OFFSHORE OIL AND GAS FIELD DEVELOPMENT PLANNING

by

Zaw Htun

An internship report submitted in partial fulfillment of the requirements for the degree of Master of Engineering (Professional) in Offshore Technology and Management

Examination Committee:

Dr. Gregory L.F. Chiu (Chair Person) Dr. Pornpong Asavadorndeja (Member) Dr. Jonathan Shaw (Member)

Nationality: Previous Degree:

Myanmar Bachelor of Engineering (Mechanical) Mandalay Technological University Mandalay, Myanmar. PTT Exploration and Production International Ltd.

Scholarship Donor:

Asian Institute of Technology School of Engineering and Technology Thailand August 2010

ACKNOWLEDGEMENTS I would like to express my sincere thanks, gratitude and attentive appreciation to my advisor, Dr. Gregory L.F. Chiu for his invaluable advice and enthusiastic encouragements. The extended gratitude and appreciation are conveyed to my examination committee members, Dr. Pornpong Asavadorndeja and Dr. Jonathan Shaw for their helpful and kind suggestions and comments. I would like to say great thanks to my mother department, Myanmar Oil and Gas Enterprise, and PTT Exploration and Production International for providing me a great chance to study at A.I.T for a professional master degree in offshore technology and management. I would like to express my enormous gratitude and appreciation to my family and my beloved wife, for their great help, encouragement and generosity.

Zaw Htun st-110069

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TABLE OF CONTENTS Chapter Title Title Page Acknowledgements Table of Contents List of Figures Executive Summary Abbreviations Introduction 1.1 1.2 1.3 1.4 Page i ii iii iv vi vii 1 1 1 1 2 3 3 3 3 11 11 12 17 18 18 20 21 23 23 23 24 25
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History of Oil Field Objectives of the Study Scope of the Study Organization of the Report

Acquisition and Exploration 1.5 Fiscal Terms 1.6 1.7 Environmental data Exploration

Appraisal and Conceptual Development Plan 1.8 Appraisal Drilling 1.9 Conceptual Development Plan

1.10 Surface and Surface Development Options 1.11 Market Evaluation 1.12 Project Evaluation 1.13 Risk Allocation 1.14 Feasibility Studies Field Development Plan 1.15 Field Description 1.16 Future Reservoir Characterization 1.17 Drilling and Well Completion Plan 1.18 Facilities Descriptions

1.19 Health, Safety and Environment 1.20 Decommissioning and Abandonment 1.21 Economic Evaluation Engineering and Construction 1.22 Basic Design 1.23 Front End Engineering Design 1.24 Detailed Design 1.25 Operating Plan Conclusion

29 30 32 34 34 34 34 35 37

References

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LIST OF FIGURES Figure 2.1 2.2 4.1 4.2 4.3 Title A sample of 3D seismic interpretation Illustration of offshore seismic survey Offshore platforms Floating liquefied natural gas facilities Decommissioning Options Page 6 7 26 28 31

EXECUTIVE SUMMARY Many Oil and Gas E&P companies, both international and national, came into emphasize on field development plan in last few decades. The very first stage of oil and gas exploration and development project is field development plan. This report is trying to extend the knowledge of field development planning for an offshore oil and gas industry. This report reveals the general concept, influence parameters, steps and procedure which may concern with offshore oil and gas field development. It is not a development plan of a specific field but for general. The steps involved in this report are incredibly simple and following on the oil and gas process workflow. There are numerous considerable factors related with field development plan such as reservoir, reservoir fluids, exploration and development facilities, available technologies, economics, environmental, HSE and many other factors and their related risks and uncertainties. Every developer needs to emphasize to all related factors to ensure sufficient economic return and safety for both personnel and environment avoiding uneconomic development. This report presents a number of aspects concerned with offshore oil and gas Field Development Plan, both technology and management. However, it is not a comprehensive study because of the time constraint and many other factors. All expressions in this report are based on the knowledge gained during the internship period in PTTEPI Myanmar Asset and books I have read within the compass of my comprehension.

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Definitions and Abbreviations Deepwater Ultra Deepwater API BPD BOE BTM DP EIRR EMV EPCI EPS EU FEED FEL FPS FPSO FPU FSO FSU GoM HSE IRR ISO IEA M MM NPV OTC PLEM SSP TLP TTR VLA 1000ft (300m) to 5000ft (1500m) 5000ft (1500m) to >10000ft (3000m) American Petroleum Institute Barrels per day Barrels of oil equivalent Buoy Turret Mooring system Dynamically Positioning system, or vessel. Effective Internal Rate of Return Expected Monetary Value Engineering Procurement Construction & Installation Early Production System Expected Utility Front End Engineering Design Front End Loading Floating Production System Floating Production Storage and Offloading vessel Floating Production Unit Floating Storage and Offloading Floating Storage Unit Gulf of Mexico Health, Safety and Environment Internal Rate of Return International Standard Organization International Energy Agency Thousand Million Net Present Value Offshore Technology Conference Pipeline End Manifold Sevan Stabilized Platform Tensioned Leg Platform Top Tensioned Riser Vertical Loaded Anchor

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Chapter 1 Introduction 1.1 History of Oil Field Oil was once produced only from places that were easy to find and collect. Oil was use all over the world as a medicine to cure numerous diseases such as scurvy, gout, toothache and rheumatism in the old age. Since it is combustible and it also used as an instrument of war and also used in lamps as fuel. The beginning of the petroleum age was opened by finding of black goo seeping in a water well near Black Creek in Canada in the 1850s by Charles Tripp. The first well was drilled on 27 August 1859 by Edwin L. Drake at Titusville, Pennsylvania, USA. It was the first commercial oil well in North America. The oil rush that followed prompted explorers to start looking beyond the easy oil sources, searching deeper below the Earths surface and farther around the globe. Some of the most promising areas for petroleum development today are also in the most remote corners of the world, with challenging geographic and climate conditions. In 1888, Karl Benz invented the petrol engine. When the car entered the scene in the early 1900s, the demand for petroleum increased further. From 1900 to 1910, automobile production increased from 8 000 to 450 000 cars per year. This increase was heavily influenced by the mass-production of the model T car by Henry Ford in 1909. With the advance of technology and development of diesel engine, worlds demand of petroleum oil rise up dramatically in the first days of 20 th century. Since those days, oil has been explored and drilled out from deeper formation in onshore area and also in offshore all over the world. Nowadays, almost all of the world inland basins and continental shelf in offshore areas have been explored and exploited but the worlds energy requirement is still rising up. Oil and gas industries have to face with the technological and financial challenges to explore in far and deeper water offshore area. Since oil and gas is the most profitable business but its also a most risky one, the role of field development plan becomes vital. 1.2 Objectives of the study The objectives of the study are: to extend the knowledge of field development planning to explain the planning and scheduling. to reduce negative impact during operation. to enhance performance in development project. 1.3 Scope of the study This report is just about the general concept of an offshore oil and gas field development plan. Only procedural approach used in this study.

