RESEARCH ARTICLE

European Journal of Business and Management Research

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Implementing Analytical Hierarchy Process (AHP)

for Oil Production Scenario from TMB & KRG
Field Development: Case Study of PT
Pertamina Hulu Rokan Zone 4

Zulfikar D. Affandi and Santi Novani

ABSTRACT
Pertamina Hulu Rokan (PHR) carries out the duties of Pertamina's
Upstream Subholding to manage the business and operations of upstream Submitted: March 27, 2023
oil and gas business activities in the Regional 1 – Sumatra region. Zone 4 is Published: May 01, 2023
one of the working areas that contributes greatly to PHR oil production.
ISSN: 2507-1076
Zone 4 manages oil and gas fields in the Southern Sumatra region which has
been producing for more than 40 years and has experienced a decline in DOI: 10.24018/ejbmr.2023.8.3.1937
production from year to year due to the decline in performance of the main
oil and gas structure. The achievement of oil production is currently only Z. D. Affandi *
95% of the target set by SKK Migas. The Subsurface Department conducts Master of Business Administration, School
studies on structures that have the potential to increase oil production in of Business and Management, Institute
Zone 4, one of which is the Teluk Merah complex consisting of the Teluk Teknologi Bandung, Indonesia
Merah Baru structure (TMB) and the Karanganyer structure (KRG). The (e-mail: affandi456@ gmail.com)
latest analysis gives results, oil reserves of 9.41 MMBO will be generated S. Novani
through the development scenario of 21 Oil Production Wells (18 Infill Wells Assistant Professor, School of Business
+ 2 Step out Wells + 1 reactivation well). What must be solved is the problem and Management, Institute Teknologi
of how to handle the oil production of the two structures. A VFT (Value Bandung, Indonesia
Focused Thinking) approach combined with an Analytic Hierarchy Process (e-mail: snovani@ sbm-itb.ac.id)
(AHP) is used to address the problem. VFT is used to generate selection
*Corresponding Author
process criteria and to narrow down alternative oil production scenario
solutions from TMB & KRG. AHP is used to prioritize alternative scenarios
best of the three proposed alternatives. Four experts conducted FGD
(Focused Group Discussion) to assess each scenario by considering these
criteria. Generated scenarios to build new production facilities in the TMB
& KRG structure area as the best scenario with the preference result is 58%.
The alternative selection process considers costs (Project Cost & Operational
Cost) and benefits (Oil Gain, Operability, and Time to Implement). The
selection of this scenario could increase Zone 4 oil production by 9.1 MMBO.

Keywords: Analytical Hierarchy Process, Decision Making, Oil Field

Development.

I. INTRODUCTION the Subsurface Development and Planning Department.

Seeing that the existing oil production of Zone 4 continues to
PT Pertamina Hulu Rokan Zone 4 is one of the backbones
fall from year to year and is experienced by all fields included
of PT Pertamina Hulu Rokan. In terms of performance, oil
in PHR Zone 4 Subsurface Department conducts studies and
production from work units administratively located in the
evaluations to provide support to meet the target Oil
South Sumatra region accounts for 43% of the total oil
production of fields in Zone 4 in line with the increasing
production of PT Pertamina Hulu Rokan. The declining of
national oil needs. The Subsurface Department studies and
existing oil production in PHR Zone 4 are an inevitability.
analyses the potential structures in order to help meet the oil
The production performance of the main structure contributed
production in the PHR Zone 4. The Karanganyer (KRG)
not as good as the previous period; this has been going on for
Group structure, which consists of the nearby KRG and Teluk
the last 10 years (Fig. 1 see Appendix). The achievement of
Merah Baru (TMB) structures, is one of the structures
oil production for PHR Zone 4 is only 95% (YTD September
examined by the study. While the TMB structure is located in
2022) Referring to the company's commitment to SKK Migas
Muara Enim Regency and Prabumulih City, roughly 20
through the WP&B event (Work Program and Budget) as
kilometers southeast of Prabumulih City, South Sumatra,
well as the company's commitment to Holding through the
with an area of about 8 km2, the Karanganyer structure (KRG)
RKAP (Company Work Plan and Budget). Looks for ways of
is located in Muara Enim Regency and Prabumulih City,
getting more hydrocarbons out of that field are main role of
about 15 kilometers south of Prabumulih City.

