Life Extension of Offshore Assets: Balancing Safety and Project Economics
Authors: Carpenter Chris 
Published: February 2015

This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper SPE 165882, ’Life Extension of Offshore Assets - Balancing Safety and Project Economics,’ by H. Brandt and S. Mohd Sarif, Det Norske Veritas, prepared for the 2013 SPE Asia Pacific Oil and Gas Conference and Exhibition, Jakarta, 22-24 October. The paper has not been peer reviewed.

The number of aging offshore facilities in the Asia Pacific region is increasing. The decision to extend the service life of an offshore asset is made on the basis of detailed technical analyses combined with detailed economical evaluations. The authors have developed an integrated approach that combines technical assessments with risk-and-reliability analysis to form a value-chain assessment (VCA) that can be used to better evaluate project economics related to a life-extension project.

Introduction

As oil and gas installations exceed their original design lives, they enter life-extension stages. For many of these installations, the economics is still favorable to continue to produce oil and gas from existing reservoirs; the installations can also become important hubs for transportation and the processing of hydrocarbons from new fields and discoveries, typically developed as subsea tiebacks. Operators seek assurance that they can extend the lives of their infrastructures and installations safely and economically.

The decision to extend service life of an asset requires answering a number of critical questions regarding the status of the installation and the equipment, the necessary investments required to verify a sound economy for the extension period, and the assurance of safe and reliable operations. The income from the production in the tailend phase of a project is typically not huge, and a detailed assessment of the capital investment (CAPEX) required for upgrades; modifications; or replacement of systems, equipment, and controls needs to be performed with care. Similarly, the operational cost (OPEX) must be examined carefully, a task that will require a thorough assessment of the status of the safety barriers and production-critical equipment to determine maintenance requirements and possibly also predict future production interruptions. The objective is to continue to operate economically without compromising performance or safety.

In many countries in the Asia Pacific region, the situation related to aging offshore assets is complicated by the change in operatorship from international to national oil companies. The new owner needs to know not only the current condition and status of the asset, but also the current work processes, responsibilities and track records, and relevant operating history.

When considering the consequences of failure of production-critical equipment in the asset, the operational context will typically have changed from the time the field was put into operation. Considering the reduced production rates, there may be redundancy in some of the units and lack of redundancy in others as water production typically increases with time. Furthermore, there may be reduced pressures in parts of the process facility, but also production enhancement from new production or injection wells that may have been put on stream. These factors will all effect the consequence of failure, and the OPEX as well as the revenue stream.