Oil&Gas Projects

Assessment, management and development

Surface infrastructure

Наземная инфраструктура

 

 

The next step of the project team is to define needed to develop the field of facilities & infrastructure and the calculation of capital expenditures (Capex).

 

Stage "Appraise"

At this stage, the project team assesses Capex its own, without the involvement of Contractors.

 

Options for the development of infrastructure

 

First, they are determined the main directions for the implementation of the project:

 

 1. Location objects preparation of crude oil/gas. It is desirable to locate the manufacture on the production place with the minimum length for the collecting system for reducing the hydrate formation in the case of gas transport and reducing deposits of paraffin in the case of oil transport. 

 

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Schemes of gas gathering system (example)

 

 2. The level of production of crude oil/gas. It is advisable to consider the three options of production capacity, since the Capex increases nonlinearly on production growth. In addition, depending on the volume of production, technology preparation crude oil/gas and mode of products transport is changing.

 

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Production of crude gas on options

 

3. The depth of the processing of crude oil/gas and types of products. It affects the Capex for the processing of crude oil/gas, their transport and operating expenses (Opex). In particular, for gas-condensate field may consider the following options:

 

    a. Preparation of raw gas and unstable condensate,

    b. Production of dry gas and unstable condensate, which is transported a third party for processing,

    c. Production of dry gas and stable condensate,

    d. Production of dry gas, LPG and stabile condensate,

    e. Production of dry gas, ethane, propane, butane and stable condensate,

    f. Generation of electricity,

    g. LNG, CNG, GTL, etc.

 

For oil field, the following options:

 

    a. Crude oil,

    b. Treated oil, APG,

    c. Treated oil, dry gas, LPG, condensate,

    d. Treated oil, private generation of electricity from APG,

    e. Own oil refining for fuel or oil option, etc.

 

Product options can be many, which in turn influence the choice of transport of the product and the search for points of sales.

 

4. Means of transportation of products. It is important to choose a mode of transport that the sum of capital and operating expenses were minimal. Here it is possible to build pipelines, auto transport, trains, or sea transport.

 

Picture below shows the application field for the currently known or developed technologies suitable for expedient transport natural gas (Wood et al., 2008). However, this graph is not a rule, and for each field must find its own path and its technology. 

 

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Production volumes and distance to market for various technologies to deliver gas, from Wood et al., 2008

 

5. Synergy with existing nearby facilities processing or transport of products. Under this item, also many variations. A need to develop variants with maximum use the existing nearby facilities processing, in particular:

 

    a. Processing part of the products (eg, unstable condensate) at the facilities of the neighboring production,

    b. Using existing pipelines for joint transport products,

    c. The use of communications along the existing pipelines for laying parallel own pipe,

    d. Resuming its own facilities by receiving products from neighboring fields,

    e. Synergy based on the conjoint electric power generation, for example, at APG, etc.

 

At the stage of "Appraise», Capex are calculated with an accuracy of + 50 / -50%.

 

Initial data for calculation are the levels of production of crude oil/gas, graphics, drilling, wellhead pressure and the location of the main production.

 

Production level of gas or oil is needed to determine the shelf production of crude oil/gas and maximum capacity lay in the calculation of the equipment. When designing the oil field, oil production shelf absent, is present only the peak production, then it is decline. In the case of the development of gas and condensate field is desirable that the shelf gas production was at least 7 years, which will pay back the capital cost of its processing. If production levels slightly higher of capacity standard equipment or slightly below, geologists and developers correct the plan of input the field in the development and production level.

 

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Oil Production profile (example)

 

Type of production raw materials (gas, condensate and oil), its parameters (pressure, temperature) and the presence of undesirable components (hydrogen sulfide, mercaptans and nitrogen) define the technology of oil and gas. On gas assets mainly provides facility of glycol gas dehydration, and in the presence of condensate in it is already necessary to provide the facility of low-temperature separation. The presence of hydrogen sulfide in the gas and oil leads to a rise in the cost of equipment and the need to include in the calculation of the additional stock for corrosion of metal, construction of treatment plants from hydrogen sulfide and its utilization.

