Capital Project Strategies, LLC
11710 Plaza America Drive
Suite 2000
Reston, Virginia 20190
t: 703.871.5079
f: 703.433.9313
 

Power Generation, Petrochemical, and Process Industries

Capital projects in the power generation, petrochemical and process industries share many common attributes – EPC and EPCM forms of project delivery and contracting, performance guarantees, complicated equipment interfaces, and intensive in-the-field piping requirements. Contractors participating in these industries are among the world’s largest Engineering and Construction (E&C) firms, and the negotiation of an appropriate contract with these firms can be a major challenge for owner teams.  

In these industries, Capital Project Strategies typically works as an integral part of the owner’s project team, interfacing with and, as applicable, reporting to the owner’s procurement department, legal department, and technical representatives.  Our primary areas of service involve “front-end” work – such as procurement and contracting advice and contract drafting, as well as advice during project administration.  We also provide training services to owners in these industry sectors.  Our experience is described in greater detail below.

Front-End Experience

We assist clients in developing the right project delivery and procurement strategy (e.g., reimbursable, EPC, EPCM, use of multiple contractors managed by a Project Management Consultant, lump sum, etc.), in appropriate risk identification and mitigation, and in drafting and negotiating contracts.  Our contract drafting and negotiation experience goes far beyond EPC contracts and includes equipment purchase agreements, construction management contracts, and operations and maintenance contracts.  In the power generation sector, we have experience with many different types of fuel sources, including coal, lignite, natural gas, orimulsion, and hydroelectric. 

The following is a sampling of the clients for whom we have experience in providing these services. 

Alcan
BP Americas
Coastal Corporation
Con Edison
Constellation Energy
Dow Chemical
Duke Power
El Paso Energy
EQUATE
Gildan Activewear


MCN Energy
Nevada Power Company

New Arbor Technologies

Panda Energy
Procter & Gamble
PSEG Global
Synergics Energy Development
Tampa Electric Power
Tractebel Power Company
Utah Power & Light

The majority of our front-end services involved assisting the owner's project development teams in drafting and negotiating the design and construction contracts, many of which were EPC forms of contract.  Our consultants have participated in the drafting and negotiation of contracts with many of the world’s largest E&C firms, including Bechtel, Fluor, Black & Veatch, KBR, Skanska, Technip, and Foster Wheeler.  We have also negotiated turbine purchase agreements with most of the major turbine vendors (including General Electric, Siemens Westinghouse, ABB, and Toshiba).  Our representative projects are located throughout the United States, as well as around world, including Kuwait, Nigeria, Pakistan, India, China, and Central America. 

The specific front-end assignments upon which we have experience are too numerous to mention in detail.  The examples that follow are intended to show some of the more unique and diverse projects and technologies upon which we have been engaged.

  • NTF Construction (Turkey).  Mr. Loulakis has been retained by NTF Construction, a developer in Ankara, Turkey, to draft and negotiate a series of complex EPC agreements on a hydroelectric project in Turkey.
  • Mobile Bay Processing Partners, Mobile Bay NGL Recovery Plant (Alabama).  Mr. Loulakis was retained by Mobile Bay Processing Partners, a project company whose principal shareholders were MCN Corporation and Duke Energy Corporation, to draft and negotiate an EPCM agreement with Dresser Industries for a natural gas liquids recovery plant and related facilities off the Gulf Coast.  The contract involved a variety of complex technical and commercial issues, including: (a) performance guarantees for throughput of natural gas and recovery of ethane and propane; (b) testing methodologies for determining capacity, quality, and power usage; and (c) integrating the liability limitations associated with the license for the plant’s technology.  Mr. Loulakis worked with the client’s project management team in drafting the contract and directly participated in the negotiations with Dresser.
  • Shrinigar Hydroelectric Facility (India).  Synergics Energy Development retained Mr. Loulakis to assist in the drafting and negotiation of an EPC contract for a 330 MW hydroelectric plant located in Uttaranchal, India.  The EPC contractor was an international consortium of contractors, including Skanska International, ALSTOM Power, ATM, and Voith.  Major negotiation issues included performance requirements and guarantees (efficiency and capacity levels), parent company guarantees, and responsibility for governmental actions.  The negotiations were significantly affected by the proximity of the plant to Kashmir, which created a number of political obstacles (e.g., conflicts between Pakistan and India) and project management challenges (e.g., the displacement of villagers around the facility’s reservoir and along the route of the penstock).
  • Alcan (Worldwide).  Capital Project Strategies was retained by Alcan to provide assistance in the development of procurement and contracting strategies for Alcan’s capital expansion program.  This program involved the construction of new aluminum smelters and facilities at several locations around the world.  We provided specific advice on the best way to procure, negotiate and contract for EPCM services.
  • New Arbor Technologies, LLC, Pulp Manufacturing Plant (Michigan).  Mr. Loulakis assisted New Arbor Technologies, LLC in drafting and negotiating an EPC contract for a project-financed 100 ton per day (TPD) pulp manufacturing (deinking) plant located in Michigan.  The EPC contract addressed a number of unique EPC and technology issues, including: (a) performance criteria, testing, and guarantees associated with the facility; (b) technology transfer and risks associated with this “micro-deinking” process developed by our client; (c) turnover to the owner’s operators and operational acceptance; and (d) limitations of liability.  We also drafted and negotiated project oversight and construction management agreements for other members of the owner’s team.

