School of Engineering

COURSEWORK SUBMISSION SHEET

All sections except the LATE DATE section must be completed and the declaration signed, for the submission to be accepted. Any request for a coursework extension must be submitted on the appropriate form (please refer to http://www.rgu.ac.uk/academicaffairs/quality_assurance/page.cfm?pge=44250), prior to the due date.

Due Date 04/01/2011 MATRIC No. SURNAME FIRST NAME(S) COURSE & STAGE
Eg MSc Oil & Gas Engineering MSc Drilling & Well Engineering

Date Submitted 04/01/2011 1112841 EBHOHIMEN OSEMEKHIAN

For official use only LATE DATE

MSC OIL AND GAS ENGINEERING ENM 203 FACILITIES ENGINEERING COURSEWORK PROFESSOR DAVID ARULANANTHAM

MODULE NUMBER & TITLE ASSIGNMENT TITLE LECTURER ISSUING COURSEWORK

I confirm: (a) That the work undertaken for this assignment is entirely my own and that I have not made use of any unauthorised assistance. (b) That the sources of all reference material have been properly acknowledged.
[NB: For information on Academic Misconduct, refer to http://www.rgu.ac.uk/academicaffairs/assessment/page.cfm?pge=7088]

Signed

OSEMEKHIAN EBHOHIMEN................... Date ...04/01/2011.............................

Markers Comments

Marker

Grade

OSEMEKHIAN EBHOHIMEN 1112841

Page 1

ALPHA OIL COMPANY

TANTALUM FIELD DEVELOPMENT PROGRAMME

Prepared by: Reviewed by Approved by

OSEMEKHIAN EBHOHIMEN

Revision record Revision Date Comment

OSEMEKHIAN EBHOHIMEN 1112841

Page 2

TABLE OF CONTENTS_________________________ 3 i. ii.

iii. iv. v. vi. vii. viii. ix.

SUMMARY____________________________4 INTRODUCTION ______________________ 4

Alpha Oil Company Tantalum Oil Field Tantalum Field Data Tantalum Petroleum Characteristics Tantalum Field Estimated Production Forecast Tantalum Production License legal and Fiscal Requirements Nearby Fields Available Data

x.

DISCUSSION_________________________ 8

1. DEVELOPMENT CONCEPTS____________________ 8 1.1 Selected Development Theme 2. STANDALONE OPTION________________________ 14 2.1 Fastest Development Theme 2.1.1 Hydrocarbon production and Processing 2.1.2 Wells 2.1.3 Production Platform and Storage 2.1.4 Separators 2.1.5 Flow Scheme Architecture 2.1.6 Gas Processing 2.1.7 Gas Lift 2.1.8 Produced Water Processing 2.1.9 Waste Treatment 2.1.10 Hydrocarbon Metering and Export 2.1.11 Flow Assurance 2.1.12 Decommissioning 2.1.13 Commercial Analysis 3. EXISTING FACILITIES OPTION________________ 23 3.1 Minimum Capital Expenditure (CAPEX) Theme 3.1.1 Technical Analysis 3.1.2 Flow Scheme Architecture 3.1.3 Wells 3.1.4 Production Platform and Storage 3.1.5 Separators 3.1.6 Flow Scheme Architecture 3.1.7 Gas Processing 3.1.8 Gas Lift 3.1.9 Produced Water Processing 3.1.10 Waste Treatment 3.1.11 Hydrocarbon Metering and Export 3.1.12 Flow Assurance

OSEMEKHIAN EBHOHIMEN 1112841

Page 3

3.1.13 Decommissioning 3.1.14 Hydrocarbon Allocation 3.1.15 Commercial Analysis 4. DEVELOPMENT OPTIONS ADVANTAGES AND DISADVANTAGES___________________________ 29 5. DEVELOPMENT OPTION OF CHOICE_____________ 30

6. 7. 8.

CONCLUSION___________________________ 30 REFERENCES___________________________ 31 BIBLIOGRAPHY_________________________ 31

i.

