- Fixed Jacket Offshore Platform -

Outline
1. Design Spiral of Offshore Field Development
2. Field Development Timeline
3. Front-End Loading (FEL)
4. Factors That Drive Concept Selection
5. Field Development Cost
6. Impact of Innovation Level
7. Reliability of TIC Estimates at Various Project
Phases
8. Example (Cash flow considerations)
9. Multi-criteria Concept Selection
1. Offshore Field Development Design Spiral
Each loop of the spiral indicates one design cycle.
The spokes of the spiral represents the activities (1-8).
 Description
The first loop
Evaluating several field development options, which satisfy the input
requirements and establishing their relative merits with respect to the decision
criteria.
It is not only alternatives for field development systems, but also alternatives
for each major system component are identified, developed and ranked.
The next loop
Preparing a preliminary design for the selected system.
The selection activity is focused on the system components and detail
elements.
The last loop
All the system components and the construction activities should be well
defined.
Beyond this point
A few changes to the system and its components could be made without
suffering delays and cost overruns.
2. Field Development Timeline
 Description
The Acquire phase geological, seismic, concept and economic
risk assessment activities that lead to the acquiral of a lease.
Explore phase The exploratory drilling, production test and data
gathering and planning phases.
Appraise phase Reservoir approval, well location/Depth,
production profiles, soils information, execution plan.
The Develop phase engineering design, construction,
production drilling, well completion, hook-up and commissioning.
The Operate phase includes maintenance, production, repair
and reassessment and transportation activities.

The viable field development options are identified,

developed and the most suitable option is selected parallel to
the Acquire, Explore, Appraise cycle.
 3. Front-End Loading (FEL)

All project activities that precede the start of the

Basic Design phase are called the Front-
End Loading - FEL activities (i.e. Acquire,
Explore, Appraise).
FEL is the most important phase of a field
development timeline.
An ideal field development schedule should
allow for a sufficient lead-time to perform all
FEL work with a high level of definition before
Basic Design starts.
 4. Factors that Drive Concept Selection
Factors that drive the field development concept selection
(Morrison, 1997).

Morrison, D. G. (1997). Low cost designs for facilities in shelf and deepwater
development. Proceedings of the OMAE 97 Conference, Yokohama-Japan.
 5. Field Development Cost
The FEL phase consumes only about 2-3% of TIC of the field development
has the highest impact on cost, schedule, quality and success.
 Reanalysis of a recently completed project
indicated a 50% TIC reduction could have
been achieved if a satisfactory FEL was
performed.
Our ability to influence cost and savings
decreases as we march along the field
development timeline.
At the concept development stage, selecting
and developing the right concept would have a
major impact on the TIC.
Savings in detailed design and construction
phases would generally stem from good project
controls and execution.
 6. Impact of Innovation Level

The level of innovation (or the number of novel ideas and

components) within a field development system has a
significant impact on TIC and operability of the field. When
first of a kind system or component is used, technical and
construction issues may crop up during the implementation
and operations phases that may affect the project capital
expenses (CAPEX) and operational expenses (OPEX).
Experience shows that a standard project with routine
components and almost no novel ideas will experience very
low operability problems.
A recent survey of the offshore projects (Morrison, 1997)
indicated that 90% of the projects with substantial
innovations had major operability problems.
 7. Reliability of TIC Estimates
at Various Project Phases
At the start of the FEL, a number of options would be available and identifying
the right field development concept will have a profound impact on a projects
success.
I. The Conceptual Design phase of FEL

During the conceptual design phase of FEL, general

definition of each system component (well systems,
platform(s), topsides facilities, transportation) and their
subcomponents (hull, mooring system, tethers, living
quarters, process, utility systems, pipelines, storage,
risers, etc.) are made and a cost and schedule estimate
is prepared.
Selection and definition of the system components and
subcomponents would also have a significant impact on
our ability to reduce cost and/or schedule. At this phase,
the accuracy of our TIC estimates would be around the
25~50% range.
II. The Preliminary or Basic Design phase