Before developing an oil and gas field, the developer or the operator company needs to submit a field development plan to the local government to get approval. Field development plan is the core business processes in upstream oil and gas industry. It defines the project requirements and link between technical requirements and commercial objectives to avoid the risk of taking inappropriate technical solutions. It should be comprised of all activities and processes required to develop an oil and gas field such as environmental impacts, geology, geophysics, reservoir engineering, petroleum production engineering, infrastructures, well design and construction, well completion design, surface and subsurface facilities, and economics and risk assessment. After acquiring concession rights and ensuring the existence of hydrocarbon, a development plan must be prepared. According to the evaluation results of reservoir analysis, planning of the field development evolving the facilities planning must be established to optimize the hydrocarbon production. Hydrocarbon recovery is maximized in development planning considering the production profile, hydrocarbon fluid properties change over the lifetime of production. Additional development plan might be required in the meanwhile of production phase. It is very important to optimize development costs over the exploration and production life, including the initial costs previously required until the start of production, the development period prior to production and the facility extension, to accommodate the production profile changes during the production life. The production profile of the oil and gas field can be clearly identified by drilling exploration wells, and conceptual development planning is performed while analyzing the development plan developed in the initial stages. It is important to have sufficient tolerance in the initial stage plan, for the development conditions have not been sufficiently understood yet. However, too much wider tolerance, of course, could increase the initial costs required. At the same time, it is also vital to study the environmental impacts in the greater concerns of the global environmental conservation. Since the reservoir performance varies with geological structure, experience and successful outcomes related to field development are essential. 1.4 Organization of the report The report was organized with six chapters as follows: Chapter 1: Introduction Chapter 2: Acquisition and Exploration Chapter 3: Appraisal and Conceptual Development Plan Chapter 4: Field Development Plan Chapter 5: Engineering and Construction Chapter 6: Conclusion
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Chapter 2 Acquisition and Exploration 2.1 Fiscal Terms Petroleum taxation is one of the vital aspects of the oil and gas industry. Since oil and gas is the most risky business it is important to study the fiscal term of local government where there intended to invest. Fiscal systems for hydrocarbon exploration and development have come a long way during the last 75 years. The current fiscal systems are much more sophisticated as compared to the ones seven decades ago. The ideal fiscal systems are designed in such a way that it is simple to apply and provide the contractor with a fair rate of return (ROR) on investment commensurate with the project risks, and provide the host government (HG) with an adequate resource for rent, thereby resulting in a win-win situation. Some fiscal systems are unnecessarily cumbersome and do not achieve the main objective. There are two main petroleum fiscal systems in the world namely concessionary system and contractual system. Concessionary system allows ownership or a free hold interest of mineral resources. It is also called royalty/tax system. Some countries use contractual system and it can be divided into production sharing contract system (PSC) and service contract system according to their reserves. Contractual system does not allow the mineral right. Government tries to guard their petroleum resources and used to negotiate fiscal terms. Some countries use more than one fiscal system and so it is used to say that there are more fiscal systems in the world than the countries in it. However, the bottom line of them is a financial issue that measure how costs are recovered and profits are divided. The flexibility of the fiscal system can lead to a win-win situation for both local government or NOC and the contractor or IOC. It is vital that the deep understanding of fiscal terms of the government where the interested prospect is situated such as signature bonuses, royalties, cost recovery limit, production sharing, taxes and government participation before making an investment. 2.2 Environmental Data It is one of the most important factors to be considered where the interested area to explore is located and which kind of environmental hazards might be encounter. According to the environmental data such as location, water depth, climate, weather, and oceanographic data, the requirement of the facilities and technology may change. The following data should be examined; Water depth (as the water depth increase, more risky and more technological challenges will encounter) Location (how far from the nearest supply shore base)

 Target depth (rig capacity and Operating costs higher with depth) Weather of the area (temperature, rainfall regime, wind speed, monsoon, cyclone, etc. affect) Oceanography (wind, wave, current, tide, sea water temperature, salinity, marine growth etc.) Seabed condition (bathymetry changes, solitons, sea-mounts, seabed soil composition) Seismic hazard (earthquake, volcanoes) 2.3 Exploration Hydrocarbon exploration phase is subject to great uncertainties. The purpose of exploration is to find out accumulation of hydrocarbons situated thousands of feet underneath the earth surface. Exploration still remains as a high risk venture although the development of excellent tools, such as 3D Seismic, 4D Seismic and growing of information technology. It is because of today oil and gas business become complex and sophisticated almost in every aspect such as politic, volatile stock market, taxation systems, and environmental regulations. 2.3.1 Geology Hydrocarbon is found in sedimentary basins in sedimentary rock, although many of the sedimentary basins of the world contain no known significant accumulations. The followings conditions may exist the accumulation of petroleum: (1) rock layers in which organic matter that generated petroleum (2) a mechanism of structure to move or migrate the petroleum (3) A porous rock layers to allow petroleum fluid (4) The seal layer of low-permeability or dense rock to trap and prevents further migration. There are four main branches of geology relevant in the exploring for hydrocarbons. They are; Sedimentology, the study of sedimentary rocks Stratigraphy, the organization in time and space of sedimentary rocks Structural geology, the study of deformations and fractures and

Organic geochemistry, the study of the potential of rocks to produce hydrocarbons.

Geologists analyze and synthesize the collected information into subsurface structure maps on different scales. The most common geological maps are: Equal thickness contours (isopachs) Equal depths contours (isobaths) and Physical rocks properties (lithofacies). Geologists organize additional data obtained from exploration drilling to the subsurface maps. 2.3.2 Surveys Firstly, the area of interest is explored by airplanes or took satellite photographs roughly. Then expert geologists study those photographs to discover the formations that probably contain oil traps. These basic surveys permit the search to be narrowed down and continued with more detailed explorations in smaller areas. Image to identify the subsurface properties of a formation cannot be extrapolated from surface characteristics and so it is need to be used geophysical methods. There are three main types of survey oil and gas industries used to be carried out today for successful prospecting. They are; Magnetic survey Gravity survey and Seismic survey methods.

Magnetic survey method measures variations in the earths magnetic field usually from an aircraft. This method indicates the subsurface distribution of crystalline formations, which have no chance of containing hydrocarbons, and more promising sedimentary formation. Gravity survey method measures variations in gravitational fields which occur as a result of the different densities of rock close to the surface. It provides indications of the depth of the layers and their natures. Seismic survey methods are the most popular and informative way of detecting and defining subsurface structure. It involves ultrasound imaging of the subsoil by studying the nature of wave propagation providing prospectors with information on the subsurface structures and stratigraphy.To continue finding and to be able to view hydrocarbon bearing reservoirs those are buried under far distance of sea or rock, seismic surveys are conducted. Sound waves transmitted from water surface penetrate
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many layers of rock. When one layer meets another at a boundary, the waves are reflected back to the surface. Each boundary reflects a part of the sound back to the surface. The rest continues downward. On the surface, special devices called hydrophones collect the reflected sound waves. Depending on the time taken to reflect back to the surface, the type of geological formation can be detected. The sound carries information of the subsurface structure. Cables from the geophones transmit the collected information to the receiver devices. After that, the information is analyzed and processed by using smart computers in the specially designed laboratories. Both 2D and 3-D images can be generated from the information from relevant survey type. 3D seismic is much more expensive than that of 2-D for it use several lines of hydrophones in a grid to get detail record of signals. Those signals can be translated as a virtual reality by using sophisticated computer software revealing the thicknesses and densities of the sub-surface reservoir rock layers. It can also reveal the types of folds or faults where there hydrocarbon might be trapped. Nowadays, even 4-D images are created and used where the fourth dimension being time. This allows a follow-up of the changes in a reservoir during its producing life. The graphs are then interpreted by the experts to say where there is a possible hydrocarbon trapping or not. Because of the reliability in these surveys, oil companies can be quite sure that when drilling a well, it will produce oil or gas. The many variables in sediment types, fossils, depositional environments, and geologic history, structure, and deformation make each prospect unique.

Figure 2.1 A sample of 3D seismic interpretation. (source: Oil :from pores to the pipeline. Schlumberger )

An offshore seismic survey is conducted by a survey boat and hydrophones are long trailed behind with cables. Waves source is a normally a compressed air gun. The waves transmitted from the air gun pass through the sea water column and then reflect and refracted back from the different layers of rock. Once, explosives used to be used, but since they can harm marine life and so air guns have replaced them. Hydrophones then pick up the information. The grid of cables can be very large, up to 1 km per 8 km.

