONPOST.COM, OILANDGASINFO.CA, RANKEN-ENERGY.COM, EARTHSCIWEEK.ORG, LISTVERSE.COM, WIKIPEDIA.ORG, ENERGY.GOV, CONOCOPHILLIPS.COM, OILFIELDPULSE.COM

18 10/12 INDUSTRY REPORT • SPRING 2022

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COVER STORY

BRAVE NEW WORLD How Louisiana’s industry and workforce are innovating and growing for the inevitable energy transition. BY SAM BARNES

1012industryreport.com

10/12 INDUSTRY REPORT • SPRING 2022 19

COVER STORY

“We’re in the process of purchasing training equipment for solar technician training to support new solar farms in the area, as well as equipment for the offshore wind farm initiative in the Gulf of Mexico.”

DON KADAIR

JIM CARLSON, interim chancellor, River Parishes Community College, referencing a $1.49 million Delta Regional Authority grant from the U.S. Department of Labor that will be used expressly for renewable energy training for jobs in hydrogen, solar and wind energy

t represents a monumental shift in mindset. Owners in the industrial space are no longer digging in their heels in resistance to a changing global energy dynamic. Instead, they are preparing for the inevitable “energy transition.” Along the way, they’re discovering real job-creating potential in a brave new environmentally conscious world. With that as part of their motivation, in 2021 the Water Institute of the Gulf in Baton Rouge and nonpartisan think tank Energy Innovation launched the Louisiana Energy Policy Simulator, or EPS, to model how particular climate policies would not only reduce greenhouse gas emissions but create jobs as well. What they found was surprising. “We looked at the jobs creation potential from the strategies and actions proposed by Louisiana’s Climate Initiative Task Force and found that by 2050 there would be more than 165,000 in net new jobs created through the plan,” says Allison DeJong, senior planner at the Water

20 10/12 INDUSTRY REPORT • SPRING 2022

Institute and project lead. The Louisiana EPS modeling tool allows users to evaluate specific climate policy proposals and assess the economic, jobs and public health impacts of those policies in an easyto-use web interface. As a policy simulator, it’s very complex, “but it has a ‘business as usual’ set of variables and then a set of policies that you can turn on and off, set different schedules and intensities or manipulate through a web application,” DeJong says. “From that, you can get a number of different outputs.” It predicts job creation in three market sectors: fossil fuels and utilities (including renewable forms of energy), manufacturing and construction, and others. “The vast amount of investment in the task force plan comes from industrial electrification, renewable energy and switching to hydrogen … they’re all huge job creators due to the labor required to make that happen.” Going forward, the Water Institute plans to fine tune the data by “refining our data set and continuing to

make adjustments and improvements over time.” Academia is taking its own steps to proactively stay ahead of the jobs curve. Jim Carlson, interim chancellor at River Parishes Community College, says a $1.49 million Delta Regional Authority grant from the U.S. Department of Labor will be used expressly for renewable energy training. Co-sponsored by GNO Inc. and Associated Builders and Contractors’ Pelican and Bayou chapters, the DRA investment will assist RPCC in providing training opportunities for jobs in hydrogen, solar and wind energy. The money will also be used to support a new Process Equipment Trainer Plant at the school’s Gonzales campus, which will be operational this summer. Ultimately, RPPC will have the ability to train students as wind and/ or solar technicians, in addition to a variety of other opportunities in renewables. “We’re in the process of purchasing training equipment for solar

technician training to support new solar farms in the area, as well as equipment for the offshore wind farm initiative in the Gulf of Mexico,” Carlson says. Electrolysis training will also be included in the portfolio, in support of efforts by CF Industries and others to produce green ammonia. Of course, private industry is taking the lead in turning many of these new initiatives—whether wind power, biofuels, carbon capture or solar— into real-world investments. Many have already made radical changes to their business models to prepare for these new environmentally focused opportunities, while remaining true to their traditional customers. IT’S NOTHING NEW FOR KEYSTONE ENGINEERING Mandeville’s Keystone Engineering Inc. began testing the waters in the renewable energy market over a decade ago. Sara Ghazizadeh, an LSU engineering graduate and current manager of renewable energies at Keystone, says the 30-year-old engi1012industryreport.com

neering company patented its first “twisted jacket” foundation for offshore wind in 2007. “We designed and installed our twisted jacket for a wind tower in the North Sea, and that opened up a whole new world to us,” Ghazizadeh says. The firm’s most high-profile project came five years ago, when it designed five, four-pile jacket substructures for the Block Island Wind Farm off the coast of Rhode Island. It was the first offshore wind farm to be constructed in North America and demonstrated that offshore wind energy is eco-

1922 2022

nomically feasible in the U.S. During the project, Keystone provided on-site engineering, construction support, load-out analysis and sea fastening support for the structures, while leveraging technologies developed for the offshore oil and gas industry to meet the jacket foundation’s complex design criteria. Gulf Island Fabrication in Houma played an equally critical role by fabricating the jackets. Ghazizadeh stresses that Keystone has never abandoned its traditional oil and gas roots in Louisiana, but like many companies has

“We think we’ve got a significant opportunity in Louisiana to reduce emissions and achieve ESG goals, but also build a business that didn’t previously exist at EnLink or in any other company.”

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SCOTT GOLDBERG, vice president of carbon solutions, EnLink Midstream

Active Members of: • • • • • •

Associated Builders & Contractors Associated General Contractors American Subcontractors Association Construction Financial Managment Association Mississippi Valley Associated General Contractors American Council of Engineering Companies

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COVER STORY added renewables to its portfolio. It wasn’t as difficult a transition as one might think. “We have a lot of great engineers who have decades of experience in offshore oil and gas, and that’s directly relevant to the work we do for offshore wind,” she says. “The big difference is the dynamic nature of the offshore wind turbine loading,” she adds. “That adds another level of complexity to the offshore platform design, but we still prefer to have engineers who have that offshore oil background.” Keystone is proactively promoting offshore wind in the local market by working closely with GNO Inc. and participating in advocacy events such as Louisiana Wind Week 2021, organized by the governor’s office. Additionally, they’re in discussions with manufacturers and fabricators about turning Louisiana into a hub for offshore wind from a supply chain perspective and pursuing possible pilot projects to showcase the local capabilities of fabricators and designers. “We want to educate the public about the benefits of the market, and we’re in talks with big offshore wind developers in the Gulf of Mexico that have showed interest,” she adds. Ghazizadeh feels Louisiana is ideally positioned “for a real breakout” in offshore wind, but there are some roadblocks to clear first. Many regions of the country have “local content requirements” that inhibit the participation of Louisiana companies. Additionally, the barrier to entry is high for fabricators. “In general, this market is very competitive,” she adds, “and there needs to be some initial investment for fabricators to be able to fabricate jackets. That initial investment is quite large.” From a strategic standpoint, Keystone plans to open an office on the East Coast in the near future. And recently, the engineer announced a new partnership with Natural Power, a leading renewable energy consultancy and service provider, for the purpose of pursuing and collaborating on technical consulting and advisory business opportunities in the U.S. offshore wind market. The partnership will enable both parties to benefit from each other’s experience and expertise, and collectively ensures an even broader range 22 10/12 INDUSTRY REPORT • SPRING 2022

WIND INDUSTRY: In its effort to proactively promote offshore wind, Mandeville’s Keystone Engineering Inc. is in discussions with manufacturers and fabricators about turning Louisiana into a hub for offshore wind from a supply chain perspective and pursuing possible pilot projects to showcase the local capabilities of fabricators and designers.

of qualifications for project developers and investors. “Keystone is the leader in offshore foundation design,” she says. “We are trying different avenues to make sure that the oil and gas industry, and the skillsets that we have as a region, can be transferred to offshore wind.” ENLINK MIDSTREAM USES WHAT IT ALREADY HAS Scott Goldberg is excited about his fledgling role as vice president of carbon solutions at EnLink Midstream in Dallas. He has only been in the position for about 10 months, “but that makes me a veteran, because everyone in this business in new,” Goldberg says. “Everything has accelerated over the last year and more companies are thinking about it and devoting resources to it.” An 11-year employee at EnLink,

Goldberg spearheaded the idea of targeting the carbon capture, utilization, and storage, or CCUS, market with the company’s existing network of pipelines. It’s rare for CCUS sites to be co-located, since certain geological conditions and land rights need to be present. “So there is an opportunity for the transportation of CO2 by pipeline,” he says. “It might be a few miles, or it might be 50 miles, so that’s the range we’re pursuing.” EnLink looked across its nationwide platform and quickly settled on Louisiana to launch the initiative, where it already has thousands of miles of pipeline connected to the largest sources of emissions along the Mississippi River. The company also has a strong local presence, with 230 employees in its Lafayette office and field offices across the region.

“We think we’ve got a significant opportunity in Louisiana to reduce emissions and achieve ESG (Environmental, Social and Governance) goals, but also build a business that didn’t previously exist at EnLink or in any other company.” Many of EnLink’s pipeline are duplicative, Goldberg says, which means the company can use its existing network for carbon transport. “There are segments that we can segregate from the natural gas system to convert into a CO2 system,” he adds. “The segments will then be isolated, evacuated, tested and then converted into CO2 service to deliver to the sequestration facilities.” The actual conversion process is not terribly complicated, Goldberg says, and will be consistent with how EnLink already operates. “It’s a different product that we’re 1012industryreport.com

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GULF COAST TRANSPORTATION transporting, but we’ll be transporting CO2 in a gaseous state, and in that way it’s a lot like natural gas. Additionally, the pressures in the line are similar.” Nevertheless, EnLink doesn’t have extensive subsurface expertise, so in February it partnered with Talos Energy Inc. to offer a complete CCUS solution for industrial-scale emitters in the state. The service will be focused on the Mississippi River corridor from New Orleans to Baton Rouge and will use significant portions of EnLink’s existing regional pipeline infrastructure of about 4,000 miles. For its part, Talos recently acquired the River Bend CCUS site in east Louisiana, with a sequestration capacity of over 500 million metric tons. Of course, the industry as a whole 1012industryreport.com

is facing its own challenges. Most importantly, there have been no Class 6 permits issued by the EPA, to date, for CCUS wells in Louisiana. While permit applications have been filed, “everyone remains in the developmental process,” Goldberg says. “Nevertheless, we have a deal with the landowner to do this service, so the next steps will include a significant geologic analysis and the preparation and submittal of the Class 6 permits.” At the same time, EnLink will begin promoting the service to various upstream companies and planning for the conversion of its existing pipeline system. “We will primarily use our existing pipelines, which makes our offering unique. That way, we can reduce the overall cost, which will result in lower fees for customers.” To date, EnLink

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COVER STORY different from transitional projects. Turner Energy will provide us with the flexibility that we need, no matter the sources of funding or contractual arrangement,” he adds. Toups is excited about the potential of the new endeavor, adding that most of Turner’s skillsets are easily transferable to renewable work. “For a contractor, a pipe is a pipe, and an electrical box is an electrical box, so our workforce is already capable of handling whatever work is on the horizon,” he says. Through Turner Energy, they’ll marshal the experience that they already have around such things as alternative energy, carbon capture, batteries, offshore windmills, solar etc. to ensure that their resources are easily accessible when the time comes. “We truly don’t see a downside to this,” he adds. “It’s not a separate company; instead, it will enable us to focus our resources for anyone that’s interested in an alternative energy source.” Going forward, Turner will likely hire additional personnel to back up the effort, but that hasn’t happened yet. “Right now, during COVID, there haven’t been a lot of projects going forward. There are a lot of people that we’re talking to about it, but as these projects begin to develop, we’ll possibly hire more people to work specifically on renewable energy projects.”