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According to volumetric calculations, TMB & KRG
combined in-place resources are as follows.
TABLE I: INPLACE VOLUMETRIC OF TMB & KRG
Structure Layer Volumetric (MMSTB)
Zone A3 1.91
TMB Zone A6 1.08
Zone D 2.33
Zone D1 3.44
KRG Zone F 1.73
Zone A4 0.65
The handling of oil production is a current issue. Karangan
Gathering Station (GS) which is located 21 km from TMB &
KRG area, is the closest production facilities that can process
oil production from those structures. Oil production can be
flowed directly to the Karangan GS join the trunkline of East
Limau Field which has the potential backpressure which can
cause Loss Production Opportunity of TMB & KRG
structure. The closest facility is the Main Gathering Station
(MGS) Prabumulih which is 5 km away, but the oil
production sent to the facility must be net oil to be delivered
to customers at RU III Plaju in Palembang. Regarding the
production fluid flow scenario, technical and economic
considerations are required. The produced fluid can be
directly sent on a gross basis to East Limau GS via trucking.
The produced fluid can also be processed first by building a
new facility in the TMB & KRG area, then the net oil
production can be sent to MGS Prabumulih.
II. RESEARCH METHODS
The problem with the TMB & KRG field development
project is the location of the area which is far from existing
production facility that can process the gross oil production.
(Fig. 2 see Appendix). The Value Focused Thinking (VFT)
framework is used involving four Subject Matter Experts
(SME) who are qualified and experienced enough to make
right decisions are conducting Focused Group Discussion
(FGD) to generate alternative solutions. SMEs come from
several functions in PHR Zone 4, with various expertise
backgrounds such as, subsurface & development, surface,
project engineering & planning, and Limau Field.
TABLE II: SUBJECT MATTER EXPERT (SME)
Member Position Experience
Expert 1 Sr. Manager Limau Field 19 years
Expert 2
Sr. Manager Subsurface Development
21 years
& Planning
Manager Operation & Surface
Expert 3 29 years
Facilities
Manager Project Planning &
Expert 4 16 years
Engineering
Values are what we are all about. Therefore, values should
be the basis for the time and effort we spend thinking about
decision. But this is usually not the case, decision-making
usually focuses on the choice of alternatives. (Keeney, 1996).
Value-focused thinking (VFT) is a way of thinking that
focuses on the fundamental goals of decision makers. VFT
begins by identifying goals, then criteria and/or sub-criteria,
and finally alternatives. From the discussion among SMEs,
Fig. 6 is a diagram of VFT gaining alternatives (see
Appendix).
DOI: http://dx.doi.org/10.24018/ejbmr.2023.8.3.1937
RESEARCH ARTICLE
Based on the VFT above, three scenarios were created (Fig.
3 see Appendix) to handle the oil production to
commercialize TMB & KRG Structures.
1. Scenario 1: Flow to the existing production facilities,
namely Karangan Gathering Station (GS): build new
trunkline to deliver Gross Oil production (oil &
produced water) from the TMB & KRG structures to
the Karangan GS and combine with the existing line
that deliver Oil production from the East Field.
Potential back pressure and decrease in production
volume from combination of line from TMB & KRG
structures with the East Field production.
2. Scenario 2: Transport Gross Oil Production: Build a
new Early Production Facilities (EPF) in TMB &
KRG wells area, to temporarily process the oil
production then transported using Road
Tank/Trucking to the East Limau Gathering Station
(GS).
3. Scenario 3: Build a new Production Facility: Build a
new gathering station in KRG & TMB area to process
the gross oil production and then build a close range
of trunkline channeled to the Main Gathering Station
(MGS) Prabumulih to deliver net Oil Production.
Three scenarios above are illustrated in Fig. 4 (see
Appendix). The criteria and sub-criteria specified in each of
the above scenarios are:
TABLE III: DESCRIPTION OF CRITERIA/SUB-CRITERIA
Criteria/Sub-Criteria Description
Total cost to implement the alternative
Cost
(project and operational cost).
Cost of investment, including material
Project Cost purchases, fabrication cost, and
commissioning cost.
Costs associated with the operating
phase include those for maintenance,
Operating Cost
chemical use, operator wages,
transportation, etc.
Benefit The benefit that can be attained
The maximum amount of oil that may be
Oil Gain produced overall using the selected
scenario.
Possibility of risk at the preferred
Operational Risk
alternative.
The anticipated time or duration needed
Time to Implement to finish the project and begin to reap
benefits.
After three alternatives have been generated, the next step
is to select the best alternative using the Analytical Hierarchy
Process (AHP). This method was developed by Thomas Saaty
in the 1970s. AHP is widely used for decision-making in
many areas such as planning, economics, materials handling,
energy policy, project selection, budget allocation, and more.
(Goodwin & Wright, 2010).
A. Step 1: Decomposition
The definition of a problem that is used to solve a large
problem and simplify the problem into a smaller problem and
is described in the form of a hierarchy (Fig. 5 see Appendix).
B. Step 2: Comparative Judgement
At this stage is made prioritization of the element. The first
step in determining the priority of elements is to make a
pairwise comparison, that is, to compare elements in pairs
according to the given criteria using the matrix form.
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Filling in the matrix of pairwise comparison is by using TABLE VIII: PAIRWISE COMPARISON-OPERATIONAL COST
numbers to represent the relative importance of one element Operational Cost
Scenario 1 Scenario 2 Scenario 3
Attribute
to another element in question in the form of a scale from 1
Scenario 1 1.00 5,92 3.00
to 9. This scale defines and explains the values 1 through 9 Scenario 2 0.17 1.00 0.33
for consideration in the comparison of pairs of elements at Scenario 3 0.33 3.00 1.00
each level of the hierarchy to a criterion at a higher level. Total 1.50 9.92 4,33