SUMMARY

This report analyses the field development options for the Tantalum field. Seven options were identified and ranked in ascending order based on cost of development. Development options were narrowed down to two options based on cost and investment risk analysis. The Fastest Development Theme was selected after extensive technical and commercial analysis.

ii.

INTRODUCTION

An oil field development plan is about justifying the business case for a chosen option of development. To be able to do this, all legal, political and technically viable options and their constituent parts and considerations must be examined and compared on an equal basis. Various aspects of each development proposal such as technical feasibility, capital expenditure (CAPEX), operating expenditure (OPEX), environmental impact and assessment, risk assessment, legal requirements, decommissioning costs and issues, profitability (considering lease costs, taxes and royalties, cash flow and sensitivity analysis), lead time to first oil and company objectives in terms of the fields development theme, need to be considered. Another major consideration that plays a part in the development route chosen for an oilfield is whether the field can be considered as a marginal field or not. Marginal fields are typically developed under a minimum CAPEX /OPEX development theme, subject to favourable operating conditions. There are many definitions of what a marginal field is (Milton

OSEMEKHIAN EBHOHIMEN 1112841

Page 4

1980). For the purpose of this development plan, a marginal field is defined as a field where the minimum capital expenditure outlay from well appraisal to first oil is considered too high to justify the investment risk of a full scale development platform (Milton 1980). Alpha Oil Company Assumptions: Alpha Oil Company is an independent oil producing company with 104 years of experience in offshore exploration and production. It has a worldwide staff level of 80,000 people with a high percentage of highly skilled and experienced workers. The company is a leading light in technological innovation and oilfield implementation of new technologies and has strong industry relationships with oil servicing companies, shipping and banking firms. Its average weighted average cost of capital (WACC) per oilfield is rated low by standard international banking institutions. As a result it is not inhibited from marginal field development.

iii.

Tantalum Oil field

Assumptions 1.1 Tantalum oil field is located under moderate sea conditions at a water depth of 100 metres. The nearest landfall at a distance of 50km does not only have limited infrastructure, it is also a breeding ground for an existing nationalist organisation waging an independence struggle with the central government based at the main town 300km away. The organisation, is blatantly terrorist, and has been known to employ terrorist tactics in the past in its not too successful struggle with the central government. The central government maintains a very active and strong naval presence in the continental shelf surrounding this landfall and has promised protection for Alpha Oil Company activities. The price of oil (light sweet crude) will not fall below the base price of $65 used in this field development proposal. Current price of Brent blend as at 31/12/2011 is $107.21 (www.oil-price.net 2011) All equipment, services and facilities required to develop any development option is readily available for immediate deployment and payment costs are not a problem.

1.2

1.3

1.4

OSEMEKHIAN EBHOHIMEN 1112841

Page 5

1.5 iv.
No 1 2 3 4 5 6 7

Mean sea temperatures are moderately low. Tantalum Field Data

Parameter Reservoir depth Oil Water Contact Initial Pressure Bubble point Initial Gas Oil ratio Crude Quality Stock Tank Oil Initially in Place (STOIIP) Recoverable Reserves Location

Value 10000ft 10200ft 5000psia 3800 psia 450 scf/bbl 36O API Light sweet crude 300 MMBBLS

8 9

120MMBBLS 20km from Landfall, 300km from Main Town Terminal

Table 1

Figure 1 v. Tantalum petroleum characteristics

OSEMEKHIAN EBHOHIMEN 1112841

Page 6

With an initial Gas Oil ratio (GOR) of 450 scf/rb, Tantalums oil is classified is a black oil (Mason 2011). Hence gas production is not expected to be substantial. vi. Tantalum Field Estimated Production forecast
Year 1 2 3 4 5 6 7 8 9 10 11 12 Net Oil kbpd 10.0 25.6 50.9 50.1 49.8 40.5 30.1 23.9 20.0 17.2 15.0 13.0 Water Cut % 5 15 20 30 40 52 58 62 67 71 73 75

Table 2

vii.