Figure 2.2 Illustration of offshore seismic survey. (source: Oil :from pores to the pipeline. Schlumberger ) The more challenging oil and gas reservoirs being searching for today do not usually give any visible clues about where to find them. Instead, explorers must use indirect survey methods to determine the best places to drill exploratory wells. These methods look for the kinds of geological formations that are most likely to contain petroleum. Measuring the magnetic properties of subsurface rocks can reveal the presence of granite, or other types of rocks that might push petroleum upward into subsurface traps. In magnetic surveys, a boat tows a magnetometer that can record magnetic distortions in the Earths crust. Another device called a gravimeter indirectly weighs the rocks. It can detect rocks that seal reservoirs, the porous materials in which petroleum can lie, and formations like salt-domes that can trap hydrocarbons. Another test, called geochemistry, involves taking soil samples and testing them for faint traces of hydrocarbons that have seeped to the surface from underlying reservoirs. 2.3.3 Exploration Drilling The prime objective of exploration wells is to define the nature of the fluids such as oil, water or gas in the reservoir rock and to get preliminary data on the reservoir to make further necessary measurement. Drilling is the last stage of the exploration process and it can help making decision whether hydrocarbons are there or not obviously. Knowledge getting from geological and geophysical surveys allows the potential of a
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prospect to evaluate broadly but the presence of suspected hydrocarbon resources cannot be classified. Drilling is the only way that can establish the presence or absence of oil and gas in a given subsurface formation. It also allows the chance to get pressure and temperature of the reservoir and also allows taking sample of interested subsurface formation to the surface for necessary analysis. The main objective of the exploration wells is to identify the characteristics of reservoir fluids and reservoir rock types and to get preliminary reservoir data to make further studies and measurements. After accomplishing an exploration drilling, the following data should have achieved accordingly; The nature and characteristics of the reservoir fluids originally in place such as oil, gas and water The characteristics of the pay zones (sandstone, carbonate, shale content.etc.) and especially the initial pressure, the initial temperature and the approximate permeability, porosity and productivity.

By drilling exploration wells, operator got a chance to take a number of surveys by means of electric wireline logging tools lowering down into the wellbore and also possible to run temporary testing stream in order to perform production testing. A number of physical data of the rock and reservoir fluids can be recorded by taking logs which represent graphically as a function of depth or time. Production testing allows to take formation samples and to record the variation of formation pressure and variation of flow rate (Q). Exploration drilling is related with lots of uncertainties and most risky process. For offshore exploration the choice of drilling facilities depends on the depth of the water at interested well location, expected target depth, climatic conditions, oceanography and remoteness from the nearest logistic shore-based. It should be noted that the majority of exploration wells will not encounter a commercial hydrocarbon accumulation. Operator should have decided how many unsuccessful exploration wells are necessary before proposing to relinquish the license. Nowadays, offshore exploration drilling is very expensive. A typical offshore well of 4000 meters will cost about 15 to 50 millions US dollar in shallow water, 30 to 70 millions dollar in deep water and 50 to 100 millions in ultra deep water.

According to the information and data obtained from exploration drilling and the data already received from geological and geophysical studies, a decision must be made either develop the reservoir or not or to drill further more wells to get additional information after a feasibility study whether technically or economically viable to appraise the reservoir. Surveys used in early exploration work can also identify potential hazards to vessels or seafloor conditions that may be unsafe for the placement of exploration drilling rigs. Shallow hazard surveys look for underwater peaks and valleys (topography) or man8

made dangers like shipwrecks. In the Arctic, special surveys on conditions such as ice gouges and strudel scours may be conducted to gather data for potential future oil and gas production activities. 2.3.4 Rig Selection According to the location and water depth of the area to be explored, suitable rig type must be chosen. The following rig types are commonly used in oil and gas exploration in the offshore area. 2.3.4.1 Floating Rigs There are two main types of floating rigs: drillships and semi-submersibles. All mobile offshore rigs float when moving from one location to the next, but these vessels are labeled floating rigs because they remain buoyant while the well is drilled. Drillships

Drillships are the most mobile drilling units because they are shaped like ships and can easily and rapidly move under their own power. This type of rig can operate in remote, deep waters. A walled hole in the middle of the ship, called a moon pool, is open to the waters surface so that the drill bit and other equipment can be lowered to the seafloor. The rig holds its position over the top of a well either by being moored (using wire or chain attached to anchors or piles in the seafloor) or by thrusters (directional propellers mounted in the bottom of the ships hull) that counteract the forces of wind, waves and ocean currents. Drillships are suitable for deep water and far miles offshore areas and generally they can drill in water depths up to 12000 feet (3700 meters). Semi-Submersibles Rig

A semi-submersible rig consists of a platform on top of columns, which are connected to pontoons. These pontoons can be partially filled with water, or ballasted, so that the lower portion is submerged. This helps to stabilize the semi, which is held in position by huge anchors, allowing it to operate in ocean conditions that may be too challenging for drillships. Because it does not sit directly on the seafloor, a semi can drill in deeper waters than bottom-supported rigs. Once the drilling is complete, water is pumped from the hull to re-float the vessel so that it can be self-propelled or towed away. Normally, semi-submersible rig can be used in water depth ranging from 200 to 10,000 feet (60 to 3000 meters) 2.3.4.2 Bottom-Supported Rigs There are two main types of bottom-supported rigs they are submersibles rigs and jackup rigs. Submersible Rigs

Fully submersible rigs operate much like semis, except that they rest on the bottom and are most suitable for shallow water. Some submerge the hull completely so that it rests on the bottom with the main deck supported above the surface on rigid columns. Jack-up Rigs

Jack-ups rigs are floated out to the drilling area and have legs lowered down to the seafloor. Sometimes the legs are filled with water for extra stability so they can work in open-ocean areas. Jack-ups can drill in slightly deeper water than submersibles and are very portable. When its job is done, the legs are raised up out of the water so that the rig once again becomes a floating barge that can be towed away or placed upon a large transport ship. Jack-up rigs are typically used to drilled in water depths up to 450 feet (140 meters).

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Chapter 3 Appraisal and Conceptual Development Plan 3.1 Appraisal Drilling After drilling exploration wells and hydrocarbon accumulation is discovered, the reserves need to be appraised to outline the reservoir and evaluate its potential production. This appraisal stage essentially involves to carrying out the following tasks iteratively: Mapping (making a more accurate evaluation of the size and position) of reservoirs by mean of the seismic data and the data acquired from the exploration drillings Reservoir Simulation Drilling Additional wells