 

Schedule wellhead pressure drop. This indicator is required in gas projects to determine the power of booster compressor stations and the timing of entry into service. Low shelf gas production, but more gradual decline in wellhead pressure, allow to postpone entering the booster compressor stations, that will have a positive impact on project economics. For oil field, the sharp wellhead pressure drop causes the earlier transition to mechanized production oil.

 

Wellhead pressure, the volume of gas and condensate factor also determines the technology of gas treatment. Here are possible options for the construction of low-temperature condensation, glycol dehydration and drying gas adsorption facility. The presence of condensate in the gas imply the construction of low-temperature separation, which is compounded by the early introduction of booster compressor capacity, the need to build the facility of condensate stabilization, its export. 

 

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Facility of glycol dehydration of natural gas

 

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Facility of low temperature separation (LTS)

 

Plan of arrangement of the pads allows to estimate the length of gathering system, and together with the schedule of wellhead pressure - pipe diameter. In calculating the costs, necessary to consider the type of the laying of pipelines (ground, underground), electric heating, the presence of the methanol pipe, construction of roads and overhead lines on the pads. At the stage of "Appraise" laid the necessary infrastructure (so-called "clean field"). At a later stage, is held for more detailed study of the terrain and explore synergies with the already constructed infrastructure.

 

Product requirements in knots tie-in pipelines is define the technology of preparation of crude oil/gas and power of pumping units. To determine the power of gas compressor units is assumed that at the point of tie-in, requirements on the input pressure to the gas pipeline is 7,5 MPa in infield pipeline - 5.5 MPa, pipeline "The Power of Siberia" - about 11 MPa. Usually tie-in provided at the outlet of the compressor station of gas pipeline. For tie-in the pipeline, it is provided storage tanks with metering unit for the entire amount of oil, directly to the point of connection. Delivery of oil in the pipeline is made on one of the main oil pipeline pump stations.

 

 

Сalculation of capital costs

 

Calculation of capital expenditures is carried out depending on the data available - on the already built analogs the past 5 years, data from the suppliers of equipment, drilling contractors and own calculations. All the data provided have many questions. In particular, there is a big problem in the existence of database on constructed analogs of the last 5 years. In addition, it is very difficult to find a complete analogue of the object - there are differences in composition or crude oil/gas, or capacity, the construction district, the required depth of processing, the type of equipment used (coefficient of imports), etc. Suppliers can submit incorrect information - or depressed prices for the opportunity to get to the list of potential suppliers or inflated to reduce the large number of uncertainties involved at this stage of evaluation.

 

Determining the cost of piping has a lot of uncertainties and risks. In particular, at this stage is difficult to determine the accuracy of the length of the pipeline due to lack of carried out research works. To reduce this risk, we add to tracing pipeline on map another 25% of its length on maneuver vertically and horizontally.

 

The cost of construction of overhead lines, roads, methanol pipeline determined by the specific on a 1km by analog objects. In determining the Capex of pads should pay attention to the construction district, which affects the volume of deposition of soil (for example, in high waterlogged sand flow will be significantly higher), and the cost of the work in this district. Distance to the importation of soil greatly affects the determination of the Capex of pads (its share is about ½ of all works).

 

To determine the Capex of drilling should be used the price of prospective contractors for drilling with the mobilization / demobilization of drilling rigs. Calculation should be carried out by the supposed design of the well and the schedule of drilling.

 

Final calculation includes the cost of design and survey works 5%, PGR, costs the customer 1.2% and contingency costs 20%.

 

To calculate the economics of the project, Capex must be allocated by year. It is necessary to adequately assess the timing of construction and installation works in view of the winter season and the possibility of delivery of equipment to the construction site, the time of producing equipment and the execution of necessary design and survey works to the start of construction. Example of a table on the breakdown of Capex for oil and gas field are shown on picture below.

 

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The structure of the Capex of the "Appraise" stage (example)

 

According to pictures below, the difference in Capex of oil and gas fields is shown in the cost of drilling development wells and external transport, which includes pipelines and pumping/compression units. 

