What an EPC Project Is

An oil company wants a new gas compression station. A refinery needs a new hydrotreater unit. A petrochemical producer plans a new storage terminal. Each of these is a capital project: a one-time investment to build a physical asset that will then operate for 20 or 30 years.

Most capital projects of this kind are delivered through Engineering, Procurement and Construction (EPC). The name describes three streams of work:

• Engineering — turning the process design into drawings, specifications and data that people can buy and build from.
• Procurement — buying the equipment, bulk materials and services, and getting them to site on time and to specification.
• Construction — building and installing everything on site, and proving it is complete and ready to commission.

"EPC" is used in two ways, and it is important to keep them apart. It can mean the type of work (any project with these three streams). It can also mean a type of contract, where one contractor takes responsibility for all three streams, often for a fixed price. Contract types are covered later in the course.

A worked example: one compression station

Operator X, an invented gas company, needs to raise pipeline pressure. It awards an EPC contract to Contractor Y, also invented. In month two, Contractor Y’s process engineers fix the compressor size, and procurement immediately orders the compressors, because the vendor needs about 14 months to build them. In month six, civil engineering issues foundation drawings, and a civil subcontractor starts work on site. In month ten, piping isometrics are still being produced while steel is being erected. Each stream depends on information from the others, and a late or wrong input in one stream moves into the next one.