The main objective of the appraisal phase is to acquire sufficient information at minimum cost in making decision whether the development of a field is economically viable or not. After implementing this phase the following information should have been acquired. a. Both the volume and nature of the hydrocarbon of the reservoir should be calculated. It is important to know the OHIP, original hydrocarbon in place and its type, oil or gas or gas condensate. Flow assurance is one of the most important parameters in upstream development so that chemical composition of the hydrocarbons in the reservoir should be identified. b. Reservoir characteristics such as lithology, porosity, permeability and water saturation and structure such as anticline or fault of the reservoir should be known. c. Drive mechanism of the reservoir, such as aquifer, gas cap drive, depletion drive or combination drive, is most prominent factor effecting the recovery factor of the formation. d. Probable producing rate of the development wells should be guessed. The appraisal stage is a period of high economic risk. On the other hand, a detailed appraisal program needs to be drawn and targeted studies should be conducted so that sufficient information will obtain to make the right decision. And it is important to know when to stop this phase to avoid losses and abandon the program entirely, or to proceed the field development and produce hydrocarbon as quickly as possible in order to ensure the project profitable.
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When the field has been delineated, data are available on the following parameters: The thickness of the reservoir and its porosity at the location of the wells Oil and gas saturation rates The composition of the effluent and The reservoir pressure. Many important investigations have to do to justify whether the field is commercial or not and to decide when it should be developed and what kind of development plan should be adopted. The understanding of reservoir engineering and the interplay of geology, geophysics is very helpful in this case. The total recoverable resources will depend on how recovery is to be affected: the production rate, the drainage methods adopted, the number and positioning of the wells, etc. The overall economic context (prices, taxes, etc.) and the circumstances of the company itself (financial resources) are of course also relevant. These circumstances are subject to change. For this reason the results from the exploration and appraisal stages and other sources are studied by multidisciplinary teams comprising geologists, geophysicists, petroleum architects, drillers, producers and reservoir engineers. They also take account of the thinking of economists and financiers. These teams build up a detailed picture of the size of the reservoir, its characteristics and of the resources present. This allows various development scenarios to be considered and tested with the help of simulation models and their value in economic terms evaluated. These innovations have permitted to progressively extend the search for oil. Today even difficult areas like the Arctic Sea are explored for oil. Another example is the deep water drilling in the Gulf of Mexico. 3.2 Conceptual Development Plan During the appraisal stage, conceptual development proposals are formulated in very broad terms to be refined later and cast formally into firm development plans. They must take into account the reservoir data, and predicted behavior as well as factors such as location and environment (meteorological and oceanographic data). The primary objectives of this phase are to estimate hydrocarbon volume in the reservoirs to assess recoverable reserves, and to prioritize development based upon the value of the various resource classes in the area to be developed. This process try to classify whether the interested reservoir has enough business opportunity of hydrocarbon bearing or not and so that can avoid excessive investment on poorly conceived plan. First steps may be to delineate the extent of the reservoir, to estimate the original hydrocarbon volume in place considering the depth of the resource (or depths if there are multiple horizons), and to provide a preliminary analysis on the fluid characteristics. Identifying both the viscosity (cP/Pa.s) and gravity (API) provides

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important input for selection of production methodologies as well as hydrocarbon value. 3.2.1 Subsurface Studies Following the basic target selection processes, a more thorough reservoir evaluation is undertaken. The aim is to determine the potential recovery rate of a target reservoir. This involves a first, significant data acquisition to provide a preliminary economic valuation. The inputs would include more detailed rock and fluid property analysis and a geologic model. These can be integrated to provide a full reservoir model, from which possible recovery mechanisms are identified and predicted recovery rates determined. The nature of the reservoir being developed is vitally important in setting development strategy. Understanding of the nature of the reservoir requires knowledge of the geology, geophysics, rock, reservoir fluid properties and drive mechanisms. 3.2.1.1 Geophysics Seismics

The interpretation of the development plan is based on the 2-D and 3-D seismic data and data obtained from the exploration wells previously drilled. The synthetic seismograms should be computed using both sonic and density logs. The VSP traces and synthetic seismograms were then visually character matched to the surface seismic data to give the final well to seismic correlations. Some data manipulation must be done whether the seismic data provided a higher level of confidence in the structural interpretation or not. Structural Configuration

The structural configuration of the reservoir should be examined. A reservoir is intrinsically deterministic. It has potentially measurable, deterministic properties and features at all scales and it is the end product of many complex processes that occurred over millions of years. Reservoir description is a combination of observations (the deterministic component), educated aiming (geology, sedimentology, and the depositional environment) and formalized guessing (the stochastic component). 3.2.1.2 Geology The following geological reservoir parameters should be examined carefully for they can impact OHIP, recovery factor and the remaining reserves. Structure Derive mechanism (depletion, gas-cap, aquifer, combination etc.) Vertical permeability across shale barrier
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Sealing and reservoir compartmentalization Net pay thickness Relative permeability Reservoir fluid properties (gravity (API), viscosity, impurity composition etc.) Diagenesis

Conventional core and sidewall core and cutting sample should be examined to determine it diagenetic process could have created differences in formation petrophysical attributes above and below the fluid contact which might form a barrier to flow from aquifer (if the reservoir drive mechanism is aquifer drive). Diagenetic process can change the original composition of the sediments and so that the porosity and permeability of the reservoir should be emphasized. Geochemical

Various geochemical analyses should be performed to help evaluate the vertical and lateral continuity of the reservoir sand between the wells. Heterogeneity might be a key challenge in developing heavy oil reservoirs for reservoir fluids can change significantly over very short distances both laterally and vertically. Geochemical characterization can help reducing uncertainty of type of oil probably be encountered during a new well drilling. Moreover, geochemical characterization can help to place wells optimally for maximum productivity. Stratigraphy

Sequence stratigraphy is used to establish chrono and litho-stratigraphic correlations in different wells. The purpose of this investigation is to establish a stratigraphic frame work which could be used for initial reservoir simulation of the field. Geologic Model

The structural and sequence stratigraphic analyses determine general reservoir architecture while the sedimentologic characterization control the distribution of petrophysical properties. Geologic model should be developed to identify the depth of the layer of reservoirs and to define whether the fluid contact (oil/water or gas/water contact) is. Before developing a field complete reservoir characterization can supply better Full reservoir characterization, including geochemistry, prior to field development can provide a better indication of the reservoir fluids and the most effective steam, solvent, or other potential production method. Solvents can be used alone or as part of an alternating steam/solvent cycle. Injecting an unsuitable solvent, or rushing steam assisted gravity drainage (SAGD) operations, can kill a well. Geochemical precharacterization can aid the selection of appropriate solvents.
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3.2.2 Formation Parameter 3.2.2.1 Petrophysical Interpretation Quantitative log analysis should be performed by using various logs taken such as density, neutron, sonic, focused resistivity, micro-sensitivity, natural and spectral gamma ray and borehole televiewer to determine the shale volume, porosity and water saturation of the formation. Shale volume can be calculated from environmentally corrected gamma ray with a curved relationship, calibrated with Fourier transform infrared spectrometry (FTIR) data from the exploration wells, between gamma ray index and shale volume. Porosity can be calculated by cross-plotting shale and hydrocarbon corrected neutron and density logs. And then water saturation should be estimated by using Archies equation and Indonesian equation. 3.2.2.2 Fluid Contact Oil/water contact or gas/water contact can be estimated based on pressure/depth profiles from FMT and DST tests and visual inspection of effective water saturation and resistivity curves. 3.2.3 Reservoir Fluid Parameters 3.2.3.1 PVT Analysis PVT analysis examines the reservoir fluid parameter in a laboratory under different temperatures, pressures and volumes determining the characteristics and behavior of the fluid. It can help in determining compressibility factors (Z), viscosity factors of the fluids and the formation volume factor (B). 3.2.3.2 Reservoir Fluid Analysis The results from the recombined compositions of various well tests must be incorporated into a design composition it can be used to determine hydrocarbon liquid yields at varying surface operating conditions in the design of the surface separation facilities. Flow assurance should be deeply emphasized because it can be a very problematic one in facilities design for hydrocarbon production. Flow Assurance is the engineering and science of predicting and managing production behavior as it moves from a reservoir to market through the changing environment of the production system. It means that ensuring produced hydrocarbons flow from the reservoirs to the market place. It includes all aspects of the production system and incorporates topics such as: Thermo-hydraulic Analysis encompasses all pressure and temperature related aspects of flow behavior. This will include pressure loss or gain calculations for applications such as deliverability optimization and pipeline sizing. It will also include calculations of heat loss or gain that consider the pipeline surroundings, thermal insulation, and active heating of pipelines.
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Operability is how the system reacts to changes in operating conditions. An operability study might address concerns associated with terrain slugging or slugs generated by pigging operations and the sizing of slug catchers required by such operations. Thermal effects of start-up and shut-down operations or limiting flow rates associated with a variety of operating conditions. Blockages is the result of deposition of hydrates, wax, asphaltenes, elemental sulphur, sand, or other produced solids. The formation of such deposits is a function of the operating conditions in the production system. PVT and Rheology classifies the properties of the fluids flowing in the system. The phase behavior and physical properties of the fluids will significantly impact on production operations. For the viscosity of produced fluids from more conventional hydrocarbon-water mixtures to less common fluids such as stable emulsions and foam will have a significant impact on the frictional pressure losses in the system. Mechanical Integrity is the impact of corrosion and erosion on the physical materials (e.g. steel) that make up the system. The nature of both the fluids in the system and the manner in which they flow can influence on the corrosion and erosion affecting the inside of the pipes Mitigation efforts is the nature of the flow in the pipe are influenced by the chemical inhibition, operational procedures, or choking.