“For a contractor, a pipe is a pipe, and an electrical box is an electrical box, so our workforce is already capable of handling whatever work is on the horizon.”

DON KADAIR

STEPHEN TOUPS, president and CEO, Turner Industries, of the company’s new renewables subsidiary, Turner Energy

has talked to 20 or so potential customers who are all interested in CCUS. TURNER ENERGY PREPS FOR A CHANGE Stephen Toups, president and CEO of Turner Industries, says irrespective of its new subsidiary, Turner Energy, his company has already completed an impressive portfolio of work in the renewables market over the last decade. “While Turner Energy will re-in24 10/12 INDUSTRY REPORT • SPRING 2022

troduce Turner Industries to the growing renewables market, we’ve always been an active player in that space,” Toups says. In the beginning at least, Turner Energy will utilize much of the corporation’s existing resources to pursue new business and lean upon its existing craft workforce. At the same time, it will give Turner the flexibility it needs to pursue projects that aren’t in its current wheelhouse. “Turner Energy will allow our existing operations group to pursue

work that might not exist within our current operations model,” Toups says. Biodiesel and alternative forms of fuel will be of particular interest, as well as carbon capture solutions, LNG and hydrogen. A lot of the current projects on the horizon will likely come from existing clients who are simply pursuing new methods for producing energy. “As projects come online, they’ll be funded from a variety of sources, and the contracts or terms might look

NOT SITTING ON THE SIDELINES Perhaps nothing was more indicative of industry’s changing mindset than the slate of panelists at LMOGA/LOGA’s Annual Industry Conference in Lake Charles March 7-8. The conference kicked off with panels discussions with titles like “Industry & the Energy Transition” and “Carbon Capture.” During the energy transition discussion, Simon Moore, vice president of investor relations for Air Products, told the gathering that providing clean energy is nothing new for his company. “We’ve been in the hydrogen business for decades,” Moore says. “We’re the world’s largest operator of hydrogen assets; about 25 percent of our business today is producing hydrogen.” That’s a big reason that Air Prod1012industryreport.com

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of pipeline in Louisiana alone, serving the petrochemical and refining industries with hydrogen. “We’re building on that hydrogen expertise and are recognizing the energy transition that the world is going through,” Moore says. “Everywhere in the world they’re looking for lower-carbon forms of energy, and hydrogen offers tremendous opportunities.” Aaron Smith, business development manager with Colonial Pipeline, says his company’s efforts to tap into CCUS will intensify in 2022, and will depend heavily upon its existing network of Gulf Coast pipelines and customers in south Louisiana. “It’s a real opportunity for us, so we’re looking at how can we support our customers with pipeline transport solutions,” Smith says. “There’s a great opportunity for carbon sequestration and movement of CO2 in this footprint.” It’s still in the exploratory phase, but much of the initiative would be accomplished through the installation of new pipelines, Smith says. “We are looking at additional infrastructure investment for the most part, but we’ll also piggyback off of existing pipelines where that makes sense.”

SERVICES

ucts is leading the energy transition effort with shovel-ready projects, he adds. Last year, Air Products announced a $4.5 billion blue hydrogen clean energy complex in Ascension Parish, representing the company’s largest-ever Investment in the U.S. at 750 million standard cubic feet per day in production. “Blue” products are those produced utilizing hydrocarbons as a feedstock, with the carbon dioxide in the production process captured for permanent sequestration. A portion of the blue hydrogen will be compressed and supplied to customers by Air Products’ hydrogen pipeline network, which stretches more than 70 miles from Galveston Bay to New Orleans. It can supply customers with more than 1.6 billion cubic feet of hydrogen per day from approximately 25 production facilities. Approximately 95 percent of the CO2 generated at the facility will be captured, compressed and transported safely by pipeline to multiple inland sequestration sites located along a pipeline corridor extending up to 35 miles to the east of the new production facility. The megaproject is expected to be operational in 2026. Air Products has some 700 miles

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RAMPING UP: Colonial Pipeline’s efforts to tap into CCUS will intensify in 2022, and will depend heavily upon its existing network of Gulf Coast pipelines and customers in south Louisiana.

Local Industries Make a Significant Impact on Southwest Louisiana By providing residents of Southwest Louisiana with consistent employment through a pandemic and multiple natural disasters, local industry continues to be an economic driver for our region. The almost 10,000 good-paying jobs with benefits for direct employees and contractors and another 17,000 associated jobs in the region that exist due to industries result in over $2 billion in annual earnings. Local industries provide generous donations to education and nonprofit organizations, and they are 17 of the top 20 property tax payers in Calcasieu Parish. Lake Area Industry Alliance is the umbrella organization between its 22 industrial members and our local community, government officials, educators, business leaders and non-profit organizations.

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With such a significant impact in our community, the work of LAIA is as important as ever. LAIA will continue to be a conduit of communication to enhance industrial advancements along with partnerships within the community.

1012industryreport.com

laia.com | (337) 436-6800

10/12 INDUSTRY REPORT • SPRING 2022 25

YEAR

ANNIVERSARY

A culture of transparency and resilience J OEL LANDRY KNOWS how to spot a weed. He worked for decades as a farmer before investing in the Plattenville-based RES Contractors back in 2012. He knows how to live lean, too. During the freeze of 1989–his first year in farming–he lost 90 percent of his crop. At the end of the year, he owed about $100,000 and was staring at a stack of bills. “All of my vendors were calling,” Landry says. “It taught me a lot about the importance of communication and relationship building. I had to assure them that if they stayed with me, they wouldn’t regret it. And I’m still doing business with them today.” Because of these and other experiences, Landry’s transition into industrial construction wasn’t as difficult as one might think.

That’s because there are some unmistakable parallels between farming and industrial work. “You pass by some farms and many of them look weed-free from the highway. But in farming, as well as industrial work, what we do in the front we do in the back. There’s no façade.” “You accomplish that by having complete transparency,” he adds. “It’s the same in the industrial sector. We must be transparent in everything we do or we lose our client’s trust.” Landry’s investment in RES Contractors marked the next big iteration for the company. Founded 20 years ago as Reeves Electrical Services, the contractor got its start performing mostly electrical work for the U.S. Army Corps of Engineers.

After Hurricane Katrina in 2005, they began to evolve into more of a general contractor’s role for the Corps, and subsequently changed their name to RES Contractors to reflect the change. “The Corps loved us because we did most of our own work,” says D.J. Torres, current COO at RES. Torres joined the company as a project manager in 2006 after graduating from LSU. “When Katrina hit, they called us because they knew we would get the job done.” Then, in 2012, RES took the next decisive step by entering the industrial market and opening its first full-service fabrication facility. Today, the contractor performs mostly capital projects and maintenance in the industrial space. RES has picked up some

new skillsets along the way and transitioned to the point where “we self-perform nearly everything now,” Torres says. Their workforce has grown in tandem. It’s all about the culture RES Contractors places a lot of emphasis on its corporate culture and has built a team that shares the same mindset of honesty, transparency and perseverance. At the end of the day, you can’t just talk the talk, you need to walk the walk, says Fred Henderson, current president. He originally came on board as a consultant with 30 years of experience in the industrial sector and was impressed by how the RES team conducted itself in the field. “I talked to a client and asked them what they liked

HIGHLIGHTS

In the beginning

Fabrication facility

20 years

RES was founded in 2002 in the heart of south Louisiana’s industrial corridor.

RES has a 50,000 square foot full-service custom fabrication and welding facility with the ability to deliver each customer’s individual needs.

Now in its 20th year, RES serves more than 100 clients and continues to grow.

FROM THE CEO

JOEL LANDRY

This year marks a significant milestone for RES as we proudly celebrate our 20th anniversary. As times have changed, so have we. One of the top challenges as a leader is maintaining a clear vision while constantly adapting and realigning to market conditions. Staying complacent is not an option in an industry that is always on the brink of new and innovative solutions. Fortunately, I am surrounded by an incredible team who share my vision and work day in and day out to make it a reality. Our team members are the backbone of our company, and it’s my job to motivate and inspire them to reach their full potential. I look forward to the next 20 years and the lessons that can only be inherited from timely growth and perseverance.

about the company,” Henderson says. “Without hesitation, they said, ‘These guys are able to collaborate with the client to overcome unforeseen obstacles. They find a way to get it done.” RES also strives to develop long-term relationships. For one client, they’re currently working about $28 million in projects across six sites. That’s a testament to relationships and dependability, Torres says. “We try to pair our people with the dynamics of a particular site,” he adds. “We want to make sure they’re the right person for that site.” Quality control and safety are equally important. RES is its own worst critic and constantly collects and reviews data for reliability and improvement.

“It’s a part of everything we do, from civil work to piping to steel,” says Wendell Breaux, corporate quality control manager. “We follow stringent quality control processes and utilize an in-house data analytics software to ensure we meet and exceed industry standards. We build test packages for everything we work on, and do a lot of in-process examination.” They maintain a full-time designated QC manager in the fabrication shop and a number of QC supervisors in the field. The company is continuously examining different QC parameters for welding and other control measures. RES holds numerous credentials, including The American Society

of Mechanical Engineers (ASME) “U” Stamp, “S” Stamp and “R” Stamp certifications. They are nationally recognized as an ABC Accredited Quality Contractor and have achieved Platinum Level in ABC’s STEP Safety Management System. Looking ahead, RES is most excited about its recent move into modularization. They’re currently working on their largest design-build modularization project for an existing client within their 50,000-square-foot fabrication facilities. Involvement in industrial advocacy is equally important. Landry has recently become more involved with the Louisiana Chemical Industry Alliance, and currently serves

on the organization’s board of directors. RES now serves over 100 clients in the industrial and petrochemical industry and looks forward to continued growth over the next 20 years.