Project Administration and Conflict Resolution Experience

We have a broad range of experience in assisting owner teams in assessing and defending claims and disputed change orders.  In performing these services, we work closely with all members of the project management team – and in particular with in-house and litigation counsel – to evaluate the problem and find solutions.  If the dispute moves to a more formal setting, we help the team create effective “litigation” or “arbitration” strategies and give our clients unfiltered, “peer review” assessments of where they stand.  Included below are some of our representative experiences:

  • Olefins II Kuwait (Kuwait).  This multi-billion dollar petrochemical complex is being constructed in Kuwait, and is owned by a joint venture with The Dow Chemical Company and its Kuwaiti partner.  This complex project involves several EPC contractors, multiple prime contractors working directly for the owner, and several reimbursable contractors.  Capital Project Strategies was initially retained to provide claims training to the entire project team. Mr. Loulakis has since been actively involved in working with all levels of project management to assist in the analysis, negotiation, and resolution of claims and contracting issues, including the ghost-writing of letters.  We have also assisted in the administration and strategic direction of the scheduling consultant who is working on behalf of the owner, addressing potential delay and disruption claims.
  • Energia Azteca VIII, S. de R.L. de C.V. (Mexico). Owned jointly by AEP and Intergen, this project was designed and constructed under an EPC contract with Bechtel Power Corporation.  Various disputes arose on the project, with Bechtel making claims for over $25 million for delays and heat rate bonuses.  Mr. Loulakis was project counsel in representing the interests of the ownership in its dealings with Bechtel on these issues and, as such, analyzed the various claims and developed a resolution strategy in conjunction with the project team.  The matter went to mediation, and was resolved shortly thereafter.   
  • Fujian Pacific Electric Company Limited (People’s Republic of China).  Owned by subsidiaries of Intergen, El Paso and Lippo Group, this project consisted of two 362 megawatt coal-fired electric power generation units and common facilities, and was constructed under an EPC contract with Bechtel Power Corporation.  The disputes between the parties, in excess of $50 million, primarily involved responsibility for project delays, and included a number of complex issues relative to alleged interference by Chinese public agencies.  Mr. Loulakis represented the company in developing a claims mitigation and negotiation strategy.  The matter was ultimately resolved favorably, shortly after the initiation of an arbitration proceeding.
  • Sweeny Cogeneration Facility (Texas).  Mr. Loulakis represented an American Electric Power (AEP) subsidiary on issues arising out of its relationship with Siemens Westinghouse Power Corporation (SWPC).  SWPC furnished four combustion turbine generators on the project that experienced various performance problems.  He assisted the owner in determining a negotiation strategy and litigation was ultimately started, based on a latent defect claim theory.  The matter settled shortly after the commencement of litigation.    
  • Red Hills Lignite Plant (Choctaw County, Mississippi).  Mr. Loulakis was lead counsel for Choctaw Generation Limited Partnership (CGLP), whose general partner was Tractebel Power Corporation, in a dispute with its EPC contractor, Bechtel Power Corporation, on a 440-mw lignite plant in Mississippi.  The project was completed almost 16 months late, resulting in claims between the parties exceeding $500 million to address responsibility for the delays.  The case featured claims by Bechtel for labor force majeure and owner interference with the execution of the work, as well as some complicated technical issues associated with the Alstom-furnished boilers and lignite and limestone handling systems.  Mr. Loulakis assisted the client not only on these issues, but also in obtaining an injunction in the Southern District of New York against Bechtel’s surety, compelling the surety to replenish a letter of credit.  As a result, CGLP was able to draw a substantial amount in liquidated damages during the progress of the job.  The case was successfully resolved in mediation.