 

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Structure of Capex in the oil field (example)

 

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Structure of capital investments in the gas field (example)

 

Stage "Select"

 

The objective of phase "Select" - consideration of alternative design options and the selection of a preferred option of the design in accordance with business-objectives. When you select a preferred option, the concept is developed for the transition to stage "Define". The selected option should be sufficiently worked out in detail for the subsequent development of specifications for a feasibility study / FEED and implementation of procurement of materials and equipment with long delivery and manufacturing in the future.

 

At this stage, the project team is evaluating capital expenditures involving the subcontractors to develop a feasibility study / FEED. The basis for the elaboration is options of the steps "Appraise", which gave a positive economic effect and meet the business objectives of the Company. The most important thing - to take on a contract of the Contractor, who has considerable experience in the region and knows all its specificity.

 

At the stage of "Define", cost estimate is performed with an accuracy of + 30 / -30%. In the feasibility study, the specialists of the Contractor together with the project team work out more detail the technology of preparation and processing of crude gas/oil, large equipment, pipeline route. Based on existing database of the Contractor and the consolidated budget calculation, we calculate the cost of capital expenditures.

 

During this phase, held preliminary talks with potential suppliers, customers and providers of key technologies in accordance with the plan to incorporate new technologies developed at the stage of "Appraise". The is specified the procedure for obtaining permits and approvals / statements, identification of key milestones necessary actions and approvals.

 

Stages "Define" and "Execution"

 

At the stage of "Define" by the Contractor are held development, coordination, approval and examination of project documentation in accordance with the regulatory -technical requirements of Russian legislation (Design). Evaluation of Capex is carried out with accuracy + 10 / -10%.

 

Before the Design will be submitted to the supervisory authority for approval / agreement should be completed the Hazard and Operability study (HAZOP), and Pre-analysis of the issues on Health, Safety and Environment (PHSER).

 

At the stage of "Execution" the is developed the working documentation, ordered equipment and carried out construction and installation works. Evaluation of the Capex is performed with an accuracy of + 5 / -5%.

 

 

 

Deciphering some concepts and terms

 

FEED - Front End Engineering Design. Preliminary design. Stage R & D activities (R & D) and the appropriate package of design and estimate documentation (DED), characteristic of Western Engineering. In the Russian practice and normative documents such section and such a document is missing. If we compare FEED with the Russian design documents, the volume of the information contained in FEED similar on "Initial data for design" and is shaped like a "Project Design Document" without some paragraph. FEED contains all the calculations, graphs, and drawings based on facts and are able to prove and show the effectiveness of investment and technical solutions.

 

HAZOP - HAZard and OPerability studies. Accepted in international practice abbreviation for hazard and operability study. The study HAZOP - is the process of detail and identify problems hazard and operability of the system, performed by a team. HAZOP study is intended to identify potential deviations from the project objectives, assessment of their possible causes and impact assessment.

 

PHSER - Project HSE Review. Analysis (review)  of security and the definition risks of the project on the basis of demand from HSE. Such a procedure is common practice for the design works of western engineering companies. The study carried out by an independent group of experts, to consider solutions of the project (technical, organizational, regulatory, questions of definition and risk management, and others.), Which may be direct or indirect cause of significant accidents or incidents that could lead to environmental damage, accidents, education sources of harm to people, the negative impact on the reputation of the project participants and non-compliance with regulatory requirements.

 

ENVID - Environmental Design Procedure. The procedure to identify environmental risk factors. This method was developed in order to ensure the integration of environmental considerations into design decisions on the design and planning stage of the Project. In practice, the process ENVID is periodic seminars and workshops between invited experts of the Customer for the protection of the environment and the engineers and designers to discuss issues of protection of sensitive environmental components, design solutions, plans to reduce impacts and residual impacts. ENVID process allows to identify priority environmental issues, which need to be addressed during the project. The end result of procedures to identify environmental risk factors is a list of activities and changes in the design solutions to meet the challenges identified at an early stage.

 

17.02.2015