Energy transition is changing the global energy sector from traditional fossil-based oil and gas energies to lower carbon and greener energy solutions. This transition has affected all energy industry stakeholders and is driving a rapid change in the oil, gas, and chemical industries.
Currently, these industries are seeing increases in the prevalence of renewable energy sources, such as biomass, wind, solar, geothermal, hydrogen, and hydroelectric, wherever possible and economically feasible. However, this shift will take time, and these industry changes will occur incrementally. Perhaps the biggest driving force of the energy transition is the desire of energy market stakeholders to reduce energy-related CO2 emissions.
As energy stakeholders begin to adjust to new government regulations and market expectations, they must decide what steps to take towards a lower carbon future. It’s also important to know how and when to make these changes and the optimal route to execute them while maintaining successful operations. Many energy stakeholders are turning to engineering, procurement, and construction (EPC) contractors for energy transition projects for an added level of project delivery certainty and predictability.
Let’s take a closer look into energy transition projects and their unique challenges, how to leverage an EPC contractor for energy transition projects, associated owner benefits, and what to look for in an EPC contractor.
Understanding Energy Transition Projects and Their Challenges
Many of the current projects that companies are exploring in terms of energy transition include retrofitting current infrastructure to deliver different products or new products altogether. Some examples of energy transition projects presently occurring in the oil, gas, and chemical industries include the following:
- Hydrogen capture/green hydrogen/blue hydrogen
- Biomass (creating fuels such as renewable diesel and utilizing other materials, such as animal fats, wood chips, waste, etc.)
- Recycling (plastic waste recycling, zinc recycling, etc.)
- Battery production and storage
- Carbon capture and sequestration
While the planning and execution of energy transition projects ultimately require the same methods as traditional capital projects, several unique challenges may be present, such as the following:
- Financial uncertainty with investment in new technologies
- New players in the market in need of building infrastructure
- Economic feasibility
- Logistics and strategy for retrofitting current infrastructure
- Identification of new technologies with proven experience and the utilization of these technologies
- The assessment of technology feasibility compared to traditional methods
- Geography-dictated locations for specific projects (e.g. wind farms)
Leveraging an EPC Contractor for Energy Transition
EPC, also referred to as design-build, is a project delivery system in which an EPC company works under a single contract with a project owner, providing all design and construction services. The early and frequent collaboration between estimating, engineering, procurement, and construction teams is a key defining factor for this method.
With new concepts and technologies being implemented into existing facilities, a strong scope and robust upfront goal is necessary for project success. Well-established EPC contractors with proven industry experience can help project owners achieve a well-thought-out plan from concept through completion.
Just like any project delivery method, the EPC approach to project execution has unique benefits, such as those detailed below.
- Potentially faster timeline due to avoidance of the bidding process and ability to overlap project phases
- Risk transference from project owner to EPC contractor
- Generally reliable budget and high certainty of maintaining ROI
- Streamlined communication
- Reduced management efforts
What to Look for in an EPC Contractor for Energy Transition Projects
There are several crucial elements to look for in an EPC contractor to provide a greater level of certainty of overall project success. When looking to utilize an EPC contractor for energy transition projects, here is what to look for:
- Industry-specific experience
- Experience with the area and type of work being performed
- Robust capital project management and project controls capabilities
- In-house fabrication
- Strong front-end planning skills and experience
- History of project execution success
H+M: Your Trusted EPC Contractor for Energy Transition Projects
At H+M Industrial EPC, we have more than 30 years of experience providing leading capital project management services to the energy, chemical, and terminal and logistics industries. As your project execution experts, we internally execute all project steps, from planning and engineering to fabrication and construction, utilizing our proven EPC approach. This strategic approach provides you with the project supply chain certainty that keeps project life cycles intact while reducing owner costs.
