FIELD DEVELOPMENT PLAN

Field Development Plan

After successfully completing the appraisal period, field development stage takes place.
Field Development Plans (FDPs) provide the necessary support for field optimization,
and include all activities and processes required to optimally develop a field.

Phase 1

Milestone Review 1:

First phase of field development plan involves planning in which desired objectives
related to this study are discussed and finalized.

Value Addition: This phase gives crystal clear strategic direction.

Phase 2

FDP Study

Milestone Review 2:

·        Static Model Evaluation

·        Volume Assessment (Probabilistic and Deterministic method)

·        Uncertainty and risk analysis (tornado chart)

Milestone Review 3:

·        Dynamic Performance Evaluation

·        Prediction

Milestone Review 4:

·        Integrated Surface and Subsurface Development

Milestone Review 5:

·        Drilling and Completion Costs

·        Facilities Cost

·        Economic Assumptions

·        Economic Analysis and Sensitivities

Value Addition: This is the phase where sharing of technical knowledge between

different cross functional departments takes place. By doing this different perspectives
are heard and all the issues are resolved and at the end of this phase all the
departments are on single page.

Phase 3

FDP Submission

 FDP is submitted to required regulatory authority for its approval.

Phase 4

FDP Execution

After approval of FDP from regulatory authority, it is executed in the most effective and
efficient way.

·        Development Drilling

·        Deviation from FDP (Any significant deviation from an approved FDP requires

authority’s approval)

Uncertainty Management in Field Development Plan

    Every field development plan has risks associated to it, so understanding and
managing these uncertainties play a vital role in achieving the well-informed business
decisions.

·        For an efficient field development plan, it has to capture all the project
uncertainties related to surface and subsurface disciplines.

·        Successful field development involves risk mitigation plan and early strategy to
reduce the uncertainties.
Some following type of uncertainties, their impact and its mitigation strategy is
tabulated below:

Identify key uncertainties and scenarios

The first step is to identify the key uncertainties and scenarios that
affect your field development plan. These can include technical,
economic, environmental, social, and political factors. For example,
you might consider how different reservoir models, production
profiles, oil prices, cost estimates, environmental impacts, and
regulatory regimes would influence your plan. You can use tools such
as decision trees, sensitivity analysis, and Monte Carlo simulation to
quantify and compare the outcomes of different scenarios.
Gautam Chaudhury

Consultant

Field development planning requires seamless collaboration and interface between subject matter
experts from three major disciplines: subsurface reservoir management, drilling and completion, and
subsea plus surface facilities with associated production planning. Each step is bound by the science of
business economics of systems selection, engineering, procurement and contracting strategy, regional
politics, technology risk and opportunity, and health and environmental safety. The process is challenged
by the risk of reservoir uncertainty while trying to justify a robust business case capturing the possible
potential, especially when estimated net recovery is low (marginal fields).

Afield development plan consists of a reservoir depletion management plan, drilling and

completion plan, production management plan, and facilities systems concepts. These are selected
through iterative interactions from multitudes of variations of the three main disciplines subsurface,
drilling completion, and surface facilities. Each reservoir comes with its unique constraints in terms of
reservoir and other associated parameters influencing system selection. This makes it difficult to use
reservoir depletion analog, especially for recent high-pressure/high-temperature discoveries in ultra-
deep Lower Tertiary subsalt Paleogene sands where adequate past experience history is very limited.

There is no perfect solution in terms of life cycle cost (capex + opex) and safety primarily due to reservoir
uncertainty in terms of well count, completion and intervention, net recovery, and fluid properties. Even
considering a given reservoir of absolute certainty, different system concepts and development plans
may be justified as a strong business case depending on company or individual bias. Only time can really
tell if a selected concept is fit for purpose and fulfilled expectation relative to competing concepts.

Field development evaluation must consider strategies of procurement, project delivery, and contracting
early on as they have significant impact on cost and schedule, thus ultimate success of the selected field
development plan. Absence, inadequate, or inefficient strategies may jeopardize the success of an
otherwise sound field development concept plan. These strategies add robustness by reducing project
execution risk and other associated uncertainties.

