Cost Reengineering

Abstract This article presents the method developed by Gazprom Neft to systematically improve efficiency of reserves of mature assets through the use of automated and integrated modules designed for comprehensive calculation of surface infrastructure construction and maintenance costs. A new and relevant for the oil and gas industry term – cost reengineering is suggested and its definition is given. Best practices of cost engineering/reengineering are tested within the framework of some integrated reengineering projects implemented at Gazprom Neft's petroleum fields. The automation of the capital and operating costs estimation process contributed to the rapid consideration of a significant number of production optimization scenarios, and the high degree of decomposition of cost items and their formation parameters made it possible to manage costs in the context of individual elements of field infrastructure facilities. The result of the efforts made by the multidisciplinary team was the development of a step-by-step workflow for reengineering projects which allows, in a systematic and integrated manner, to identify constraints and form the matrix of optimization measures.