THE OIL FIELD CYCLE

The oil field cycle can be divided into 5 phases-

1.   Exploration

2.   Appraisal

3.   Development

4.   Production

5.   Decommissioning

The essence of all these phases can be understood in terms of cash flows-

1.   Exploration

Energy companies build a portfolio of exploration interest over a period of time this includes fields of high risk to low risk, terrain diversity, geopolitics scenario, nature of hydrocarbon, distance of nearest market, skilled workforce etc The company has to justify atleast one of the scenario to justify their investment..

2.   Appraisal

Four possible options are considered at this time-

a) To proceed with the development and generate income.

b) To carry out further appraisal in order to get better understanding of the field.

c) To sell the field after appraisal.

d) To do nothing and wait for winds to be in your favour.

3.   Development

Based on field feasibility study a field development plan (FDP) is created. The steps include-

a)FDP

b) Detailed design FEED

c)Procurement of material

d) Fabrication and installation of facilities

e) Commissioning

  

4.   Production

The planning of production phase is done 3 phases

a) Build up perio- production form newly drilled well

b) Plateau period- period of sustained production which may include IOR/EOR.

c) Decline period- period when production falls

5.   Decommissioning

When economic lifetime of project ends, the net cash flow turn negative.

Usually companies take following steps when the field is on the decline

a) Reduce operation cost

b) Increase hydrocarbon throughput

c) Try to bring some near by small field to production.

The infrastructure is then abandoned as per rules and regulation. Offshore facility such as plate forms are sunk and the act fertile place for coral reef.