Field development profitability is a function of many income and expense factors such as capital expenditures (CAPEX), operating expenditures (OPEX), production rate, product price and the frequency of component failures. Component failures reduce the field total production rate and increase OPEX. Regardless of the chosen concept, the ability to efficiently keep production wells on stream is one of the most important factors determining field economic performance. When moving into deeper water, subsea interventions become more expensive and are associated with longer waiting times for the required intervention vessels. Furthermore, deepwater developments rely on new technology, which has yet to be field proven. This paper demonstrates how Reliability, Availability and Maintainability (RAM) analysis can be used to quantify the costs associated with well interventions and subsea repairs. These costs can be combined with estimates of CAPEX and OPEX to select efficient subsea deepwater solutions from a total lifecycle cost perspective. Until recently deepwater ventures were evaluated based on the balance between potential revenue, (CAPEX) and operational expenditures (OPEX). Little effort was put into evaluating the potential of lost revenue and expensive intervention costs due to component failures. RAM Analysis is a systematic approach to evaluate the uncertainty related to these "unforeseen" events, and can strengthen the decision making process. This paper describes the RAM analysis methodology, and illustrates some of the benefits of applying it. Furthermore, an overview of industry initiatives currently carried out by the deepwater industry to develop and to qualify new technology is given Introduction: During the last forty years technology has been essential to provide access to hydrocarbon resources increasingly difficult to reach and produce. The economical efficiency of these new achievements was never questioned as long as margins were high and the demand was growing. Over the last decades however, finding and producing quickly was no longer the only objective, companies were forced to cut costs and produce and explore more efficiently. Today, access to the resources and cost reduction are combined efforts in the industry, and remarkable improvements have been made within different disciplines in order to meet the demand for faster and more cost efficient exploration and production. Within the field of drilling technology for example, mastering horizontal drilling has allowed for more complex well architecture, which has reduced the required number of wells and improved productivity. The latest achievement in this area, is the development of intelligent well completions allowing for predrilled wells with access to several zones, which reduce later costs associated with re-completion of the reservoir. Technological improvements have allowed oil and gas developments to emerge into deep and ultra-deep waters, introducing an operating environment not encountered in shallow water. Following this trend, it is essential to understand the various uncertainties associated with operation in these new environments, and accept full accountability for the economical consequences. The current deep and ultra-deep water developments in the Gulf of Mexico are forcing operators and manufacturers to look for new cost efficient solutions without compromising safety, property or the environmental issues.
Subsea processing offers several advantages compared to traditional ways of producing, processing and transporting well fluids to onshore terminals. By removing the need for expensive, manned floaters, initial investments can be reduced significantly. A concept based on subsea processing also offers the option to provide additional energy to the well stream to reach treatment facilities (offshore or onshore). This is particularly important for exploitation of hydrocarbon reservoir in deepwater, where the needs for providing energy to the well stream is higher. This has the potential benefit of increasing the ultimate recovery and/or accelerating the production. Regardless of the chosen concept, the ability to keep wells on stream is the most important factor determining field economic performance. For subsea processing, the anticipated equipment performance and the associated operating costs are subject to uncertainty. In addition, moving into deeper water, subsea interventions become more expensive and are associated with longer waiting times for the required intervention vessels. The fundamental question is whether the reduced CAPEX of a subsea processing system is out-balanced by the higher OPEX as compared with traditional systems. Ultimately this question can be addressed using a cost/benefit approach. This paper discusses the advantages and disadvantages with subsea processing systems from a life cycle cost perspective (capital and operating expenditures), and describes how implications of component failures can be factored into business decision analyses that seek to evaluate the viability of new technology. In particular a review of the subsea processing technology provided by the industry today is given together with an overview of the new functionality that is required to make subsea processing a viable option for the exploitation of hydrocarbon reserves. The paper will identify areas of uncertainty related to subsea processing and define a rational approach to support the decision making process in the qualification of subsea processing solutions.
Many cost components must be considered to determine the most cost effective deepwater production system for a particular site. Too often, only the well systems CAPEX 1 is adequately included in field development alternative studies. OPEX, RAMEX and RISKEX depend largely on reservoir characteristics, specific well system designs and operating procedures. The effect of these factors nearly always outweigh differences in well system CAPEX. Optimization of total lifecycle cost of deepwater production systems must include all of these factors.The risks associated with blowouts are often an important factor in choosing one dry tree tieback well system over another. Another important factor often overlooked is the cost of well system component failures. As oil exploration and production moves into deeper and deeper water, the costs to repair well system component failures escalate dramatically. This paper presents the methodology developed by a Joint Industry Project to quantify capital, operational, blowout risk and reliability costs associated with deepwater well systems. Five well systems have been modeled to demonstrate the methodology: a dual casing dry tree system, a single casing dry tree system, a tubing riser dry tree system, a conventional tree subsea system and a horizontal tree subsea system. Case examples demonstrate the model for these five well systems.The methodology, results and main conclusions from this Joint Industry Project are presented.