Tantalum Production License legal and Fiscal Requirements

Requirement No flaring Must meet minimum acceptable international standard Must be metered

No 1 2

Parameter Gas Environmental discharges

Revenue streams

Table 3 viii. Nearby Fields available data

OSEMEKHIAN EBHOHIMEN 1112841

Page 7

Palladium Field data No 1 2 3 4 Parameter Platform type Oil Export type Production rate Production type Value Steel Jacket Offloading buoy to shuttle tanker 60kbpd , off Plateau Water injection, 30% water cut, rapidly increasing 100,000 bopd, 100,000bpd gross liquids 30O API Via SBM to shuttle tanker Used as fuel, excess flared Overboard discharge, 40ppm maximum oil in produced water Oil metered to fiscal standards, 3 parallel trains + prover loop 20 km south of Tantalum field

5 6 7 8 9

Production Capacity Crude Quality Oil Export Gas Water

10

Metering

11

Location

Other fields in Vicinity 1 Location of Successful exploration wells under appraisal. 100-150km south of Tantalum

Table 4

ix.

DISCUSSION

1. DEVELOPMENT CONCEPTS A number of development themes are available as options for the development of the Tantalum oil field. Itemised in the table below are the options possible.

OSEMEKHIAN EBHOHIMEN 1112841

Page 8

Theme

Well Configuration

Platform

Oil transport to terminal

Produced gas disposal

Produced water disposal

Drill Cuttings disposal

Fastest Development

Subsea template

FDPSO

Offloading buoy to shuttle tanker Offloading buoy to shuttle tanker 300 km undersea pipeline 50 km undersea pipeline, land pipeline to main town Shuttle tanker

Reinjection

Sea disposal

Reinjection

Minimum CAPEX

Wellheads

Subsea tieback

Reinjection

Sea disposal

Reinjection

Maximum Production 1

Platform wellhead

Converted Jack-up rig Converted Jack-up rig.

Reinjection

Sea disposal

Reinjection

Maximum Production 2

Platform wellhead

Reinjection

Sea disposal

Reinjection

Maximum Production 3

Platform wellhead

Converted Jack-up rig with concrete subsea storage FDPSO

Reinjection

Sea disposal

Reinjection

Maximum Production 4

Subsea template

300km Undersea pipeline 50 km undersea pipeline to land, pipeline to main town

Reinjection

Sea disposal

Reinjection

Maximum Production 5

Subsea template

FDPSO

Reinjection

Sea Disposal

Reinjection

Table 5 Below is the computed cost of development of each option.

OSEMEKHIAN EBHOHIMEN 1112841

Page 9

Table 6

Table 7

OSEMEKHIAN EBHOHIMEN 1112841

Page 10

Table 8

Table 9

OSEMEKHIAN EBHOHIMEN 1112841

Page 11

Table 10

Table 11

OSEMEKHIAN EBHOHIMEN 1112841

Page 12

Table 12 Ranking the options by cost only gives the following table.
Development Theme Development Cost ($ million) 851 930 989.25 1057 1083 1216 1358 Rank

Minimum CAPEX Maximum Production 2 Maximum Production 5 Maximum Production 4 Fastest Development Maximum Production 1 Maximum Production 3

1st 2nd 3rd 4th 5th 6th 7th

Table 13 1.1 Selected Development Themes

The objective is to narrow down the options to two themes, one using a standalone platform, and the other using a subsea tieback.

OSEMEKHIAN EBHOHIMEN 1112841

Page 13

From the foregoing, the Minimum CAPEX option is selected for further consideration as a tieback option. Maximum Production options 2 and 5, the next two options selectable on a least cost basis, use a land pipeline through territories subject to potential terrorist activity. These are undesirable options due to political instability and terrorism risks. Maximum Production option 4 uses a 300 km subsea pipeline to the main town. This is likely to be fraught with operational challenges, undue risk and high OPEX. Fastest Development theme, the next option on the least cost ranking, offers a technically and politically viable option for further study as a standalone option. This is therefore chosen as Alpha Oil Companys standalone option.

Table 14a

2.

