ANALYSIS OF SUCCESS FACTORS OF THE II WEST –EAST GAS PIPELINE PROJECT

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Assignment Submission Form
Submission Date: 23rd September2017
ANALYSIS OF SUCCESS FACTORS OF
THE II WEST –EAST GAS PIPELINE
PROJECT.
Student Names & Student Numbers
A Sabeeha Murad
M.Z.Erandi Peiris
T A C Rashminie Perera
K.C Nandika Perera
K W Okshika Prabhani
K.C. Nandika Perera 16210381
T.A.C.R.Perera 16208207
Module Code BMGT2003L
Module Title Project Management
Module Coordinator Dr Ali Nazarpour

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Table of Contents
List of Figures............................................................................................................................iii
1. Executive Summary............................................................................................................. 1
2. Introduction........................................................................................................................ 2
2.1 Introduction to the sector............................................................................................. 2
2.2 Introduction to the project ................................................................................................ 3
3. Analysis ............................................................................................................................... 6
3.1 Theoretical Background related to analysis .................................................................6
3.2 Application Theory to the project ................................................................................ 7
4. Discussion & Conclusion................................................................................................... 13
5. References ......................................................................................................................... 16

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List of Figures
Figure 1 – World energy consumption by source, 1990 -2040.......................................................... 2
Figure 2 –Three westeast gas pipeline projects.............................................................................. 3
Figure 3-Map of second West East Gas Pipe Line Project.................................................................4
Figure 4 – Risk Management Process............................................................................................. 6
Figure 5 - Green Pipeline Model ....................................................................................................8
Figure 6 – Pipeline Integrity Management Process..........................................................................9
Figure 7 - Joint prevention, treatment and control..........................................................................9
Figure 8- Guideline in approaching risks....................................................................................... 10
Figure 9 –PMBOK Process ........................................................................................................... 10
Figure 10 - Avoidance Measures during Construction of II West-East Gas Pipeline Project............... 11
Figure 11-The proportion of natural gas consumption WEGP ........................................................ 13
Figure 12-Monitoringresultsfromthe Ministryof WaterResourcesvsII WEGP (west) project
construction............................................................................................................................... 14

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1. Executive Summary
Oil and gas sector becomes the world preeminent energy source from many decades to future
decades. Manufacturing and transmitting oil and gas is a tough thing due to its qualities. So
build up a project related to this sector becomes difficult. In world some projects success and
most of them failures. Within in this report try to analyse success factors of the II West –East
Gas pipeline project. It’s the world’s largest natural gas transportation line which starts from
Turkmenistan to Hong Kong which length 8819 km. Aim of this project to supply clean and
sustainability energy and power source to residents in Hong Kong and other suburbs in china.
Risk management and other supporting theories were used for analysis. According to analysis
firstly conduct risk analysis, assessment of risk and do the risk analysis procedure. Identified
major risks were environmental risks, quality risks safety, tendering, bidding related risks and
etc. Green pipeline model uses to risk assessment and overcome risk associated with
environmentally sensitive areas in Gansu, Shapotou National Nature Reserves and Shaanxi
cultural relic’s areas. To overcome risk related to geological and safety Risks Company uses
pipeline Integrity Management Process to assess the risk, evaluate and solve them. To Risk
response development uses concept of life long project with whole project withal staff safe and
gain an accepted quality output. To that uses various ways like 3rd party inspection, daily site
visits, mining regulations and etc. According to PMI at the 19th December 2012 company
connecting the WEPII network from mainland China to Hong Kong after solving complex
challenges with the help of Proactive risk and safety management. With the other project
management functions like Effective planning, Effective scope management, Proactive quality
monitoring ,People management ,Effective communication ,Effective decision making
,Effective stakeholder management and achieved with a great success on the project showing
on time completion, minimum impact on 20 km undersea pipeline construction through three
shipping channel (Dachan Fairway, Tonggu Channel and Urmston Road) the latter of which is
one of the world’s busiest marine channels and minimal environmental impact and three
million hours of pipeline construction with zero reportable incidents.