The preliminary or basic design phase includes a firm

definition of the process through process flow diagrams
(PFDs) and preparation of the field and equipment
layouts. Piping and instrumentation diagrams (P&IDs),
general platform drawings, materials and equipment
lists, data sheets, specifications and a final engineering,
procurement and construction (EPC) cost and schedule
estimate. Basic design phase allows some system
optimisation but only at a subcomponent and
specification level. At this phase, the accuracy of our TIC
estimates would be around the 15~25% range.
III. The Final Design and Construction
phases
In a well-organised project, the final design and construction phases
should have the lowest impact on the TIC optimisation. This phase
provides detailed engineering analysis and design, approved for
construction (AFC) drawings and fabrication, transportation,
installation, precommissioning and the hook-up and commissioning
(HUC) of the field by selected constructors or an EPC (engineering,
procurement, construction) contractor. Efficient project management
[execution plan, cost, schedule and quality control (QC), verification,
quality and safety assurance (VIQSA), purchasing and
documentation] would have some impact on the TIC but not as
profoundly as the FEL phase. Past experiences indicate that at the
start of the construction phase, the accuracy of the TIC estimates
would be in the 5~10% range.
North Sea Multi-Platform field development concept
with separate production (P), drilling (D)
and living quarters (Q) platforms
Self-contained North Sea Production, Drilling
and Living Quarters (PDQ) platform
Oil production rate comparison [Self-contained (PDQ) vs. multi
platform (Separate PDQ)] field development approaches.
A production rate of 6000 barrels of oil per day (BPD) for each of the planned
36 wells is assumed for the production platform with satellite well protectors.
 Multi-Platform PDQ

Due to earlier drilling and completion of 18 wells from a

satellite well protector drilling (D) platform, a 100,000
barrels per day production rate would be reached
immediately after the installation of production platform.
Within one year from the production platform installation,
all 36 wells would be completed and 200,000 barrels per
day production rate will be reached.
Single self-contained PDQ platform
For the single self-contained PDQ platform case, a
period of about 3 months from the tower installation has
to elapse before 6000 barrels per day oil production rate
may be achieved.
For this case, a period of about 2,5 years from the
platform installation would be required to drill and
complete all the 36 wells, reaching the peak production
rate of 200,000 barrels per day.
 Cash flow comparison:
Self-contained (PDQ) vs. multi platform
field development approaches
Cash flow comparison, self-contained (PDQ) vs.
multi platform field development approaches

The vertical axis:

Represents the cumulative cash flow from the project
start to a given project year.
The cumulative cash flow is normalized against the
highest negative cash flow invested for the self-
contained tower platform-based field development.
The horizontal axis: shows the years measured from
the project start.
Cash flow comparison, self-contained (PDQ) vs.
multi platform field development approaches

For the self-contained PDQ platform, the highest

negative cash flow point is reached within the second
quarter of the third year when some oil production will
start. From this point on, positive cash flow from the
produced oil will start offsetting the negative cash flow
from early investment and operating costs. The zero
cumulative cash flow position is reached within the fourth
quarter of the fourth year, representing the date when all
the field investments to date will be paid off.
Cash flow comparison, self-contained (PDQ) vs.
multi platform field development approaches
The highest negative cash flow for the multi-platform concept is reached six
months ahead of the self-contained platform, sometime within the first
quarter of the third year, when the oil flow from the production platform will
start. Due to the heavy up front investment on a satellite platform and the
early drilling programme, the maximum cash invested will be about thirty
percent more than that for the self-contained platform. However, rapid cash
recovery from early drilled production wells would start offsetting the
negative cash flow at a rapid rate. Within the first quarter of the fourth year,
the zero cumulative cash flow (payoff) point will be reached, about six
months ahead of the self-contained platform concept.
From this point on, the multi-platform concept would result in higher
cumulative cash flow.
Cash flow comparison, self-contained (PDQ) vs.
multi platform field development approaches
The up front available cash for investment may vary from one oil company
to the other. If plenty of cash is available from other operations and some
tax hedging is desired, an early high cash investment option may be
preferred. However, if the company is cash starved or a higher corporate
cash discount rate must be imposed due to many other competing
investment options or interest rates, a lower up front cash investment option
may be preferred. This is a somewhat simplistic presentation of the
economic factors affecting the platform concept selection. Many other
economic factors other than the cash flow, including the tax and discount
rates, inflation and the time value of money also need to be considered,
resulting in complex net present value calculations. Investment analysis
specialists generally perform these calculations.
 Multi-criteria
Concept Selection
At the FEL stage, external factors such as national content, technology
transfer, environmental pollution potential; the cultures, politics, economics
and infrastructure of the host nation and the operating oil company and its
partners may have major influences on the concept selection.
Not so easily comparable criteria such as the economics, design
completeness and maturity, and external factors have to be weighed
against each other and used for concept ranking and selection. In a multi-
criteria process, first the goal of the exercise is defined. Then the viable field
development options are identified. This is followed by the identification of a
multitude of selection criteria that are grouped and
ordered in a hierarchical manner. This is followed by expert judgements
where the importance of each criterion is compared to the others in a pair-
wise manner. These comparisons are then passed through an analytical
process to obtain weights for each ranking comparison and ranking of the
alternatives. There are a number of such processes in current use (Saaty
and Thomas describes the analytical hierarchy - AHP method, which is one
of such tools in use for multi-criteria concept selection).