CONNECT WITH US TOP EXECUTIVES: Joel Landry, CEO; Fred Henderson, President; DJ Torres, COO; Alisha Templet, CFO; Paul Amedee, Vice President of HSE ADDRESS: 256 Ideal St., Plattenville, LA 70393; Fabrication shop: 284D Hwy. 1007, Napoleonville, LA 70390 PHONE: 985.252.3400 WEBSITE: res-usa.com

”

I talked to a client and asked them what they liked about the company. Without hesitation, they said, ‘These guys are able to collaborate with the client to overcome unforeseen obstacles. They find a way to get it done. FRED HENDERSON, PRESIDENT

NEWS OPERATIONS

Miracle workers

By SAM BARNES

Contractors and owners find creative ways to circumvent the triple threat: supply chain shortages, delays and inflation.

t was unquestionably serendipitous. A few years back, Performance Contractors in Baton Rouge began an extensive self-assessment to gain better visibility into its procurement processes. The initiative was prompted by a period of rapid growth—from 2009 to 2015, revenues rose from $650 million to $1.53 billion. Leading the effort was Lance Glaser, director of strategic procurement, equipment and logistics,

who has high-level oversight of the contractor’s procurement practices. “We were growing so quickly that we realized that we had room to enhance what we were doing to take advantage of our size and scale,” Glaser says. In the process, Performance closely examined its procurement history, including what they were buying and who they were buying it from, then began developing strategic partnerships with key suppliers and manufacturers to improve their abil-

ity to react to changing dynamics. Little did they know what the future would bring, and more importantly how advantageous those partnerships would become. Pandemic-related shutdowns in upstream manufacturing facilities, followed by a range of transportation issues—shipping delays at multiple West Coast ports, rail bottlenecks, manpower deficiencies and an alarming lack of trucks—have contributed to unprecedented supply chain disruptions.

In effect, materials can no longer be counted on to be available when, or at the cost, they’re needed. Anirban Basu, chairman and CEO of Sage Policy Group in Baltimore and chief economist for Associated Builders and Contractors, says a variety of factors came together to create a logistical perfect storm. And the problem might not yet have peaked. “The amount of goods the ports are handling now is far above pre-pandemic levels,” Basu says. “And while they’re taking steps

“When we’re purchasing cranes, forklifts, etcetera, our suppliers will give us a heads up when they see significant price increases in the near future and we can lock in a price before that happens.”

DON KADAIR

LANCE GLASER, director of strategic procurement, equipment and logistics at Performance Contractors, (left) with Corporate Director of Purchasing Jimmy Betz

28 10/12 INDUSTRY REPORT • SPRING 2022

1012industryreport.com

“Just because you negotiated the terms doesn’t mean that will be reality. You have to be able to adapt to that.”

DON KADAIR

JOHN SCROGGINS, plant manager, Westlake Chemical Corp. in Geismar, noting that project cost equations must now account for contingencies related to increased shipping costs, delays or redesigns

to deal with this, they just can’t keep up with this massive movement of goods between economies.” For their part, contractors are getting involved earlier in a project’s lifecycle to collaborate with owners and other team members, work through logistical hurdles and minimize risk. Some of the more radical solutions have been in procurement, where the entirety of a project’s materials and equipment are more frequently being ordered before groundbreaking. The offsite modularization of project components has become another popular way to minimize risk. Performance’s fortuitous decision to shake up its procurement processes has paid off in big ways. They now have critical partnerships in place with various vendors, which has enabled them to more accurately forecast price increases and shipping times for certain materials. “Our vendors have insight into 1012industryreport.com

what’s going on at the mills that we don’t,” Glaser says. They’ve also improved their responsiveness. “When we’re purchasing cranes, forklifts, etcetera, our suppliers will give us a heads up when they see significant price increases in the near future and we can lock in a price before that happens,” he adds. PULLING OFF THE IMPOSSIBLE In the industrial space, expedited shipping costs and inflation are now commonly factored into every project analysis, and some owners must dole out millions of dollars for expedited shipping. John Scroggins, plant manager at Westlake Chemical Corp. in Geismar, says the unpredictable dynamic has radically changed the way his plant conducts business. In fact, Westlake Chemical recently paid some $2 million to expedite the shipping of materials for a

capital project, because the original shipping arrangement would have delayed the project by weeks. Scroggins credits Westlake’s purchasing group for pulling off miracles, chiefly by collaborating with multiple departments “to materialize what we need when we need it … but it has still been a challenge.” For the budgeted replacement of an obsolete furnace, for example, “they (the purchasing group) worked and negotiated with our engineering team for probably two months before it was resolved. Even then, the resolution wasn’t ideal and we had to spend more, but at the end of the day we got the equipment delivered.” A big part of any project cost equation must now account for contingencies related to increased shipping costs, delays or re-designs. That requires than an industrial plant be nimble in today’s economy. “Just because you negotiated the

terms doesn’t mean that will be reality,” Scroggins says. “You have to be able to adapt to that.” Inflation is another concern, so industrial owners must also account for price escalations. There’s also a trend toward “lump sum” contracts, and owners are buying more of their construction materials before even hiring a contractor. “If we know we’re going to have a lot of commodity materials such as sheets of nickel alloy, we might lock in a price with a vendor, give them a purchase order and secure the material,” he adds. As for Performance, they more frequently get involved during the pre-FEED, or front-end engineering design, stage of a project, which enables them to begin pricing and procuring materials much earlier in a project’s lifecycle. “The more time we have, the better,” Glaser says. “In the past, an engineer or owner might have 10/12 INDUSTRY REPORT • SPRING 2022 29

NEWS: OPERATIONS

ISTOCK

SUPPLY CHAIN UNCERTAINTY: In the industrial space, expedited shipping costs and inflation are now commonly factored into every project analysis, and some owners must dole out millions of dollars for expedited shipping.

released the bulk of the design when the model was 90 percent complete. Now, it’s more like 60 percent complete to allow fabricators to lock in material prices and lead times earlier.” Ultimately, Performance is able to provide the owner with more accurate expectations as to schedule, cost and materials. “If we can get involved earlier, specifically during the procurement of piping, valves, and modular work, the more realistic their 30 10/12 INDUSTRY REPORT • SPRING 2022

timeline will be,” he adds. “And if we can order materials nine months out, we feel pretty confident that we’ll be able to deliver the materials based upon the current conditions.” No one likes bad news, but sometimes it’s unavoidable. Prices can fluctuate daily, if not hourly, and a certain material might be available one day, then the next day be delayed by eight to 16 weeks. Jimmy Betz, Performance’s corporate director of purchasing, says ven-

dors used to hold pricing for carbon steel for 30 to 60 days, and metal alloys a couple of weeks. Today, it’s three or four days for carbon steel and only one day for steel alloys. Performance makes a point to be transparent with their clients regarding potential future supply and inflationary challenges. “I think all of our clients are aware of the supply problems,” Betz says. “No one likes to hear that something’s going to take two extra weeks

and that the price went up 15 percent, but it’s always better to share bad news immediately than to hold off and wait to report it later.” Performance also focuses on communication and managing expectations to proactively stay ahead of the problem. “It’s all about making sure our clients, our engineering partners and internal group all aware of the challenges, what the delivery times are, and what the pricing looks like,” Glaser says. 1012industryreport.com

SAM BARNES

MAKING A DIFFERENCE: Speaking at Louisiana’s Tec Next conference in February, Data Gumbo founder Andrew Bruce said “smart contracts” powered by blockchain technology are pioneering a new approach to commercial relationships that can streamline procurement and transactional certainty.

BLOCKCHAIN TO THE RESCUE? Andrew Bruce, founder of Houston-based Data Gumbo, says technology—block chain, in particular—could play an increasingly important role in alleviating some of the current supply chain uncertainty. Speaking at the annual Tec Next conference in February in Baton Rouge, Bruce said “smart contracts” powered by blockchain technology are pioneering a new approach to commercial relationships that can 1012industryreport.com

streamline procurement and transactional certainty. “Rolling out GumboNet (Data Gumbo’s proprietary product) to your supply chain delivers more than a 10 percent cost-savings within six months of receiving company data and implementing a smart contract between counterparties,” Bruce says. Data Gumbo started out as a data platform that connected to collected and standardized operational data to enable machine learning, AI and

condition-based maintenance systems, then transitioned to utilizing blockchain after they spotted an opportunity to eliminate sizable cost inefficiencies during procurement. Data Gumbo’s smart contracts offer a new approach to commercial relationships—whereby every transaction is accurate and certain, touchless and automated. In the process, they can streamlines business processes and reduces numerous steps down to only two,

and offer visibility into “real-time” spending. Today, GumboNet is the only smart contract network of global industrial enterprises and their customers, suppliers and vendors that successfully incorporates real-time sensor level and field data to validate transactions. It can upgrade legacy processes and deliver a modern approach that ensures transactional certainty to drive millions of dollars of improved performance. 10/12 INDUSTRY REPORT • SPRING 2022 31

NEWS: MARINE

BY SAM BARNES

ESCALATING DEMAND: Danish shipping giant Maersk recently announced its first decarbonized ships will run on green methanol.

COURTESY MAERSK

A growing interest and demand for decarbonized container shipping fuels an investment surge in Louisiana.

hen Danish shipping giant Maersk announced in August that its first decarbonized ships would run on green methanol, then ordered a dozen 16,000-TEU container ships with dual-fuel methanol engines, it sent shockwaves throughout the shipping industry. After all, a methanol-powered fleet would require significant increases in production at U.S. plants once in full swing. “By themselves, these Maersk ships are going to need thousands and thousands of metric tons of methanol annually—for just 12 ships,” says Greg Dolan, CEO of the Methanol Institute in Alexandria, Virginia. Dolan has noticed a surge in his membership in just the last year, mostly on the marine side of the business. The Methanol Institute is the trade association for the global methanol industry, and represents methanol producers, distributors and technology companies from its

32 10/12 INDUSTRY REPORT • SPRING 2022

offices in Washington, D.C., Singapore, Brussels, Beijing and Delhi. Traditionally, China has accounted for more than half of global methanol demand. “They’re a huge consumer of methanol, most of which is driven by MTO (methanol-to-olefins) plants,” Dolan says. “In 2020, they imported 13 million metric tons of methanol, and in 2021 that number was likely higher. A lot of that is for MTO. “Each plant has its own unique palate of products, and typically those products are in high demand. So it’s essential that those units keep running.” For these and other

reasons, there has been enough projected long-term demand growth in the methanol market to fuel a surge in U.S. capital investment, despite a reduction in the number of planned MTO plants in China from about 50 to 17 over the last three years. A significant price differential in natural gas between the U.S. and Europe is another big reason. “Natural gas is just so much cheaper here,” says economist Loren Scott with Loren C. Scott & Associates in Baton Rouge. “There have been some huge investment announcements … this price differential should kick that all into high gear.”

