QuestionQuestion

Facilities Coursework

Purpose:
This coursework is designed as a self-study programme to further the student’s knowledge of the subject beyond the directly presented course material through web and publication searches.
In the coursework you are expected to demonstrate
1. Knowledge and understanding
2. Critical analysis

Project Brief
ECRGU Oil Company has discovered a new offshore oil field, Tantalum, in an area with high prospects of future discoveries. Your task is to carry out a critical analysis (clearly stating your appraisal criteria) of the two options available for the development of this field and recommend the best option to progress the project. Include a Process Flow Diagram (PFD) (showing the main facilities required) for your recommended option.

Basic Facts about the Tantalum Field:
 Location: 50 Kilometers from the nearest landfall;
 Depth of water: 350 meters;
 Climate: Tropical;
 Estimated recoverable oil: 36 million barrels;
 Crude quality: Sweet – 40 degrees API.

The two field development options are given below.
Option 1 – Standalone (Fixed Steel Jacket Structure)
 Develop with 4 smaller capacity wells. Each well requires a capital investment of $50 million. The production capacity of each well is 1.0 million barrels per year.
 Make a capital investment in a fixed platform. The cost of this investment is $540 million.
 Make a capital investment in a pipeline at a cost of $340 million.

Option 2 – Subsea Tieback
Develop Tantalum field by subsea tieback to a nearby Palladium FPSO.
Tantalum’s oil will be stabilised using one of Palladium’s existing processing units which is soon to become excess to requirement. Tantalum and Palladium oil will be commingled and exported as a blend using the existing tanker operation, with export measurements made using Palladium’s metering system. Palladium operator has indicated that there may be restrictions on space and weight for any new metering system to measure Tantalum’s production before it is commingled with Palladium’s oil. Details of Palladium field is as follows;

 Palladium field is 10 km from Tantalum
 Daily production: 100,000 barrels of oil per day;
 Crude quality: Sour - 30 degrees API;
 Export: Via SBM to a tanker;
 Current status: Palladium reservoir has come off plateau and its oil and gas production rates are expected to decline gradually over the next few years.

Subsea tie back development plan is as follows;
 Develop with 3 larger capacity wells. Each well requires a capital investment of $80 million. The production capacity of each well is 2.0 million barrels per year.
 Rent FPSO at an annual cost of $80 million per year.
 Rent shuttle tanker to transport the oil at a cost of 10 US$ per barrel times the number of barrels transported by the tanker in the year.

Scope
 For each option, calculate:
o The field life (number of years of production);
o Annual production capacity;
o Total development cost;
o The average development cost per barrel of production;
o Total net revenue before tax.
* Assume “money of the day” i.e. no inflation and discounting requirement.
* Cost per barrel of crude oil is $75
* Assume cost of 10km tieback is included in the development cost.
 Discuss a proposed gas consumption/disposal option for your recommended field development option including gas processing requirement (N.B. flaring not permitted).
 Discuss produced water treatment to suit proposed disposal option for your recommended field development option.

Report
The report should be no more than 2,000 words with flow diagrams and other relevant drawings to illustrate any points being raised. All references used must be properly identified.

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Introduction

In this document we perform a critical analysis of the two given options recommended for ECUG Oil company field development. We discuss in detail the process flow diagram for each of the options. The economic analysis is summarized for both of the options.

Calculation method:
Here we propose to use the Net cash flow method as it includes the annual cash in from production and the annual cash out from Opex and Capex that are summed into the project cumulative undiscounted cash flow calculation to compare between two scenarios for production for the proposed oil field development. The calculation method is found into the first reference and also the production decline rate for production forecast.
Option 1 – Standalone (Fixed Steel Jacket Structure)

Initial production:
The field will be developed by 4 small wells drilled before the fixed jacket is installed to make the jacket installation easier. Each well will begining production by 1 million stbd per year that means production of 2740 stopd per day. The total field will begin production by 4 million barrel of oil per year that means 10960 barrel of oil per day.

Production Forecast:
As the reservoir will deplete that will lead to production decline continuously, the production decline annual rate is assumed to be 10% as a general trend for most of medium expandable reservoirs. The reservoir is assumed to produce until reaching the recoverable reserve that was estimated as 36 mmbbl. Upon this assumption, the field life time will be calculated.

Oil transportation:
Production will be transported by 2 pipelines; one for the bulk production and the other on can be used to test wells periodically. The main pipeline can be 12 inch diameter and the other pipeline can be 8 inch diameter. Pigging operation is required to be done every winter to sweep any waxes or...

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