This study intends to propose parameter adjustment for economic evaluation in considering abandonment expenditures (ABEX) during front end loading (FEL) of discovered petroleum resources. In maturing a petroleum field development, abandonment and decommissioning of wells and facilities requires consideration during FEL. FEL, long adopted by prominent E&P players worldwide is used to support capital investment decision-making where value i.e. expected monetary wealth is measured and evaluated by Discounted Cash Flow (DCF) analysis. However, the DCF approach is outdated and flawed where it does not capture fluctuation well. This study reviews ABEX of sub-commercial contingent resources or shelved projects and economic evaluation method used in the author's organization and their parameters, identifying relevant and applicable adjustments that could be made associated to ABEX. Combining the revised ABEX with a modified economic model, a proposed set of categorical adjustments to is produced. The results show that the ABEX of the previously sub-commercial projects yield a more competitive number with revised semi-detailed estimates and different escalation and inflation approaches. Additionally, a standardized assumption for abandonment year before cessation of production is recommended to provide a more realistic evaluation of when ABEX is actually required to incur. These, in turn, improves the Net Present Value (NPV) of the projects tested as well as their viability and rank towards being sanctioned for development.

This study intends to propose parameter adjustment for economic evaluation in considering abandonment expenditures (ABEX) during front end loading (FEL) of discovered petroleum resources. In maturing a petroleum field development, abandonment and decommissioning of wells and facilities requires consideration during FEL. FEL, long adopted by prominent E&P players worldwide is used to support capital investment decision-making where value i.e. expected monetary wealth is measured and evaluated by Discounted Cash Flow (DCF) analysis. However, the DCF approach is outdated and flawed where it does not capture fluctuation well. This study reviews ABEX of sub-commercial contingent resources or shelved projects and economic evaluation method used in the author’s organization and their parameters, identifying relevant and applicable adjustments that could be made associated to ABEX. Combining the revised ABEX with a modified economic model, a proposed set of categorical adjustments to is produced. The results show that the ABEX of the previously sub-commercial projects yield a more competitive number with revised semi-detailed estimates and different escalation and inflation approaches. Additionally, a standardized assumption for abandonment year before cessation of production is recommended to provide a more realistic evaluation of when ABEX is actually required to incur. These, in turn, improves the Net Present Value (NPV) of the projects tested as well as their viability and rank towards being sanctioned for development.

The scope of this paper discusses the development of Offshore Wellhead Facilities within PETRONAS Group of Companies to mitigate the development of marginal offshore fields during low and volatile oil prices, as well as a case study of its first implementation at Field T, offshore Peninsular Malaysia. As the oil price plunged from USD 115/barrel to USD 27/barrel (Brent) in 2014, PETRONAS’ flagship marginal field operator, Vestigo Petroleum Sdn Bhd faced challenges to develop fields within its portfolio. It instigated a new way of field development, which includes a portfolio-based view, accelerated monetization, uncertainties reduction and better control of scope and cost. Uncertainties on the facilities design are narrowed and greater focus could be allocated to manage subsurface uncertainties during planning stage. Uncertainties on the facilities design are narrowed and greater focus could be allocated to manage subsurface uncertainties during planning stage. PETRONAS has since adopted this approach for other field development types e.g. near field developments, redevelopment of existing fields and stranded fields.