“By themselves, these Maersk ships are going to need thousands and thousands of metric tons of methanol annually—for just 12 ships.” GREG DOLAN, CEO, Methanol Institute

SHIPPING SURGE The growing interest in methanol as a marine fuel is undoubtedly generating a lot of buzz. Trey Hamblet, vice president of chemicals research for Industrial Info Resources, or IIR, in Sugar Land, Texas, says marine applications will likely become a catalyst for growth in the years ahead. “ They’re advancing with those technologies, and other non-traditional means and methods, which supports a certain level of enthusiasm,” he adds. “We will see more capacity, no doubt.” Methanex, with one of its largest plants in Geismar, has already played a significant role in promoting methanol to the maritime industry. The methanol producer currently has 11 dual-fuel 50,000-ton chemical tankers in its shipping fleet. “In fact, the engines in their vessels, made by MAN Energy Solutions, are the same kind as the ones going into the Maersk ships,” Dolan says. Elsewhere, American Patriot Holdings announced in December that it is moving forward with a 1012industryreport.com

concept for a hybrid river container vessel that will be capable of using methanol as its fuel source. The vessel would ultimately link the new container terminal under development for Plaquemines Parish with Memphis via transportation on the Mississippi River. It’s part of an overall effort to expand America’s waterway transportation as an alternative to truck-based transportation of containers. Known as an “Exoskeleton Structure,” the design concept was developed by Naviform Consulting and Research and places the vessel’s structure outside the hull to maximize cargo carrying capacity while reducing the vessel’s weight. APH issued a request for proposal to seven U.S. shipyards calling for the construction of four vessels and options

for up to four additional vessels. The first four vessels will initially operate between the Louisiana Gulf Gateway Terminal in Plaquemines Parish and a new container terminal in Memphis. They are expected to begin service in April 2024. Apart from maritime applications, the methanol industry is pursuing other uses for the versatile product—chiefly bio-methanol and e-methanol—albeit to lesser degrees. The Methanex plant in Geismar, in fact, is already capable of producing bio-methanol. “Bio-methanol can come from municipal waste plants, dairy farms or other sources of biogas,” Dolan says. “You run the plant with conventional natural gas, but purchase biogas that’s going into the pipeline.” E-methanol is produced from

green hydrogen and CO2 and is carbon neutral. “E-methanol is not in the U.S. just yet, but there’s definitely a lot of interest,” he adds. “All you need is renewable electricity, such as a solar or wind power, and a source of CO2.” SHORT-TERM: NOT SO ROSY IIR’s Hamblet says the short-term demand growth hasn’t been nearly as robust. That’s why Methanex was “slow playing” construction of Geismar 3 until recently. “It was slow-played intentionally for a long time, and it just started back up due to incremental increases in demand,” he adds. Nevertheless, it’s the mid- and long-term outlook that matters most to investors. Global ethanol demand is currently about 100

million metric tons per year and is projected to grow, and there has been a resurgence in U.S. domestic production driven largely by the shale gas revolution, affordability and availability of natural gas and robust and increasing global market for methanol. “We have continued to see increased demand for methanol globally,” says Dolan at the Methanol Institute. “The methanol market is still 60 percent chemical derivatives such as paints, plastics, solvents, resins etc., with 40 percent being energy applications such as a fuel, MTBE, biodiesel products etc., so we have a pretty diverse range of products.” Louisiana currently supports the two largest recent investments in the U.S.: Geismar 3 and Koch Methanol in St. James Parish.

METHANOL EXPANSION IN LOUISIANA 1. Methanex’s Geismar 3 Ascension Parish - Late 2023/early 2024

2. Koch Methanol One expansion St. James Parish - November 2025 3. Bia Energy Shreveport - December 2024 4. Lake Charles Methanol Calcasieu Ship Channel - October 2025 5. IPG Methanol Plaquemines Parish - June 2026 SOURCE: Industrial Info Resources

2 5

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10/12 INDUSTRY REPORT • SPRING 2022 33

COURTESY METHANEX

NEWS: MARINE

METHANOL MARKET: Louisiana currently supports the two largest recent investments in the U.S.: Methanex’s Geismar 3 and Koch Methanol in St. James Parish. Above: Methanex’s existing Geismar facility.

METHANOL DEMAND BY REGION

Global methanol demand has doubled over the last decade. According to The Methanol Institute, the growth is led by China, specifically methanol-to-olefins and fuels. As shown in the first chart, average annual growth rate since 2021 has been 3.1%.

AAGR = 3.1%

AAGR = 5.8%

53.5

West Europe

7.3

North America

7.3

Northeast Asia 80 60 40 20 0 2015

2017

2019

All Other Southeast Asia Northeast Asia

2021

2023

N. America EuRussia China

34 10/12 INDUSTRY REPORT • SPRING 2022

2025

3.4

Middle East

2.9

FSU

2.4

India/South Asia

2.3

South America

2.0

Central Europe

1.3

Africa

0.3

Australia

0.2 0

2020

87.7mn t

mn t 10

150

4.9

Southeast Asia

175

Production capacity

125

100

47 Methanol-to-Olefins

75 50

35 24

Chemicals

Capacity and demand in Mtoe

100

China

mn t

Capacity and demand in million tonnes

120

12 Fuels

2012

2014

2016 Year

2018

0 2020

Data and charts courtesy The Methanol Institute

1012industryreport.com

“The timing is right to restart construction on our Geismar 3 project as the methanol industry outlook is positive,” says Geismar Plant Manager Rawle Ramlochan. “We have a strong financial position to fund the project, the project has been significantly de-risked and is well positioned to be completed ontime and on budget.” The Geismar 3 facility will ultimately produce about 5,000 tons per day of methanol, equating to about 1.8 million tons annually. “We estimate the total capital costs for the Geismar 3 project to be $1.25 billion to $1.35 billion,” Ramlochan adds. “G3 will be among the lowest CO2 emissions intensity methanol plants in the world.” Geismar 3 will utilize autothermal reforming technology with hydrogen rich purge gas imported from Methanex’s G1/G2 plants,

which has lower CO2 intensity than the older steam methane reforming, or SMR, process. The project has several capital and operating cost advantages including being able to use of excess hydrogen rich purge gas from Geismar 1 and Geismar 2, eliminates the need for a primary reformer, all underpinned by abundant and reliable US natural gas resources. Commercial operations are targeted for late 2023 or early 2024. Other methanol plants being tracked by IIR in Louisiana include Bia Energy in Shreveport, with a planned December 2024 startup; Lake Charles Methanol LLC, planned for October 2025; an expansion at Koch Methanol One in St. James Parish, planned for November 2025; and IPG Methanol in Plaquemines Parish, planned for June 2026.

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ON THE RIVER: American Patriot Holdings has unveiled a hybrid river container vessel with methanol fuel capabilities. It will link the new container terminal under development for Plaquemines Parish with Memphis via transportation on the Mississippi River.

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SPE C I AL AD V E RT I SI N G PRO F I L E

DANOS OUR HISTORY

In 1947, Allen Danos Sr. borrowed $2,000 to start a tugboat company with his brother-in-law Syriaque Curole. The duo purchased their first vessel, the Yoyo, and contracted their first customer, Gulf Oil (later Chevron). They kept their overhead low and conducted business from the kitchen table. (Their wives kept the books.) The men were proud to be able to provide for their families and also create job opportunities for their community. Today, the Danos family’s third generation is at the helm of the organization, which has grown into a trusted strategic partner for energy operators around the world. CEO Paul Danos credits the company’s longevity to the values established through three generations of leadership. “When I think about how Danos has sustained success,” he says, “I think about our values of integrity, safety, service, respect and improvement. These founding principles have served us well for 75 years. Although we’ve said them different ways throughout the years, they are the core of who the organization is today.”

WHAT WE DO

Danos offers onshore and offshore energy customers integrated services that include production workforce, fabrication, construction, intelligent integrated materials solutions, project management, coatings, automation, instrumentation and electrical, scaffolding and rope access, shorebase and logistics, mechanical maintenance, regulatory compliance, power generation, and valve and wellhead services. The company has 2,500 employees and nine offices with operations across the Gulf of Mexico and North American shale plays.

36 10/12 INDUSTRY REPORT • SPRING 2022

TOP EXECUTIVES Garret “Hank” Danos: Owner and Chairman of the Board Eric Danos: Owner and CEO of Danos Ventures Paul Danos: Owner and CEO of Danos LLC Mark Danos: Owner and CEO of Danos Family Investments (From left) Paul, Mark, Hank and Eric Danos

CELEBRATING 75 YEARS

This year, Danos celebrates 75 years in business. Danos is marking its special milestone with a 75th Anniversary Road Show, hosting a series of events to honor and thank employees, customers and the many partners who have been integral to the organization’s success. In addition, Danos team members have pledged to volunteer 1,947 hours to nonprofit organizations in honor of the company’s founding year. Danos has invested in technology to improve workforce capacity and skill development, developed an automated system to improve warehouse efficiency for customers, and increased activity in renewables. The company plans to continue adding service lines and increasing operations to meet the needs of its customers.

YEAR FOUNDED 1947

PURPOSE AND VISION

Our purpose is to honor God and develop great people to solve big challenges for our customers and communities. Our vision is to set the standard for operational excellence, customer service and care for people.

HEADQUARTERS

3878 W. Main St., Gray, LA 70359 985.219.3313 danos.com

1012industryreport.com

NEWS: REGULATIONS

The Legal Quagmire

BY SAM BARNES

Federal and state rights in regulating environmental policy are at the heart of current courtroom battles.

ourtrooms across the U.S. are finding themselves on the front lines of a nationwide struggle over federal and state rights in regulating environmental policy. Activists are taking industry to court with increasing frequency for the express purpose of delaying, postponing or outright canceling projects. Chuck Talley, a partner in Kean Miller’s New Orleans office with expertise in oil and gas law, says many of his clients invest in projects only to find themselves embroiled in a courtroom battle. “For any project that gets developed today, you’re going to see environmentalists filing suits to challenge that lease or project,” Talley says. “That means our clients are going to have to build into their timelines another couple of years to deal with litigation.” Talley remains hopeful that the

U.S. Supreme Court will eventually remove some of the ambiguity, but until then a battle is under way between energy and environmental lawyers. “This is the new game plan by the environmentalists,” he says. “There have been legal challenges before, but I think we’re seeing a tremendous uptick in the volume.” The granting of federal permits is also being “slow-played” and local regulatory bodies such as the Louisiana Department of Natural Resources are being stonewalled in their attempts to gain regulatory “primacy” for approving carbon capture, utilization and storage, or CCUS, projects. Michael Blumenthal, a veteran of energy law and partner in McGlinchey’s Cleveland office, says oil companies, manufacturers and developers have become mired in the federal permitting process. Blumenthal currently represents two trade associations that plan to push for

changes to the National Environmental Protection Act, or NEPA. “We’re in discussions with different agencies to see if there’s something that can be done short of a lawsuit,” he adds. “If anything, NEPA needs to be seriously streamlined. If that can’t be done, the states really need to jump in and start challenging the application of NEPA so as not to delay development projects.” OFFSHORE BATTLE One of the more high-profile court battles has been over last November’s federal offshore lease sale. Earlier this year, a U.S. federal judge blocked the sale of oil and gas drilling leases across 80 million acres in the Gulf of Mexico—the largest in history— ruling that the Biden administration did not properly consider the leases’ impact on the climate crisis. The administration had been compelled to hold the sale due to a successful legal challenge by a dozen

states, including Louisiana, to lift a blanket pause it had placed on new drilling projects on federal land and waters. The Gulf of Mexico auction eventually resulted in 1.7 million acres sold to ExxonMobil, Chevron and BP. The Biden administration has announced that it won’t appeal the latest decision. Erik Milito, president of the National Ocean Industries Association, says his offshore advocacy group filed suit over the lease pause, along with the American Petroleum Institute, while also citing the federal government’s failure to develop a five-year offshore leasing program. “Under the Outer Continental Shelf Lands Act, they have to develop a plan that includes the schedule of lease sales,” Milito says. “They’ve already indicated that they’re not going to have a plan ready on July 1, which would be in violation of the law.”

