David Armstrong, who runs the crucial procurement and supply chain side of bp’s revolutionary Net Zero Teesside Power project, tells Mike Hughes how hundreds of firms will help him piece together one of the most complex and innovative projects the region has ever seen.
The Net Zero Teesside Power plant will be one of the engineering marvels of the 21st Century, sitting next to the river at the heart of Teesworks, it will be an 860-megawatt, gas fired power station that can run up to 1.3 million homes every year.
The carbon dioxide it generates will be captured and transported approximately 145 kilometres offshore to be stored safely deep beneath the North Sea. The plant is a joint venture between bp and Equinor, with bp as operator and aims to be the world’s first commercial-scale gas-fired power station with carbon capture – right here on Teesside just a few yards from where the steel furnaces glowed with pride and graft.
Read more: bp outline plans for 4,000-job power plant at Teesworks site
Companies like bp are now leading the way in finding solutions and alternative routes to power.
For people like David Armstrong, the whole project starts with the first meeting, the first lines on paper and the first person to ask ‘what if we do it this way – could we make this work?’.
Complex matrix
David is the Senior Procurement Manager, responsible for answering that question by assembling a complex matrix of partner companies who will supply everything from handrails to gas turbines.
At a recent NOF (the not-for-profit business development organisation) event to pull together that matrix, more than 300 businesses were told about the benefits and opportunities that lie ahead before the site is up and running in the next five years, with the project potentially generating up to 4,000 jobs during its construction.
The energy in the room and around the region was palpable. North-East businesses large and small know they deserve the scale of investment and the benefits it will bring and are proudly putting themselves forward as partners to make it happen.
Joanne Leng MBE, chief executive of NOF, said: “Net Zero Teesside Power will be a major contributor to the energy transition and our members, together with the wider supply chain are well positioned to support its development, construction and operation. The innovation, technologies and energy industry expertise available within the supply chain will be of significant benefit to this landmark project.”
Tees Valley Mayor Ben Houchen said: “It’s essential our local supply chain businesses know the ins and outs of everything we’re doing at Teesworks and with projects like NZT so they can grab these massive opportunities with both hands. This will help all corners of Teesside, Hartlepool and Darlington benefit from transformational work that we’re carrying out, boosting businesses and, ultimately, putting more money in people’s pockets.”
Government support
The NZT project has been strongly supported by government to date. In March 2021 Net Zero Teesside was awarded funding as part of the Industrial Decarbonisation Challenge under the UK Research and Innovation’s (UKRI) Industrial Strategy Challenge Fund (ISCF).
“Net Zero Teesside has developed tremendous momentum since receiving a grant award of £28 million from UKRI’s Industrial Decarbonisation Challenge. This flagship UK decarbonisation project will deliver the world’s first flexible gas power plant with CCUS. It will also boost the competitiveness of the local economy, create and project jobs and will drive inwards investment into the region,” said Dr William Joyce, Innovation Lead at UKRI.
For David Armstrong, the work had started well before.
“My role began way back when there were about five of us on the project,” he explains.
“My accountability, working with the project general manger, is to develop the contracting and execution approach for the project. What we set out here sets the tone of the project and the strategy for next five to six years.
“What funnels through me is all the third party spend with contractors and suppliers. We decide how best we spend that money - how we want contractors to come together and how we can best use the enormous variety of UK and local suppliers.
“I look after the strategy around the contracting approach we want to take on the project, so we're now in the phase where we're doing a lot of the front-end engineering, and shortly we'll be getting ready for the big EPC contracts (Engineering, Procurement, Construction) that will be executed from May 2023 onwards.”
New benchmarks
He is a polite and precise man who seems completely at ease with his task. I’m sure there are sleepless nights in there somewhere, but he clearly knows his job and is confident enough to redefine it for each project, having worked on the astonishing Khazzan natural gas project in Oman, which set new benchmarks for quality and innovation.
This was a previously undeveloped desert site 350 kilometres south of Muscat which will contribute around a third of Oman’s natural gas supply, involving 12,000 construction staff, 56 kilometres of roads, several thousand metres of power lines and a 60-kilometre water pipeline.
