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SPE 149916
Capital Costs Estimation Method for Arctic Offshore Oil Projects
M.A. Kuznetsov, K.K. Sevastyanova, P.A. Tarasov, S.A. Nekhaev
LLC RN-SakhakinNIPImorneft
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Challenges: The lack of cost-evaluation methods for
the Arctic region
The lack of input normals
The absence of analogous fields
High risks: Harsh ice conditions Reserves value uncertainty The lack of geological data The lack of coastal infrastructure
Prospective projects in the Russian Arctic
Actuality:
Joint development of licensedareas in the Kara Sea with foreigncompanies
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Current status: Existing software products:
do not support estimates for Arctic conditions
require large amounts of input parameters
use foreign costs structure for materials and equipment
Goal:
Evaluation of capital investments in the early stages of project analysis
Tasks: Identify a minimal set of informative parameters for costs modeling
Development of econometric models for integrated structure of capitalcosts
Research tasks
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Statistically marked out
homogeneous groups offields
Regression models were built for certaingroups
Method is based on real projects
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Topside costs are modeled by 2 parameters: peak oil (Qoil) andpeak gas (Qgas)
Scale effect: topside costs rise slower then facilities capacity
Topside
Real data Model
Mtopside Mtopside
Qoil Qoil
Qgas Qgas
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hwater
Mtopside
GBS costs are influenced by: Topside weight (Mtopside) and water depth (hwater)at the installation point
GBS
Gravity Based Structure (Subarctic)
hwater
topside
GBS
)( 02
bhhaM waterwatertopsideunitGBSunitGBS
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GBS CAPEX in the Arctic depends on water depth (hwater) atthe installation point
h=30m
h=60m
h=120m0
50
100
150
200
250
300
20 40 60 80 100 120
, .
,..
0h - Min water depth for GBS installation
Gravity Based Structure (Arctic)
0
lnh
ha waterunitGBSunitGBS
GBS
weight,
000t
Water depth, m
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Subsea costs are determined by: the number of wells (Nwells) in cluster andwater depth (hwater)at the installation point:
0
50
100
150
200
250
300
350
0 5 10 15 20 /
,.$
Nwells/Cluster
hwater
Subsea facilities
waterinstwellsunitsubsea haN 7,0
Subseacosts,m
ln.
$
Nwells/Cluster
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Cumulative forecast error does not exceed 30% (permissible error for theconceptual design)
30%
Hibernia
--
-
0
50
100
150
200
250
0 20 40 60 80 100 120 140 160 180
, V , ...
,
V
,...
30%
0
10
20
30
40
50
60
70
80
0 10 20 30 40 50 60
, ..
,..
Forecast accuracy
GBS model error
30% spacing error
Topside model error
30% spacing error
Realvalue,
000t.
Estimated value, 000 t. Estimated value, 000 cub.m.
Realvalue,
000cub.m.
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Tampico
TamaulipasMorgan City
Daewoo
Hyundai
Okpo
Verolme
VlissingenSt.Wandrille
Algeciras
Puerto Real
Keppel
Labor
Matherials Transportation
St. Johns
k2
k3
k
4
k5
k1
CAPEX = kiCAPEXtopside+ kjCAPEXGBS+ klCAPEXSubsea
Regional component
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An example of a typical platform evaluation
Unit capex >15$/bbl (reserves 90 mln.t)
The minimum set of parameters:
Result:
Peak oil, '000t/d 24
Peak gas, mln.cub.m./d 2,88
Water depth, m 60
Topside CAPEX, mln.$ 3477
GBS CAPEX, mln.$ 1348
GBS CAPEX DRILLEX
Topside CAPEX
Other
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-20 000
-10 000
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
OPEX
CAPEX
.
30% error in estimating capital costs leads to a shift in the NPV assemblyaverage at 28%
100% -4%-77%
-18%-4%
-- CAPEX
-60%
-30%
0%
30%
60%
-30% 0% 30%
NPV
CAPEX
-15%
0%
15%13%
18%
23%
28%
33%38%
43%
+30%-30%
Economics
-52%
-40%
-28%
-16%
-4%
Mln.rub
Revenue
Transportation
costs
Royaltiesand
taxes
conditional permanent CAPEX
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Results
1. Identified a minimal set of informative parameters forcapital costs modeling with an accuracy of 30%
2. Unit capex for the Russian Arctic region is estimated
3. Practical application:
investment committee
preparation of proposals on tax optimization
development of the Declaration of Intent to develop
fields
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Thank you!
Capital Costs Estimation Methodfor Arctic Offshore Oil Projects