1012industryreport.com

BRYAN OLIN DOZIER/NURPHOTO VIA AP

SUPREME COURT SHOWDOWN: Climate change activists gather outside of the Supreme Court in Washington, D.C. in February during arguments in the case of West Virginia v. Environmental Protection Agency, which will determine the ability of the EPA to regulate carbon dioxide emissions. Bryant Bremer, a partner in Kean Miller’s Baton Rouge office specializing in environmental regulations, says the case further exemplifies the confusion over regulatory rights.

10/12 INDUSTRY REPORT • SPRING 2022 37

NEWS: REGULATIONS Bryant Bremer, a partner in Kean Miller’s Baton Rouge office specializing in environmental regulations, says another recent Supreme Court case, West Virginia vs. EPA, further exemplifies the confusion over regulatory rights. At the heart of the matter: Did Congress constitutionally authorize in the Clean Air Act that the EPA issue significant rules, including those capable of reshaping the nation’s electricity grids and unilaterally decarbonizing virtually any sector of the economy, without any limits on what the agency can require? In essence, Bremer says, the federal government instructed the state to consider other forms of energy, rather than simply establishing an emissions threshold for particular plants. “The question before the court is can they make a wholesale change to an industry, or do they need to regulate individual specific plants … that’s going to be the wait and see outcome.” The appeal is pending adjudication before the U.S. Supreme Court.

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ON HOLD: One of the more high-profile court battles has been over last November’s federal offshore lease sale. Earlier this year, a U.S. federal judge blocked the sale of oil and gas drilling leases across 80 million acres in the Gulf of Mexico—the largest in history—ruling that the Biden administration did not properly consider the leases’ impact on the climate crisis. The Biden administration has announced that it won’t appeal the decision.

EXECUTIVE ORDER 13990 In a related matter, several states, including Louisiana, were granted an injunction in February to block the Biden administration from adopting Executive Order 13990, which in essence directs federal agencies to capture the full costs of greenhouse emissions, including by taking global damages into account. The plaintiffs allege that the order would harm their interests and those of their residents. Defendants include President Biden and numerous government officials and agencies, including the Interagency Working Group on Social Cost of Greenhouse Gases. “It’s in the courts right now, and we’re waiting to see what the courts are going to do with it,” Blumenthal says. “The states allege that the Executive Order didn’t take into account the carbon cost for importing foreign oil. The order is also supposed to account for the additional regulatory costs imposed on industry.” The case could ultimately have significant consequences for oil producing states. “States used to have

a certain amount of latitude in calculating their industry’s greenhouse gas emissions,” he adds. “They’re essentially taking that away from the states, and giving that responsibility to the federal government. “The socioeconomic impact of the Executive Order could inflict real and lasting injuries to those oil producing states.” CARBON CAPTURE IS A TARGET Perhaps most perplexing has been the federal government’s slow playing of CCUS permits. It would seem to be a “win-win” scenario by any measure, but the state’s budding CCUS market is not without its detractors. Environmentalists, in particular, object to any technology that perpetuates the production of fossil fuels, and have concerns about the safety of the storage process itself. The Louisiana DNR views a lack of regulatory streamlining as a fundamental obstacle to CCUS, so is lobbying for regulatory “primacy” over the EPA. If and when that’s granted, it could shift permitting

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NEWS: REGULATIONS

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POWER STRUGGLE: The Louisiana Department of Natural Resources views a lack of regulatory streamlining for carbon capture, utilization and storage as a fundamental obstacle, so the agency is lobbying for regulatory “primacy” over the U.S. Environmental Protection Agency. If and when that’s granted, it could shift permitting responsibility from the EPA to the Louisiana Office of Conservation.

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responsibility from the EPA to the Louisiana Office of Conservation. “I think that if we can show that the state’s regulation is no less stringent, we’re going to get a fairer assessment in the oil producing states … and it won’t take forever to get a permit,” Blumenthal says. To make that happen, each state would need to adopt legislation asserting primacy review of carbon sequestration permits. The environmental groups would likely challenge the legislation, then a judge would determine if it meets primacy requirements. “At that stage, it’s a pretty heavy burden for the environmental groups to overcome,” Blumenthal adds. While there’s no current bill yet to be announced, trade groups are in discussions with legislators interested in backing such a proposal. “I think we’ll have a bill introduced sometime before they adjourn, possible by June,” he says. “I really think of this as a viable option that will satisfy everyone.”

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...IN OUR PEOPLE At Interfor, we invest in our people because we know our best talent is homegrown. We provide meaningful programs for our employees to grow their skills and knowledge resulting in more than 70% of positions filled through internal promotions. We also make it our mission to provide a safe and comfortable work environment for every employee.

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NEWS: ENERGY

“We’re looking at faster utilization of our capacity, and that’s not a bad thing. FERC changing the rules regarding pipeline permitting means they are aligned with the idea that we can at least get the gas to the terminals so it can be liquefied and exported. That’s all positive for LNG.”

FILE PHOTO

ERIC SMITH, director, Tulane Energy Institute

The Natural Gas State

By SAM BARNES

Shale plays and LNG are about to become big business for Louisiana—but there are obstacles.

ouisiana’s liquefied natural gas industry and the Haynesville Shale play are now inseparably linked as they move in tandem toward a future where natural gas, not oil, is the state’s big moneymaker. Things look promising, from a purely economic standpoint at least. U.S. natural gas prices are much cheaper in the U.S. than Europe, and that has revitalized a lagging LNG export market. Haynesville rig counts are on the rise, too—mostly because of the burgeoning exports. As of March 7, there were an impressive 48 rigs drilling in Haynesville Shale, according to the Louisi-

1012industryreport.com

ana Oil & Gas Association, the bulk of which are in DeSoto and Caddo parishes. “Once natural gas gets above $3.5 mmtbu (it was $4.5 mmtbu at Henry Hub in early March), you’re well above the break-even point for Haynesville Shale,” says Loren Scott, an economist at Loren C. Scott & Associates in Baton Rouge. And while the price likely will be driven downward somewhat due to seasonal factors, the outlook should remain good for the northwest Louisiana play. “If you’re trying to get natural gas from the Permian, you have a lot further to go and there are pipeline capacity issues,” Scott adds. “We’ve

got a good thing going here. I’m very optimistic. The rig count has more than doubled in the last year and the market is responding to that.” Current prices and relatively low service costs make production economics the best in years. And firms are investing more as they estimate that higher prices will be more than adequate to cover the rising costs of labor and equipment. Natural gas prices are in the “sweet spot” for both upstream producers and LNG owners, Scott says. “The price might be $3.5 MMBtu in the U.S. but it’s $100 in Europe,” he adds. “It won’t stay like that, but it won’t go away either. That’s really good news for LNG.”

That’s a far cry from 2020, when “everything seemed bad for the LNG market, especially in late summer and early fall when they were canceling contracts and ships. It’s now looking more like that was just an anomaly caused by COVID-19 and the resulting shutdown.” CHANGING GOVERNMENT PERSPECTIVE The mood in Washington, D.C., has also softened somewhat about LNG. Until February, the Biden administration seemed intent on delaying, not accelerating, the approval of new projects, says Eric Smith, director of the Tulane Energy Institute. 10/12 INDUSTRY REPORT • SPRING 2022 43

NEWS: ENERGY FERC changing the rules regarding pipeline permitting means they are aligned with the idea that we can at least get the gas to the terminals so it can be liquefied and exported. That’s all positive for LNG. “But the devil’s in the details,” he adds, noting the “bipolar” public policy of the last several years continues to make it difficult for LNG owners to secure long-term financing for new facilities. Challenges by environmental groups are another fly in the ointment, says Bryant Bremer, a partner in Kean Miller’s Baton Rouge office who specializes in environmental regulation, compliance and incident and emergency response. “For environmental or operational permits, there are a growing number of challenges by environmental groups, and that adds time and expense and resources as they’re challenged or reviewed,” Bremer says. “Citizen suits” are an additional concern, whereby a grassroots group

ROLL OUT THE EXPORTS: At press time, world leaders were contemplating additional sanctions against Russia for atrocities committed in its invasion of Ukraine. A key potential target: Russian oil and natural gas, and the $850 million European importers pay for those supplies every day. In March the U.S. Department of Energy authorized additional exports from Cheniere Energy Inc.’s Sabine Pass facility in Louisiana and Corpus Christi plant in Texas to help meet demand. Above: The Enagss regasification plant—the largest LNG plant in Europe—in Barcelona, Spain.

44 10/12 INDUSTRY REPORT • SPRING 2022

seeks to block or prevent the permitting of a facility or expansion. “They’ll do that during the permitting phase or by contesting a governmental agency’s inaction, whether that be through enforcement or permitting,” Bremer adds. “Those can become very time consuming. It’s a long process and very expensive.” The end result? An increased hesitancy on the part of financiers “who aren’t going to put the money up until they have an iron-clad guarantee from the government that they won’t have their pipeline truncated a few years from now,” Tulane’s Smith says. “All it takes is one lawsuit to shut everything down. All you’ve got to do is have a judge issue a restraining order. They’re essentially behaving as political representatives of their particular region.” Certain logistical hurdles have also become problematic for LNG. While the market dynamics are optimal —plentiful gas supply,

profitable drilling and high demand for LNG in Europe and Asia—there are simply not enough import and export terminals in place to meet the demand. “The Europeans are running the few LNG import terminals they have flat out, and they can’t take any more,” Smith says. “Unless you can move it to where someone needs it, it’s not much good to anyone.” It’s a growing problem, says Scott. “Those European countries with the greatest demand lack the capacity to re-gasify all of the LNG that they need,” he says. “They would love to receive more LNG, but they can’t just accept it.” The LNG industry is also particularly vulnerable to supply chain issues, as about 95% of LNG produced in the U.S. is exported, all of it leaving on foreign-flagged ships manufactured in Asia. The Panama Canal is another stumbling block, as it can only allow one ship at a time, per day. “So if you wanted to pick a product that’s uniquely susceptible to shipping issues, it would be LNG,” Smith says. And as U.S. projects are delayed due to these inherent logistical problems and political uncertainty, the number of foreign competitors continues to grow. “The buyer, whether they be in the Asian or European countries, is going to go to the seller with the best deal, and that’s usually the one that has the best contract at the best price,” Smith says. That makes it particularly difficult for an LNG owner to secure 20- or 30-year contracts, which banks require before financing a project.

