Life Cycle Cost Of Subsea System
Many cost components/aspects must be considered to determine the most cost-effective subsea system for a particular site. The risks associated with blowouts are often an important factor during drilling/installation. Another often overlooked important factor is the cost of subsea system component failures. As oil exploration and production moves into deeper and deeper water, the costs to repair subsea system component failures escalate dramatically. Therefore, besides CAPEX and OPEX, two other cost components are introduced for determining the total life cycle cost of a subsea system :
- RISEX: risk costs associated with loss of well control (blowouts) during installation, normal production operations, and during recompletions;
- RAMEX: the reliability, availability, and maintainability costs associated with subsea component failures. Let’s also revisit the definitions of CAPEX and OPEX at this time:
- CAPEX: capital costs of materials and installation of the subsea system. Materials include subsea tress, pipelines, PLEMs, jumpers, umbilicals, and controls systems. Installation costs include vessel spread costs multiplied by the estimated installation time and for rental or purchase of installation tools and equipment.
- OPEX: operating costs to perform well intervention/workovers. The number and timing of these activities are uniquely dependent on the site-specific reservoir characteristics and operator’s field development plan. The life cycle cost (LC) of a subsea system is calculated by:
LC = CAPEX + OPEX + RISEX + RAMEX
Risex
Risex costs are calculated as the probability of uncontrolled leaks times assumed consequences of the uncontrolled leaks: RI =PoB • CoB where RI: RISEX costs; PoB: probability of blowout during lifetime; CoB: cost of blowout. Blowout of a well can happen during each mode of the subsea system: drilling, completion, production, workovers, and recompletions. Thus, the probability of a blowout during a well’s lifetime is the sum of each single probability during each mode: PoB = P(dri) + P(cpl) + P(prod) + P(wo) + P(re - cpl) The cost of a subsea well control system failure (blowout) is made up of several elements. Considering the pollution response, it is likely to be different among different areas of the world. Table 6-5 shows this kind of costs in the industry from last decades.
Ramex
RAMEX costs are related to subsea component failures during a well’s lifetime. A component failure requires the well to be shutdown, the workover vessel to be deployed, and the failed component to be repaired. Thus, the main costs will fall into two categories:
- The cost to repair the component, including the vessel spread cost;
- The lost production associated with one or more wells being down.
Actually, the repair cost of a failed component is also a workover cost, which should be an item of OPEX. Normally, however, only the “planned” intervention/workover activities are defined and the cost estimated. With “unplanned” repairs, RAMEX costs are calculated by multiplying the probability of a failure of the component (severe enough to warrant a workover) by the average consequence cost associated with the failure. The total RAMEX cost is the sum of all of the components’ RAMEXs: RA = Cr +Cp where RA: RAMEX cost; Cr: cost of repair (vessel spread cost and the component repair/change cost); Cp: lost production cost. The vessel spread costs are similar to the installation vessel costs;. For more information about failures of subsea equipment. LCWR is lost capacity while waiting on rig, TRA is the resource’s availability time (vessel), and TAR is the active repair time. The mean time to repair is dependent on the operation used to repair the system. A repair operation is required for each component failure. Each operation will have a corresponding vessel, depending on the scenario. Note that this cost is the sum of all of the individual subsea wells.
References
[1] AACE International Recommended Practice, Cost Estimation Classification System, AACE, 1997, NO. 17R-97.
[2] Douglas-Westwood, The Global Offshore Report, 2008.
[3] C. Scott, Investment Cost and Oil Price Dynamics, IHS, Strategic Track, 2006.
[4] U.K. Subsea, Kikeh – Malaysia’s First Deepwater Development, Subsea Asia, 2008.
[5] Deep Trend Incorporation, Projects, http://www.deeptrend.com/projects-harrier.htm, 2010.
[6] American Petroleum Institute, Specification for Subsea Wellhead and Christmas Tree Equipment, first ed., API Specification 17D, 1992.
[7] American Petroleum Institute, Specification for Wellhead and Christmas Tree Equipment, nineteenth ed., API Specification 6A, 2004.
[8] FMC Technologies, Manifolds & Sleds, FMC Brochures, 2010.
[9] Mineral Management Service, Life Time Cost of Subsea Production Cost JIP, MMS Subsea JIP Report, 2000.
[10] R. Goldsmith, R. Eriksen, M. Childs, B. Saucier, F.J. Deegan, Life Cycle Cost of Deepwater Production Systems, OTC 12941, Offshore Technology Conference, Houston, 2001.