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2. Introduction
2.1 Introduction to the sector
Oil & gas industry is considers as biggest sector in the world in terms of dollar value.&
generating hundreds of billions of dollars globally each year. And also it is a global
powerhouse. Worldwide there are hundreds of thousands of employees are employing. Oil &
gas industry is con- sider as engine of the world economy. In the current global market
economic oil & gas industry is a fastest growing industrial sector. There are three areas in oil
and gas industry which includes Upstream, Midstream and Downstream.
Upstream is the process of mining oil and gas which is in under the sea or in the underground.
Mining the wells and preparing for getting the oil and gas to outside done in this process.
In downstream process the main thing is to clear the crude oil and filtering the content in the
crude oil and gas. Several number of products are filtering from the crude oil for commercial
distribution such as natural gas, LPG Gas, Diesel, Petrol etc.
When the twentieth century oil and gas industry was bit contravention topic because of the
environmental issues. Some major environmental pollutions such as global worming made a
significant drawback of the oil and gas industry.
However still it is the world biggest industry which operates 30 billion of barrels in worldwide
each year. And it is the highest expenditure industry in any country in the world. However
estimates on world energy consumption shows in 2040 liquid fuels and natural gas becomes
world dominant energy sources.
Figure 1 – World energy consumption by source, 1990 -2040
Source - (U.S. Energy Information Administration, 2017)

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China has a huge history of mining oil and gas wells. They have started the oil mining in 1900s
and they had been grown up to export level in 1973. Now china is the fourth large oil producer
in the world and they are the main importer in crude oil in the world. China have created a
market which is importing the crude oil and filtering the gas and other petroleum products.
2.2 Introduction to the project
China- Hong Kong is a city that sizzles with energy. It requires a reliable supply which can
maintain within 24 hours economic and social and the better life for its people. At presences
with growing concern over environmental protection supplying, more than the demand. It helps
to improve air quality decreasing the effect of climate change.
Natural gas has become popular for its efficiency and environmental benefits at all power
options. It has become nearly doubled over the past three decades the share of gas in global
electricity generation.
There are three projects under the West East Gas pipe line called, I West East Gas Pipe Line
Project, II West East Gas Pipe Line Project and III West East Gas Pipe Line Project. We have
selected second West East Gas Pipe Line Project to analyses the Project management aspects.
Figure 2 –Three west east gas pipeline projects
Source -CNPC,( 2013)

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Financed and operated this project by China National Oil and Gas Exploration and
Development Corporation (CNODC), joint venture of China National Petroleum Corporation
and Petro China. There are three main objectives in this project. They are,
I. Ensure the reliability of the electricity supply in Hong Kong.
This new gas supply to Hong Kong using for power generation in Black Point Power Station.
II. Supply energy resources to 7.1 million residents.
Hong Kong special administrative region of the People’s Republic of China. There are 7.2
million population and 1104 square kilometres.
III. Sustain clear power generation in Hong Kong.
This is the world’s largest natural gas pipe line. It has spread for 8,819 kilometres long and aim
to carries 30 billion cubic meter annually for over 30 years. It passes one trunk line and eight
branches and runs from Horgos in Xinjiang, where it is connected with the Central Asia-China
Gas Pipeline and passes 14 provinces, independent regions and municipalities, together with
the Yangtze River Delta and Pearl River Delta region, and finally getting Hong Kong, to
Shanghai and Hong Kong (CNPC, 2013).
Figure 3-Map of second West East Gas Pipe Line Project
For this project China National Petroleum Cooperation invested 21.56 billion (USD). Second
West East gas pipe line construction was started in February 2008 and it was completed and
put into operation in 19th December 2012.

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From this second west east gas pipe line project evaluation we try to examine success or failure
of the project with pay more attention to Risk Management process and other supporting
functions to success of the project.