ASSOCIATED PRESS

The Russian invasion of Ukraine, however, brought about calls for increased supply to Europe, and in March the U.S. Department of Energy authorized additional exports from Cheniere Energy Inc.’s Sabine Pass facility in Louisiana and Corpus Christi plant in Texas. Additionally, FERC backed off some of its regulatory guidance for interstate pipelines to hasten the flow of natural gas to the facilities. In February, the commission had issued two significant policy statements governing how it would review proposals for new natural gas pipeline projects, including the consideration of greenhouse gas emissions in project reviews. However, in late March FERC changed course and designated the policies as drafts that would not apply to pending project applications. “Things have generally been positive since then,” Smith says. “We’re looking at faster utilization of our capacity, and that’s not a bad thing.

WILL MARKET DYNAMICS WIN? Nevertheless, there’s growing confidence that the strong supply and demand for natural gas and LNG is here for the long term. That’s why Tellurian recently announced that construction of its $30 billion Driftwood LNG plant—located on the west bank of the Calcasieu River south of Lake Charles—would begin in April, even as funding arrangements for the project have not yet been finalized. The Driftwood LNG production plant, which is being built by U.S. engineer Bechtel, is intended to pro1012industryreport.com

duce 28 million tons of LNG a year. Tellurian has also acquired some 1.5 trillion cubic feet of natural gas in the Haynesville play to supply the plant, as well as constructed a pipeline from the play. By doing so, Tellurian hopes to control costs and circumvent impending pipeline shortages. Charif Souki, executive chairman of the Houston company, said in a press release that Tellurian had signed 10-year deals with Shell, Guvnor and Vitol for 9 million tons of gas, which justified beginning work on the first phase. Tellurian is still attempting to arrange financing with other lenders but felt “comfortable” about beginning the project due to the high global demand for gas in Europe. Phase one will comprise two plants, each with up to four liquefaction trains. 1012industryreport.com

Elsewhere, Venture Global LNG announced that oil and gas major Shell Plc has agreed to buy LNG produced at its proposed Plaquemines LNG export plant. The contract is for 2 million tons per annum (MTPA) of LNG for 20 years, Venture Global said in a statement. Shell already buys 2 MTPA from Venture Global’s Calcasieu Pass plant. Plaquemines, which has not been formally approved, would produce up to 20 MTPA beginning 2024. And Cheniere Energy LNG recently finished construction of a sixth liquefaction unit at its Sabine Pass LNG export plant, paving the way for higher commercial exports. Contractor Bechtel Group recently finished building the sixth LNG processing train ahead of schedule and within budget, the companies said. The work began in June 2019.

LOREN SCOTT, economist, Loren C. Scott & Associates in Baton Rouge

THE PHYSICAL STRUCTURE in which it will eventually reside is still in design, but McNeese State University in Lake Charles is already making moves to turn a newly funded LNG Center of Excellence into reality. The university has begun offering courses within its College of Engineering that teach the entire LNG process, from fracking through shipping, as well as added a certificate program in the College of Business that addresses the business side of the market. It all comes on the heels of a $2.8 million CARES Act Recovery Assistance grant, awarded to the McNeese State University Foundation in 2021 for the purpose of building the center. This grant is expected to create 112 jobs and generate $6.3 billion in private investment and will be matched with $687,500 in local funds. Dr. Tim Hall, dean of the College of Science, Engineering & Mathematics at McNeese, says Lake Charles is a fitting location for the facility, as the region is rapidly becoming the epicenter for LNG development in the U.S. And while the full intent of the multipurpose facility is still coming into focus, it will likely support conferences, academic classrooms, a laboratory and control room for employee training in the LNG industry. “The full scale and scope of the building is still being determined,” Hall says. “We’ve been reaching out to the various LNG owners and regulatory people to see if they want space in the facility. That could enlarge the footprint.” One thing is certain: The center will be constructed at the corner of Ryan Street and West Sale Road. “McNeese owned the land and donated it to build the facility,” he adds. “We’re currently working with the architect and hope to get close to a final architectural drawing this spring and perhaps start construction later this year.” Inflation and supply chain shortages could delay construction, however, and a total price tag for construction has been difficult to estimate. “We originally thought we’d break ground this spring, but things aren’t moving as fast because of the lack of manpower and other things,” he adds. Hall expects the center will play a leading role in educating the public about LNG’s purpose in the energy landscape of the future. “We’ll also tie it back into the university,” Hall says. “We’ll continue to develop course work at the university level for engineers and look at continuing education opportunities for LNG employees.” Earlier this year, the university appointed regional LNG guru Jason French as the center’s executive director. French says it’s the collaborative aspects of the center that he’s most excited about. “My role will be facilitating and ‘selling’ the center to stakeholders and potential donors,” says French, who also owns French Strategic Partners in Baton Rouge. “We are in discussions with other universities in the state and LNG Center of Gulf Coast to determine the best way to partner Excellence Executive through collaborative research projects around the Director Jason French LNG Center. “The mission is still being refined, but our goals will likely be accomplished through training, workforce development and as a repository for best practices in the industry.” French expects that the center will become a nationally recognized source for LNG information and research and will be one day become financially self-sufficient. “I want to establish the university and the region as a thought leader in the LNG space,” he adds. To clarify the strategic direction of the center, French will be organizing an advisory work group comprised of senior political and business leaders in the LNG industry. For now, the LNG center will operate in a limited capacity at McNeese, then move seamlessly into the new building once it’s completed.

We’ve got a good thing going here. I’m very optimistic. The rig count has more than doubled in the last year and the market is responding to that.”

DON KADAIR

McNeese hopes its LNG Center of Excellence will solidify the region’s leadership role

—Sam Barnes

10/12 INDUSTRY REPORT • SPRING 2022 45

SPECIAL ADVERTISING SECTION

EXECUTIVE

OUTLOOK

We invited industry and construction leaders to share their organizations’ perspectives on the challenges and opportunities they anticipate in 2022 and the lessons they have learned in the past year. Issue Date: Spring 2022 Ad proof #2

Issue Date: Spring 2022 Ad proof #2

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• Please respond by e-mail or fax with your approval or minor revisions. • AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. This ad design © Louisiana Business, Inc. 2022. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

LELA MAE WILKES

CHIEF EXECUTIVE OFFICER Brown Eagle

AT BROWN EAGLE, we’re excited to see the continued economic recovery and people getting back to a life similar to the “before COVID” times. That said, global, and local supply chains continue to struggle to keep up with demand, and many providers are stretched to the breaking point. From personnel to transportation to storage & distribution space, supply is tight, and costs have risen faster than the overall inflation rate. For many organizations in the chemical industry, the opportunity to partner with Brown Eagle has helped them keep costs in check without compromising quality. That’s because our company brings more than 50 years of experience to solving logistics challenges. We have the people, systems, and expertise to package a product and get it to the customer so our clients can focus on what they do best – making the best product possible Simply put, Brown Eagle provides cost-effective and best-in-class solutions for integrated site logistics, warehouse storage, and logistics personnel including forklift drivers, dispatchers, distribution center management, and administrators with SAP experience. We’re fortunate to have an experienced team of tenured logistics professionals supporting our clients, as well as the capacity to support more projects. And while economists are expecting supply chain issues to continue through 2022 and possibly beyond, manufacturers can still soar with the unmatched logistics expertise of Brown Eagle.

46 10/12 INDUSTRY REPORT • SPRING 2022

BRANDON MUNN PRESIDENT Bartlett Group

I AM FORTUNATE to be at the helm of a team of leaders that actually understand what leadership and communication mean, but even better than understanding it, they live it every day. Everyone in business has daily goals and activities that must be accomplished to be successful in our worlds. These tasks can be accomplished by a very diverse group of personnel, but they are typically driven by two very different management types—leaders and directors. Directors and leaders can both accomplish daily goals, but directors are unable to assist in growing company culture, employee development, or help an organization be better in the future. Leaders are able to accomplish those same tasks while mentoring future leaders, securing the company’s future and making the staff and overall organization better. Both management types accomplish what is necessary to be successful as a business, but only one of those allow your business and most importantly the employees—the true assets— to become successful in the future. I am truly honored to work with our team of young leaders and admire their determination to make us successful day in and day out! For more information on the Bartlett Group’s line of industrial services, please visit www.bartlettgrp.com or call (855) 804-4443.

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BEN J. LEBLANC

CHIEF EXECUTIVE OFFICER Patriot Construction & Industrial, LLC OPTIMISM IS in the air at Patriot. Our industrial work is growing rapidly, and this trend is expected to continue. We’ve also been awarded additional opportunities to provide our full scope of civil, deep foundation and marine construction services on projects throughout the Gulf Coast region – a clear signal we’re moving in the right direction. To maintain customer trust, we self-perform our unique blend of sitework, deep foundations, civil, concrete foundations, marine and hydro excavation services. This “take ownership” approach helps ensure we deliver consistent results and reinforces our ability to uphold the highest safety, quality and performance standards. Agility is critical in our business, especially as customers navigate potential challenges from inflation and uncertainty overseas. With demand for our expertise and capabilities increasing, we must meet our customers where and when they need us to help mitigate risks and optimize project outcomes. Patriot is adapting and strengthening our presence to meet these new market realities. By focusing on strategic opportunities, staging “ready to roll” equipment in the right locations at the right time, and hiring and retaining the best people, we will continue to lay a strong foundation for customer success and drive long-term value.

Issue Date: Spring 2022 Ad proof #2

• Please respond by e-mail or fax with your approval or minor revisions. • AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS This ad design © Louisiana Business, Inc. 2022. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

CONNIE P. FABRÉ

PRESIDENT & CEO Greater Baton Rouge Industry Alliance, Inc.

THE START OF 2022 began with great enthusiasm for GBRIA’s program of work and our many networking events. Our members and partners are experiencing increasing demand for their products and services, and industrial manufacturing and construction activities are trending higher. In a poll of member plants in February, 65% say they expect to increase capital expenditure and 50% expect to increase contract hiring in the next 6 months. Plant production and company employment is expected to remain steady and busy. Many also report that they expect greater increases in 2023. Members cite some challenges though, including difficulty staffing positions such as engineers and skilled labor, increased regulatory scrutiny and supply chain difficulties. GBRIA’s work for 2022 includes continuing outreach to the public and local governmental elected officials, promoting the Industry Makes campaign, improving safety and security within the industry, and developing a highly skilled and qualified workforce by collaborating with education partners, from high schools and trade schools to universities and state government. We appreciate the tremendous and growing support for the association and our program of work, and we’re looking forward to a great remainder of the year!

