Activity-based life-cycle cost analysis : design, operation and maintenance in Arctic environment

Abstract

Currently the oil and gas exploration and production is moving north towards the Barents Sea on the northern coast of Norway, north of the Arctic Circle. This unfamiliar operational environment of the Arctic poses new challenges for the industry, as climate is harsher, the geographical location is more remote from the market and oil and gas fields are located in an environmentally sensitive area. Due to lack of data and experience with Arctic operations, the uncertainty and risks can be higher than in the familiar climate on the North Sea, as well as it is expected that there may also be increased operational and maintenance costs. This research highlights the main challenges of the Arctic climate affecting life-cycle costs of advanced, complex and integrated offshore oil and gas production facilities. The research evaluates the current practices of the usage of the conventional life-cycle cost analysis by the oil and gas industry and identifies the needs and motivation for development of a more suitable and simplified engineering decision making support tool. The research work demonstrates and discusses a comparison of the conventional and non-conventional cost systems, life-cycle cost (LCC) analysis and activity-based life-cycle costing (AB-LCC) analysis, respectively. This thesis studies the activity-based life-cycle costing method as an alternative cost assessment methodology, and suggests it as a more suitable methodology when designing of oil and gas production facilities to be used in the harsh, remote and sensitive environment of the Arctic.