3.2.4 Reserves 3.2.4.1 Hydrocarbon Volume in Place The most important parameter in oil and gas field development is the original hydrocarbon volume in place and the recoverable reserve for development facilities mainly depend on it. OHIP can be calculated from the following properties of the reservoir determined by creating computer grids of them. Reservoir layer structural top Reservoir layer thickness above fluid contact Average layer effective porosity and Average layer initial hydrocarbon saturation.

3.2.4.2 Production Profiles According to the recoverable reserves, production profile must be clearly identified. Conceptual planning intended toward production should be conducted while the development plan prepared in the previous stages is being revised. It is important to have sufficient tolerance in the initial stages, because the development conditions and
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other factors in these stages have not been fully understood yet. However, too much wider tolerance leads to increase the higher initial costs than required. Moreover, it is also important to study the environmental impacts in the greater interests of global environmental conservation. For a gas field, production profile will also depend on the current gas sale agreement. Nowadays, many reservoir simulation softwares are available to determine recovery efficiencies (ER) and can generate predicted production profile. Production profile is important because it influences in determining the number of wells desired, well design, and well completion strategy. According to the reserves and production profile, design life of subsurface and surface facilities is considered. There are many factors to be considered to choose the production profile and to determine the number of wells relevant to it. The following necessary factors should be emphasized in drawing a production profile. Reservoir size, permeability barriers and the well drainage area The drive mechanism Flow capacity of individual well related to the reservoir characteristics, to oil and/or gas properties, to fluid interface problems, to the drive mechanisms and artificial lift intended to use. Local regulations related with depletion rate, maximum flow rate of individual well or multilayer reservoir production. Economic factors such as development costs, operating costs, oil and gas price, petroleum tax.

3.3 Surface and Subsurface Development Options Various possible development alternatives should be identified and evaluated in order to ensure that the selected concept represents the optimum solution. All identified development concepts must be evaluated and screened against technical, consent and approval acquisition, risk and economic criteria and HSE standard. After that a recommended conceptual development plan for further study must be identified. A review and challenge of the options and recommendations shall be undertaken prior to final selection. To select a proper option a concept selection shall be emphasized on the followings; The design basis data and assumptions used Detail of each option considered Technical evaluation

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HSE evaluation Schedule and cost (Capex and Opex) evaluations of each option stating percent accuracy and Preliminary risk assessments of each option.

3.4 Market evaluation To determine the value of the hydrocarbons, crude oil or gas, in the marketplace, downstream specialists should have been brought into the process. They use a full hydrocarbon assay to better understand the processing needs, and they can decide the options that would deliver the highest value per barrel. These would include selling the raw crude or upgraded crude, and the costs versus value associated with processing and transportation. Various economic and production variables and risks also need to be factored into the analysis. 3.5 Project evaluation At this point, a pilot study is designed and executed to thoroughly test the selected production methodology from the sandface to the point of sale. This would include various components of the design, such as engineering, both well and facilities constructionaccording to the recovery methods selected and the transportation requirements and limitationsas well as completions and artificial lift. There would also be some element included for production monitoring. This phase is lengthy, as concepts are being tested and proven or adjusted. The pilot well construction, operation, and evaluation phase can take up to 10 years in some cases, depending on the necessary infrastructure required, and it may continue to run concurrently with fullscale commercial operations. 3.6 Economic Analysis Economic analysis plays a key role in all phases of the life of a joint venture, from the initial establishment of the venture to the final abandonment of facilities and the winding up of the venture. During the joint venture lifetime the price of oil and gas will vary, the understanding of the reservoirs and appropriate technologies will change, government will change taxation and royalty arrangements and participation arrangements may be introduced. Each change will require to be assessed to ensure that the changed circumstances do not cause one or more of the joint venture partners to be unable to meet their liabilities to the others. In the early exploration and appraisal phases, exploration may proceed when the economic analysis yields a positive value for the proposed well. Based on seismic data, an estimate is made of the expected net income to be received from the prospect assuming it is commercially viable. Both probabilistic and deterministic approaches should be used to reduce the uncertainty range.

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The expected income stream is normally discounted at the firms cost of capital to provide an estimate of its worth at the date of the calculation, Net Present Value. The cost of capital can often be regarded as the weighted cost of equity and debt used by the firm. The Net Present Value (NPV) is then compared with the anticipated cost of exploration and appraisal (E) after the NPV is weighted by the probability of exploration success (P). The Expected Monetary Value (EMV) is the difference of P(NPV)-E. The following forecast profiles should be included in the key elements of a field economic study at the exploration and appraisal stages. Production Costs over time Development cost Operating cost Transportation cost (pipeline to shore terminal or tanker loading)

Oil and gas prices Inflation rates Exchange rates

The analysis should also include the effect of existing fiscal arrangements making due allowance for the possible range of alternatives. A typical capital investment project evaluation requires input variables such as future product prices, production forecast over the economic life of the project, initial capital expenditure and ongoing operating expenditures, useful lifetime of facilities, salvage value at the end of the economic life of the project, and interest rates. The uncertainty of some of the variables may be very detrimental to the profitability of the investment as compared to the others. In oil and gas industry, the following analyses are used: a. Sensitivity Analysis Sensitivity analysis is a technique in which how much the profitability of a project will change in response to a given random change in an input variable. The most likely input values are used in the first stage of analysis stating from base case situation. A specific percentage above and below the expected value and profitability calculated change each variable at a time. b. Scenario analysis

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It is a technique to consider the sensitivity of profitability of the investment to changes in key variables and the range of likely variable values. In scenario analysis, a bad set of circumstances (such as lower production, less ultimate recovery, lower price, high operating cost, higher capital cost, and so on), an average set, and a good or optimistic set are picked. The investments profitability at these three conditions are then calculated and compared. The worst-case scenario, most likely scenario, and best-case scenario refer the bad set, average set and good set respectively in general. c. Probability Approach I The expected value of a decision criterion is used for each alternative and the preferred course of action based on expected value is determined in probability approach. d. Probability Approach II In this approach, an explicit measure of risk is used in addition to the expected value. e. Computer Simulation Different combinations of uncertain variables are derived from probability distributions of each variable in computer simulation. The outcome for effectiveness of the profitability measure is determined for each combination. Different combinations for each variable are normally tried randomly. 3.7 Risk Allocation Many oil and gas investments involve a relatively high risk that the investment may not achieve the desired results. On the other hand, some of these investments may possibly generate better than the desired results or even a bonanza. Therefore, the investment decisions have to be based on sound trade-offs between the risk of complete or partial loss and the potential of significant gains. The nature of oil and gas industry itself, taking out of volatile substances under extreme pressure in unreceptive environment, has risk and sometime accidents and tragedies occur. So that it is a big issue to be considered which party should take the responsibility for risks during the life of a project. Where there is found to be a risk inherent in any aspect which might have consequences for the success of the project, the parties will need to agree who will bear the risk of such consequences. The considerable risks when structuring a decision analysis problem are; a) Geological Risks There is the risk that petroleum reserves on a particular project may ultimately prove to be recoverable at a far lower level than originally calculated. Dry hole, bottom hole location, field size and reservoir heterogeneity (pay thickness,

