The lone rangers of LNG
Going West: building a new business from the ground up in the booming gas fields of America.
KAEFER isn’t as well known in the United States as it is in other parts of the world. This can be an advantage, as it allows the company to start virtually from scratch and define itself on the basis of its competences and services. It’s also a challenge, as the US is a mature market, where it can be difficult to gain a foothold.
Choosing the right path is the task of KAEFER LLC’s CFO Wolfgang Richter, together with Victor Bogos, Ian Carter and the support of the very experienced management team at KAEFER in Australia. The common goal was to establish KAEFER in the US LNG market.
To give the story some more context, the United States is now the third largest exporter of liquified natural gas and will be considered as the world leader within the next five years, despite only being currently ranked number five according to proven reserves. In short, natural gas, specifically liquified natural gas (LNG), is booming in the US. Yet it’s a well-established market, with mature, tried and tested players on the scene. That’s why the strategy is to work with existing clients on LNG projects and to leverage the expertise and ingenuity of the company.
Cameron LNG is an export terminal situated along the Calcasieu Channel in Hackberry, Louisiana. The first phase of the terminal, consisting of three liquefaction trains, became fully operational in August 2020. KAEFER secured the cryogenic insulation contract for the valve and flange boxes on train 2 and train 3 on these immense projects with Chiyoda and McDermott being the clients.
“The LNG market in Texas and Louisiana is as big as the market in the rest of the world, it’s like nowhere else in terms of its unique potential,” Richter says. “This was the ideal place for us to leverage our LNG expertise from projects in Australia or Southeast Asia, for example, and to gain a foothold in a rapidly expanding, forward-looking market.”
Green fields and new opportunities
In order to do so however, a completely new company had to be established. “We had to adopt a greenfield approach,” explains Richter, “we needed a legal entity, contractor’s licences (which included various hurdles), visas with work permits, insurances, pre-qualification by clients, a payroll, identification of US-suppliers.
The amount of work and paperwork was simply staggering.” On top of that, the new venture would be set up in the centre of the insulation world. Houston, Texas is where the who’s who of insulators have a presence and everyone knows one another. When word got out that there was a new kid in town, it spread fast.
Taking up experience from Down Under
KAEFER has an excellent reputation in LNG internationally, much of it based on the exemplary work done in Australia and the Asia-Pacific region. According to Ian Carter at the LNG Solutions Centre in Perth, “The first wave of KAEFER’s LNG business was built over here and we experienced success as well as failure. We learned from those mistakes and this means that other KAEFER LNG projects and entities can benefit from our experience.”
Wolfgang Richter agrees, “One of the things that I’ve learned in my time in the US is that there is an attitude that says: ‘fail harder’.
“The experience brought over from projects completed in Australia is one of our success factors.”
Wolfgang Richter, CFO KAEFER LLC
There’s a pioneering spirit here in which in which failure is considered as a necessary part of success. You cannot be successful unless you learn from the mistakes you make. That’s one of the benefits we have over here – the experience brought over from projects completed in Australia.”
This isn’t to say that Australian LNG projects were marked by mistakes and difficulties, but the reality of cryogenic insulation with LNG gas volumes reducing by 600 times in a liquefying process at temperatures of -163 degrees means there is little margin for error and figuring out what works is imperative.
Making a mark that lasts
The Australian LNG competence centre became the model for the US business. To facilitate the entry into a new market, KAEFER partnered with an American company in a joint venture. The US partner provided local knowledge and much of the manpower needed and KAEFER brought its know-how, project management, supervision and modern technology to the table.
“It was a challenge,” recalls Richter “especially in such an established market but there is a bright future for LNG in the region and KAEFER has the experience and expertise to build a successful business.” Even though you could compare Richter to KAEFER’s lone ranger, he will be the first to tell you that it’s never a one-man job: “we’re all part of a team and a family and we depend on one another to succeed.” Thanks to the very experienced project manager Rick Copping, KAEFER managed to earn the respect of US clients and even reach above-average productivity.
“Everything we do is based on creating a business that’s sustainable for the long term – for our clients, partners and our people. We’re here to stay.” And with that, Richter and his team ride off into the Louisiana sunset.