  • East River Repowering Project (New York City).  Mr. Loulakis represented Con Edison in providing contract administration services on improvements made to Con Edison’s East River Generating Station project.  The contractor on the project, Slattery Skanska, executed a $188 million construction contract to complete the scope of work, inclusive of installation of gas turbines, heat recovery steam generators and other equipment furnished by the owner.  During the course of construction, Slattery Skanska claimed that the original design documents were defective and that changes made to the baseline design delayed and disrupted its performance.  Mr. Loulakis assisted the project management team in evaluating these claims and developing a mitigation strategy to resolve the claims without the need for litigation.  His services included reviewing schedule and productivity data submitted by the contractors and developing project correspondence to support Con Edison's position.  The claims were ultimately settled amicably and out-of-court.
  • Newington Energy, LLC and Hawkeye Funding, Limited Partnership (New Hampshire). Mr. Loulakis represented Newington Energy, LLC and Hawkeye Funding, Limited Partnership (subsidiaries of Con Edison) in a dispute with Duke/Fluor Daniel (D/FD), the EPC contractor on a 525-mw gas-fired power plant in Newington, New Hampshire.  The primary issues between the parties involved claims by D/FD of approximately $88 million for labor force majeure and alleged delays in the notice to proceed, among other items.  There also were disputes between the parties pertaining to whether the claims by D/FD were arbitrable in accordance with the JAMS rules or if litigation was required.  Mr. Loulakis supported legal activities in New York and New Hampshire, working directly with in-house counsel for Con Edison in leading the litigation and arbitration efforts.  The case was successfully resolved in mediation.
  • Eagle Point Cogeneration Project (West Deptford, New Jersey).  Mr. Loulakis represented a project company formed by Coastal Corporation and PSEG Global on delay and disruption claims filed by Ebasco Constructors on the Eagle Point Cogeneration Project in West Deptford, New Jersey.  Selected early in the project as special construction counsel, Mr. Loulakis had initially drafted and negotiated the EPC contract with Ebasco, and then helped the project owner develop a claims resolution strategy.  The dispute was settled amicably between the parties.
  • Wailuku Hydroelectric Project (Hilo, Hawaii).  Mr. Loulakis represented Synergics Energy Development in defending a total cost, delay, and disruption claim submitted by the EPC contractor, Kiewit Pacific Corporation, on this Hawaiian hydroelectric facility.  The claim was based on differing site conditions, and Mr. Loulakis took the lead in analyzing and developing a claims resolution strategy.  This dispute was successfully resolved in mediation.
  • Panda Energy (Nepal).  Panda Energy retained Mr. Loulakis to help it in claims involving a Chinese-based EPC contractor on a hydroelectric facility in Nepal.  The claims were largely for delay and disruption, and the total amount in controversy between the parties was in excess of $10 million.  The matter was settled through mediation for a small fraction of the overall amount claimed.

            Training Experience

In addition to working on project-specific matters, we have a substantial amount of experience in providing high-level, “industry-focused” training to clients in the power generation, petrochemical, and process industries.  Mr. Loulakis is a regular presenter on procurement and contracting issues for Independent Project Analysis (IPA), having participated in several Contracting and Procurement Conferences.  He is also a member of the faculty at the BP Project Academy, where, he works in conjunction with professors from MIT to train senior project management on the current contracting environment and claims and change management.  Mr. Loulakis has also provided periodic in-house training and strategic contracting advice to Alcan, BP, Dow Chemical, and El Paso Energy. 

 

 

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