Module 2 Introduction to Oil and Gas Engineering

Topic 4 Operational Aspects

Module 2 Introduction
to Oil and Gas
Engineering

Topic 4 Operational
Aspects

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Module 2 Introduction to Oil and Gas Engineering

Topic 4 Operational Aspects

Topic 4: Operational Aspects

Operations and Maintenance
Organisational Structure
The organisational structure describes the hierarchy of management
and reporting relationships in a company. The details and structure
may vary from one oil company to another depending on the nature
of their operations. Usually however, line managers have
responsibilities for specific aspects of the job, e.g. production,
safety, etc. Duties are assigned along these areas from top
management down. All offshore production and drilling facilities are
directly under the control of an Offshore Installation Manager
(OIM). He/she is the ultimate authority for all activities that take
place on the installation.
Operator Contractor Interactions
Oil operating companies are involved in the business of finding,
producing and marketing oil or gas. Sometimes they also integrate
downstream activities into their business chain. This means their
operations also involve the refining, distribution, and marketing of
oil products.
Successfully undertaking these broad responsibilities under one unit
is a tremendous challenge. Specialty is required in different areas
of the business for optimum performance and returns. Where such
specialty is needed in the oil industry, service companies are
engaged on a contract basis on clearly defined terms to undertake
particular, defined jobs. Such companies provide services across
the entire supply chain from the highly technical areas in oil
exploration and production to utilities like catering.
Joint Ventures
Oil exploration and production is a high risk business. Operating
companies usually invest in a way that spreads the investment risk
across two or more of them. In joint venture agreements this is
done by allocating equities among the investors. The cost of
running the business as well as profits made are shared in the ratio
of the equities held by each investor or operator. Usually, one of
the operating companies is elected as the operator in the
agreement. The operator is responsible for the day to day running
of the business in line with the provisions of the agreement.
Operating Procedures
Operating procedures are documents which detail the guidelines to
be applied when operating a facility. They are usually a sequence
of steps and decisions that have to be taken to ensure that
optimum system performance is guaranteed.

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Safety
Safety is of fundamental importance in the oil industry at every
phase of a job. At the design stage, every project is safety
reviewed. This will generally involve a Hazard and Operability
Study (HAZOP). Hazards will be identified and corrective measures
taken. At the construction stage, rigorous procedures will be put in
place and hazards identified using tool box talks and techniques
such as Hazard Identification (HAZID). During the offshore
installation phase, every activity, from loading pipes and equipment
onto a vessel to its installation on the seabed will be subject to task
based risk assessment, using techniques such as Hazard Impact
Risk Assessment (HIRA).
The oil industry takes safety very seriously. However, ultimately it
is everyones responsibility to ensure that all activities are executed
safely.
Permit to Work Schemes
All offshore facilities have extensive permit to work schemes in
place to ensure that all tasks are controlled and are properly safety
assessed before taking place.
Monitoring
Monitoring is required to compare system performance against
expected design. Monitoring helps in assessing the reliability of
operations, preventive maintenance measures and general
troubleshooting.
Shutdown
It is sometimes necessary to stop operations either for repair work
or operational reasons. Shutdown activities refer to the procedures
and steps that are taken to bring the system to a halt. Under
urgent circumstances, emergency shutdown procedures are used in
turning off the system. In normal situations a planned shutdown is
used. Planned shutdowns normally take longer but are safer for the
system.
Downstream Refining
Introduction
Raw crude as it is removed from the ground is not very useful in its
unrefined form. To maximise the profit from the crude it must be
separated into its hydrocarbon components and converted into the
more valuable fractions.
Crude Refining
Crude oil needs to be refined to produce the desired high value
products for the market place. Refining crude oil involves a number
of complex steps. The first stage for a refinery is distillation where
the oil is heated and broken down into its component parts.
Subsequent processes, often referred to as conversion processes,
focus on transforming lower value products into higher value
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products. For example this could involve the removal of impurities

such as sulphur. Generally it is the differences between the
conversion processes that distinguish between refineries. These
differences in size and specification of the conversion processes will
mean that refineries have specific types of crude they would want
to process.
As described above, the first operation at a refinery is fractional
distillation. The process uses the fact that different hydrocarbons
have different boiling points. The major classes of hydrocarbons in
crude oils include:

Paraffins
o general formula: CnH2n+2 (n is a whole number, usually
from 1 to 20)
o straight- or branched-chain molecules
o examples: methane, ethane, propane, butane,
isobutane, pentane, hexane