STANDALONE OPTION

2.1. Fastest Development Theme Technical analysis of this theme involves examination of the processes of hydrocarbon production and processing, storage, gas and produced water processing, flow assurance and decommissioning issues. 2.1.1. Hydrocarbon Production and Processing 2.1.2. Wells A subsea template with a total of eight slots will be installed and the two appraisal wells recompleted to producing wells. The eight slot subsea template makes provision for four additional wells to be drilled initially, with room for additional two producing wells in the future. One slot will be used for a gas injection well. The producing wells would be connected to subsea manifold which is connected to the FDPSO using flexible risers. 2.1.3. Production Platform and Storage An Enhanced Floating Drilling Production Storage and Offloading (FDPSO) unit will be built for the Tantalum field. This option is chosen because of high rig rates, the requirement of drilling in the future, additional wells while in production and the requirement of early production of first oil (Murray 2009). It will be the third such vessel in the world and consists of a modular rig that can be removed and used elsewhere. Apart from standard oil processing facilities, it would also include gas compression facilities for gas lift and injection, desalters and NGL recovery (Kawase 1998). 2.1.4. Separators
Page 14

OSEMEKHIAN EBHOHIMEN 1112841

The FDPSO will have two trains of horizontal separators to separate the oil, gas and water phases. Each train will consist of a HP and LP threephase separator connected in series. Gas from the separators would be piped to the vessels NGL recovery plant, while produced water will be piped to the water treatment plant. NGLs extracted would be added to the crude oil which is then piped to storage. Oil separated will be of Reid vapour pressure (RVP) and basic sediment and water (BS&W) specifications for the shuttle tanker. Antifoam and de-emulsifier chemicals would be injected at the inlets to aid the separation process.

Figure 3: Horizontal 3 phase separator (Ted Mason 2011) 2.1.5. Flow Scheme Architecture

OSEMEKHIAN EBHOHIMEN 1112841

Page 15

LP Compressor

HP Compressor

To Gas lift

Fuel NGLs extractor gas

Shuttle tanker 2 Slots for future well on manifold

Recompleted wells
Train2

LP Separator

Stage 2 LP Separator

Meter system

Storage tanks
HP Separator Stage 2 HP Separator

Train1

Produced Water Treatment system Test Separator

To water Reinjection Well

Subsea Template

Subsea Manifold

Figure 2: Flow scheme for Fastest Development Theme

OSEMEKHIAN EBHOHIMEN 1112841 Page 16

2.1.6. Gas Processing Gas from the HP and LP separators will be dried of moisture in dehydration column using glycol before being piped to the NGL module. The lower hydrocarbon gaseous effluent from the NGL module is then compressed and used as fuel gas for power generation. Excess gas is injected through the gas injection well into the reservoir. 2.1.7. Gas Lift: All the producing wells will have completion components (side pocket mandrel SPM) to support future gas lift operations. When this is needed, gas will be diverted from the gas re-injection pump to the production wells. 2.1.8. Produced Water Processing The produced water from the separators would then pass through hydrocyclone units to reduce the oil content to international standards of 30mg/L monthly average (Mason 2011). Effluents from the hydrocyclones would be passed through knock out drums to remove remaining gas. Oily water skimmed from the drums would be recycled to the separators. The treated water would then be pumped into the sea. 2.1.9. Waste treatment During the drilling phases, waste cuttings will be pulverised into a slurry and reinjected into the subsurface. Sewage will be macerated and electro-chlorinated before discharge 20m below sea level. 2.1.10 Hydrocarbon Metering and Export Periodically calibrated turbine flow meter systems would be installed on the export line to the shuttle tanker for proper fiscal metering. Temperature, pressure, density and other oil sample data would be used to compute the net standard volume (NSV) of oil transferred. 2.1.11. Flow assurance Flow assurance problems that are likely to occur are wax formation (due to black oil status of oil), hydrate formation (due to low temperatures subsea), scale deposition, sand erosion, loss of containment due to corrosion and slugging. As a result of these, an active regimen of hydrate inhibitors, oxygen scavengers, chemical de-waxing solvents, corrosion and scale inhibitors would be injected into the subsea wellheads, to arrest these problems from developing along the flow from wellhead through the flowlines, subsea manifold and flexible risers. In addition, the flexible risers would be of insulated type. Slugging would be addressed with installed slug catchers on the FDPSO. The table below illustrates the injected chemicals used in the production operation.

