Phased approach facilitates
FPS can be sanctioned,
Over the past two years, it has become in- creasingly clear that in order for produc- ers to remain profitable with oil at or less than $45/bbl, they will have to look beyond short-term cost cutting measures such as
driving supplier and contractor prices down, reducing headcount, etc. This is particularly true in the
offshore environment, where the high cost of construction and lengthy time to first oil have made
traditional deepwater development operations uneconomical. In the coming years, new technology
will undoubtedly play an important role in helping
reduce the cost of offshore production. However,
the time has come for the industry to face the facts
and admit that current field development strategies, particularly in deeper waters, are simply not
working. One method that may serve as a solution
to this problem is phasing.
To put the current offshore industry challenges into better perspective, let’s first review a cost
breakdown for a “typical” deepwater field development (standalone wet tree) floating production
system (FPS) to identify the biggest contributors
to cost. As an example, let’s use a prospect in 5,000
ft of water, lower Miocene wells ( 25,000-30,000 ft)
with a subsalt reservoir. The first table shows what
a cost breakdown for this example could look like.
Of course, in addition to these costs, there is the
cost of ongoing operations and pipeline transportation, along with processing and delivery fees.
These costs have not been included because they
are generally paid through production and do not
have a substantial impact on the project’s net present value (NPV).
It becomes evident when looking at the field development cost that the overall drilling program is the
largest contributor to overall cost. This includes the
drilling of discovery and appraisal wells, which oc-
Audubon Engineering Solutions
Development timeline for conventional FPS development
strategy vs. phased/two SFPS strategy.
(All graphs/tables courtesy Audubon Engineering Solutions)