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The EPC Role in Next Generation Biorefining Capital Projects

Ron Jones

Principal, Process & Industrial Group ronjones@burnsmcd.com

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Burns & McDonnell Overview

Project Lifecycle

Risk Mitigation

Technology

CAPEX

Drivers in EPC Partnerships

Traits of Successful EPC Partnerships

Click to edit Master title style Company Snapshot

• History – Founded in 1898 – 100% employee owned

• Strength – 3600+ employee owners – $1.1B annual revenue – 50% EPC balance

• Stability – Growth in a recession – < 4% employee turnover

• Service – 85%+ repeat client base – Relationship driven business model

Our Mission: Make Our Clients Successful

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• Business Case – Identify a business need and plan how to satisfy

• Definition & Front-End-Planning – EPC engagement – CAPEX allocation ready plan for project execution

• Project Execution – Execute project design, procurement and installation – EPC conclusion

• Operation – Startup through decommissioning and dismantling or other disposal

Expected Project Lifecycle

Click to edit Master title style Technology Risk Mitigation for a Serial #1

• Laboratory – Develop the basic chemistry / biology – Using lab grade chemicals, reagents and media

• Pilot (100 to 500 x Lab) – Prove out laboratory ideas – Usually still using lab grade materials

• Demonstration (100 to 500 x Pilot) – Demonstrate scalability and robustness – Introduce commercial grade materials

• First Commercial (20 to 50 x Demonstration) – Understand and plan accordingly – This is not the Nth Commercial

Understand the risk of skipping steps on the

technology curve

Click to edit Master title style Lab to Pilot

• Technical Evaluations: Build confidence in process – Process – Commercially Available Equipment – Scalability Issues

• Estimates: Begin to develop project cost parameters – Pilot Plant Goal Setting – Conceptual for Future Scale-up

• Funding Support: Build credibility in team – Application Input – Qualification Level Presentations to Investors – Leverage Technical Evaluations/Estimates

Click to edit Master title style Pilot to Demo & Demo to Commercial

• Technical Evaluations: Build Confidence in Scale-up – Commercial Scale Equipment Availability – Scalability Issues

• Estimates: Refine & Fix Project Cost Parameters – Demonstration Scale – Commercial Scale

• Funding Support: Build Credibility of Project – Leverage Success of Prior Phase – Definitive Estimates – EPC Commitment to Cost & Schedule

Click to edit Master title style CAPEX Risk Mitigation for a Serial #1

• Phase 0 – Develop Basic Business Case

• Phase 1 / Front-End-Planning 1 (FEP1) – First look at CAPEX needs

• Phase 2 / FEP2 – Alternative evaluation

• Phase 3 / FEP3 – Definitive Scope, Schedule & Budget

• Engineer, Procure & Construct (EPC)

Click to edit Master title style CAPEX / OPEX Influence

Start - up

Feasibility,

Concept and Basic Design

Total Cost Established

Permitting Procurement

Design and Construction Commissioning

Proect Timeline

Cash Flow

Enhanced Documentation, Commissioning and Qualification

Ability to influence Cost

Click to edit Master title style Drivers for EPC Partnership

• Risk management/mitigation (project and financial) – Help owner sort through technical options early (FEP phases) – Use pilot/demo and simulation to answer “will it work?” – Use solid Front-End-Planning to answer “how much will it cost?” – Use 3D rendering/animation to answer “what will it look like?”

• Cost control / early certainty – Core business (allows both parties to focus on what they do best) – Interface w/financial providers – Established supplier chain

• Schedule certainty – EPC firms do this for a living – Have a staff of professionals that specialize in required roles (CM,

Scheduling, Controls, Site Super, Discipline Super) • Need for entire project lifecycle to be defined & managed

Click to edit Master title style EPC Importance to the Funding Process

• EPC balance sheet – Remove financial provider concern of EPC health

• Leverage EPC track record – Capital project delivery is core capability – Project delivery capability, etc.

• Contract Structures – Open Book

• Price certainty • Shared savings • Promote partnership atmosphere

– Lump Sum • Price certainty

Click to edit Master title style EPC Partner Must Have Traits

• Safety Leadership • Leadership • Flexibility • Responsiveness • Can-do Culture • Teamwork Culture • Optimized Resource Use • High-Value Performance • Value Added Work Processes • Understands Risk in Biorefining Space • Established Risk Mitigation Practices • Willingness to put “Skin in the Game”

Click to edit Master title style Successful EPC Partnerships

• Require a special: – Leadership team – Board of Directors – Financial team – EPC partner

• Dependent upon a viable, well considered plan: – Laboratory through commercialization – Gated process – Risk mitigation – Comprehensive funding strategy (with back-up plan)

• This game is different

Click to edit Master title style Successful EPC Partnerships

Thank you!