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LABIDCO: Rising from the rubble of controversy

December 10, 2003
By Raffique Shah

EVEN as the opposition UNC continues its strident calls for an enquiry into government's initial expenditure on Labidco, the industrial estate at La Brea, part of the 400-acre site is a beehive of activity. Currently, some 40 kilometers of 56" pipes for the proposed cross-country gas line are being offloaded and stored at the estate, with ships bringing in the pipes calling at the port every week.

Adjacent to the port, a local contractor is working at a frenetic pace to meet a deadline for completion of a part of the proposed fabrication yard. bpTT intends to use that for its "Cannonball" project–the fabrication of a new off-shore platform. And elsewhere Trinmar is working apace to have a huge storage facility completed soon.

"It's a pity this project became mired in political controversy," said Prakash Saith, CEO of the National Energy Corporation (NEC), which has Labidco as part of its portfolio. "But that is behind us now. We have completed all infrastructure work in Phase I, which comprises 400 acres. We have nine tenants in this area, which is fully serviced with potable water, electricity and the availability of gas. But real growth will come with the establishment of Union Estate, the other 800 acres apportioned to us. That's where a number of huge, gas-based industries will be set up. In another five years, this site will start to resemble the Point Lisas will be the second biggest industrial estate in the country."

The name Labidco became synonymous with stupidity when the UNC took office in 1995 and immediately set up an investigating team to scourthe project for financial irregularities...

The name Labidco became synonymous with stupidity when the UNC took office in 1995 and immediately set up an investigating team to scour the project for financial irregularities. The government was convinced that the estate was sited on unstable soil, and that its only purpose was to serve as a "feeding trough" for "party hacks".

It insisted that the $100 million-plus spent on Phase I was riddled with corruption. But its 12-member team found nothing corrupt about any of the contracts awarded. It did, however, say that the thrust into LNG was ill-conceived. The committee suggested LNG was not the way to go (the PNM had already negotiated Train I with Atlantic LNG). So the ALNG plant that was originally slated to be constructed there was moved to Point Fortin. Labidco, a subsidiary of the NGC, was then left to fend for itself.

"What was bad about that hiatus is that no other industrial estate was developed, and that at a time when the downstream energy sector was ready to explode," said Saith. "No new sites were developed during that period...only ALNG was put in Point Fortin. Now we have huge foreign corporations banging at our doors, and what happens? Point Lisas is full to capacity. Government wants to spread out these heavy industries, so new sites are needed. Now we have to work at a furious pace to get Phase II, which will be named Union Estate, going. We are playing catch up...and losing money that should be flowing into our coffers through the establishment of these plants."

Phase I of Labidco is set off the old Brighton harbour where there is one docking facility with a depth of about 12 metres. On the day the Express Business visited the site, a barge was docked for refurbishment work. "But they will move tomorrow when another shipment of pipes is due to arrive," said port superintendent Aldwyn Alexander. "They work when we have no ships to offload material, but they will be finished soon. Over the next few weeks, thousands of tonnes of 56" pipes will be delivered here."

Nearby, work has begun on a second berth. "We are using a new open cell system in the construction of that berth, which will be much bigger than the one we now have. That one will be 60 metres long with a dredged depth of eight metres and will cater for vessels up to 240 metres long. This area has a natural harbour, so while there is dredging work, it's not very much." Carillon is the firm that was awarded the contract to construct the new berth.

Adjacent to the harbour two companies are working of separate projects. Damus is busy constructing the top side of a drilling platform for BHP Billiton. And close to the new berth a 30-acre site has been cleared for the construction of a fabrication yard. One portion is being fast-tracked to meet a January deadline set by bpTT. The giant oil company intends to build a platform there–the first of its kind, and size–to be built locally. "These platforms are normally built in the USA and towed to drilling sites off-shore Trinidad and Tobago," Saith said. "Now, much of this kind of work can be done here. This will mean using many skilled local workers. And when the entire yard is ready for use, many more firms will be attracted to it."

On the hill overlooking the harbour, huge pipes are stacked for hundreds of metres. These are being stored there until the cross-country gas pipeline project starts early in 2004. "They are the biggest pipes ever used in the country, and they are all offloaded at our harbour," Saith said. "When the NGC is ready to start the project, pipes will be taken to the various sites by trucks. That will be one of the biggest projects of its kind ever undertaken in the country. It will bring gas from the East coast straight down to the La Brea and Point Fortin districts. That's in preparation for the new Union Estate, which we expect will house a number of big methanol, LNG and other plants."

The estate is serviced by well constructed roads, and one can see electricity lines running through the site. But because there are only nine tenants currently occupying limited space, most of the 400-acres remains covered in bush. "That will soon change. We have a number of tenants who are seeking to locate here, and after the fabrication yard is completed early next year, we expect our site will be in great demand," Saith said. "When there was a furore over gas seepage on the site, that scared off many firms that had an interest. Now we have to woo them back. As for the safety aspect, the fact that firms like bpTT, BHP, Petrotrin and others have chosen to do work here tells its own safety story."

