Balancing Project Schedule & Cost on Sour Gas Development Project Case Study

Abstract

The gas field development project is a challenging phase, since wells need to be drilled to assess the oil/gas reserves and production facilities need to be built. The ultimate objective of the project is to deliver the gas sales to selected buyers as per agreed schedule and price. As result, the project schedule and cost are defined to achieve the objective.Project schedule and cost are known to work in equilibrium. Where one of these dimensions is restricted or extended, the other dimension will then also need to be either extended/increased or restricted/reduced in some way. Given that quality must not be compromised, this paper aims to describe how to get the optimum balance of project schedule and cost on an onshore gas processing plant project located in north-east Indonesia with 90 MMSCFD feed gas capacity. The feed gas has a high content of CO2 and H2S.The schedule of the development project was initially divided into 2 phases: Early Production using sweet gas facilities will be constructed in 22 months and Complete Phase 1 with sour gas facilities will be constructed in 26 months. The project cost was developed by referring to third party cost estimates as part of FEED, to the most recent quotation from the vendor, and to the project cost owner. The Government had to approve the CAPEX of the project as part of the PSC scheme.Monte Carlo simulation was used to calculate risks related to schedule and cost estimates and furthermore to establish realistic ones. The simulation showed that p75 falls within 28 months and MUSD 200 for project phase-1 completion. However, according to its commitment to the gas buyer, the company has to deliver gas within a maximum period of 22 months, which makes this project very challenging.