Exhibit Mo. ATC-344
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`Page 1 of 2
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`From: Bametl, John T <John. T Bamet@conocophil ips.coms
`Sent: Thursday, Dctober D8, 2005 11:01 AM
`To Flood, Patrick M <Patrick M.Flood fconocophil lips. com:
`Subject: FW: DRAFT REPLY: Alyeska reconfiguration - lettar to Mulva
`e —
`Fram: Frogd, Patrick M
`Sant: Wednesday, October 05, 2005 +4:58 PM
`Ta: Earmett, oo T
`[= - Drumm, Tk
`Sulbfoct: FE: DRAFT REFLY; Alyeska neconfigurstion - letier to Muiva
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`| added same additional language and eliminated the informalion that can ba found In the altachmant,
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`Pra-sanction Review
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`A pre-sanction Owner review of the TAPS Strategic Reconfiguration Project was performed in
`October 2003 (note an early preliminary engineering projact assist/raview was hald June
`2003). Al fiva Owner Companies participated, ConocoPhillips had 7 represantativas, 5 from
`Infrastructure Engineering and Project Management. A joint Owners' reporl was issued
`immediately following the review. Tha report, including a list of action items and attendeas, is
`altached.
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`Post Review Actions
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`All recommanded actions and deliverables wera addressad prior lo sanction of the AFE. The
`AFE costs were raviewed by third partias, including Larkspur and Alaska Construction
`Contractors, Savings were scrutinized by Owners' staff. The next best alternative was fully
`evaluated and a comparison of alternatives was completed on a component basis. Costs
`ralated to separately juslified work were identified and funded separately. The probability
`analysis included costs, savings, and a prediction of overall project performance. A detailed
`project execulion plan indicaled a tight schedule with zero floal, but the project appeared
`doable with timely decisions. The impact of delay was analyzed, but not recommended
`bacause of increased costs and a significant loss of savings.
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`Original Project Sanction Timing
`Tha AFE was approved in March of 2004. Long-lead materials were orderad immediately and
`delailed engineering began.
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`Project Challenges in Hindsight, Current Outlook
`The project team was handed a deadline and conceptual engineering cost estimates that were
`improperly used as banchmarks. The project was "boxed” into those parameters instead of baing
`allowed to fully evaluate options, costs, and risks. The resulting cost estimates and probability
`analyses were not realistic. This did not become apparent until additional engineering was
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`completed.
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`For schedule reasons, the project was approved at the end of preliminary engineering. The
`angineering appeared to be well progressed at that point, but the project scope was not fully
`astablished until well into detailed design. Several assumptions from concaptual engineering and
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`1 FEDERAL ENERGY REGULATORY COMMESSION
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`Exhibit No. ATC-344
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`the "value engineering” process were too aggressive and had to be changed. Page 2of 2
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`During detailed design, the engineering contractor did not secure sufficient resources and did not
`amploy effective projact controls. This contributed to schedule slippages and the inability to predict
`cost and schedule impacts. Slow decisions, lack of stakeholder alignment, and insufficient
`engineering resources caused significant delays.
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`The Owner-lead initiative created resistance within the Alyaska organization that resulted in a lack of
`internal resources and alignment. It is obvious that the project would not have progressed to this
`point without cutside help, but the resistance was more than anticipated and caused significant
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`problems and delays.
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`Operaticnal readiness conlinues 1o be a concern, but the recent changes to make this an
`Alyaska-lead project should help create alignment. Additional Alyeska resources have
`already been added to the team. Alyeska has lakan over project managament from the
`engineering cantractor and the project execution plan has been revised to includa detailed
`plans from Alaska Construction Contractors. Module fabrication is over 50% complete and
`fiald construction is approximataly 20% complete. The Owners companies will continue to
`watch progress and inlervene, as necessary.
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`TSRCOPOD105524
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