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Oil and Gas Development Project Lifecycle (Cairn Energy PLC 2010)

y License award- when a governmental body awards exploration acreage for

leasing by an exploration and production company typically in return for a free

and a performance or work obligation.

y Seismic surveys are carried out following the license award to develop a picture

of the geological structure below the surface. If results show structures exist that

are potential hydrocarbon reservoirs, oil and gas company may then proceed

with site surveys.

y Site surveys are carried out to gain more information about the area of a potential

prospect, including data on the environment around a potential drilling location. If

the results support the identification of a prospect and safe and viable drilling

location is identified, the company may proceed to exploration drilling.

y Exploration drilling- one or more exploration wells are drilled to determine if a

prospect exists and to gain further data on the subsurface conditions. If a

hydrocarbon reservoir is encountered the well is surveyed to see whether the

reservoir is a viable for production, in which case the company proceed to

appraisal drilling

y Appraisal drilling if promising amounts of oil and gas are confirmed, field

appraisal is used to establish the size of the field and the most appropriate

production methodology to assess whether the field is commercial.

y Development once a prospect has been shown to be technically and

commercially viable a development plan is submitted to the authorities for

approval. Before the field is developed, materials and services are procured, and

equipment is installed. Once development drilling is complete the production

starts.

y Production once a development is online, production is gradually increased to

peak production.

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y When oil and Gas Company decides that the production facility is no longer

economically value, the company will shut the facility down and make it safe.

Patel and Morris have stated that "The life cycle is the only thing that uniquely

distinguishes projects from non-projects". According to the same source the sequence

of phases through which the project will evolve. It is absolutely fundamental to the

management of projects . . . It will significantly affect how the project is structured. The

project lifecycle is extremely useful in planning a project since they provide a framework

for budgeting, manpower and resource allocation, and for scheduling project milestones

and project reviews. Thus our understanding of the life cycle is relevant for our

understanding of projects.

References

Cairn Energy PLC 2010. Corporate Responsibility Report.

Office of ComplianceOffice of Enforcement and Compliance AssuranceU.S.

Environmental Protection Agency 2000. Profile of the Oil and Gas Extraction Industry

Available online: < www.epa.gov/oeca/sector>. Accesses on 18 October 2011.

Patel, M. B. & Prof. P.G. W. Morris, Guide to the Project Management Body of

Knowledge, Centre for Research in the Management of Projects, University of

Manchester, UK, 1999, p52.

R. Max Wideman 2004. The Role of the Project Life Cycle (Life Span) in Project

Management. AEW Services, Vancouver, BC. Available online >. Accesses on 18 October 2011.