Within a few weeks of finishing that project, he was on his way to Teesside to start looking at NZT Power. Over the next few weeks and months, he knew it would be possible to change the way energy was generated.
“We started doing our homework very early on,” he tells me at the Hardwick Hotel where the NOF event was taking place.
“Wherever it makes logical sense to grow the business, I will come in to help and make sure we've assessed the supply chain, understand the risks, and think about how we can best execute that into the market.
“Admittedly, mainland UK has not been a particular hub for major projects for bp over the last 10 to 20 years, so it’s been fantastic for a lot of the project team with 15 to 25 years of experience of working on projects in the North Sea, Mexico, Azerbaijan, or the Middle East to now be able to focus on one here. Now there are major projects in the UK, and this will be one of the big hubs going forward.
“It's massively exciting and energising for us to bring that talent, those skills and all the learnings and experience together for our work in the UK market.”
Read more: Energy giant bp joins Northern Echo's Level Up campaign
It is time well spent listening to David as he deconstructs the process of coming on-board during the early days of concept development, to working towards a completed project that will be the talk of the industry. How perfectly each section of his own Procurement pipeline meets the next is crucial not only for bp and Equinor, but for the Government’s own net zero ambitions.
“No one's ever done what we're trying to do before,” he says.
“It’s a world first and just a brilliant project to work on because there's no playbook for the contracting and execution approach that we can grab off the shelf to say, right, this is how to do it. Not only that, it's a headline project for bp and the UK Government - so no pressure! ”
Supply chain
“We wanted to engage the supply chain while recognising there's no existing strategy for this type of scope - we don't have all the answers. So we're quite humble in the way that we approach the market.
“When we brought our key players together - major engineering and construction contractors, Power providers and Carbon Capture licensors in the UK - there were over 20 of them in the mix - I envisaged it almost like a giant dance floor.
“We outlined our initial thoughts, our project drivers and what we're trying to achieve, and asked them to come together and then respond back with their ideas and solutions in quite a rigorous form over six months. We were quite convinced that this consortium approach would make a lot of sense.”
One of the unique challenges they all faced was that this breakthrough business model wouldn’t work if it was just a power station throwing out CO2 into the atmosphere. It had to capture it at the same time as it was producing electricity.
That was new. So, they needed all sides working together and learning about each other from a very early stage.
“Because of the technology firsts that we saw here, we wanted to bring them together now. To maximise something we call front-end loading – which basically means bringing them together early, to integrate their complex technology, reducing project technical and executional risk. Power and construction contractors would never normally get involved in the FEED, but they are in it now.
Two consortiums
“We ended up with four potential consortiums and last year, we conducted a tender exercise with those four, and got it down to two.
“At the end of the process one of them will be selected for the execute phase. This ensures both front end loading and early contractor engagement plus competition - to demonstrate value for money.
“On the one side we have Technip Energies and GE consortium with Shell Cansolv for the capture technology, and Balfour Beatty being the construction contractor. And then on the other side a consortium of Aker Solutions, Siemens and Doosan Babcock with Aker Carbon Capture technology.”
Those two are now competing against each other for the rest of this year, when each will give an EPC bid and one will be selected for a contract in excess of £1 billion. There are many different technology challenges and therefore each contractor group could come up with different solution designs and execution approaches, but at every step of the way they will be calling on the supply chain to work with them.
“We want to maximise the use of UK and local supply chains and as part of that, and what BEIS want as well, is transparency and early engagement in the market to make sure local contractors are aware of what's happening, how they can get involved, and how they can then get plugged in with the Tier 1 EPC contractors.”
As David says, as well as the supply chain expertise, the skills for this remarkable project are going to be needed for generations to come.
That is a challenge on such a vast scale, but one the region will thrive on as school pupils, apprentices, university and college students and graduates turn to inspiring work like this to redirect their aspirations and build their careers here in the North East.
And for bp this is an investment in the future of those young people as well as the revitalisation of the region they live in, as David and his team drill deep down into the talents and skills we have here and those that we are capable of developing, to find the right people.
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