Hydrocarbon Field Life Cycle



    • Sunk cost
    • Acquisition cost

    • G&G costs (Geological & Geophysical)
    • Number & well cost in the effort to explore potential hydrocarbon reservoir worth exploring for development and production.
    • Timing of exploration & appraisal costs
    • Probability of exploration success

    • Reserves for fields
    • Development scenarios including but not limited to hydrocarbon evacuation philosophy.
    • Development cost detailed by fixed structure, facilities, pipeline, etc
    • Development drilling cost
    • Phasing of each type of development CAPEX (Capital Expenses)

    • Start in the first year of production
    • Hydrocarbon production profile can be generate.
    • Hydrocarbon demand forecasting and demand matching between the supplier ability to supply and demand of the receiver or end buyer.
    • Typical OPEX (Operating Expenses)

    • Abandonment cost
    • Timing of abandonment
    • Salvage value

Abandonment usually opt for when the the field is at the end of it economic lifetime, that is, once its net cash flow turns permanently negative although still technically possible to continue to produce hydrocarbons from the field. Therefore, careful economic studies shall be develop in order to ensure that all possible aspect to maximize net cash flow for the field have been thoroughly considered.


(1) However, with respect to gas field, there might be or there is some difference especially when dealing with gas holding period in which a contractual buyer is sought for the estimated gas produced since unlike liquid hydrocarbons (crude oil and condensate) which can be stored in tank farms, gas produce must be supplied directly as it is produce since it cannot be stored without further processing (by converting it to LNG, liquefied natural gas) which would incur further higher investment.



Categories: Oil & Gas News

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