DuexDate DatexSubmitted Forxofficialxusexonly

28/03/2013 28/03/2013 LATE DATE

Mr Ibiye Iyalla

Marker’s Comments

Marker Grade

Contents

1.0 Introduction 2

2.0 An Outline of Possible Field Development Options 3

3.0 Proposed Options Calculations 4

3.1 Combination [a] 4

3.2 Combination [b] 5

3.3 Combination [c] 6

4.0 Best Development Option 7

5.0 Process and Transportation scheme 8

6.0 Conclusion 9

List of tables

Table 1: Economical evaluation of combinations (a) and (c)

Table 2: Technical evaluation of combinations (a) and (c)

List of Figures

Figure 1: Alba oil field development options

Figure 2: Alba oil field processing unit flowsheet

Sonatrach DWE 8 ENM202 Facilities Engineering Coursework

Executive summary

The present report is the result of a coursework in ENM 202, Facilities Engineering

Module prepared by a Drilling and Well Engineering student at Robert Gordon

University. The purpose of it is to provide a general scheme of an offshore oil field

development.

An outline of the all the possible options for development of the field form a

proposed range of well development, oil processing, and transportation options is

prepared based on technical feasibility.

For three proposed combinations, using provided information about the field, annual

oil production, the total development cost, the average development cost per barrel

of production, and total net revenue are calculated in details.

Based on development cost, technical feasibility, and other factors that affect the

success of the project a combination from those three proposed, is recommended.

Finally most important components of the recommended scheme for processing and

transporting fluids are illustrated in details.

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1.0 Introduction

After a new offshore oil field, Alba, has been discovered in a moderately

undeveloped area, a development project is planned and executed.

To achieve a successful project the development plan should be carefully prepared

based on the field conditions such as water depth, environmental conditions

reservoir properties, regulation and legislation, distance to point of sale, and

available options.

Alba field is recently discovered with relatively enormous oil volume in relatively

shallow water and near the sea shore with limited options to be analysed and

recommend the appropriate development plan.

In addition to cost-effective choice from available options, other important factors are

taken in consideration for the success of the project.

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2.0 An Outline of Possible Field Development Options

In order to get all the possible options for Alba field development with the provided

well development, oil processing, and transportation options, the need to know the

total number of options is vital. Then, the possible options are obtained by

subtracting those technically unfeasible options from the total number as shown in

figure 1

Renting a shuttle tanker is not feasible because it needs a storage capability which

is not provided by both fixed steel jacket and semisubmersible production units.

Laying a smaller pipeline that transports up to 5 million barrels per year is not

possible because the rate of production is greater (up to 8 million barrels per year)

for both well development options.

As a result the number of possible options is:

Possibleoptions=Well options× processing options×trasporting options=2×2× (3−1 )=4options

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Figure 1: Alba oil field development options

Unfeasible optionFeasible option

Well Development Oil Processing Oil Transportation

Laying a larger

pipeline

Laying a smaller pipeline

Renting a shuttle tanker

Renting a floating production vessel

(converted semisubmersible)

Capital investment in a fixed steel

jacket platform

4 larger capacity

wells

8 smaller capacity

wells

Sonatrach DWE 8 ENM202 Facilities Engineering Coursework

3.0 Proposed Options Calculations

The following calculations are based on some assumption which are:

Constant production rate along the field life

Constant oil price per barrel along the field life

All the volumes involved are considered after processing including the total

recoverable volume

As a result the field life is Field life=Estimated recoverable volumeAnual productioncapacity

Field life= 200millionbarrel8millionbarrel per year

¿=25 years ¿

Maintenance and decommissioning costs are initially included and are the

same for all the options

3.1 Combination [a]:

This option involves 8 small wells, converted semisubmersible production vessel,

and large capacity pipeline.

Annual Oil Production

Anualoil production=Number of wells× Annual production capacity per well

AnualOil Production=8×1×106=8million barrels / year

Total Development Cost

Total Development Cost=Well Devlopment Cost+Oil ProcessingCost+Oil Traspor tationCost

Well Devlopment Cost=Number of wells×WellCost=8×50×106=400million$

Oil ProcessingCost=Annual RentalCost × Field life=40×106×25 years=Onebillion $

Oil TrasportationCost=600million $

Total Development Cost=400×106+1000×106+600×106=2billion $

Average Development Cost per Barrel of Production

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Averagedevelopment cost per barrel= Total development costTotal recoverable volume

Averagedevelopment cost per barrel=2000×106

200×106=10$ per barrel

Total Net Revenue before Tax

Total Net Revenue BeforeTax=Total Revenue−Total Development Cost

Total Revenue=Oil Price per barrel ×RecoverableVolume

Total Net Revenue BeforeTax=85×200×106−2000=15billion $

3.2 Combination [b]:

This option involves 4 large wells, converted semisubmersible production vessel,

and shuttle tanker.