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3. Analysis
3.1 Theoretical Background related to analysis
Fifth Edition of Project Management Body of Knowledge (PMI, 2013) defines individual risk
as “an uncertain event or condition that, if it occurs, has a positive or negative effect on one or
more project objectives,” however overall project risk is defined as “the effect of uncertainty
on the project as a whole … more than the sum of individual risks within a project, since it
includes all sources of project uncertainty … represents the exposure of stakeholders to the
implications of variations in project outcome, both positive and negative” Hillson, D. (2014).
According to Larson and Gray (2011), there are 4 steps can be identified under risk
management process as mentioned bellow.
Figure 4 – RiskManagement Process
The Risk Breakdown Structure (RBS) can be used in the first step to identify the project related
risks like Technical, External, Organizational and Project management. In 2nd step we can do
risk assessment by using Risk Assessment Form, Scenario analysis and etc. to identify the
probability of the event and impact of the event. In 3rd step Risk Response Development we
can response to risk by mitigating, avoiding, transferring, sharing, or retaining risk. At the last
4th step
Risk Response Control
3rd step
Risk Response Development
2nd step
Risk Assessment
1st step
Risk Identification

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step list all risks identified in above 03 steps and made risk register and then using Change
Control Management try to overcome them.
3.2 Application Theory to the project
We have identified that turning the theory aspect into practical sense is easier said than done.
Since we have chosen the 2nd west east gas pipe line project pertaining to the first step of risk
management which was identifying several risks that may occur and listing them down. This
is the world largest natural gas pipe line project laid on more than 8000 km and are bound to
go through certain problems as gas and oil pipe line projects are commonly associated with
risks due to flammability of the transportation item. China National Oil and Gas Exploration
and Development Corp. (CNODC) identified several risks associated with this project. These
are
 Environmental risks
 Safety Risks
 Communication risks
 Quality Risks
 Regulatory risk
 Geological disasters
 Pipeline corrosion
 Third-party damages
Environmental risks
The project team made a clear separation amongst their construction and management team
where the responsibilities were shared amongst themselves, supervisors and contractors. They
implemented processes such as whole-process quality control and staff safe production
responsibility system as well as life-long project quality responsibility systems. These systems
were made to ensure that the quality of the project stayed intact as well as protection of ecology
was intact as well. More ways in which they aimed to protect the environment was:-
 Avoiding environmentally sensitive areas
 Planting of vegetation and grass which act as protective screens in windy barren areas
 Remove and reserve turf pre and post construction
 Topsoil stripping and layered backfill

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 Management model of “restoration for one year and maintenance for three years
Risk assessment
In here environment impact assessment, monitoring and environment management
system conducting and try to assess the employees, employers and supervisors impact
on project and get experts support and conducting researches to overcome risks. This
assessment is conducted by using “Green Pipeline Model”.
Figure 5 - Green Pipeline Model
Source – CNPC(2013) pg. 18
Ensuring Operational Safety
II West-East Gas Pipeline covers a long distance as well as a wide area therefore it is difficult
to control risks which may be caused by geological disasters, third party damage or pipeline
corrosion. In order to rectify this, the project team came up with the pipeline integrity
management system and also carried out routine inspections and joint inspections with the aim
of guaranteeing security throughout the workforce and society.

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Figure 6 – Pipeline Integrity Management Process
Source – CNPC(2013) pg. 24
Joint prevention, treatment and control
Together with governments at all levels along the pipelines, increased public awareness of such
hazards, and jointly prevented and controlled pipeline risks.
Figure 7 - Joint prevention, treatment and control
Source – CNPC(2013) pg.25

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Risk Response Development
In accordance with the risk identification the project team also came up with solutions or
developed responses to the risks identified in order to either minimize it or eradicate it
altogether.
A few methods they used in risk response development were a set of systems that they drew
up before the commencement of the project in which they adhered to and stuck by when a risk
identified itself. These methods acted as a guideline in approaching risks as well as sustaining
quality and effectiveness of the project as well.
Figure 8- Guideline in approaching risks
They also followed a guideline better known and created by the PMI, the Project Management
Body of Knowledge (PMBOK® Guide) which consists of a compilation of processes and
knowledge areas that are widely accepted as best practices amongst the project management
discipline. It involves creating risk plans for every area such as Identifying risks, performing
qualitative and quantitative risk analysis as well as as planning risk responses.
Figure 9 –PMBOK Process
Whole process
quality control
All staff safe
production
Lifelong project
quality
Accepted quality
supervision from