The following depicts a pragmatic fit-for-purpose approach that combines the best practice for each
major discipline. The procedure needs a multi-discipline experienced team, with deep understanding in
their respective and interfacing domains, using a systems approach challenging each constituent
functional element, system, and procedure in terms of technology assurance of quality, risk, and
opportunity. Empowered champions must take the lead to step changes challenging the current
techniques and practices. If not, high costs associated with offshore oil and gas exploration and
production will continue to be a barrier to futuredeepwater field development especially for challenging
small fields.

Decision making

Managing field development concept economics and risk are a series of decision making processes with
the objective to reduce risk and maximize potential. Poor framing of problems, missed important aspects
and opportunities, or sometimes topics addressed inadequately with full spectrum of possible outcomes
are some of the unknown pitfalls in a decision making process. Framing of problems must be robust to
ensure consistency of results. There should be a procedure in place to measure compliance with risk
criteria, value generating decisions, and mitigation of risks associated with options. The process will
address how and to what extent each option will satisfy objectives, which represents “value” in terms of
cost, schedule, operability, and constructability. Risk is the barometer of uncertainty and unexpected
events affecting value proposition negatively (risk) or positively (opportunity).

Concept screening

Following discovery of a prospect and initial reservoir characterization, high level preliminary evaluation
is made in terms of operator’s strategic vision, commercial and technical risk, safety requirement,
potential for maximum return on investment (ROI), and minimum risk to capital, life, and environment.
The assessment is performed based on past experience, data, knowledge, and/or lack of it. The prospect
will be further pursued only if all the findings are positive.

The final field development plan is selected by comparing risked life cycle financial values in terms of net
present value (NPV) or ROI of the competing plans. These consist of different development scenarios
with different logical and intuitive combinations of a reservoir depletion plan, production plan, and
choice of drilling, completion, and facilities. The plan with highest median (P-50) NPV and lowest spread
between P-90 and P-10 NPVs with the shortest schedule will be selected. A high P-50 represents
maximum return and lower difference between P-90 and P-10 reflects reduced uncertainty. Individual
companies have their own levels of requirement of these probable NPV values for a plan to pass this
gate. In addition, actual procedure for determining the P-10 and P-90 value may be different.
 Effective field development planning requires seamless collaboration
between subsurface reservoir management, drilling and completion, and
subsea plus surface facilities.

Uncertainties in high value spending and revenues are included through assigned probability
distributions representing uncertainty and risk. For example, a spar platform has higher execution risk as
opposed to a semisubmersible due to increased offshore marine operations for installation and
commissioning. A risk reduction factor may be used on the ground of past successful executions. A
platform-based drilling operation has high capex but less opex and uncertainty compared to using a
mobile offshore drilling unit (MODU) with increased cost and schedule uncertainty. The screening
process must consider both capex and opex.

The selection screening process requires specialized tools, extensive reliable database, lessons learned,
and an integrated team of highly experienced personnel with deep understanding from all disciplines to
guide in a rational and fit for purpose manner. The field development plan management team should
produce capex, opex, and schedule estimates of competing scenarios. Generally, estimates are made at -
20% to +30% accuracy. Estimates are validated extensively through benchmarking, standardization, and
normalization for consistency and financial equivalency between competing scenarios.

Technology opportunities

Oil and gas projects run on status quo. There is a natural reluctance to be the first to adopt a new
technology or solution. Engineers will find creative ways to push technical solution boundaries when
challenged with a problem. Eventually, we will face the technical limits where we will have to change the
game. We need visionary executive leadership empowered to take decisions who will embrace step
changing technology.

Enabling technology. When pushed to the limit, an enabling technology may get a chance through
proper qualification and verification. Here limit means there is no other alternative than to abandon or
postpone the project. Cost of an enabling technology is not a factor any more as long as overall NPV
satisfies the company requirements.

Technology of opportunity. Promoting technology of opportunity is very difficult in a high consequence

environment where it is easier to follow than lead to adopt new technology of opportunity to reduce
cost. However, for small deepwater fields technology of opportunity must be developed and pursued in
low risk areas where reward exceeds risk otherwise they will never satisfy economic criteria. For
example, low cost dry tree capable semi type hull or TLP for deeper waters.