Annual Oil Production

Anualoil production=Number of wells× Annual production capacity per well

AnualOil Production=4×2×106=8millionbarrels / year

Total Development Cost

Total Development Cost=Well Devlopment Cost+Oil ProcessingCost+Oil Traspor tationCost

Well Devlopment Cost=Number of wells×WellCost=4×80×106=320million $

Oil ProcessingCost=Annual RentalCost × Field life=40×106×25 years=Onebillion $

Oil TrasportationCost=Number of barrels×transporting cost per parrel

Oil TrasportationCost=200×106×5=one billion $

Total Development Cost=320×106+1000×106+1000×106=2320million $

Average Development Cost per Barrel of Production

Averagedevelopment cost per barrel= Total development costTotal recoverable volume

Averagedevelopment cost per barrel=2320×106

200×106=11.6 $ per barrel

Total Net Revenue before Tax

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Total Net Revenue BeforeTax=Total Revenue−Total Development Cost

Total Revenue=Oil Price per barrel ×RecoverableVolume

Total Net Revenue BeforeTax=85×200×106−2320=14.68billion $

3.3 Combination [c]:

This option involves 4 large wells, fixed steel jacket platform and large pipeline.

Annual Oil Production

Anualoil production=Number of wells× Annual production capacity per well

AnualOil Production=4×2×106=8millionbarrels / year

Total Development Cost

Total Development Cost=Well Devlopment Cost+Oil ProcessingCost+Oil TrasportationCost

Well Devlopment Cost=Number of wells×WellCost=4×80×106=320million $

Oil ProcessingCost=Investment Cost=1500million $

Oil TrasportationCost=600million $

Total Development Cost=320×106+1500×106+600×106=2420million $

Average Development Cost per Barrel of Production

Averagedevelopment cost per barrel= Total development costTotal recoverable volume

Averagedevelopment cost per barrel=2420×106

200×106=12.1$ per barrel

Total Net Revenue before Tax

Total Net Revenue BeforeTax=Total Revenue−Total Development Cost

Total Revenue=Oil Price per barrel ×RecoverableVolume

Total Net Revenue BeforeTax=85×200×106−2420=14.58billion $

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4.0 Best Development Option

After eliminating the combination [b] (4 large wells, converted semisubmersible

production vessel and shuttle tanker) because it is not feasible with a shuttle tanker,

two combinations are remaining for the best development option.

4.1 Economical evaluation

Combination [a] Combination [c]

Annual oil production 8 million bls 8 million bls

Total development cost 2000 million $ 2420 million $

Average development cost/bl 10 $ 12.1 $

Total net revenue before tax 15000 million $ 14580 million $

Table 1: Economical evaluation of combinations (a) and (c)

It is obvious that Combination [a] has the economic advantage. With the same

annual oil production, less total development cost and average development cost,

therefore best total net revenue before tax.

4.2 Technical evaluation

Combination [a] Combination [c]

Well development Better development with 8 larger wells by the late age of the reservoir by using some of them as injection wells.

Faster development option.

Oil processing Possibility of moving in case of problems.Preferable for deep waters.

Better for shallow water depth.

Better for long field life.

Less maintenance is required.

Transportation Same option is provided. Same option is provided.

Decommissioning no decommissioning is required Might be reused for other purposes with newly developed field.

Table 1: Technical evaluation of combinations (a) and (c)

Although combination [c] is not the economical option, its technical features provide the best option. For a newly discovered field in shallow water for a long field life (25 years), the best option to be recommended is combination [c].

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5.0 Processing and Transportation scheme

First, the produced oil coming from several well heads goes through a production

manifold. A well stream is composed of three main components (oil, gas, and water)

which are called “phases”. The hydrocarbons are separated to meet storage and/or

transportation requirements. The rest part must be eliminated as much as possible

that can be transported, re-injected, or disposed properly for solids.

There are two principal types that are used for separation horizontal and vertical.

Usually, the stream goes through a testing separator and multistage separators.

After separation, the three components must be treated. Then, measurements are

performed to estimate the revenue of profitable oil. Water and gas are finally re-

injected or disposed properly. Sometimes, gas is used as a fuel for the processing

unit and sometimes it is measured and commercialised.

The following diagram illustrates a flow sheet of an oil processing unit:

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From Well heads

Production manifold

Testing separationMultistage separation

Oil treatment Gas sweetening

Gas Dehydration

Gas compressing

Reinjection

Flaring

Transportation

Storage Metering

Water treatment

Transportation

Storage

Oil GasWater

Metering

Reinjection

Fuel

Figure 2: Alba oil field processing unit flowsheet

Sonatrach DWE 8 ENM202 Facilities Engineering Coursework

6.0 Conclusion

Preparation of an offshore oil field development is a complex operation that involves

many factors that should be carefully treated to achieve the project success based

not only on development cost factor.

Quite brief calculations have been done to have general overview about the field

such as annual production, development cost, average development cost per barrel,

and total net revenue before tax to help in choosing a combination based on

economical factor. In addition, the three proposed combinations are analysed based

on technical factors to make the right decision and recommend the best option.

However, in real projects these issues are treated with more serious information and

data which are not provided for us, therefore some assumptions are mentioned to

simplify and manage the calculations.

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Bibliography

MATHER, A., 2000. Offshore Engineering: An introduction, 2nd ed. London: Witherby & Co Ltd.

ARNOLD, K.E., ed. 2007. Petroleum Engineering Handbook, Vol III, Facilities and Construction Engineering. Richardson, TX:SPE

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