The 400-acre site was completed at a cost of $133 million in the mid-1998. At a cost of $133 million, the harbour was dredged and a dock constructed, abandoned oil wells were plugged and petroleum infrastructure relocated. There was also the removal and "burial" of asbestos, earthworks and drainage, the construction of a main road and the provision of utilities. The latter include telephone lines, a 12Kv electricity supply, 600,000 gallons per day water supply and a link to natural gas supply. "When you consider that it costs more than that sum to construct just a good harbour, you can see there was no wastage there. In fact, all the contracts were completed on time and within budget," Saith said.

On government's decision to site an estate at La Brea, Saith said that back in 1993 a decision was taken to look for potential sites since Point Lisas was "being gobbled up" by new mega-plants. "But there are constraints in looking for sites for heavy industries. For example, there must be a deep water harbour nearby, or one must be developed, which is a huge cost. Then there must be available land, more than 1,000 acres, with few settlers so relocation will not pose a problem. Also, all services required by such estates must be easily available. That's how La Brea was chosen. It was an old oil field, so there were wells to be capped and the clearing of some 20 abandoned storage tanks. The soil, too, was tested and found to be near perfect. That's how Labidco came into being."

In fact, the soil type proved to be a plus: a bioremediation facility was set up close to the sea shore to deal with oily waste that was taken out of the estate site. "When the firm we gave the job to (Kaizen) came in they found there were certain microbes in the soil, not found any and everywhere, that helps the process. So they did not need to use many other substances to help in breaking down the waste. For some time now we have treated oily waste from firms like Trinmar, Petrotrin and NP. In fact, since we started this facility, we have treated over 400,000 cubic metres of oily waste. That facility is the only one of its type in the country and it helps our bottom line."

The tenants who currently occupy the estate are Trinmar, Westminister Dredging, PF Engineering, Cliffs Drilling, Kaizen Environmental Services, Cross Island Pipeline and Gordon Winter Limited. "They are all involved in oil and gas related business, which is what the estate is, at this point. We service these companies. So Trinmar found it expedient to occupy a large acreage for use to store material, and it also uses our docks to ship the material between shore and its off-shore operations. The other industries we will attract to Phase I are also of the same type-bear in mind there will be no heavy industries located here. So it will be a services park and a port for the energy industries," Saith explained.

The area that is designated for Phase II, or Union Estate, is covered in secondary forest. It's on the eastern side of the South Trunk Road, located on land that belongs to Petrotrin. The land is almost contiguous with the Phase I site. "We intend to start work there early in 2004, because there are a number of big firms that want to set up plants in the country and there is no space for them. Point Lisas is almost fully occupied. And I think government's policy is to spread out its heavy industries sites. Which is where Union Estate will come in, with 800 acres of very good land. We should see the first plants start construction in early 2006. In another 10 years, the forest you see here will give way to mega-plants," Saith said.

He boasts that already, in five years of limited operations, Labidco has shown a profit for two successive years. "Normally it takes an industrial estate ten to 15 years to see returns on investment. We enjoyed a small profit in 2001, and in 2002 it was better. So in spite of the negatives that hit us hard, we survived and made profits." He is excited, though, about the completion of the docks and the 30-acre fabrication yard. "This will cost $80 million by the time it's finished. But it opens up tremendous new horizons for us as an oil and gas economy. Through this yeard we shall join the small number of countries where fabrication of these huge oil platforms are built. It holds possibilities not only for operations here, but later, when we become proficient, I can see us fabricating platforms for overseas use."

And how has Labidco impacted on the community of La Brea, home of the famous Pitch Lake, but where poverty abounds? "Every contractor that comes on the estate is asked to use as many residents as he can in his project. Right now there are about 350 employees on the estate, many of them from the surrounding villages.

"By early next year, when bpTT starts its 'Cannonball' project, another 300-plus persons, mainly welders and fabricators will be employed. Then later, when we start work on the Union Estate, more employment will come the way of our neighbors. Yes, we believe we have an obligation to La Brea residents. As the estate grows, so will the will once more come alive." He said Labidco's mandate is not only to make money but to have a positive impact on the communities that are around the estate. "There is a social component to what we do," Saith added.

Labdico appears to be rising from the rubble of controversy, but the stigma of an industrial site that was selected for political reasons still haunt it. It lies in a PNM dominated district. Saith does not see it in that light, though. He was there, in NEC, when government was planning its thrust in downstream energy industries in the early 1990s. "Frankly, given what I outlined as the necessary requirements for the establishment of such an estate, we did not have many choices. As I said, Point Lisas was bursting at the seams. La Brea was the best alternative, what with the Brighton harbour located there. Sure, there were problems, as there will be with any site where oil was mined. But that's why we have technology, to take us beyond such restrictions. I think we have overcome that and in another few years people will see a huge industrial estate that will once more stamp La Brea on the map of Trinidad and Tobago."