Cost Control in Offshore Oil and Gas Operations

Abstract

Abstract In recent times, the major interest of offshore production companies is in the development of cost control strategies that can be employed to alleviate the major challenges limiting offshore production efficiency. A well designed cost control strategy for an offshore production system helps in the reduction of monetary leakages and losses; it ensures effective utilization of materials, labour resources and other inputs in the production cycle. Due to the challenges plaguing the petroleum industry, there has been significant interest in the development of critical and effective measures that would improve cost control and efficiency in the upstream exploration and production onshore and offshore. This study was focused on cost optimization of petroleum production phase of the field development project. In this study, the main cost performance issues associated with offshore production operations were identified and analysed using quantitative and qualitative methods to derive optimal scenarios. The main production cost components as derived from this study are the labour cost, equipment cost, maintenance cost, and logistics costs. A sensitivity analysis showed that the production cost is more sensitive to equipment and maintenance costs and less sensitive to logistics and labour costs. From the analysis, avoidance of equipment breakdown through well planned preventive maintenance ranked as the most effective method for offshore cost control strategy with a mean rank of 4.80 and standard deviation of 0.50. Based on the findings of the analysis, an offshore cost control strategy was designed and was subdivided into operational and management segments levels.