Ian Copeland, Class of 2008

Bechtel’s president of Fossil Power, Ian Copeland, is a man of broad experience and scope. Now overseeing Bechtel’s involvement in engineering and construction of fossil and renewable energy plants worldwide, he helped rebuild portions of London’s subway system, worked as an assistant to Bechtel’s President & COO, was assistant project manager for Bechtel Power’s Springerville Unit 3 expansion in Arizona and served as a Bechtel Enterprises’ regional manager for Europe, Africa and the Middle East.

He began his professional career in the utility consulting practice of Booz Allen Hamilton and then worked as the vice president of project finance for Hannon Armstrong & Company, a merchant and investment banking firm now located in Maryland. Later he was managing director of Wärtsilä Power Development based in Hong Kong where he helped develop power projects in Pakistan, the Philippines, Indonesia and China. Raised in the US– but having traveled to more than 30 countries before he was a teenager and schooled in England at secondary level – he holds degrees in mechanical engineering and physics from Rutgers University.

Accordingly, Copeland brings extensive international experience and some fresh perspectives to overseeing Bechtel’s fossil and renewable energy projects around the world.

IGCC
Naturally, IGCC looms large on Copeland’s agenda. Bechtel is working with GE to build a reference plant and it is negotiating with Duke and AEP for plants in Indiana and Ohio. GE bought the technology and has been working to commercialize it.

Bechtel is not new to IGCC. It was involved in building the first large-scale demonstration project, the Coolwater plant in California, and the original commercial-scale IGCC project in the United States, the Polk County, Florida, project for TECO.

Says Copeland, “We feel things are going well. IGCC can be an important element of the future technology mix of converting fuel to electricity. Bechtel has always been in the forefront of the power generation marketplace and it is our intent to remain so. We will stay competitive in all generation technologies and generally offer the solutions our clients prefer.”

Copeland’s group will team with Bechtel’s oil, gas and chemicals group for some of the gasification effort while itself concentrating on the power generation portion. “It’s a great relationship between the two global business units,” he says. “I think this is going to be an interesting business line for us.”

The work is not merely for large power generation. Bechtel is also working on polygen projects, that is, using the gasification process to create chemical feedstock. An example is the TransCanada project in Saskatchewan. The project will produce about 300 MW of long-term electricity but also hydrogen, nitrogen, and steam as well as CO2 for fertilizer production and enhanced oil recovery. Moreover, the TransCanada project will use petroleum coke for fuel and will incorporate both carbon storage and sequestration.

A primary long-term goal of Copeland’s IGCC work is to demonstrate the technology’s commercial potential, thus to build volume and thereby eventually to lower the capital cost. “We are looking to take IGCC from a technology,” he says, “to a product.”

Coal in General
Copeland acknowledges that securing permits for coal plants in the United States is difficult, but he nevertheless sees coal as “an important part of the nation’s energy mix. It’s a domestic fuel, so it’s good for our trade balance and our national security. It has long-term price stability and thus is good for our customer and their customers. This price stability is true around the world as well and coal will remain an important fuel globally.” Despite the pressure on coal in the U.S., Copeland’s group is currently building four substantial coal plants totaling more than 4,100 MW domestically, helping to manage another 600 MW project overseas, and sees “a number of good opportunities still on the horizon.”

Combined Cycle
Copeland also sees his business unit being active in combined cycle. “We have never been out of building combined cycle plants,” he points out. He suspects that combined cycle plants will be needed so long as there are delays in, or moratoriums on, permitting coal plants. But gas pricing is volatile, making it harder to secure locked-in gas contracts, in turn making combined cycle plants less attractive for baseload production. Copeland also points out that the per megawatt capital costs of a coal plant compared to a combined cycle one is now down to about 2.5 to 1 from an earlier 3 to 1 while gas costs have risen relative to coal. This makes it more attractive for Bechtel clients to build coal plants unless they are very concerned about speed to market or are hampered by coal permitting issues.

Renewables
Copeland looks favorably on renewables as fuels. “I strongly believe they should be a good portion of the energy mix,” he says. “But that is not the case today and to this point they have not proven sufficiently able to provide capacity reliably, particularly solar and wind. I see their biggest challenge,” he says, “is, getting them to approach the reliability of more traditional fuels for feeding electricity into the grid when it’s needed.”
Copeland believes that geothermal “has some legs” and Bechtel has relevant experience with the technology. And he believes that Bechtel might be the right builder for large offshore windmill projects, the substantial arrays that will be required for solar PV and the complexity of solar thermal projects. But he sees few prospects for U.S. hydro construction that would benefit from Bechtel’s advantages of bringing economies of scale to large and complex projects.

