Page 412 - Hydrocarbon Exploration and Production Second Edition

Managing the Producing Field 399

Such increases in planned expenditure may threaten the profitability of a project in
its decline period; the OPEX may exceed the cost oil allowance under a PSC.
A more sophisticated method of estimating OPEX is to base the calculation on
actual activities expected during the lifetime of the field. This requires estimates of the
cost of operating the field based on planning what will actually be happening to
the facilities, and the manpower forecasts throughout the lifetime of the field.
This means involving petroleum engineering, drilling, engineering, maintenance,
operations and human resources departments in making the activity estimates, and
basing the costs on historical data. This activity-based costing technique is much more
onerous than the simple economic approach (see Section 14.2, Chapter 14), but
does allow a more accurate and auditable assessment of the true OPEX of the
development.
Often the divergence in costs shown in Figure 16.11 does occur, and must be
managed. The objective is to maintain production in a safe and environmentally
responsible manner, while trying to contain or reduce costs. The approach to managing
this problem is through reviewing

use of new technology
effective use of manpower and support services – automation, organisational
setup, supervision
sharing of facilities between fields and companies, for example pipelines, support
vessels, terminal
improved logistics – supplying materials, transport
reduction of down-time of the production system
improving cost control techniques – measurement, specifications, quality control.
It is worth noting that typically personnel and logistics represent 30–50% of
operating costs while maintenance costs represent 20–40% of operating costs. These
are particular areas in which cost control and reduction should be focused. This may
mean reviewing the operations and maintenance philosophies discussed in Chapter 12,
to check whether they are being applied, and whether they need to be updated.

16.3. Managing the External Factors

Production levels will be influenced by external factors such as agreed
production targets, market demand, the level of market demand for a particular
product, agreements with contractors and legislation. These factors are managed by
planning of production rates and management of the production operation.
For example, a production target may be agreed between the oil company and the
government. An average production rate for the calendar year will be agreed, at say
30,000 stb/d, and the actual production rates will be reviewed by the government
every 3 months. To determine the maximum realisable production level for the
forthcoming year, the oil company must look at the reservoir potential, and then all of
the constraints discussed so far, before approaching the government with a proposed
production target. After technical discussions between the oil company and the