Deepwater Development Economics

ABSTRACT A number of studies have been conducted to provide a data base on a variety of deep water development concepts. The purpose of these studies were to identify those concepts which were technically feasible and to determine their costs and schedules. The results from the studies were adjusted to arrive at complete development costs and to place the contractor's cost estimates on a comparable basis. The base cases were then adjusted to investigate a range of field sizes and corresponding production rates. Economic evaluations have been performed on these concepts to arrive at economic characteristics for a range of oil prices. From the results of these analyses, general conclusions regarding the use of various types of deep water concepts, the minimum economic field size and oil price were drawn. THE DEEP WATER PRODUCTION CHALLENGE Deep water oil field development has presented the offshore oil industry with a challenge to provide technically feasible concepts for production, which must also be economic. Many concepts have been designed and evaluated, each with its own distinct advantages and disadvantages. The optimum concept selection process should include consideration of development cost, operating costs and schedule. Some deep water concepts such as fixed steel platforms offer higher initial capital costs, but lower operating and drilling cost with a long fabrication and drilling schedule. Other concepts such as floating semisubmersible systems offer lower capital costs but higher drilling and operating costs, with a shorter fabrication and drilling schedule. Because of the difference in schedule, economic comparison of various deep water concepts is not meaningful without performing a complete economic analysis over the life of the field. The majority of the data base on deep water production systems has recently been focused in the Gulf of Mexico. Because of this the engineering feasibility studies and the economic evaluations in this paper have been conducted for Gulf of Mexico applications. The methodology could be applied worldwide, but the platform designs and economic analyses would have to be modified for the specific operational, environmental and economic conditions. DEEP WATER CONCEPTS DESIGNED AND THEIR ECONOMICS EVALUATED A number of studies were conducted to provide a data base on a variety of deep water development concepts. The purpose of these studies was to identify those concepts which were technically feasible and to determine their costs and schedules. The more technically promising concepts were identified and investigated. These projects resulted in feasibility studies which demonstrated each concept's technical capability to operate safely and supplied a first iteration design and cost estimate for specific environmental and operating conditions. The concepts which were selected for detailed study were:Conventional fixed steel jacketsGuyed tower platformsRoseau tower platformsSemisubmersible floating production facilitiesTension leg platformsTanker based production and storage units Water depths for these concepts ranged from 935 to 3,000 ft. Based on the six deep water development concepts identified, the following engineering feasibility studies were performed for the specific cases identified in Table 1. These studies were conducted as Joint Industry Projects or actual deep water platform designs were used where possible.