Standardization

Standardization of technology, design, contracting, and sourcing can reduce cost and improve schedule
significantly. This is more so for procurement schedule where it may become an enabler for long lead
items. All big operating companies take advantage of standardization one way or other at least for
procurement contracts. Design standardization is not so common within oil and gas field development.
Exceptions are MODU rig designs which are built on payload steps and BOPs and trees that are built on
pressure rating steps. In most cases, floating systems, topsides facilities, and subsea hardware and risers
are purposely designed, specified, and constructed. However, these systems may be designed and built
in a standardized approach, based on step change. For example:

 Hull form designs in 3,000-ton payload increments, three steps of environments, and three steps
of water depth

 Topsides facilities with steps in pressure rating and sweet or sour service

 Subsea hardware and pipelines based on pressure and water depth steps plus sweet and sour
service

 Flowlines and different types of risers in steps of pressure rating and sweet and sour service.

Procurement strategy

Procurement is a key element in the execution and delivery of any design and construction project.
There should be a dedicated team in charge of sourcing suppliers, buying, expediting orders, inspecting
bulk materials and manufacturing, and organizing delivery and logistics. The team has full ownership of
the budget and the delivery responsibility bounded by all stakeholder policies and code of ethics. The
focus is on global procurement increasing supplier base through sourcing and qualification of new
suppliers and products with target on high value items as well as dissemination of market intelligence
and trends across all groups. Oil and gas exploration and production is driven by changing technology
and long lead capital intensive procurement. Informed decision making is critically important. Supply and
demand information on raw materials, equipment, fabrication, engineering, MODU, and construction
and installation vessels can help give visibility over future pricing changes and potential of any
disruption. This is valuable information for operating companies to have during field development
planning.
Project delivery strategy

Field development engineering is not only limited to selection of system concepts. It must also take
account of the impact on cost, schedule, and execution risk of all attendant project delivery strategy and
contracting. A well thought-out delivery strategy including contracting can help the bottom line NPV and
reduce project execution risk.

Strategy is formulated based on iterative discussions early on of any project, which then gives shape to
subsequent plans and actions. Often, we are quick and use past experience analog, which may have had
different size, complexity, or risk than the one in hand. It is worth spending some time at the beginning
to bring everyone together, develop strategy, and document in the project execution plan. Without clear
strategy, direction, and a project execution plan, inefficiencies and misalignments can occur, resulting in
major financial consequence. For large offshore projects (half to several billion dollars), it is better to
have a main overall project execution plan and then separate front-end and execution plans for several
convenient related project packages. A full field development project program may be managed in
separate projects as drilling, production, facilities, hull and mooring, and SURF facilities with proper
interface links. Economy of scale comes from the common execution plan strategies applied across all
projects.

The program execution plan should outline ways on how the team will avoid inefficiencies of a very large
project “diseconomy of scale” and achieve economy of scale through proper standardization,
optimization, and integration across the entire project. The front-end plan provides project scopes, plan,
and optimization prior to sanction, based on the following:

 Evaluate alternate field development options, including system designs and concepts

 Outline scope and system design concept options

 Develop project execution plan

 Identify and propose mitigation of all risks

 Implement best practice on project organization and management, team alignment, value-
improving practice, opportunity and risk management, and lessons learned.

The project execution plan describes the planning for design, construction, installation, commissioning,
and start-up of the facilities. The focus is on execution after sanction creating the project level plan for:

 Meeting project functional and HSE objectives

 Organizing, contracting, and conducting execution plan

 Managing risk, opportunity, and changes

 Aligning the team for project execution and interface

 Manage quality, cost, schedule, and resource.

Contracting strategy
During the past few decades, large oil and gas projects were managed by commissioning outside
contractors on an engineering, procurement, construction, and installation (EPCI) or lump-sum turnkey
(LSTK) basis and combine with in-house resources, forming a dedicated project team in charge of
preparation, execution, and delivery of the project. While most of the elements for success were often
present, this approach did not always bring anticipated benefits to owners or contractors. In recent
years, contractors have suffered heavy losses and operators faced schedule delays, cost overruns, and
operability problems. Some of the reasons may be attributed to the following:

 Lack of proper placement of project risks

 Absence of clear definition of the work scope

 Tendency to be overly optimistic in all aspects, including superiority complex and complaisance

 Biased approach from team members or stakeholders

 Not understanding potential negative events and local content issues

 Operators relying on contractor to provide new technology solutions when contractor has
limited capital resources

 Lack of deep understanding of the system design, construction, installation, and not properly
including the potential impact of project delivery and contracting strategy.