TABLE IV: IMPORTANCE RATING

Importance Rating G. Benefit Criteria Analysis
Equally important 1 Based on Table IX, all experts considered Oil Gain as the
Weakly more important 3 most important sub-criteria in benefit criteria. Zone 4 oil
Strongly more important 5
production target that have not been achieved, and the
Very strongly more important 7
Extremely more important 9 performance of the existing structure is declining so that with
the development of the new structure TMB & KRG is
(Appendix 6) shows collected data from the Subject Matter expected to add oil production zone 4 and globally, world oil
Expert (SME). The next step is to process the data in every prices also tend to be positive.
criteria/sub-criterion.
TABLE IX: COMPARISON SUB-CRITERIA ON BENEFIT
C. Cost vs Benefit Oil Operational Time to
Gain Risk Implement
From Table V, all experts agreed that benefits outweigh Oil Gain 1.00 1.00 7.00
costs. Operational 1.00 1.00 5.21
Time to Implement 0.14 0.19 1.00
TABLE V: COST VERSUS BENEFIT Total 2.14 2.19 13.21
Cost vs Benefits Cost Benefits
Cost 1.00 0.20
Benefits 5.00 1.00 H. Oil Gain Analysis
TOTAL 6.00 1.20 Scenario 3 produces the highest oil gain; this scenario is
D. Cost Criteria Analysis preferred as PHR Zone 4 desperately needs additional oil
Mostly the experts believed project costs were more production.
important than operating costs. This is reasonable as the TABLE X: COMPARISON IN OIL GAIN
project costs are worth more than the operating costs and have Scenario 1 Scenario 2 Scenario 3
a greater impact on the development of the TMB and KRG Scenario 1 1.00 1.00 0.18
structures. Scenario 2 1.00 1.00 0.29
Scenario 3 5.44 3.41 1.00
TABLE VI: PROJECT COST VS OPERATIONAL COST Total 7.44 5.41 1.48
Project Cost vs
Project Cost Operational Cost
Operational Cost
Project Cost 1.00 3.00 I. Time to Implement Analysis
Operational Cost 0.33 1.00 According to experts, Scenario 2 is the fastest alternative
TOTAL 1.33 4.00 to implement.