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G. SCOTT HILL

PRESIDENT RelaDyne Reliability Services RELADYNE RELIABILITY SERVICES offers a unique and comprehensive portfolio of industrial reliability services and equipment to provide ultimate plant and operational efficiency for all critical rotating equipment in each industrial sector in the US. Our services are focused on processes to ensure maximum efficiency for critical plant equipment including product cleaning, system cleaning, equipment rentals, fueling services, embedded technicians, and ESG. Our Reliability Services serve nearly every relevant industry from petrochemical, and power generation (including nuclear) to steel and metalworking, pulp and paper, marine and automotive. Our projections for contracted service projects in the Gulf Coast area indicate record high levels for the next several years in startup and commissioning services along with traditional major outage work, plant expansions, and new alternative energy plant developments. With the industrial transition to a more carbon neutral footprint, RelaDyne’s strategic offering of carbon neutral lubricants along with our Industrial Sustainability Services will allow us to provide world class service for every major project in the 10/12 Industry corridor. Our teams have delivered over 50 years of Industrial Reliability Services and we’re ready to support the Gulf Coast sector in design Issue Date: Spring 2022 Ad proof #1 and implementation of their ESG and Sustainability initiatives to reduce • Please respond by e-mail or fax with your approval or minor revisions. theirRUN carbon footprint. • AD WILL AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

ALLEN GUIHER

SENIOR DIRECTOR, OPERATIONS Worley

THE WORLD AROUND US and our industry is changing more rapidly than anyone imagined. To achieve mid-century net-zero emissions ambitions will require the delivery of engineered solutions at a pace and scale that is historically unprecedented in global terms. It will require an ecosystem of approaches and impacts all our customers across the industries we serve. Locally, we’re seeing companies in Louisiana and the Gulf Coast transition to a lower-carbon future. There’s a wave of ongoing and proposed investments in renewable energy, low-carbon fuels, plastics recovery, battery materials, and LNG export. The region’s geology and infrastructure are also conducive to carbon capture, utilization, and storage (CCUS) projects, which will help reduce large-scale emissions across the industry sector. Worley supports the Louisiana Climate Action Plan developed by the Governor’s Climate Initiatives Task Force. The Plan contains strategies and actions to reduce greenhouse gas emissions across the entire Louisiana economy. We’re well positioned to help lead the region on its decarbonization journey, having completed more than 3,200 energy transition projects across the world. And continue to work with our customers on first-ofa-kind projects as new technologies emerge. For more information on how we’re delivering a more sustainable world, please visit worley.com.

10/12 INDUSTRY REPORT • SPRING 2022 47

FOCUS

MAINTENANCE, RELIABILITY & TURNAROUNDS

Lessons learned

By SAM BARNES

ISTOCK

In this Q&A, South Louisiana plant leaders share new strategies for maintaining reliability and resiliency.

SHORING UP: A collaborative of universities that includes LSU has embarked on an effort to anticipate, mitigate and respond to the impacts of natural disasters on the reliability of manufacturing value chains.

number of unplanned events can impact a plant’s reliability and resiliency in south Louisiana. Material delays, inflationary pressures, hurricanes, high river levels, unprecedented winter weather and manpower shortages all bring their own unique challenges. But what happens when they all occur over the course of a year or two? Plant leaders say that perfectly describes 2020-21, as no amount of resiliency planning could have prepared them for the chaos caused by 48 10/12 INDUSTRY REPORT • SPRING 2022

the COVID-19 pandemic, unprecedented supply chain disruptions, a freak ice storm and the largest hurricanes to make landfall in the state’s history. Even prior to the pandemic, though, academia had begun to tackle the problems of reliability and resiliency along the Gulf Coast. With Texas A&M acting as lead, LSU, Mississippi State University, Tuskegee University, the University of Texas at Austin and Florida Atlantic University embarked on an effort in 2019 to anticipate, mitigate and respond to the impacts of

natural disasters on the reliability of manufacturing value chains. The group is currently developing a holistic, innovative, convergent, and scientifically driven platform that enables the creation of resilient technologies, decision-making frameworks, methodologies and tools. The research is being funded by a National Science Foundation Engineering Research Grant. To provide a venue for sharing their own best practices, 10/12 Industry Report sat down with four area industry leaders to discuss their methods for ensuring reliability

during unplanned events, as well as some of the lessons learned over the last 24 months. MEET THE PANEL ∙ Jeff Blohm, site mechanical manager, ExxonMobil Baton Rouge ∙ Shanna Noble, Turnaround and Construction Department Head, ExxonMobil Baton Rouge ∙ Kristie Pickering, director, utilities and infrastructure, BASF Geismar ∙ Brent Robinson, director, maintenance, reliability, machinery & integrity expertise, BASF Geismar 1012industryreport.com

What have been the primary obstacles to de-risking your plant from reliability problems over the last two years? Kristie Pickering, BASF: Not all suppliers have the same commitment and mindset related to reliability, so overall reliability can be impacted. A rigorous approach is required to improve reliability and minimize the impact from unplanned events. Another obstacle can be logistics. This is difficult to overcome in a storm event, but we work closely with providers to ensure we can get product to customers as soon as it’s safe to do so. Finally, when an unplanned event occurs, it often impacts our employees. BASF does an excellent job of supporting employees and the community during these events. During Hurricane Ida, employees were offered fuel, housing support and supplies to make temporary repairs to their homes. Brent Robinson, BASF: The supply chain situation is continuously changing due

to the pandemic and other global impacts. Components and services that were readily available in the past may not be available today; this presents a significant challenge to de-risking our assets. Identifying, training and retaining human talent is another important factor to de-risking our facilities during unplanned events. BASF has partnered with local resources and focused internally on strong mentoring and training programs to strengthen the talent pipeline required to plan for and react to non-typical events.

Shanna Noble, ExxonMobil: We continue to invest in maintaining logistics flexibility across ExxonMobil facilities, since unplanned events can impact crude and other feedstock availability as well as product outlets. Support from governments, our commercial partners and other suppliers, such as Entergy, is critical. During Hurricane Ida, the Baton Rouge Refinery utilized the Strategic Petroleum Reserve to maintain crude supply and to continue to supply the local market with fuel.

U.S. DEPARTMENT OF ENERGY VIA ASSOCIATED PRESS

The strategic petroleum reserve near Bryan Mound, Texas

1012industryreport.com

10/12 INDUSTRY REPORT • SPRING 2022 49

FOCUS: MAINTENANCE, RELIABILITY & TURNAROUNDS

ISTOCK

For external events that provide advance notice, internal emergency preparedness plans and procedures prepare for the event and minimize customer impacts.

Jeff Blohm, ExxonMobil: For external events where we have time to prepare,

During and after an event, what is your process for capturing and disseminating ‘lessons learned’?

such as hurricanes, we have internal emergency preparedness plans and procedures to prepare for the event and minimize customer impacts. This includes collaboration and planning across the Baton Rouge area ExxonMobil facilities and with contract partners to maintain production to the extent possible without compromising the safety of our employees, contractors and community. For Hurricane Ida, we were able to provide fuel supply to the region from our Baton Rouge Fuels Terminal due to planning and coordination within our company and via collaboration with distributors, contractor firms, suppliers and other industry members. For unexpected events, we have backup systems in place, such as redundant power and logistics flexibility (such as various feedstock sources and product outlets) to help minimize production impact. For each of these events, we capture lessons learned internally to enhance our response plans in the future.

Kristie Pickering: For unexpected impacts to production, BASF takes the opportunity to learn from these events. We investigate what happened and take actions to prevent a recurrence. Some items are straightforward and can be solved with a few people. The more complex ones require a formal Root Cause Failure Analysis, or RCFA. Others may require multiple teams or RCFAs, such as an impact from a hurricane or freeze. Action items are tracked in a database to ensure timely completion. BASF tracks asset effectiveness data on a global basis, and this gives us visibility into the effectiveness of our reliability programs in driving down unplanned losses. One lesson that is key from these events is preparedness. Over the years, we’ve continued to enhance our preparation checklists for events as we have new learnings. Brent Robinson: In addition to Kristie’s comments, BASF has learned it is critical to anticipate failures in advance and develop mitigation plans to eliminate or reduce the impact of the event. This requires a commitment and dedication to complete a thorough review and implement actions as appropriate. This frontend work ensures proper plans, spare parts and supplier networks are established well in advance of an unexpected production interruption.

50 10/12 INDUSTRY REPORT • SPRING 2022

1012industryreport.com

Can we ever reach a point where reliability is unaffected by unplanned events? Why or why not? Jeff Blohm: At ExxonMobil, we are able to use our global,

integrated footprint to help maintain supply reliability. For example, in the event of a hurricane in the Baton Rouge area, we would look to leverage company logistics and integration to supply local customers with products out of Texas or other ExxonMobil facilities.

Using lessons learned from Hurricane Gustav, BASF’s site in Geismar was able to maintain essential utility production during Hurricane Ida.

Kristie Pickering: I’ve seen great improvements in our ability to ride through unplanned events. For both the 2021 freeze event and Hurricane Ida, BASF’s site in Geismar was able to maintain essential utility production—a much-improved outcome compared to impacts from Hurricane Gustav in 2008 and the 2018 freeze. Significant companywide efforts and spending were required to harden key systems to allow for continued utility production. For safety precautions, BASF shut down the production units during Hurricane Ida, but maintained key utilities to allow for less impact and more efficient startups after the storm passed. During the pandemic, the risk we experienced was maintaining adequate staffing. Our plan called for systemic tracking of staffing and availability, trigger points for escalation and a backup staffing plan. This tracking allowed us to maintain the necessary staffing for critical operations. We knew our reliability was essential to our customers, especially those customers who we helped create life-saving products during the pandemic.

Does industry collaborate to address reliability concerns and in planning for disruptive events? If so, how?

NOAA

Brent Robinson: BASF continuously strives and works towards the ultimate goal of zero unplanned events impacting production so we can deliver on our promises to customers. BASF’s ability to eliminate impacts depends largely on two main factors: our ability to predict unplanned events and develop proper plans for prevention, and the associated business case for implementing the solutions.