Aromatics
o general formula: C6H5Y (Y is a longer, straight
molecule that connects to the benzene ring)
o ringed structures with one or more rings
o examples: benzene, napthalene

Napthenes or Cycloalkanes
o general formula: CnH2n (n is a whole number usually
from 1 to 20)
o ringed structures with one or more rings
o rings contain only single bonds between the carbon
atoms
o examples: cyclohexane, methyl cyclopentane

Other hydrocarbons

Alkenes
o general formula: CnH2n (n is a whole number, usually
from 1 to 20)
o linear or branched chain molecules containing one
carbon-carbon double-bond
o examples: ethylene, butene, isobutene

Dienes and Alkynes

o general formula: CnH2n-2 (n is a whole number, usually
from 1 to 20)
o linear or branched chain molecules containing two
carbon-carbon double-bonds
o examples: acetylene, butadienes

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A diagram of distillation column showing approximate temperatures

is shown below.

Figure 2.4.1:- Distillation Column

Once the crude has been broken down into its fractional
components the less valuable fractions are passed on to a
conversion process. Three conversion processes are used:

Cracking - breaking large hydrocarbons into smaller pieces

o Thermal Cracking: Heating up the large hydrocarbons
until they fall apart
o Catalytic Cracking: Uses a catalyst to speed up the
cracking reaction
Reformation- combining smaller pieces to make larger ones
o Catalytic Reforming: Uses a catalyst to combine low
weight molecules to make more desirable fractions
Alteration - rearranging various pieces to make desired
hydrocarbons
Alkylation - Rearranges straight chained molecules into a
branched structure with a higher octane number

Downstream Economics and Market Demands

Oil is the world economys most important source of energy, and
hence is critical to economic growth. The value of oil is driven by
petroleum products and derivatives. Of the products, the transport
sectors need for fuel contributes mainly to the price. The principal
activities involved in moving crude from the reservoir to the
consumer are production, refining, distribution and marketing.

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All these activities occur in the global market place. The worlds
demand for millions of barrels of oil is growing every day.
Due to the market forces, global trading patterns are created as
countries compete for the type of crude they want. As not every
country is able to produce as much oil as they consume exporting is
an important factor. Due to the export/import requirement, the
price of oil fluctuates as a result of the geopolitical climate as well
as changing transport routes. The cost of crude oil has increased as
worldwide demand has increased because of the current good
growth in the global economies. Current growth is not just present
in developed countries, emerging countries such as China have
growing demands for petroleum products. There has been an
unforeseen spike in demand over the last few years. An associated
effect of this is the decrease in the worlds spare capacity as new
productions have to come on line to meet demand.
The current oil market is more flexible and efficient than its
predecessor. The spot and future markets are a relatively new
concept to the oil industry. From these markets the current and
future supply and demand can be determined. Spot markets are
the current/near future transactions of a commodity. The spot
market allows the supplier to adjust the cost of oil to meet near
term supply and demand. Future markets are a bit different. They
consider the future price of buying oil products and derivatives.
Refining Market
As demand for more valuable components of crude increases the
requirement for conversion of crude to these fractions also
increases. As the refineries have to produce these fractions they
look for the best ways to utilize their facilities. Hence, the demand
for lighter, sweeter crudes is greater as they require less processing
to yield the more valuable products.
HSE: Policy and Practices
Introduction
The offshore oil and gas industry comes under the Hazardous
Installations Directorate of the Health and Safety Executive (HSE).
In the past major disasters, such as Piper Alpha in 1988, have
prompted in depth investigations into the health and safety of
offshore operations. Even though specific legislation is in place
there is still a risk from fire, explosion, accidental release, etc. Now
as the industry is changing to maximise the recoverable reserves,
while using existing ageing architecture it has to keep its high
standards.

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Using the lessons learned from the Piper Alpha disaster the
industrial operators carried out the following:

Improvements to the "Permit to work" management systems

Relocation of some pipeline emergency shutdown valves
Installation of subsea pipeline isolation systems
Mitigation of smoke hazards
Improvements to evacuation and escape systems
Initiation of Formal Safety Assessments

The Offshore Installations (Safety Case) Regulations, came into

force in 1992 and have recently been updated to reflect the current
industry situation. The 2005 regulations came into force on 6th
April 2006.
A safety case must give all the details about how the facility is
going to be managed from a health and safety perspective. The
case must be updated throughout the life cycle of the installation.
Legislation Offshore
There are four sets of legislation that apply offshore:

The Offshore Installation (Safety Case) Regulations 1992

(Updated 2005) - these require all offshore installations
operating in UK waters to have a safety case that must be
accepted by the HSE.
The Offshore Installation and Pipeline Works (Management
and Administration) Regulations 1995 - these set out
requirements for the safe management of offshore
installations and the use of permit-to-work schemes.
The Offshore Installations (Prevention of Fire and Explosion,
and Emergency Response) Regulations 1995 (PFEER) - these
deal with the need for protection from fire and explosion, and
having an effective emergency response plan.
The Offshore Installations and Wells (Design and
Construction, etc) Regulations 1996 these deal with
ensuring the installations meet the set standards and ensure
the safety aspect of the offshore workplace environment is
maintained.

Enforcement
The main method of enforcement is inspection from the HSE.
During offshore visits HSE inspectors will be seeking to ensure that
management systems are in place to address health and safety
issues. As well as inspecting the installations, the HSE runs many
programmes to keep the industrial operators involved.

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Decommissioning and Abandonment

Introduction
After many years of production from a field, oil (or hydrocarbon)
production takes a natural course of decline as the resource gets
depleted. A point is reached when the production from the field no
longer justifies the cost of running it. At this point in the field life
operating companies begin the last phase of field development:
Decommissioning and Abandonment. Depending on the regulatory
environment, location and the scope of the project,
decommissioning and abandonment projects are highly capital
intensive activities. Provision is usually made by setting aside some
part of the revenue during operation for the decommissioning
phase.
Decommissioning Requirements
Three important requirements must be satisfied in a successful
decommissioning programme. They are:

The environment
Safety
Cost

Oil field development plans involve the mobilisation of massive

physical infrastructure to an otherwise pristine location. This is
especially true for offshore locations where platforms or vessels will
have to be set up. At the decommissioning phase, regulatory
expectations are that all the structures will be decommissioned and
removed from the location such that the environment is restored to
its original conditions as much as possible. A field decommissioning
programme must be environmentally responsible, in terms of both
short and long term impact on the environment. While safety is of
concern to regulatory bodies on one hand, minimising or managing
the cost of decommissioning is the responsibility of the company.
The challenge of satisfying these two criteria thus becomes very
important when undertaking a decommissioning programme. It is
most effective to plan for decommissioning right from the start, at
the conceptual development stage.
Legislative Framework/ Decommissioning Procedure
The legislative framework guiding decommissioning programmes
varies from country to country. It must, however, spell out the
guidelines which should be followed by the companies when
undertaking a field development programme.
The OSPAR Convention 98/3 on disposal of disused offshore
installations is used in the UKCS. It details what companies are
expected to do with offshore facilities at the decommissioning
stage.

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Under the OSPAR Convention, the disposal at sea and the leaving
wholly or partly in place of disused offshore installations is
prohibited. There are, however, some exceptions. The table below
indicates the options which may be considered for various
categories of offshore installations located on the UKCS:
Installation
(excluding
topsides)

Weight
(tonnes)

Complete
Removal
to land

Partial
Removal
to land

Leave
wholly
in
place

Fixed Steel

<10,000

Yes

No

No

Fixed Steel

>10,000

Yes

Yes (1)(2)

No

Any

Yes

Yes(2)

Yes

Yes

Yes

Any
Any

Yes
Yes

No
No

No
No

Yes
Yes

No
No

Concrete gravity
Floating
Subsea

Reuse
Yes
(3)
Yes
(3)

Disposal
at Sea
No
No

Table 2.4.1: Options for Decommissioning

1. The topsides of all installations must be returned to shore for
re-use or recycling or final disposal on land. Under the
OSPAR Convention topsides are defined as those parts of an
entire offshore installation which are not part of the
substructure and include modular support frames and decks
where their removal would not endanger the structural
stability of the substructure.
2. All steel/concrete installations weighing less than 10,000
tonnes must be completely removed for re-use or recycling
or final disposal on land. Any piles should be severed below
the natural seabed level at such a depth to ensure that any
remains are unlikely to become uncovered.
3. At the end of field life installations may be floated off location
and re-used elsewhere as a production or storage facility. In
those cases where re-use does not prove possible it will be
necessary to return the facility to shore for storage or
dismantling in line with the hierarchy of waste disposal
options.
For pipelines, the Pipeline Safety Regulations 1996, provide
requirements for their safe decommissioning. It specifies the
conditions under which pipelines should be removed (in whole or
part) or left in place.

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