TABLE XI: COMPARISON IN TIME TO IMPLEMENT

E. Project Cost Analysis
Scenario 1 Scenario 2 Scenario 3
Build an Early Production Facilities (EPF) on TMB-KRG Scenario 1 1.00 0.16 0.26
well area then using trucking to delivered oil production to Scenario 2 6.30 1.00 1.32
East Limau Gathering Station is preferable. Scenario 3 3.87 0.76 1.00
Total 11.17 1.92 2.57
TABLE VII: PROJECT COST COMPARISON
Project Cost Attribute Scenario 1 Scenario 2 Scenario 3
J. Operational Risk analysis
Scenario 1 1.00 0.26 0.58
Scenario 2 3.87 1.00 1.73 Build new gathering station in KRG & TMB area to
Scenario 3 1.73 0.58 1.00 process the gross oil production and then build a close range
Total 6.61 1.84 3.31 of trunkline channeled to the Main Gathering Station (MGS)
Prabumulih to deliver net Oil Production is preferable among
F. Operational Cost Analysis the others.
Oil Production flowed to the Karangan Gathering Station TABLE XII: COMPARISON IN OPERATIONAL RISK
is more preferable based on operating cost criteria. This Scenario 1 Scenario 2 Scenario 3
alternative resulted in the lowest operating costs. Scenario 1 1.00 3.00 0.33
Scenario 2 0.33 1.00 0.18
Scenario 3 3.00 5.44 1.00
Total 4.33 9.44 1.52

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III. RESULTS AND DISCUSSION less than 0.1. So, from the analysis of consistency ratio, it
showed that the analysis of the consistency rate therefore
The third step of AHP is synthesis of priority, and logical
showed that expert judgments were already consistent and
consistency. Priority vector calculations and consistency tests
acceptable. Determining the priority ranking is the next step.
are carried out. Consideration of pairwise comparisons is
The chart at Fig. 7 (see Appendix) describes the hierarchy tree
synthesized to obtain the overall priority, in the following
of weighed of all criteria/ sub-criteria and alternatives.
way:
The calculation of the global priority weight for all
1. Multiplies each value in the first column by the relative
scenario, give the result as shown in Table XV.
priority of the first element, then sum up each row.
Summarizes the normalized values for each choice. The
2. The result of the sum of the rows is divided by the
biggest value is 0.58 with Scenario 3: build new GS then
corresponding relative priority element. Then add up
deliver net oil production to the MGS Prabumulih. The
the quotient above with the number of elements
second rank is Scenario 2: built an EPF then transporting
present, the result is called the maximum Eigen (λ).
gross oil production via trucking to the East Limau GS with
3. Calculates Consistency Index (CI) = (λ max – n) / (n –
the value 0.214. Scenario 1: build a trunkline and direct flow
1) n is the number of items compared.
to the Karangan GS join with the oil production trunkline
4. Calculate the Consistency Ratio (CR) = CI/RI
from the East Field is the least priority with the value 2.06.
When CR is less than or equal to 0.1 then it is Acceptable.
From Table XIV, the Consistency Ratio of all attributes are
TABLE XIII: CONSISTENCY OF CRITERIA
Criteria Sub Criteria Weigh Priority CR Remark
Project Cost 0,750 1
Cost 0,000 Acceptable
Operational Cost 0,250 2
Oil Gain 0,484 1
Benefit Operational Risk 0,439 2 0,008 Acceptable
Time to Implement 0,077 3