OSEMEKHIAN EBHOHIMEN 1112841

Page 17

Chemical Corrosion inhibitor Scale inhibitor Hydrate inhibitor (methanol) Oxygen scavenger (water utility)

Dosage (ppmv) 30 20 60 150

Injection point Produced water pump suction Wellheads Wellheads Seawater suction for water utility lines

Fluid base Produced water Multiphase oil Multiphase oil Seawater

Table 14b

2.1.12. Decommissioning At the end of the field life of 12 years, the field installations would be decommissioned in line with the Oslo and Paris Convention for the protection of marine environments and The United Nations Convention on the Law of the Seas. The underlying philosophy would be to remove as much installations as possible from the sea floor. The decommissioning plan is as detailed in the table below.
No 1 FDPSO Item i. Decommissioning Plan The FDPSO is expected to still be in very serviceable condition after the 12 year field life and would be hired out for service elsewhere. Downhole tubing and equipment will be removed Residual hydrocarbons displaced with weighted brine. Wells will be plugged with cement to prevent fluid migration Flowlines will be flushed with water and abandoned in situ. The flexible risers will be detached and reeled into a pipe lay vessel. The umbilicals and control equipment would be retrieved. The subsea trees will be removed Wellheads will be left in place, since they pose no threat to navigational safety. Manifolds will be flushed with water and abandoned in situ.

Subsea wells

i. ii. iii.

Flowlines

i.

Flexible risers

I.

Umbilicals

i.

Subsea wellheads, Christmas trees and manifolds

i. ii. iii.

OSEMEKHIAN EBHOHIMEN 1112841

Page 18

Table 15

Figure 4 : How well will be plugged. (http://www.kosmosenergy.com/eias/Jubilee_Field_EIA_Chapter_8_23Nov09.pdf 2011) 2.1.13. Commercial Analysis

On the basis of assumptions and field specifications made earlier and an assumed inflation factor of 16% plus effective tax rate of 50% and capital allowance of 25% per year, the cash flow, cumulative cash flow and net present value (NPV) calculations for the life of the field are detailed below. The calculations and charts show a profitable operation with payback in 2nd year. In addition the sensitivity analysis shows that it will take a 78% drop in base oil price to $14.3 before the NPV falls below zero.
OSEMEKHIAN EBHOHIMEN 1112841 Page 19

Table 16 : NPV and Cash Flow

Table 17: Cash Flow at various Rates

OSEMEKHIAN EBHOHIMEN 1112841

Table 18: Sensitivity Analysis

Page 20

Economic Limit

Payback in 2nd Year

Maximum Exposure

Figure 5: Net Present Value, Cumulative cash flow versus Time

OSEMEKHIAN EBHOHIMEN 1112841 Page 21

Figure 6: Sensitivity Analysis

OSEMEKHIAN EBHOHIMEN 1112841 Page 22

3.

EXISTING FACILITIES OPTION

3.1 Minimum Capital Expenditure (CAPEX) theme 3.1.1. Technical analysis: Detailed below is the technical analysis of this theme. 3.1.2. Flow Scheme Architecture

Completed well Future Well

Shuttle tanker

4 flowline tieback
Subsea pump

Palladium Platform

Manifold

10 Bundle line with Umbilicals and Gas lift

Figure 7: Flow scheme architecture of Minimum CAPEX Theme 3.1.3. Wells A semisubmersible offshore drilling rig would be hired to recomplete the two appraisal wells and drill eight more wells, six for production and one for water re-injection and one for gas re-injection. The producing wells would be drilled at individual locations and connected with flowlines to the central subsea manifold. The manifold would have additional space for the two future wells. 3.1.4. Production Platform and Storage Due to the heavily inadequate facilities at the Palladium platform (rising water cut, 100,000 bopd and 100,000bpd gross liquids, inadequate space for additional processing facilities) Tantalum production levels will be limited by Palladiums facilities. Supply to the facility will use a valve to restrict supply to Palladiums capacity. Assuming Palladiums percentage water cut year on year rise is 20%, and rate of decline of oil production is 14% year on year, production rates from Tantalum and Palladium combined have been modelled, taking cognisance of the 100,000 bpd gross liquids restriction at Palladium. Palladiums end of field life would occur at the end of the 9th year (92% water cut, 104bpd gross liquids) using this model. The chart below illustrates.