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permeability variation, porosity variation, faults, fracture, adequate reservoir pressure, etc.) are related geological risks. b) Financial Risks Risks falling under this heading include price volatility, operating expenditure, capital expenditure overruns, inflation, currency devaluation, taxes, discount rates, etc. c) Drilling and Completion Risks While drilling exploration or appraisal wells blowout and casing collapse can occur. Extended fishing, plug back and sidetrack and poor cementing resulting in reservoir cross flow etc. are considerable risks in drilling. d) Production Risks Under this heading, risks related with reservoir management, lower than expected production profile, lower ultimate recovery, water coning, facility limitation etc. should be considered. e) Catastrophes Natural and man-made catastrophes such as blowout, fire, oil spill, chemical leak, etc. are involved in this topic. f) Political Risks The possibility of regulatory intervention, change in tax rates, and nationalization etc. are important political risks to be considered. 3.8 Feasibility Studies Oil and gas field development involves huge capital investment and is a vital issue to be decided, as it rules the future business operations. As such, it is essential to study the technical and economic viability of the project before making the final decision of investment. To avoid the risk of excessive work on poorly conceived plans, the following general feasibility study terms should be studied. 1. Market survey 2. Site location 3. Technologies 4. Infrastructure 5. Environmental conversation
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6. Short specifications of equipment 7. Project schedule 8. Project implementation organization 9. Production plan 10. Necessary funds and financing 11. Financial assessment 12. Economical efficiency assessment After feasibility studies have done, possible development options must be generated these alternatives shall be identified and evaluated in order to ensure that the selected concept represent the optimum solution. All identified concept should be evaluated against technical, consent and approval acquisition, HSE, risk and economic criteria and a recommended concept for further study shall be identified.

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Chapter 4 Field Development Plan Field development plan is a comprehensive document describing the various aspects of a planned field development. Conceptual development plans are still in fairly broad terms because detailed design studies are not justified in this stage and so that detail studies are needed to go to field development plan. There is a further process of elimination to be done through in more detail from the technical, economical, political and environmental point of view. Despite the plans in this stage are not detailed, a sufficient amount of detail must be included to make the technical analysis and costing realistic. 4.1 Field Description This section present the description of the field on which the development has been based and so provide a baseline for future modifications as development proceeds. The section comprises:The following baseline for development proceedure are : i. ii. iii. iv. v. vi. vii. viii. Seismic interpretation and structural configuration Geological interpretation and reservoir description Petrophysics and reservoir fluids Hydrocarbons-in-place Well performance Reservoir units and modeling approach Improved recovery techniques Reservoir development and production technology

4.2 Future Reservoir Characterization Development wells will help to confirm the structural, stratigraphic and petrophysical model of the reservoir. Also, by taking selected conventional cores and using special core analysis, more information on initial and residual hydrocarbon saturation can be obtained as well as vertical to horizontal permeability rations. The two key elements which could alter the recoverable reserves are new wells improving the confidence of the layering the petrophysical properties associated with the layers. Integration of the well results and with the 3-D seismic data may also assist in improving the confidence of new hydrocarbons in place and reserve calculations.

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Production from the field should confirm if the degree of compartmentalization matches expectations. By monitoring the pressure from the wells the degree of the drive mechanism support may be better estimated. 4.3 Drilling and Well Completion Plan The main purpose of development wells is to bring the field on stream, with priority going to their flow capacity, rather than to make measurements. However, it is also important to test this type of well to access the condition of the well and check how effective the completion has been and also to obtain further information about the reservoir. There are three different types of development wells. They are: Production wells Injection wells and Observation wells.

Production wells are drilled to produce hydrocarbon from the reservoir to the surface. Injection wells are intended to promote hydrocarbon recovery by injecting water, hot water, steam or gas. Observation wells are drilled to observe changes in the reservoir fluid level and pressure changes over a period. Basis well design should take into account experience from previous wells and the function requirements for the development wells. Well design evolves over the preproduction project phases and subsequently over the life of the field, in order to take advantage of equipment development, new techniques and drilling experience. Common factors influencing the well completion designs are: Production fluids Production rates Multiple reservoirs Sand control Artificial lifting Safety maintenance and Cost There are two main types of well completion. In this stage it is required to decide which type of completion, open-hole completion (barefoot) or cased-hole completion, will be utilized in accordance with the reservoir and market condition. The most common parameter in designing the best possible completion in order to:
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 Optimize productivity or injective performance during the wells complete lifetime Make sure that the field is produced reliably and safety Optimize the implementation of an artificial lift process Optimize equipment lifetime Make it possible to change some or all of the wells equipment at a later date without too much difficulty so that it can be adapted to future operating conditions Minimize initial investment, operating costs and the cost of any work-over jobs. To meet the objectives listed above, detail drilling plan and well completion strategy must be set out in this stage. Drilling plan should cover the followings. Number of wells in each development Well spacing Well pattern Drilling schedule Well types (conventional or horizontal) Well completion methods Drilling costs.

In this stage, the detailed drilling plan in accord with development phase and completion methods chosen, with schedule must be involved. 4.4 Facilities Description Water depth, weather, seafloor conditions, operational safety and efficiency all determine what kind of vessels or platforms will be used for drilling. There are many factors to be considered in designing development facilities relating to the environment of the development area. According to the water depth of the development area, suitable rig type and capacity must be selected also considering the rig cost and operating cost. In exploration drilling, the rigs are usually mobile so they can move, with crew, from one site to another. Some of these moveable rigs are floating units, such as drillships or partially submerged platforms. Others are bottom-supported, using legs to stand on the seafloor or hulls that rest on the bottom. How about arctic area? 4.4.1 Offshore Facilities
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4.4.1.1 Platforms Fixed Platforms which built on concrete and/or steel legs anchored directly to the seabed, sustaining a deck with space for drilling rigs, production facilities and crew quarters, by asset of their immobility, planned for very long term use, for example the Hibernia platform. Steel jacket, concrete caisson, floating steel and concrete are used. Steel jackets that made of tubular steel members are usually piled into the seabed. Concrete caisson structures, pioneered by the Condeep concept, often have in-built oil storage in tanks below the sea surface. These tanks were used as a flotation capability, allowing them to be built close to shore and then floated to their final position where they are sunk to the seabed. Fixed platforms are economically viable for installation in up to 1,700 feet (520 m) depth under sea level. Compliant Towers are built of narrow, flexible towers. Its conventional deck is supported by a piled foundation, for drilling and production operations. Compliant towers are designed to sustain significant lateral deflections and force by. Typical depths are varying from 1,500 to 3,000 feet (450 to 900 m).