In recent years, offshore projects are extremely large, complex, and less frequent. They require
significant amount of upfront capital, expertise, and technology resources and pose high potential
downside losses. Technology driven and evolving field developments require high competency from all
parties. Small field developments also depend on enabling or opportunity technology to be economically
viable. Technology subject matter experts with broad and deep understanding in linked disciplines are in
short supply, particularly within the operating companies due to re-organizations in the past.

Problems with the past EPCI contracts and the escalated costs which followed have resulted in a demand
for an alternative approach assuming that the direct owner’s team approach is not feasible. In an
owner’s team approach all contracts are direct between company and service provider. The company
mostly assumes all risks, and success depends on company’s ability to manage multitudes of contracts
and stakeholders interactions. For various reasons, even if a company has the resources, this approach
may only work for smaller repeated projects. Primary issues with EPCI contracts echoed within the
industry are allocation of risk and lack of definition of work scope. Based on this, an alternative is an
engineering, procurement, and construction management (EPCM) contract.

The EPCM approach is somewhere in between owner’s team and EPCI approach. In the EPCM approach
all contracts are between company and contractors thereby risk is with the company. A professional
EPCM service company performs design, engineering, and construction management but not a party to
any contract related to construction or vendor provision. The relationship is like an owner-agent where
the owner monitors and influences performance and progress of the project. The main responsibilities of
an EPCM service provider are:

 Design including FEED as necessary to complete the project efficiently

 Planning procurement, bidding, and administration of contracts

  Maintain overall schedule on track

 Administration of construction and vendor contracts

 Manage interface, changes, and report to owner.

Some of the major limitations for the owner in an EPCM approach are:

 Owner must be very pro-active to meet the construction responsibility

 Owner needs to integrate key people in strategic positions within the EPCM organization to
ensure day-to-day monitoring and control

 Owner takes the ultimate responsibility on cost and schedule.

In an EPCM approach, the owner must have adequate resources to integrate with EPCM project team
during all phases of the project. Some of the universal characteristics of a successful project are:

 Strong cross-functional and integrated project team

 Adequate front-end loading by project knowledgeable business leadership

 Engineering and project functions report to owner directly

 A system of continuous improvement (sign of excellence)

 Systematic progress and performance measurement

 In-house resources to develop and shape projects ready for detail design.

Contracting strategy of a large offshore project can take various forms. There is no unique ideal solution.
It will depend on many factors, namely market condition, project type and size, operator and contractor
resources, level of engineering definition, and finally a good project execution plan. It must be
recognized that at the end of the day operating companies take all risks and pay for it all one way or
other. The philosophy should be to use a pragmatic, well-defined/task-based, fit-for--purpose approach.
Develop a strong project management plan, provide contingency measures for any indication of cost
overruns or schedule delay, and then hope for the best and prepare for the worst.

Conclusions

Generating economic value and control risk of a field development plan comes through the art of linking
varieties of disciplines, applying the science of logical determination of boundaries, and finally
engineering, planning, and managing with courage and persistence.

The high cost of oil and gas exploration and production in deepwater and deep reservoirs means that
only large fields will be able to satisfy rigorous economic screening. A pragmatic fit-for-purpose approach
and responsible use of game-changing technology is required to make smaller fields economically viable.

A phased development plan by using early production system may help better manage capital risk of
reservoir uncertainty and provide necessary flexibility to capture potential upside benefits.
Exploration and development costs can be reduced by using improved drilling and completion
technology, more dry tree production using new hull forms, and conversion or life extension where
feasible.

Unless empowered champions use step changes in technology, the high costs of offshore oil and gas
exploration and production will continue to be a barrier to future deepwater field development,
especially for challenging small fields.