Lifecycle Cost of Deepwater Production Systems
Authors: Goldsmith Riley , Eriksen Remi , Childs Matthew , Saucier Brian , Deegan F. Jonathan 
Published: October 2008

Many cost components must be considered to determine the most cost effective deepwater production system for a particular site. Too often, only the well systems CAPEX1 is adequately included in field development alternative studies. OPEX, RAMEX and RISKEX depend largely on reservoir characteristics, specific well system designs and operating procedures. The effect of these factors nearly always outweigh differences in well system CAPEX. Optimization of total lifecycle cost of deepwater production systems must include all of these factors.

The risks associated with blowouts are often an important factor in choosing one dry tree tieback well system over another. Another important factor often overlooked is the cost of well system component failures. As oil exploration and production moves into deeper and deeper water, the costs to repair well system component failures escalate dramatically.

This paper presents the methodology developed by a Joint Industry Project to quantify capital, operational, blowout risk and reliability costs associated with deepwater well systems. Five well systems have been modeled to demonstrate the methodology: a dual casing dry tree system, a single casing dry tree system, a tubing riser dry tree system, a conventional tree subsea system and a horizontal tree subsea system. Case examples demonstrate the model for these five well systems.

The methodology, results and main conclusions from this Joint Industry Project are presented.

Introduction

This paper summarizes the work of a Joint Industry Project (JIP) sponsored by five oil companies and the US Minerals Management Service (MMS) to estimate deepwater field development lifecycle CAPEX, OPEX, RISKEX, RAMEX, for subsea systems1. An earlier JIP, The Dry Tree Tieback Study (DTTAS) /1-4/, developed and demonstrated the methodology to calculate CAPEX, OPEX and RISKEX for alternative dry tree tie-back riser systems for Spars and TLP's. That study demonstrated the importance of site-specific estimates of RISKEX, the probability of a blowout during field life multiplied by cost of a blowout, when deciding between single casing and dual casing riser systems.

In 1999 this JIP was initiated which broadened the scope of previous work to include conventional and horizontal tree subsea well systems in addition to Spar and TLP dry tree well systems. Most significantly, RAMEX for both dry tree tiebacks and subsea systems is included in this study. The methodology is especially useful for comparing alternative field development scenarios.

The spreadsheet tool that was developed in the DTTAS JIP has been expanded. The tool now expedites calculation of CAPEX, OPEX, RISKEX and RAMEX. The multiple spreadsheet format permits simple screening of alternative field development scenarios using built-in default values. In addition, detailed site-specific evaluations are possible by easily changing tabulated values for any data for which values that are more accurate are known.

Numerous case examples have been evaluated for a variety of field development scenarios. These studies have taught that a thorough site-specific evaluation is required to determine the most economical well system. The well system CAPEX, OPEX, RISKEX and RAMEX must be based on a thorough evaluation of reservoir characteristics.