Figure 4.1 Offshore platforms. (source: http://www.google.com: Images for offshore drilling rigs) Semi-submersible Platforms are floating buoyant structure build on two giant pontoons to float. These rigs can be moved freely and can be adjusted it buoyant structure by changing the amount of water in its buoyancy tanks. During drilling operation, it can be stabilized by using cable anchors although the steerable thrusters can be used to keep still in place. Semi-submersible rigs can be operated from 600 to 10,000 feet (180 to 3,000 m) depth. Jack-up Platforms can be jacked up above the sea, by dint of legs these can be lowered like jacks. These platforms are intended to move easily one place to another and are
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designed to drill or work in relatively shallow water. Jack-up platforms can be used in water depth up to 450 ft (150 m). Drillships are marine vessels which have been equipped with drilling apparatus. They are frequently used for exploration drilling wells in deep water and far remote area. Drillship is built on a modified large tanker hull and equipped with a dynamic positioning system to retain its position over the well. Floating production systems are processing facilities equipped on large marine vessel and can be moored to a location. Three types of floating production system are Floating, Production, Storage, and Offloading system (FPSO), Floating Storage and Offloading system (FSO), and Floating Storage Unit (FSU). Tension-leg Platforms are floating rigs attached to the seabed to eliminate the vertical movement of the structure. TLPs can be used in water depths up to about 6,000 feet (2,000 m). Seastars are kinds of tension-leg platforms and intend to use in water depths from 600 to 3,500 feet (200 and 1,100 meters). Sometime they are used as satellite production platform for giant deepwater fields. Spar Platforms can be moored like tension-leg platform to the seabed but spar use conventional mooring line system. There are three main types of spar. Conventional spar is made of one piece big cylindrical hull. Truss spar is composed of upper hard buoyant tank and lower soft tank connected by truss elements. Cell spar is built by combining several vertical cylinders. Spar are much cheaper than TLP but has more stability because of its counterweight at the bottom conventional mooring system. Spur platforms can be used in deep and ultra-deep water area. 4.4.1.2 Processing Facilities Crude oil from the reservoir usually consists of a mixture of hydrocarbons having varying molecular weights and differing from one another in structure and properties. These various impurities need to be separated before transporting to the sale point. The natural gas produced from the well contain many impurities such as H2S, Nitrogen, CO2 etc. and these contaminants must be processed before delivering to the mainline transportation system. Natural gas without processed that is not within certain specific gravities, pressures, Calorific value (Btu) content range, or water content levels will cause operational problems, pipeline deterioration, or can even cause pipeline rupture. According to the fields location, environmental and reserves conditions, relevant processing facilities must be developed. For example, for a far miles remote gas field, it might be technically feasible to install a pipeline system but economically not viable. In this situation, FLNG system may be much cheaper than pipeline transportation system and should be consider as an alternative. But there may have some technological challenges to handle high pressure tankers and to have sound market.
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Figure 4.2 Floating liquefied natural gas facilities. (source: http://www.google.com: Images for FLNG) 4.4.2 Export facilities The common facilities for offshore oil and gas transportation are pipelines and shuttle tankers. There may be two categories in export facilities; Offshore export facilities and Onshore export facilities.

In offshore export facilities, according to the development plan, the following facilities are used. Offshore export pipeline (mainline) FSO Offshore transport line (to FSO or storage facility) PLEM Cargo tanker

In onshore transport section, detailed of the following facilities should be involved. Landfall region (block valve station)
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Dock location Pipeline operations center (pressure reduction, pigging facilities, and maintenance) and Metering station (metering and gas filtration)

It is vitally important for the production processing system and export facilities to have sufficient flexibility for the further reservoir improvement and enhance recovery process. 4.5 Health, Safety and Environment HSE issues must be adequately identified in a timely manner at an early stage in the project life cycle and effectively managed to avoid increased risk of adverse schedule and cost impacts to the project as well as increased probability of operational accidents and incidents, which could have a severe adverse impact on business. Every project shall prepare and implement a Health, safety and Environment Management Plan that shall demonstrate how HSE aspects will be managed on the project in order to meet the requirements. The HSE Plan shall be initiated at the concept selection stage and developed prior to both Basic Engineering and project sanction. All pre-sanction design activities shall include consideration of HSE issues. No project development, execution or activities shall commence until an approved HSE plan is in place. A series of goals shall be developed for the project and shall be listed here. They should include requirements for, for example: Meeting or exceeding all international, national and company HSE standards in both design and construction of the facilities Identifying and obtaining all HSE related permits, consents and approvals in a timely manner Achieving HSE related risk levels which are as low as reasonably practicable (ALARP), and satisfy Best Available Technology Not Entailing Excessive Cost (BATNEEC) criteria, and which compare favourably with industry benchmarks by: - Identifying all SSHE design and operational hazards As far as reasonably practicable, designing them out Putting in place hardware, systems and procedures to reduce the residual risk to ALARP levels

Including HSE performance/capability in contractor selection

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Ensuring that all contractors and suppliers have acceptable HSE Plans in place before commencing any project activities Incorporating HSE performance incentives into project contracts (where Conducting an agreed number of HSE independent reviews/audits of both the PMT and contractors/suppliers at critical points in the project schedule (e.g. end of concept definition, FEED, etc.) Holding regular HSE review meetings and/or workshops involving Project Management Team and Contractor personnel Timely and thorough investigation and feedback of all HSE-related incidents, plus implementation of lessons learned Developing the project Safety Case and Environmental Impact Assessment Developing a full lifecycle HSE Management System Ensuring that HSE is never compromised by schedule and commercial pressures Achieving safe and environmentally compliant project construction and Commissioning Meeting the Project HSE Goals. For each of the listed goals, a plan shall be presented to show how the goal will be met, including specific activities and responsibilities, plus methods of monitoring and reporting. In particular, due considerations must be given to meeting the varying HSE resourcing needs throughout the project lifecycle.

4.6 Decommissioning and Abandonment Decommissioning is the process for the removal of the old or unused platform after the service life for navigation point. When many of the oil and gas installations are reaching the end of their economic production life, and proposals for decommissioning of them need to be prepared by the operators. After reaching the end of their production life of oil and gas installations, the operators must prepared the proposal for decommissioning. The activities for abandonment and decommissioning are as follow: Killing and plugging of wells Depressurization and purging of process facilities Dismantling and removal of topside equipments Dismantling and removal of all support structures including module support frames and jackets

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Clearance and inspection of the sea bed and The flushing, sealing and burying of pipelines or the removal of the pipelines.

The national and international regulations since forty years ago were needed to be revised due to extremely high cost of decommissioning and removal off offshore installations led. For example, the Convention on the Continental Shelf (Geneva, 1958) and the United Nations Convention on the Law of the Sea (Montego Bay, 1982) for removal of abandoned offshore installations totally. The immediate and total removal of offshore structures mainly platforms must be weighing up to 4,000 tons in the areas with less than 75 m depth and after 1998 change to less than 100 m depth. The upper parts from 55 m depth below surface water must be removed and only structure in deeper water is allowed to remain in place. After removing of the fragments, they must be transport to shore or buried in the sea. The secondary use of abandoned offshore platforms can be possible for other purposes.

