4.4 Development costs
4.4.3 Production and transport installations
It would be a vain enterprise to seek to list exhaustively the costs of all the various items of equipment currently used in development drilling. Instead we describe below some typical onshore and offshore project configurations and review some of the methods traditionally used to cost these installations. We then present a set of unit costs and ratios which can be used for very preliminary evaluations. More detailed descriptions will then be given for two specific cases: a deep offshore development programme and an example of an LNG project.
Whether onshore or offshore, the principles of production, gathering, separation, treatment and transport of the products remain the same. The structures and equipment will vary according to the composition of the effluents, the product specifications applying to transport and sale, but also, obviously, according to the characteristics of the environment.
4.4.3.1 Onshore development
In an onshore oil or gas production facility the wells, whether isolated or grouped into clusters, are linked by a network of gathering lines to a production and processing facility from which one or more transmission lines run (Fig. 4.14). Some remarks follow on the different components of the production facility.
A. Well cluster
Each cluster normally includes the facilities needed to test the output of each well.
B. Gathering network
The lines of this network are generally made of carbon steel, but occasionally of more sophis-ticated alloys (Inox or Duplex steel) or composite materials. They are subject to attack both external and internal, in the form of corrosion and erosion. They can also undergo processes such as blocking, scaling, the deposition of minerals (sand, sulphur) or hydrocarbons (paraffins, asphaltenes) through settlement or the formation of hydrates. They are therefore equipped with cathodic protection or systems which inject protective or preventive chem-icals, heating and insulation systems, systems for scraping and detection “pigs”.
Chapter 4Investments and costs
C. Production and processing facility
The effluent from a well is made up of gaseous and liquid hydrocarbons, usually water and sometimes salt, sand and solid hydrocarbons. The different phases present, which sometimes also include emulsions and foams, have to be separated. This is traditionally done in successive phases through pressure drops, the effluent waste (water and sediments) being separated from the oil and gas and treated, before being discharged. The specifications of the separation and treatment units touched on above will depend on the types of effluent, their quality and the specifications which need to be met.
• Separation requires separators, cyclones, hydrocyclones, desalters, filters, coalescers, decanters and, less frequently, plate columns.
• Oils are treated mainly by removing the water, salt and excess gas so that they can be stored, transported and handled by normal methods. Desalters and stabilisers are the most common installations.
• The gas is treated to remove the pollutants (CO2, H2S, water) and heavy hydrocarbon frac-tions which can be condensed out. There are various processes for sweetening, drying and condensing the heavy fractions: molecular sieves, adsorbent beds, chemical or physical absorption, traps with cooling coils or self-refrigeration by expansion and recompression.
The gaseous fractions are compressed for transportation or reinjection into the reservoir or, very occasionally, for storage.
• The water treatment usually involves a treatment plant and pumping facilities which reinject the water back into the reservoir.
• The production facility may also supply the utilities required (electricity, water and other services).
• The effluents are transported to a terminal, factory, etc. by pipeline.
Chapter 4Investments and costs
The processing plant:
Separation Heating Storage Pumping Power generation
➂
The pipeline
④
The loading terminal
⑤ The field:
well clusters and gathering system
➁
Well cluster
➀
Figure 4.14 Onshore development concept.
4.4.3.2 Offshore development
In an offshore installation the wellhead may either be on the platform or underwater.
Combined surface and subsurface production facilities are becoming increasingly common in offshore development.
The production support, which may be a fixed platform or a floating vessel, houses the utilities needed for production (particularly power) and all the safety installations. For reasons of weight, installation cost and maintenance, the offshore processing equipment is often limited to that which is necessary to ensure that the effluents can be transported ashore.
These are transported by pipeline or, sometimes in the case of oil, stored for loading onto tankers. The remaining processing needed to ensure that the products comply with the delivery specifications are carried out on arrival. Accommodation for personnel, the control room and offices and the amenities needed for life on board are situated either on the production platform itself or on a dedicated accommodation platform.
Two common types of development are illustrated below: concepts based on fixed plat-forms and on a floating vessel.
A. Development based on fixed platforms
The well, processing and accommodation platforms are linked together by walkways to form a production complex, to which a small flare platform can be added (Fig. 4.15).
B. Development based on a floating vessel
The production support consists of a FPSO (Floating, Production, Storage and Offloading Vessel) linked to the underwater wellheads by means of flexible lines (Fig. 4.16).
Chapter 4Investments and costs
ACCOMMODATION PLATFORM
UTILITIES/PROCESSING PLATFORM
FLARE
WELL PLATFORMS Pipeline
32” - 82 km
PROCESSING PLANT
Figure 4.15 Offshore development configuration with fixed plat-forms.
4.4.3.3 Key parameters of development costs
The capital cost of developing an oil or gasfield may amount to several billion dollars. It is crucial that the key parameters are identified and evaluated so that the project can be properly defined and its viability assessed, because some of these parameters strongly influence the costs.
A. Situation of the field and constraints on exploitation
Onshore, the nature of the terrain is the main determinant of costs. Offshore it is the water depth, which may be conventional (to 300 m), deep (to 1 500 m) or ultra-deep (over 1 500 m).
B. Oceano-meteorological conditions
Producing oil and gas in a hostile environment means costly production installations: plat-forms must be able to withstand extreme climatic conditions, for example storms in the North Sea, hurricanes in the Gulf of Mexico or typhoons in the Gulf of Thailand.
C. Reservoir type and behaviour
These reservoir parameters determine the number of wells required, and whether water or gas injection will be needed during the lifetime of the field.
D. Composition, pressure and temperature of the effluent
The processing required in order to transport and sell oil products is influenced by the content of H2S, CO2and asphaltenes, by high pressure and/or temperature, by the gas/oil ratio (GOR), by the API gravity, etc. High pressures and temperatures require heavy-duty equipment and sometimes hi-tech materials for the piping and pressure vessels. For example, a gathering line 10” in diameter costs about $30/m for an operating pressure of 50 bar, but about $150/m for 300 bar.
Chapter 4Investments and costs
Figure 4.16 Offshore development configuration with FPSO.
4.4.3.4 Development costs summary table
Table 4.4 is an example of a typical summary made by the estimators, in this case for an on-shore gas treatment plant. The methods used to prepare it will be explained later. The table shows that the technical costs4, although important, are just one element in the overall estimate. They are accompanied by a range of other costs related to the studies, surveys, project management and insurance.
Chapter 4Investments and costs
Table 4.4 Example of structure of cost: onshore gas treatment plant.
Project information Characteristics
Gas flow: 1 000 mm.s.ft3/d Oil flow: 90 573 bbl/d Weight of equipment: 2 245 t
Summary of costs Ratio (%)
• Direct costs
Process equipment 42%
Utilities 11%
Ancillary equipment 2%
Infrastructure 3%
Total direct costs 58%
• Indirect costs
Technical facilities 1%
Construction-related costs 2%
Costs related to transport of equipment
and bulk materials 3%
Total indirect costs 6%
• Technical costs (direct and indirect) 64%
Engineering 10%
• EPC costs (technical costs and engineering) 74%
Basic engineering, surveys 1%
Project management 7%
Commissioning 1%
Insurance 1%
Total costs (w/o contingencies) 84%
• Contingencies 16%
Total costs 100%
4. The technical costs are the sum of the direct costs (main equipment and bulk items such as pipework, valves and fittings, electricity, instrumentation, prefabricated materials and on-site construction) and indirect costs (equipment transport, temporary installations, etc.).
4.4.3.5 Unit costs and standard ratios
Table 4.5 presents various standard cost data for the main elements of the production and transport installations, which can be used for a very preliminary costing.