Nekhaev Eng 2

8/3/2019 Nekhaev Eng 2

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SPE 149916Capit al Costs Estimat ion Method for Arct ic Off shore Oil Proj ects

M.A. Kuznetsov, K.K. Sevastyanova, P.A. Tarasov, S.A. Nekhaev

LLC «RN-SakhakinNIPImorneft»



Challenges:

• The lack of cost-evaluation methods for the Arctic region

• The lack of input normals

• The absence of analogous fields

High risks:

• Harsh ice conditions• Reserves value uncertainty• The lack of geological data• The lack of coastal infrastructure

Prospective projects in the Russian ArcticProspective projects in the Russian Arctic

Actuality:

• Joint development of licensedareas in the Kara Sea with foreigncompanies



Current status: Existing software products:

• do not support estimates for Arctic conditions

• require large amounts of input parameters

• use foreign costs structure for materials and equipment

Goal:

Evaluation of capital investments in the early stages of project analysis

Tasks:

• Identify a minimal set of informative parameters for costs modeling

• Development of econometric models for integrated structure of capitalcosts

ResearchResearch taskstasks



Statistically marked outhomogeneous groups offields

Regression models were built for certaingroups

Method is based on real projectsMethod is based on real projects



Topside costs are modeled by 2 parameters: peak oil (Qoil) andpeak gas (Qgas)

Scale effect: topside costs rise slower then facilities capacity

TopsideTopside

Real data Model

Mtopside Mtopside

Qoil Qoil

Qgas Qgas



С t o p s i d e =

С 0 + C 1

Q o i l +

С 2 Q g a

s



hwater

Mtopside

GBS costs are influenced by: Topside weight ( Mtopside) and water depth (hwater )at the installation point

GBS

GravityGravity BasedBased StructureStructure ((SubarcticSubarctic))

hwater

Мtopside

МGBS

)( 0

2СbhhaM water water topsideunit GBS unit GBS ++==



GBS CAPEX in the Arctic depends on water depth (hwater ) atthe installation point

h=30m

h=60m

h=120m0

50

100

150

200

250

300

20 40 60 80 100 120

Глубина моря, м.

Массаоснования,тыс.т.

0h - Min water depth for GBS installation

GravityGravity BasedBased StructureStructure ((ArcticArctic))

0

lnh

ha

wa te r

uni t G B S uni t G BS ==

GBS

we

ight,‘000t

Water depth, m



Subsea costs are determined by: the number of wells (Nwells) in cluster andwater depth (hwater ) at the installation point:

0

50

100

150

200

250

300

350

0 5 10 15 20Число скважин/ПДК

СтоимостьПДК,млн.$

Nwells/Cluster

hwater

SubseaSubsea facilitiesfacilities

water inst wellsunit subsea haN +=7,0

Subseaco

sts,mln.$

Nwells/Cluster



Cumulative forecast error does not exceed 30% (permissible error for theconceptual design)

Ошибка модели ОГТ

30% интервал ошибки

Hibernia

ПА-БЛУН-А

Аркутун-Даги

0

50

100

150

200

250

0 20 40 60 80 100 120 140 160 180

Расчетные значения, V железобетона, тыс.куб.м.

Фактическиезначения

,V

желе

зобетона

,тыс.куб.м.

Ошибка модели ВСП

30% интервал ошибки

0

10

20

30

40

50

60

70

80

0 10 20 30 40 50 60

Расчетные значения, тыс.т.

Фактическиезначения,тыс.т.

ForecastForecast accuracyaccuracy

GBS model error

30% spacing error

Topside model error

30% spacing error

Realva

lue,‘000t.

Estimated value, ‘000 t. Estimated value, ‘000 cub.m.

Realv

alue,‘000cub.m.



Tampico

Tamaulipas

Morgan CityDaewoo

Hyundai

Okpo

Verolme

Vlissingen

St.Wandrille

Algeciras

Puerto Real

Keppel

Labor

Matherials

Transportation

St. John’s

k 2

k 3

k 4

k 5

k 1

CAPEX = kiCAPEXtopside+ k jCAPEXGBS+ klCAPEXSubsea

RegionalRegional componentcomponent



An example ofAn example of a typicala typical platform evaluationplatform evaluation

Unit capex >15 $/bbl (reserves 90 mln.t)

The minimum set of parameters:

Result:

Peak oil, '000t/d 24

Peak gas, mln.cub.m. d 2,88

Water depth, m 60

Topside CAPEX, mln.$ 3477GBS CAPEX, mln.$ 1348

GBS CAPEX DRILLEX

Topside CAPEX

Other



-20 000

-10 000

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

Валовая

выручка

Транспортные

расходы

Платежии

налоги

OPEX

CAPEX

млн.руб

30% error in estimating capital costs leads to a shift in the NPV assemblyaverage at 28%

100% -4%-77%

-18%-4%

-условно-постоянный CAPEX

-60%

-30%

0%

30%

60%

-30% 0% 30%

Δ NPV

Δ CAPEX

-15%

0%

15%13%

18%

23%

28%

33%

38%

43%

+30%-30%

EconomicsEconomics

-52%

-40%

-28%

-16%

-4%

Mln.rub

Revenu

e

Transportat

ion

costs

Royaltiesa

nd

taxes

conditional permanent CAPEX



Results

1. Identified a minimal set of informative parameters for capital costs modeling with an accuracy of 30%

2. Unit capex for the Russian Arctic region is estimated

3. Practical application:

• investment committee

• preparation of proposals on tax optimization

• development of the Declaration of Intent to developfields



Thank you!

Capital Costs Estimation MethodCapital Costs Estimation Methodfor Arctic Offshore Oil Projectsfor Arctic Offshore Oil Projects

Documents

Nekhaev Eng 2