Decommissioning

Removal

Leave in place

Complete

Partial

Toppling

Removed Portions

Removed Portions

Residue on Seabed

Reuse

Inshore Alternative Use

Scrap

Deep water Dump Site

Figure 4.3 Decommissioning Options 4.6.1 Secondary use of offshore fixed platforms
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The reuse for abandoned platforms can be utilized in some purpose. Dokken, 1993; Gardner, Wiebe, 1993 studied about an analysis of scientific potential of research stations permanently based on abandoned oil platforms in the Gulf of Mexico. The regulation of the marine populations and coral reproduction, making underwater observations, monitoring the sea level, and collecting oceanographic and meteorological information within the framework of international projects were studied. Rowe ( 1993 ) mention that transformation of abandoned platforms into places for power generation using wind/wave and thermal energy should be considered. Side (1992) suggested that platforms could be utilized as bases for search and rescue operations or centers for waste processing and disposal. From the point of view of fisheries, the project has aim to convert the marine structures into artificial reefs. Artificial reefs were widely and effectively used on the shelves of many countries to provide additional habitats for marine life. The offshore structures can attract many species. In particular, observations in the Gulf of Mexico discovered a strong positive correlation between the amount of oil platforms and commercial fish catches in the region. Positive impact of offshore oil and gas developments on the fish populations and stock are occurred. Environmental, health and safety issues need to be considered in the operation. Health risks can cause usage of asbestos, dust from scale which normally present in the oil reservoir. Handling of Waste materials should be careful and controlled. Concrete and other non-recyclable materials such as wood, plastic and glass can be disposed in landfill site. Incinerating can be done for oily residues and sludge. 4.7 Economics Evaluation When the plans have been examined from all points of view, only a few will remain. These are technically feasible plans which will now have to stand up to economic evaluation. For this purpose the elements of the plan must be costed and the phasing of expenditure and income determined. Cost must be broken down into capital and revenue items and factors such as taxes and royalties taken into account. The plan must be evaluated according to some common yardstick for the purpose of comparison. Several ways are available such as Net Present Value (NPV) and Internal Rate of Return (IRR). Normally, deterministic approach is used in the development phase. It is vital that the economic assessment should consider the effect of possible price changes, both facilities and products, and inflation in so far as these are predictable. It is important to develop an economic model in which the contractor and government cash flow should be clearly examined. The details of cost and revenue must be clearly identified and cost schedule must be provided together. Capital expenditure (Capex) and Operational Expenditure (Opex) should be divided into: Pre-project costs (Seismic, Exploration Drilling, Appraisal Drilling, Studies and Simulations in Money of the day)
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Drilling Capex. Facilities Capex. Abandonment Expenditure. Field Opex, excluding tariffs. Tariff Opex. Details are required of the tariffing arrangements and gas agreements where applicable.

Once the economic evaluations have been completed it is possible to rank the plans in order of economic merit. The final ranking, however, may not be the same because of non quantifiable factors which may be political or environmental, or even technical risk. The ranking may well be subjective and calls for sound judgement and experiences. By the time that the development options have been ranked they will have been subject to repeated scrutiny. Each review will contribute more information, better data, or more precise ideas.

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Chapter 5 Engineering and Construction Engineering and Design work is usually the first thing and the major activity for the realization of an industrial facility and it is often the case that engineering is conducted in a number of phases. Engineering and design may start with a Feasibility Study prior to materialization of the project, followed by Basic Design, Front End Engineering Design (FEED) and Detailed Design. 5.1 Basic Design In the Basic Design phase, the process design employed for the facility and the various basic concepts of the plant design are defined. In some cases, the Licensor (a technology owner) undertakes a major role in this phase. Engineers will study the material and heat balances, and define major equipments, control systems and instrumentation for all parts of the process. This determines the basic functions of the elements and provides the spatial requirements for the facility. 5.2 Front End Engineering Design Following the basic process design, the FEED phase includes sizing of the major components and layout design. The basic design of major components and layout may be fed back to the process design to optimize functional requirements further refine the skeleton and layout of the facilities. Basic design continues with mechanical equipment, control and electrical systems; quotations may be obtained from vendors for critical items during the FEED phase. Piping and civil engineers contribute to develop the overall layout and define the outline of the necessary buildings, structures, roads and other elements as required. 5.3 Detailed Design During the Detailed Design phase, engineers will prepare a significant number of construction drawings including foundation, steel frame, construction drawings for electrical equipment, instrumentation and piping are prepared. These construction drawings are prepared incorporating detailed information obtained from suppliers for mechanical equipment, instruments, electrical and other equipment to be included in the facility. Offshore oil and gas industries use a number of standards developed by industry organizations. In order to standardize, international standards such as ISO TC67, API, ISO or IEC standard are recommended to use. In attached with detailed design the exact plan for procurement, fabrication and construction, installation and hook-up and commissioning must be provided. The detailed operation plan, cost estimation and time schedule for all engineering work must be properly prepared. In this stage the accuracy for cost estimation should be higher enough as much as possible. 5.3.1 Transport and facilities construction
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In the case of heavy oil production, there is always a requirement for the traditional facilities. For thermal production techniques there are significant additional facilities and processes needed for water handling and/or steam generation and transportation. Also, thermal processes may create emulsions and sand issues that require more extensive handling. If heavy crude oil transport has to be provided by the producer then this will include special pipeline construction with either heating or blending facilities. Sometimes heavy oil projects require upgrading of the crude on site, or at some intermediate site, before final delivery to a refinery. This will require full process engineering. Commissioning the various facilities and recruiting and training staff to maintain production levels while meeting safety and environmental standards will help ensure consistent product quality throughout the operation. This is an essential part of fulfilling sales contracts and generating revenues for the project. If contracts change, then changes to the process will need to be implemented. 5.4 Operating Plan In this stage the following activities need to be conducted and relevant document reports should be delivered. Hydrocarbon production Benchmarking of produced hydrocarbon Update reservoir management Operation technical review HSE evaluation Risk management.

5.4.1 Operational optimization The aim of oil and gas industry is to ensure a long term optimum production rate to maximize the asset Net Present Value (NPV). To help ensure this, production processes need to be refined, and systems which may include elements of remediation are required to monitor, analyze and optimize injector and producer wells. A significant part of the operation is to manage the production and recovery of oil from the field. As wells are shut in, new wells have to be planned and drilled to maintain production to planned levels. There is an ongoing process to fine-tune the understanding of the reservoir and the production paradigm to enable an optimum reservoir strategy to be executed.

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Ongoing operational optimization is only possible if there are adequate systems of data management. These systems deliver information that enables accurate history matching to update both the geologic and reservoir model and maintain planned production. 5.4.2 Project Evaluation As part of the continuous process improvements, regular project auditing and reviews are carried out. Performance improvement plans are implemented, if needed, through systems of change management, and the balance between operational expenditures versus returns is subsequently improved to ensure product value is optimized.

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Chapter 6 Conclusion Oil and gas industry face with increasingly complex challenges in the exploration and development of energy resources. Successful execution must consider many variables such as technical, financial, environmental, regulatory, logistical and cultural. In oil and gas development planning, normally decisions are made according to the facilities at in which phase, facility capacities requirement, number of wells, locations and completion method and drilling schedule. Before making decisions, Down-side Risk and Up-side Potential (minimum and maximum recoverable reserves) and variation in price (Capex and Opex) need to be considered. Many kinds of uncertainties can be faced in making decision for oil and gas field development planning. For example, geological uncertainties such as hydrocarbon generation, Reservoir Seal, Reservoir Rock properties, Migration Path, Reservoir Trap, Type of Hydrocarbon, OHIP, Reservoir Fluid Properties, Reservoir Drive Mechanism: Engineering Uncertainties such as Performance of the well, Recovery Factor, Facilities Design, Project Execution Start-up, Commercial Uncertainties, Political Uncertainties, Market Uncertainties, Capital Expenditures, Operational Expenditures. In conclusion, development strategy focuses on deriving the maximum profit from available data sets and information ensuring adequate economic return and safety for personnel, environment and reservoir avoiding uneconomic development. Development strategy emphasizes to reduce uncertainties and its influence while trying to optimize future opportunities.

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References [1] Wilkinson, J. (1997): Introduction to Oil and Gas Joint Ventures. OPL [2] Perrin, D. (1995): Well Completion and Servicing- Oil and Gas Development Techniques. Editions Technip [3] Gray, F. (1995): Petroleum Production in Nontechnical Language. PennWell Books, Tulsa, Oklahoma [4] Editions TECHNIP (2007): Oil and Gas Exploration and Production: Reserves, costs, contracts. IFP Publications [5] PTTEP (2010): PREP Management Standards- PREP-SD-01 Revision No:0 [6] PTTEP (2010): Project Realization Process- PREP-QM-01 [7] Mian, M.A. (2002): Project Economics and Decision analysis. Vol. I and II, PennWell. [8] Nguyen Ngoc Hoan (2004): Offshore Field Development Option and Strategy. Proceeding of The 3rd workshop of PPM Philippines case study,Baguio City. [9] Mian, M.A. (2010).Designing Efficient Fiscal Systems.Society of Petroleum Engineers SPE 130127.

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