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Risk controlling techniques
As risks have been identified, assessed as well as responses developed it is very important to
pursue the following step which is controlling of the risk. Having risk controlling techniques
is essential and pivotal if the project is to succeed as planned.
They took into consideration all these factors which would affect the environment and
identified the risks and implemented models and solutions and avoidance measures explained
below.
Figure 10 - Avoidance Measures during Construction of II West-East Gas Pipeline Project
Source -CNPC(2013) pg. 19
The controlling techniques the project team used are listed as below and were implemented to
mitigate, share and avoid risks to ensure smooth running of the project :-
 Right person-right task technique – ensuring that suitable tasks are given to suitable
individual who encompass the right competencies to carry out the task at hand.
 Multiple languages used – As the project crossed many cities, many language were used
however they took base languages and maintained certain languages for different purposes.

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 Daily site visits – A pipeline onsite inspection measure was established and furthermore
improved with the management help as well as technology. Global positioning system
(GPS) as well as (GIS) and networking systems were used to acquire accurate information
of locations and recording of routes. This helped in graphical patrol information.
 Scheduled and non scheduled management walkthroughs – Quality inspections are vital
and walkthroughs that were planned and unplanned were carried out in order to ensure
smooth running of operations and that risks were mitigated.
 Third party inspection - Inspection was also given to a third party group that shared risks
with the project team and they too carried out inspections when possible.
 Good practices and methodologies from the PMBOK® Guide – Throughout the project
they utilized the PMBOK as a guideline as well as a controlling factor.

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4. Discussion & Conclusion
The project was successfully ended in the correct time schedule and also with minimum
negative environmental impacts and zero incidents reported which can be identified as an
impressive outcome for a three million man hour large project as the II West-East gas pipeline
project. The outcomes were identified to be a success as the planning was done prior to the
project in an effective way and also people involved in the project was managed in a way they
were self-motivated. Safety measurements were also carried out in the correct way which is
shown by “Zero” incidents reported during the project.
According to the West-East gas pipeline project (2002-2013) report, it is clearly mentioned that
the natural gas consumption has increased in all the countries taken as a sample. For example
Shanghai has an insignificant usage of gas in 2002-2003 where by 2013 the natural gas
consumption has dramatically increased up to 8%.The quality of life has also increased due to
this pipeline where as people living around bid farewell to gas tanks and firewood which has
led them to a safer and a better life.
Figure 11-The proportion of natural gas consumption WEGP
Source - CNPC(2013) pg.11
The impact on the environment of any project is a major concern and this project was a success
with a result of improving the environment where 76.08 million tons of coal will be replaced
and approximately 130 million tons of standard coal and other hazardous chemicals plus
Carbon Dioxide emission were replaced with the help of the II West-East gas pipeline.

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The input for this project to become a success was significant where there were experts,
contractors, supervisors and employees playing major roles to complete this successfully where
they followed an integrated system to work internally with t mitigate the amount of loopholes
and slip-ups happing during the project. The Green Pipeline system have helped the
stakeholders of the project to communicate effectively and also to take effective decisions
which will bring positive consequences at the end of the project whereas communication plays
a major role in getting things done in the correct way and therefore take collective and correct
decisions.
Following graph of the china’s Ministry of Water Resources show that the 6 displays of soil
and water conservation of the Second West-East Gas Pipelines (west) project construction are
all higher than the national standard. These happened due to the successfully implementation
of Green pipeline concept throughout the project and achieved the Second West-East Gas
Pipeline (Western Section) as the “National Environmental Friendly Project” and “Soil and
Water Conservation Demonstration Project” continuously.
Figure 12-Monitoring results from the Ministry of Water Resources vs II WEGP (west) project construction
Source –CNPC(2013) pg.21
Not only the success stories of the project but also within the project completion duration some
problems can be identified. According to the (National Audit Office) NAO, “CNPC purchased