OSEMEKHIAN EBHOHIMEN 1112841

Page 23

Figure 8: Modelled flow rates of Tantalum and Palladium working together The processed oil would be tied back to the Palladium platform 20 km south using a 4 multiphase flowline. A 10 bundle line would also be laid alongside to carry, control umbilicals and inhibitors to the wellheads and manifold. Oil would be metered to fiscal standards before being commingled at Palladium. The processing operation would be integrated with palladiums for a fee in accordance with contract agreement. 3.1.5. Separators The Tantalum fluids, once commingled with Palladiums will use Palladiums separators, regardless of its state, efficiency or design. 3.1.6. Gas Processing Palladium currently flares its excess gas. This would be a problem for the terms of Alpha Oil Companys production license. Gas Lift: When gas lift is needed, gas will be pumped through the bundle line from Palladium to the wells. All the wells would have gas lift completions. 3.1.7. Produced Water Processing and Waste Treatment This would be restricted by Palladiums specifications and would be done by palladiums facilities within capacity limits. 3.1.8. Flow assurance This would be the same as those faced by the Fastest Development theme discussed earlier. The flowline however, would be of insulated type. As dis cussed earlier, inhibitor injection would play a large role in maintaining flow assurance. 3.1.9. Decommissioning The applicable regulations and philosophy are as earlier discussed in the Fastest Development Theme. The decommissioning plan is as follows:
OSEMEKHIAN EBHOHIMEN 1112841 Page 24

No 1

Item Subsea wells

i. ii. iii.

Flowlines And bundle lines Subsea wellheads, Christmas trees and manifolds

i.

Decommissioning Plan Downhole tubing and equipment will be removed Residual hydrocarbons displaced with weighted brine. Wells will be plugged with cement to prevent fluid migration Flowlines and bundle lines will be flushed with water and abandoned in situ. The subsea trees will be removed Wellheads will be left in place, since they pose no threat to navigational safety. Manifolds will be flushed with water and abandoned in situ.

i. ii. iii.

Table 18 3.1.10 Hydrocarbon Allocation As a result of the sour nature of Palladium fields crude, the best allocation method to use for the commingled stream is the Gross Product Worth method. Both streams would be metered before commingling. Fiscal metering will also be done at shuttle tanker loading. The market values of distillation products of Tantalum crude oil and the market values of distillation products of palladium crude will be obtained after laboratory analyses of the crude samples. The fuel oil component will be adjusted for sulphur (sour) content and viscosity. The actual allocation will then be done in accordance with the following formula: GPWx ($/te) = sum of [gas contentx x value ($/te) + naptha contentx x value ($/te) + gas oil contentx x value($/te) + fuel oil contentx x value($/te)] (Arul 2011) Where x refers to Palladium or Tantalum crude. It is assumed that no other operator is commingling their product with palladium. This calculation would also be done for the blend, and by difference, actual values of each crude obtained. 3.1.11 Commercial Analysis

Using the same variables as for the Fastest Development theme, this option, though profitable on the basis of the flow rate assumptions made, does not compare with the fastest Development theme. This is evident form the charts and data below.

OSEMEKHIAN EBHOHIMEN 1112841

Page 25

Table 19: Generation of Actual allowable Tantalum production at Palladium

Table 20: NCF at various discount factors

OSEMEKHIAN EBHOHIMEN 1112841

Table 21: Oil and Tax sensitivity table

Page 26

Figure 8: Net cash flow and Cumulative cash flow versus Years for Minimum CAPEX option

OSEMEKHIAN EBHOHIMEN 1112841

Page 27

Figure 9: Sensitivity analysis of Minimum CAPEX option

OSEMEKHIAN EBHOHIMEN 1112841

Page 28

4.