TABLE XIV: CONSISTENCY OF SUB-CRITERIA

Sub-Criteria Alternatives Weigh Priority CR Remark
Scenario 1 0,156 3
Project Cost Scenario 2 0,552 1 0,006 Acceptable
Scenario 3 0,293 2
Scenario 1 0,652 1
Operational Cost Scenario 2 0,097 3 0,017 Acceptable
Scenario 3 0,252 2
Scenario 1 0,148 3
Oil Gain Scenario 2 0,173 2 0,021 Acceptable
Scenario 3 0,679 1
Scenario 1 0,256 2
Operational Risk Scenario 2 0,101 3 0,024 Acceptable
Scenario 3 0,643 1
Scenario 1 0,091 3
Time to Implement Scenario 2 0,532 1 0,004 Acceptable
Scenario 3 0,377 2

TABLE XV: PRIORITY RANKING

Alternatives
Criteria Weigh Sub Criteria Weigh
Scenario 1 Scenario 2 Scenario 3
Capital Expense 0,750 0,156 0,552 0,293
Cost 0,167
Operational Expense 0,250 0,652 0,097 0,252
Oil Gain 0,484 0,148 0,173 0,679
Benefit 0,833 Operational Risk 0,439 0,256 0,101 0,643
Time to Implement 0,077 0,091 0,532 0,377
Overall Weigh 0,206 0,214 0,580
Priorities 3 2 1

IV. CONCLUSION Since different backgrounds, experiences, specialties,

and functional divisions were taken into consideration,
1. Combination between the Value Focused thinking
the decision is solid.
(VFT) and Analytic Hierarchy Process (AHP) for
3. According to the results of data processing on the AHP,
decision analysis to get best scenario. The decision-
building a new Gathering Station in the TMB & KRG
making tools are employed with due consideration for
area and delivering the net oil production via new close-
the business situation and the objectives of this
range trunkline to the Prabumulih Main Gathering
research.
Station is the best option for handling the Oil
2. Four Subject Matter Expert (SME) conducted Focus
Production from TMB & KRG structures. The
Group Discussion (FGD) to analyze the qualitative
preference result is 58%.
parameter and data of the alternatives on AHP process.

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APPENDIX

Fig. 1. Zone 4 Oil Production Performance from Main Structure.

Fig. 2. Location of TMB & KRG Structures to the existing facilities.

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Fig. 3. VFT Process of TMB & KRG Field Development Scenario.

(a)

(b)

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(c)
Fig. 4. Illustrated Scenario: a) Scenario 1; b) Scenario 2; c) Scenario 3.

Fig. 5. Structure of Decision Hierarchy.

Fig. 6. Decision Hierarchy for Best Oil Production Scenario from TMB & KRG Structures.

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Fig. 7. Decision Hierarchy for Best Oil Production Scenario from TMB & KRG Structures.

CONFLICT OF INTEREST
Authors declare that they do not have any conflict of
interest.

REFERENCES
Goodwin P., & Wright, G. (2010). Decision Analysis for Management
Judgment (3rd ed), EN: John Wiley and Sons, Ltd.
Keeney, R. L. (1996). Value-Focused Thinking: A Path to Creative Decision
Making. Elsevier Science B.V.
Saaty, T. L. (1980) The Analytic Hierarchy Process. New York: McGraw
Hill. International, Paperback Pittsburgh: RWS Publications.

Zulfikar D. Affandi, S.T. is an engineering

graduate from Diponegoro University of Semarang
Indonesia in 2008 majoring in mechanical engineering.
Currently completing post-graduate education, Master
of Business Administration program at the School of
Business and Management, Institut Teknologi
Bandung (SBM ITB) in Indonesia. He works as
Assistant Manager Limau RAM Regional 1 PT
Pertamina Hulu Rokan Zone 4 and currently an active
member of the Association of Indonesian Oil and Gas Production Facility
Experts (IAFMI).
Author’s formal
photo Santi Novani, S.Si, MT, PhD earned her
Doctoral from the Department of Value and
Decision Science, Tokyo Institute of Technology.
Her research interests include service science,
game theory, decision-making, multivariate
statistic, and negotiation. She has several
international publications, including Journal
Systems Research and Behavioral Sciences, Wiley
& Son. She has also served as a member of the
project, including research awards by DIKTI, JSPS, and LPPM ITB. Her
research interests are value co-creation in service systems using modeling
and simulation.

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