Deep Offshore Technology (DOT) Marseilles November 19-21, 2003

Maximising Asset Value by using combined Engineering and Economic Analysis (RMA) to Quantify Field Development Option Risks.

Outline of Paper

This paper demonstrates the application of an analysis technique, originating in the aerospace and defence industry, to quantitative evaluation of reliability risk in all aspects of offshore engineering (surface, sub-sea and down-hole) and across the whole life-cycle of the field. It is illustrated by examples from case studies of specific offshore intelligent well developments.

Whole life-cycle plans are defined for each of the options. Quantitative failure mode analysis incorporating consequences is performed on the construction processes and on the production subsystems. The consequence costs are then calculated from the field economics, and the “Risk-Dollars” are calculated from the product of the probability of failure and the consequential costs of well intervention, oil deferment and/or loss of reserves.

The analysis results, expressed in Risk-Dollars, provide risk profiles relating directly to the engineering elements of the system, and highlight potential critical failures to provide a sound basis for comparing different field development options. Risks are broken down into construction and production elements, and into the economic categories of intervention, deferred production and lost reserves.

The results show which option carries the greatest overall risk, the highest total number of failure modes and most high-cost failures. This technique is found to have a unique ability to ‘drill-down’ from the risk drivers to the causes at the engineering level. Proposed improvements to address key risks can then be accurately focused and quantitatively assessed, in terms of economic benefit that can be related directly to the business case for the field development.

The use of quantitative risk results, expressed in economic terms, has wide application in making systematic reliability comparisons between complex systems. The results clarify the reliability risks present in conventional well development options, even before considering more advanced alternatives such as ultra-deepwater implementation.

Relevant Conference Focus Area: Field Architecture / Field Concept Selection

Significance: Failures during production can have major economic impact on the revenue. Failures during construction can have a major impact on CAPEX. The impact increases as developments move into ultra-deepwater, so it becomes ever more important to be able to evaluate the risk.

A business case will only succeed if it can demonstrate that the risks involved have been properly identified and assessed, and the development options compared in quantitative terms. We also need to be able to identify and assess the best mitigating measures to bring those risks, in Dollar terms, to an acceptable level.