Coal Plant Overhauls
Copeland’s group is also active in coal plant pollution control projects. One of the largest is the Sammis plant along the Ohio River being done for First Energy. Copeland’s group is taking flue gas from seven units and routing it through a new back end, a $1.2 billion effort that Copeland says is logistically quite complex. Ductwork is extending a long way along the river and also crossing a highway. But the result is going to be significantly lower emissions.
Copeland expects a good deal of similar work – or new construction - to arise in Europe where power plants are mandated to significantly upgrade controls or shut down and be replaced with new plants. He points out that the UK recently granted its first permit for a coal plant in about 30 years.

The CO2 Question
A big question for the industry, of course, is the growing environmental concern about CO2 emissions. Copeland sees this mainly as an issue that has to be dealt with by the public and its representatives in the government. “Until people begin to value or price the CO2 externalities, the engineering and power industries will not have surety about risks and technology requirements or be willing to make significant investments around these issues,” he says. “Government and the public have to give us indication of their priorities. Right now the pricing levels for CO2 credits being talked about are in the $25 range, but these prices will probably not support technologies. To do so they would have to be closer to $50.

The big question is how the government is going to create incentives and what the public will be willing to support so that our customers will have the confidence to make the proper investments. Government has to make its decisions and then the market should set the pricing. However, it’s extremely important that the policy makers and industry clearly communicate the challenges and choices to the public. For example, the debate seems focused on coal plants when the reality is that gas plants produce a substantial quantity of CO2 as well. So if you exclude nuclear and if coal is not going to play large in the fuel mix, or people aren’t willing to change their habits, then electricity is going to be produced primarily from natural gas, it’s going to be very expensive and you may not address CO2 the way you thought you were. The other element of the issue is that it’s a global problem and the increases that are expected to come from other emerging nations are a real factor in the policy debate.”

Copeland points out that Bechtel is working with several technology providers and customers to evaluate, develop and demonstrate ways to capture and sequester CO2. Doing so is easier and less costly with an IGCC plant than with a conventional coal plant, making the IGCC technology attractive for the future. But he also points out that for now capture technology is more advanced than that for sequestration; the problem is what to do with the CO2 that is captured.

Copeland also worries about proposals to regulate CO2 as a hazardous material. Doing so would impact not only fossil fuel plants but also oil recovery. “There is a real policy debate required on the CO2 issue” he says. “It will be a defining question for us in the next few years and be of such impact that if we make the wrong decision then in 20 years we will be looking back on it and asking ourselves, ‘What were we thinking?’ There are lots of elements of change and risk here, and of defining what is going to drive us as a society. It is a very interesting time to be in this business.”

Contracts
Copeland emphasizes the flexibility with which Bechtel approaches contracts. He points out the Bechtel pioneered the modern lump sum turnkey contract in the 1970s and ‘80s when Bechtel did work with independent power producers developing PURPA plants. But he notes that since then prices of commodities and labor have risen greatly and that in a period of volatility lump sum contracts may not be the best choice. This is because the contractor has to assure its own coverage of costs plus achieving a profit. “In volatile times what we would rather see is a pricing and an alignment that says we will take risk alongside our client rather than having us take on all the risk. I think this is a better value proposition for our customers. We deliver a high degree of price certainty but provide customers a lower price by writing a contract in a much more shared risk perspective than in a lump sum environment.

“Generally,” he continues, “what you see is that some elements of a contract can be fixed but it may be more attractive to approach some elements with risk shared. We are trying to provide our clients a certainty of outcome, and to work cooperatively with them to solve their problems in a way that makes sense to them.
Our goal is to understand what our customers want, offer them a competitive, technology neutral, solution, then contract for risk both parties are willing to bear, and price that risk in a way that that makes sense.
In sum, we see ourselves as being very flexible, having principles in what we work toward and simply wanting to be fairly paid for the value we deliver. Everyone should know what is on the table, and what the risks are and then produce a contract that aligns interests to achieve the certainty of outcome everyone desires.”

Bechtel’s Mix and Advantages
Copeland concludes with an assessment of his company. He believes that being privately held grounds the firm’s culture of integrity and focus on safety and imparts a model of senior-level engagement that has helped the company thrive for more than a century.

Its assets, he believes, are greatest where the tasks are the largest and most complex. “We are an integrated engineering-procurement-construction contractor that can optimize across the whole spectrum of possible work,” he says. “Some contractors might claim and concentrate on a savings in engineering, or a savings in construction, but they are liable to miss some other element in doing so.

We are able to look at work holistically, from the very beginning to long into the operating stage. By managing more of the portfolio of risk in an integrated way, we add significant value.”

Copeland also says that the Bechtel bench is “three or four deep with enviable stability. In addition to that strong, experienced talent pool we can call on in-house experts from all around the world.

Most importantly, there’s an attitude and culture at Bechtel of our people focusing on detail and of being proactive. We look around corners. Our culture is very strong that way and really helps to save our clients money.”