Shanna Noble: Yes, we collaborate and plan with local and state organizations—the Mayor’s Office of Homeland Security & Emergency Preparedness, Governor’s Office of Homeland Security and Emergency Preparedness, Baton Rouge Area Mutual Aid System and the North Baton Rouge Chemical Industry Task Force—to ensure we are aligned on emergency preparedness plans across the region, share expertise to support mutual aid responses and ensure strong communication systems. We also work with our contractor firms and their areas of expertise to help our sites manage through situations. Additionally, we maintain strong working relationships with feedstock and energy providers, such as Entergy, to ensure plans are in place for unplanned events. LSU is an educational partner with the fire training facility, where our volunteer fire team can train and support mutual aid learning. Finally, trade associations such as the Louisiana Mid-Continent Oil & Gas Association, Louisiana Chemical Association, and the Greater Baton Rouge Industry Alliance bring opportunities to share best practices in emergency preparedness. Kristie Pickering: From an industry perspective, we are very connected. We often share suppliers and have supplier/customer relationships, so plant operations are integrated across companies. We also share key lessons learned and best practices through industry organizations, such as LCA and GBRIA. Brent Robinson: In addition to the connection with suppliers and peers

and industry organizations, we are also active participants and contributors in many technical organizations that are focused on improving supply reliability, such as the American Society of Mechanical Engineers, Institute of Electrical and Electronics Engineers, Society of Maintenance and Reliability Professionals and others.

1012industryreport.com

10/12 INDUSTRY REPORT • SPRING 2022 51

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FOCUS: MAINTENANCE, RELIABILITY & TURNAROUNDS

Managing the ‘data tsunami’

BY SAM BARNES

Staying ahead of the maintenance curve is becoming an information-driven, immersive experience.

1012industryreport.com

“Industry data is moving at exponential speeds. There has been a 4,300 percent increase in big data from 2016 to 2021. That’s significant, since it ultimately provides the foundational point for visual transformation.” KYLE DAUGHTRY, digital and extended realities solutions architect, ExxonMobil in Houston, (at right) with extended reality domain architect Athicha Dhanormchitphong, at the Tec Next Conference in Baton Rouge

10/12 INDUSTRY REPORT • SPRING 2022 53

DON KADAIR

echnology is making great strides in enhancing the ability of maintenance workers to do their jobs more efficiently and safely, primarily through the manipulation of data. Industry 4.0, robotics, AI, virtual reality, machine learning and a host of other tools are all playing a role in transforming the landscape. Kyle Daughtry, digital and extended realities solutions architect at ExxonMobil in Houston, says the industrial space is heading toward a more visual way of working. In February, he spoke at the annual Tec Next Conference in Baton Rouge. Nearly 200 attended the two-day event, during which industry and technology experts gave brief, 15-minute talks about various technologies. “Industry data is moving at exponential speeds,” Daughtry says. “And it’s a tsunami of data—there has been a 4,300 percent increase in big data from 2016 to 2021. That’s significant, since it ultimately provides the foundational point for visual transformation.” The “digital reality ecosystem” is becoming the new way of working at ExxonMobil. Data is being captured in real time and in a variety of ways, then accessed and manipulated whenever and however needed. ExxonMobil is finding that most of that data is best interpreted in a 3D, not 2D, world. “We see a future where an operator has access to all of that information at their fingerprints, and in real time,” he adds. “It’s changing complete work processes in our industry, from being able to perform maintenance or engineering design in a collaborative environment, to putting yourself through high-consequence scenarios to emergency response.” Working in today’s industrial space is a lot like playing a team sport, says Art Powers, ExxonMobil’s principal for Emergency Preparedness & Response in Irving,

FOCUS: MAINTENANCE, RELIABILITY & TURNAROUNDS

“The things people are wanting to accomplish in the industrial space— reduce operational costs, gain efficiencies, extend the lifetime of their assets—haven’t changed throughout all of the various industrial revolutions. It’s just the kind of tools that you have to solve those problems that have changed, and quite dramatically.”

DON KADAIR

RISHI VAISH, chief technology officer and vice president of AI applications, IBM

Texas. In both environments, there’s a common desire to accurately simulate “game time” conditions during practice. And like never before, Powers adds, immersive technologies are enabling industrial owners to do just that. Powers was the opening keynote speaker at TEC Next. “Practice like we play is what we hear on our sports teams, but it boils down to simulating game-time conditions in order to perform at optimal levels,” Powers says. “That’s part of what we do every day in the industrial space. 54 10/12 INDUSTRY REPORT • SPRING 2022

It just has a different terminology associated with it … walk throughs, dry runs, beta testing, etcetera.” As for its part, ExxonMobil created an Immersive Technologies Studio at its Houston campus in 2019 and manned it with experts in the fields of learning, collaboration and design. Along the way, they’ve identified existing technologies and synced them with the needs of the company. “We’re all technologists at heart, and we are taking on real challenges in our work,” he adds. “Our Immer-

sive Technologies Studio tries to create that synergy.” INDUSTRY 4.0 IS VITAL Rishi Vaish, chief technology officer and vice president of AI applications at IBM, says Industry 4.0 will be critical to the future of maintenance. “The things people are wanting to accomplish in the industrial space … reduce operational costs, gain efficiencies, extend the lifetime of their assets, those questions haven’t changed throughout all of the

various industrial revolutions,” says Vaish in addressing the Tec Next audience. “It’s just the kind of tools that you have to solve those problems that have changed, and quite dramatically.” Blockchain solutions, AI-based applications, hybrid cloud technologies, cloud computing, software-asa-service architecture and application middleware as all necessary parts of the 4.0 matrix. Much of them are easily transferrable to the maintenance space. “We all have a ‘digital twin’ online, and 1012industryreport.com

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FOCUS: MAINTENANCE, RELIABILITY & TURNAROUNDS

TECH BENEFITS: Industrial maintenance work is being made more efficient and safer through technological advances, primarily in the manipulation of data. Industry 4.0, robotics, AI, virtual reality, machine learning and a host of other tools are all playing a role in transforming the landscape.

you can do exactly the same thing for every asset in your plant,” Vaish says. “You have data on these assets, such as the manufacturer, the date you installed it, the various performance measurements that you take … that makes up that digital profile. “You can then take that data stream and put it somewhere in a digitized database, then mine that data however you like,” he adds. “Typically, you want to get this data from sensors installed by the manufacturer, or from sensors you add around your devices—cameras, temperature gauges etcetera. “This is a way you can transform your operations without having to make a lot of physical changes to what you do,” he adds. “The data from your digital twin is what AI needs.” Vaish is most excited about AI’s future potential. He says current AI 1012industryreport.com

applications in the auto manufacturing industry can be easily transferred to industrial maintenance. “We helped one auto manufacturer create and load an application onto their phone, which can then be pointed at an assembly and immediately tell them if there’s a defect. It has revolutionized the speed of their assembly line and the number of defects that they find.” It can also considerably reduce safety risk. “You can deploy these same visual inspection and recognition technologies via a robot that can go into areas that are unsafe without putting workers at risk,” he adds. The same technology can also be deployed on drones. NOTHING WORKS WITHOUT CONNECTIVITY Kit Keen, a senior technology consultant at engineering firm MS

Benbow & Associates in Metairie, says regardless of the technology, it’s only as effective as the internet connectivity available within the plant. “We’re trying to integrate a lot of things … and without wireless connectivity where are we? It’s that non-sexy but necessary conversation when you’re thinking about implementing the next technology.” The cellular industry has done a good job of providing Wi-Fi coverage in the public domain, but the industrial environment has been traditionally overlooked, Keen says, largely due to security concerns and a reluctance by owners. Private LTE (Long-Term Evolution) is the answer, he adds, as it provides a way to alleviate those concerns. LTEs enable mobile data to be transferred in larger amounts and at higher speeds than was possible

under earlier wireless communication standards, while Private LTE offers network scalability, increased security, SIM-based authentication and administrative control. “If you’re in an outdoor environment, Wi-Fi doesn’t do a good job for people and assets moving in a 3D space,” Keen says. “Private LTE has matured significantly over the last couple of years and allows for owners to build and own their own private LTE system with the features of a public system.” Seamless mobility is perhaps the biggest advantage it offers the maintenance space. “There is the benefit of seamless handoffs throughout the coverage area,” he adds. “And it comes with network speeds and bandwidths comparable to Wi-Fi, with increased reliability, and an increased indoor and outdoor coverage footprint.” 10/12 INDUSTRY REPORT • SPRING 2022 57

CLAIBORNE

CLOSING NOTES: PROJECT MAPS BOSSIER

Project by project

WEBSTER

CADDO

($25M-$250M)

BIENVILLE

Active Louisiana industrial projects announced or proposed since Jan.1, 2014, with projected capital investment of $25 million to $250 million. Second line shows projected capital investment and direct new jobs. List is representative, not complete; statuses and costs change frequently. 1 ExxonMobil Refinery upgrades and new technology

$240M | 1,300 jobs retained Location: Baton Rouge Status: Completion in 2023

8 International Matex Tank Terminals storage tanks, pipelines + dock $100M | 8 jobs Location: Geismar Status: 2023 completion

14 CF Industries Nitrogen fertilizer plant expansion $41.4M | 7 jobs Location: Donaldsonville Status: 2023 completion

2 Kinder Morgan Louisiana Pipeline expansion

9 Cornerstone hydrogen cyanide plant

15 Arq Proprietary fuel production facility

3 IMTT terminal upgrades

10 Placid Refinery upgrade

16 Port of South Louisiana improvements

$151M | 0 jobs Location: Southwest Louisiana Status: Pending $150M | N/A Location: Geismar Status: 2023 completion

4 Delek Refinery

$150M | 30 jobs Location: Krotz Springs Status: 2024 completion

5 Air Liquide air separation unit $145.5M | 10 jobs Location: Port Allen Status: N/A

6 Air Liquide air separation unit $139M | 4 jobs Location: Geismar Status: N/A

7 CF Industries Green Ammonia $100M | N/A Location: Donaldsonville Status: Completion in 2023

$100M | N/A Location: Jefferson Parish Status: Pending $94.5M | 5 jobs Location: Port Allen Status: FID pending

11 Eastman Taminco expansion $70M | 5 jobs Location: St. Gabriel Status: Underway

12 International Paper Modernization

$52M | Retain 492 jobs Location: Bogalusa Status: N/A

13 Hood Container efficiency upgrade and capacity expansion

$50M | Retain 306 jobs Location: West Feliciana Parish Status: N/A

RED RIVER

DESOTO

NATCHITOCHES SABINE

$40M | 12 jobs Location: St. Rose Status: N/A

$37.8M | N/A Location: Port of South Louisiana Status: In progress

VERNON

17 1.4Group chemical processing facility

$35M | 34 jobs Location: Ascension Parish Status: Underway

BEAUREGARD

18 Ingevity Caprolactone polyol production capabilities to existing facility N/A | N/A Location: DeRidder Status: 2022 completion

CALCASIEU

CAMERON

BLUE = ADDED SINCE PREVIOUS EDITION 58 10/12 INDUSTRY REPORT • SPRING 2022

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UNION

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

OUACHITA

RICHLAND MADISON

JACKSON

FRANKLIN

CALDWELL

TENSAS WINN

CATAHOULA LASALLE GRANT