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in April 2009, 15,000 units of heat shrinkable tape used to protect pipelines from corrosion
without calling for a public tender, and those materials were put to use without any quality
testing” (Lee and Yu, 2011) . After testing them NAO found that these 13,500 units are in poor
quality and using the tapes would lead to corrosion and damage to the pipeline.
Limitations for this project could be the limitations of different resources including regulations,
human resources, communication and ground work. Project crossed the border of China and
Hong Kong. Project team had to acquire permits from both authorities and need to fulfil
differing practices and statutory approval processes. Communication problems occurs due to
various working teams used several different languages like English, Putonghua and Cantonese
and required the different style of reporting data. They try to overcome this using used English
and Chinese for documents and PowerPoint presentations. Also there can be instances where
the IT and software resources lack where the managers and other stakeholders of the project
will have to manually create and build certain parts for the project to be successful. Also there
are other standards which should be fulfilled in order to complete the project. For example:
thickness of the pipe, Pipe material and grade, Fluid velocity and safety factor or the design of
the pipe.
There are various learning outcomes which could be grasped from this project where it shows
proper planning and people management leads to a successful end and also having an effective
system where all stakeholders are able to communicate and make decisions which will result
in a successful final outcome of the project that is being carried out. II West-East Gas Pipeline
project represents that a particular project should be timely with the right quality where it also
teaches how an enormous project could be carried out not by polluting the environment but
enhancing the quality of the environment, quality of life of human and other living creatures.

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5. References
 China National Petroleum Corporation (2013). West-East Gas Pipeline Project (2002-
2013). Special Report on Social Responsibility. [Online] Beijing: China National
Petroleum Corporation, pp.6-7. Available at:
http://csr.cnpc.com.cn/csr/xhtml/PageAssets/2013xqdsbg.pdf [Accessed 8 Sep. 2017].
 CLP (2012). SECOND WEST-EAST GAS PIPELINE PROJECT - WORKING
TOWARDS A GREENER TOMORROW. [online] Available at:https://www.clp.com.hk
/en/about-clp-site/media-site/archives-site/Documents/WEPII_EN.pdf [Accessed 2 Sep.
2017].
 Hillson, D. (2014). Managing overall project risk. Paper presented at PMI® Global
Congress 2014—EMEA, Dubai, United Arab Emirates. Newtown Square, PA: Project
Management Institute.
 Lee, C. and Yu, S. (2011). China audit finds violations by CNPC in West-East gas pipe
project. S&P Global Platts. [online] Available at: https://www.platts.com/latest-
news/oil/shanghai/china-audit-finds-violations-by-cnpc-in-west-7092150 [Accessed 11
Sep. 2017].
 PMI (2014). Project Management Helps Create World's Longest Natural Gas Pipeline |
PMI. [online] Available at: https://www.pmi.org/business-solutions/case-studies/eworlds-
longest-natural-gas-pipeline [Accessed 1 Sep. 2017].
 Project Management Institute. (2013) A guide to the project management body of
knowledge (PMBOK Guide) - Fifth edition. Newtown Square, PA: Author.
 Second West East Gas Pipeline 2017, introduction. [online] Available at:
http://www.cnpc.com.cn/en/SecondWest/CentralAsia_index.shtml [Accessed 07.09.2017]
 U.S. Energy Information Administration (2017). Energy consumption increases over the
projection for all fuels other than coal in the Reference case. [image] Available at:
https://www.eia.gov/outlooks/ieo/pdf/0484 (2017).pdf [Accessed 18 Sep. 2017].
 www.clp.com. (2017). West east gas pipeline project. [online] Available at:
https://www.clp.com.hk/en/about-clp-site/media-site/archives-
site/Documents/WEPII_EN.pdf [Accessed 8 Sep. 2017].