W2_MR_Production Expansion Project

Problem definition

The company has a target is to increase its oil production rate by additional 10,000BOPD before end of 2013 as per the encourage exploration results. Accordingly new fields were explored as to be considered for satisfying this target. A field production facility/ies with 150 km pipeline should be considered as to process and transferred the new discovered filed production. Company has to decide over two given options for the filed production facilities, the evaluation is based on Noncompensantory model.

Development of the feasible alternatives

The targeted areas are divided to two parts with respect of location and expected reservoir quantities, the facilities were proposed as following:

Option 1: Build one filed production facilities (FPF) with a capacity covering the production of Areas-1 and current estimation of Area-2.

Option 2: Build two FPF of medium capacity in each area considering future exploration in both areas.

Analysis and comparison of the alternatives

Scenario 1: Development of AREA-1

1.       AREA-1 Field Surface Facilities (FSF) i.e. wells, OGM and trunk line to Hadida FPF

2.       AREA-1 FPF.

3.       Transit line from AREA-1 to Central production facilities (CPF).

4.       Power Generation Plant and Distribution for FPF and other FSF Requirements.

5.       Expansion in the Central Processing Facilities (CPF) to handle the extra fluid

Scenario 2: Development of AREA-1 & Area-2: Will be same as above, in addition to the following:

6.       AREA-2 FSF & FPF

7.       Transit Line from AREA-2 to AREA-1

Selection of the preferred alternatives

			Option-1		Option- 2
1-	Cost		70 MM		100 MM
2-	Time		12 Months		10 Months
3-	Distance		150 KM		210 KM
4-	Complexity		High		Medium
5-	Production Rate		30 KBOPD		40 KBOPD
6-	Management		Good		Fair
7-	Operation Staff		100		150
8-	Security		Good		Poor

Ordinal ranking of options attributes: ordering of attributes from the most preferred to the least preferred as follows:

Ø      Result of Paired Comparisons:

Cost > Time

Cost > Distance

Cost > Complexity

Cost > Production Rate

Cost > Management

Cost > Operation Staff

Security > Cost

Time > Distance

Time > Complexity

Time > Production rate

Time > Management

Time > Operation Staff

Security > Time

Distance > Complexity

Production Rate > Distance

Distance > Management

Distance > Operation Staff

Security > Distance

Production Rate > Complexity

Complexity > Management

Complexity > Operation Staff

Security > Complexity

Production rate > Management

Production rate > Production Staff

Security > Production rate

Operation Staff > Management

Security > Management

Security > Operation Staff

Ø      Ranking of each attributes as per the number of times it appears on the left –hand side of the above comparison:

	Attribute	Number of times on left of > (= ordinal ranking)
1	Cost	6
2	Time	5
3	Distance	3
4	Complexity	2
5	Production rate	4
6	Management	0
7	Operation Staff	1
8	Security	7

Application of Lexicography:

	Attribute	Rank*	Alternative Rank**
1	Cost	6	Option1> Option2
2	Time	5	Option2 > Option1
3	Distance	3	Option1> Option2
4	Complexity	2	Option2 > Option1
5	Production rate	4	Option2 > Option1
6	Management	0	Option1> Option2
7	Operation Staff	1	Option1> Option2
8	Security	7	Option1> Option2

*   Rank of 7 high important, rank of 0 = least important

** Selection is based on the highest-ranked attribute

Asp per the above application of Lexicography method. The final choice would be Option 1 because Security is the top ranking attribute, and Option 1 Security is ranked above option 2, moreover the option 1 Cost is ranked above Option 2. The conceptual study is on progress and the results of our decision will be clearer after getting the result of the conceptual study.

Performance monitoring and the post evaluation of results

The result of the chosen option one will be determined after the completion of conceptual study.

Conclusion

The company has taken the risk and concentrates on the first option considering it’s the most optimum choice and its added value more than the second option.

References

*  The Noncompensatory Model – Lexicography P555, Engineering E economics 15^th Edition

*  Petroenergy FDP analysis report.

*  AACE Kristal Team, W8_MR_Production Expansion