Field development profitability is a function of many income and expense factors such as capital expenditures (CAPEX), operating expenditures (OPEX), production rate, product price and the frequency of component failures. Component failures reduce the field total production rate and increase OPEX. The losses are directly drawn from the bottom line. Regardless of the chosen concept, the ability to efficiently keep production wells on stream is one of the most important factors determining field economic performance. When moving into deeper water, subsea interventions become more expensive and are associated with longer waiting times for the required intervention vessels. Furthermore, deepwater developments rely on new technology, which has yet to be field proven. This paper gives an overview of the challenges related to the selection of deepwater completion tieback concepts. There are number of different ways of developing oil production fields in deepwater. Dry Tree Tieback Concepts ("Dry") require a platform to support the permanently attached production/intervention risers, but provide the efficiency and the convenience of direct well access for remedial activities. Subsea Tieback Concepts ("Wet") provide greater flexibility in utilization of existing infrastructure, well location and development schedules, but require more challenging and costly well interventions/workovers. The fundamental question is whether the higher CAPEX of a dry tree tieback system is justified for the lower OPEX as compared with a subsea tieback system. The paper discusses the typical advantages and disadvantages with "wet" and "dry" tieback alternatives and outlines a method for how the experiences gained by the deepwater industry so far can be factored into business decision analyses that seek to evaluate the profitability of alternative field development concepts. Introduction The economics of deepwater developments are different from shelf activities. Deepwater is characterized by high capital expenditures with relatively low operational expenditures and high sustainable production rates - hence high costs for production interruption. Until recently it was quite common for the decision making process used to evaluate deepwater ventures to focus on optimizing the balance between potential revenue, (CAPEX) and operational expenditures (OPEX) according to the equation: Profit = Max (Revenue - CAPEX - OPEX) (1) The shortcoming in this equation is that it does not take into account unscheduled and unplanned events (such as component failures) that have the potential to shut down production for a long time, destroy a facility, pollute the environment and/or tarnish a company's reputation. When moving into deeper water, the economic penalty for delayed/lost production becomes greater. The uncertainty related to whether "unforeseen" events will occur is also increased as prototype and novel technology are introduced into an operating environment not encountered in shallow water developments. Furthermore, subsea well system repairs and interventions also become more expensive and are associated with longer delays due to availability and mobilization times for required repair vessels, particularly in ultra deep water environments.
There are number of different ways of developing oil production fields in deepwater. Dry Tree Tieback Concepts ("Dry") require a platform to support the permanently attached production/intervention risers, but provide the efficiency and the convenience of direct well access for remedial activities. Subsea Tieback Concepts ("Wet") provide greater flexibility in utilization of existing infrastructure, well location and development schedules, but may require more challenging and costly well interventions/workovers. The economics of deepwater developments are different from shelf activities. Deepwater developments are characterized by high capital expenditures, relatively low operational expenditures and high sustainable production rates - hence high costs for production interruption. The uncertainty related to whether "unforeseen" events will occur is increased as prototype and novel technology are introduced into an operating environment not encountered in shallow waters. This paper describes the various solutions evaluated for the Ormen Lange field development project offshore Norway and how system reliability was factored into the concept selection process. The Ormen Lange field, which is the first deepwater discovery to be developed offshore Norway, is located 130 km from the West Coast of Norway at a depth of about 1000 meters. Developing Ormen Lange represents a major challenge with a combination of large water depth, extremely rough seabed conditions, long tie-back distance and demanding weather conditions. Concepts that were evaluated covers a full range of innovative solutions - ranging from a relatively novel "Subsea to Land" concept (subsea wells tied back to on onshore terminal) to a more traditional deepwater concept with an offshore processing facility with wet and dry wells. The paper discusses the advantages and disadvantages with the various alternatives evaluated and outlines a rational approach to assess the consequences associated with component failures and flow assurance issues. 1. Introduction Field development profitability is a function of many income and expense factors such as capital expenditures (CAPEX), operating expenditures (OPEX), production rate, product price and the frequency of component failures. Component failures reduce the field total production rate and increase OPEX. Regardless of the chosen concept, the ability to efficiently keep production wells on stream is one important factor determining field economic performance. This paper demonstrates how RAM analysis successfully can be used in the decision making process of deepwater developments. The RAM methodology will be described, and some of the benefits of applying these techniques will be illustrated. One of the main results from this exercise is the potential cost savings related to focusing attention on critical areas, and improve solutions and concepts where the potential value-yield is highest. A second advantage emerging from this technique is the discovery of enhancement opportunities during the conceptual design phase rather than later in the development when cost of changes is much higher. Several industry projects have recently been undertaken with focus on reliability techniques and economical optimization. The need to address challenges related to deepwater developments, and to allow for a better and more complete understanding, have been a driving factor to combine the industry's effort in Joint Industry Projects (JIP). The methodology and data described in the following sections are based on these projects.
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