Korea Oil Company Ulsan Refinery-Korea's First Refinery - EPC

Historic Project: Groundbreaking Work From Earlier in Fluor’s History

Client: Korea Oil Company

Location: South Korea

Business Segment: Energy Solutions

Industry: Fuels

Map showing the location of Korea Oil Company Ulsan Refinery-Korea's First Refinery - EPC

Executive Summary

Despite several delays caused by heavy rains, Fluor delivered in only 16 months to Korea Oil Corporation its first major grassroots refinery, the schedule promised at contract award.

We had to ship major pieces of equipment from the U.S. as well as recruit and train a large number of Korean nationals to complete the project. Fourteen experienced Fluor construction managers from the U.S. were assigned to the project and oversaw the activities of 1,200 Korean nationals.

The 35,000-barrels-per-day refinery was part of Korea's First Five Year Plan and a major segment of a huge industrial complex in the southeastern part of the country. The refinery was destined to facilitate Korea's economic growth.

Client's Challenge

The Government of the Republic of South Korea tasked the Korea Oil Corporation to build a grassroots refinery in Ulsan to meet the country's needs for self-sufficiency and self-produced petroleum products.

The Korean refinery included crude atmospheric- and vacuum-distillation units, a platformer-unifiner, a distillate unifiner, an asphalt oxidation unit and UOP merox treaters for butane, light naphtha, kerosene and jet fuel.

The refinery supplied domestic demands for gasoline, light and heavy oils and other petroleum by-products, thereby saving the Republic a considerable amount in foreign exchange every year. Operation of the refinery also provided employment to residents of Ulsan.

Fluor's Solution

Fluor provided engineering, procurement and construction management to the Korean Oil Corporation for Korea's $16 million grassroots refinery in Ulsan.

We guaranteed completion of the refinery within 16 months and were awarded the contract based on that guarantee.

Our experience enabled us to anticipate most challenges, but we faced additional obstacles unique to the Korean jobsite: poor roads leading to the site; no communications network; scarcity of lumber; and availability of sand and rock sources.

In addition, we had to provide power for construction, establish security and fire protection services, furnish housing for U.S. expats, in effect, make the site self-sufficient. We also had to recruit and train 1,200 Korean nationals.

We established a liaison office in Seoul to manage in-country issues while engineering began at Fluor's California offices. Procurement was also handled in the California office.

Once construction managers were onsite, they faced more challenges when heavy rains caused delays in construction. The heavy rains continued throughout the spring and into the summer, but in August of that year, the weather improved and we regained some of the time lost to the weather.

In September, with a peak construction workforce, minimal design changes and cooperative vendors, the project was nearing 80% complete. Near the end of October, the project was 85% complete. On December 21, 58 days earlier than the contract called for, we turned over operation of the refinery to Korea Oil Corporation.

Conclusion

Fluor used a management team experienced in building refineries around the world to deliver Korea's first grassroots refinery. The team overcame many obstacles to beat the proposed schedule 58 days early.

The project is a testament to our global expertise and technology transfer to nationals of the countries where we work. Our program manager on the Ulsan Refinery stated that “the success of the various training programs at the jobsite played a major role in the early completion date.”

Fluor personnel also formed personal relationships with the Koreans. They took the time to become acquainted with the Koreans, their culture and their country. In the process, the Americans developed a genuine admiration and respect for the hard-working Koreans. On their own, the American workers “adopted” a local orphanage; each contributed about $3 a month for rice to help feed the 133 children.

We also established an apprenticeship program for 14 of the older boys from the area. Some of the youths became self-sufficient and were able to find housing on their own. This project was just another example of giving back to the communities in which Fluor works and lives.