DEVELOPMENT OPTIONS ADVANTAGES AND DISADVANTAGES

The advantages and disadvantages of the two options are detailed below.
No 1 2 Fastest Development Theme: Technical and Commercial Advantages Higher production rate achievable. Flow Assurance problems of long tie backs minimised. Flexible control of production process. Modular concept favours reusability of FDPSO. Disadvantages Expensive CAPEX on FDPSO.

Sea stability issues affecting separator retention time. Long lead time for FDPSO procurement.

Heavy exposure to lost production time due to small holding capacity of FDPSO (50,000 bbls), and potential weather problems for shuttle tanker (Waiting on weather WOW). Much higher OPEX due to shuttle tanker rental.

Availability of temporary storage.

7 8

Easy to decommission. Easy to do well workover operations. Much more profitable operation than the tieback option. Purity and consequently higher value of crude preserved Higher Cumulative Net Present Value. Lower sensitivity to changes in Oil price or tax rate.

10

11

12

Table 22

OSEMEKHIAN EBHOHIMEN 1112841

Page 29

No 1 2

Minimum CAPEX Theme: Technical and Commercial Advantages Much lower OPEX. Disadvantages Limited processing facilities at Palladium constrict production severely. No room for expansion of facilities at Palladium. Purity of Tantalum crude lost due to sour nature of tantalum crude. Gas flaring at Palladium violates the terms of Alpha Oil companys production license. Potential for disagreements on wording and execution of signed agreement with Palladium. Inefficient well workover and maintenance. Higher exposure to flow assurance and corrosion problems. Personnel Exposure to Palladium sulphur risks. Lower Cumulative Net Present Value. Higher sensitivity to changes in Oil prices or tax rates.

Cheapest route to first oil.

Easy to decommission.

Operates on a stable platform.

7 8

Table 23

5. DEVELOPMENT OPTION OF CHOICE From the foregoing analysis, the Fastest Development Theme offers better return on investment and lower capital risk. It is therefore selected for development of the Tantalum field.

CONCLUSION
The field development option that best meets the existing constraints and objectives of Alpha Oil Company for the development of the Tantalum field is the Fastest Development theme. In addition, going our earlier definition of marginal fields, Tantalum cannot be said to be marginal because the sensitivity

OSEMEKHIAN EBHOHIMEN 1112841

Page 30

analysis of the chosen option shows that the investment is safe irrespective of a huge 78% reduction in Oil price.

REFERENCES
MILTON A., 1980. A Progressive Approach to Marginal Field Development in S.E. Asia. Proceedings of Offshore South East Asia Show. 26-29 February 1980, Singapore: Society of Petroleum Engineers. Document ID 8851-MS. CRUDE OIL PRICE 2011. Oil price chart [online]. Available from: www.oilprice.net [Accessed 28 December 2011]. MURRAY J., 2009. First drilling FPSO goes to work offshore Africa.[online]. Available from: http://www.epmag.com/Production-Drilling/First-drilling-FPSOto-work-offshore-Africa_37206 .[Accessed 23 December 2011]. KAWASE M., 1998. Design of FPSO systems for re-use, decommissioning.[online]. Available from: http://www.offshoremag.com/index/article-display/24292/articles/offshore/volume-58/issue4/news/general-interest/design-of-fpso-systems-for-re-usedecommissioning.html .[Accessed 23 December 2011]. MASON T., 2011. Class lectures, ENM 202.[Lecture notes]. Separator Systems. Facilities module, Robert Gordon University, Energy Centre, School of Engineering, Room C47, 13 October. ARULANANTHAM D., 2011. Class lectures, ENM 202.[Lecture notes]. Hydrocarbon Allocation. Facilities module, Robert Gordon University, Energy Centre, School of Engineering, Room C47, 17 November.

BIBLIOGRAPHY
OFFSHORE FIELD DEVELOPMENT PROJECTS. [online]. Available from: www.subseaiq.com

OSEMEKHIAN EBHOHIMEN 1112841

Page 31