Projects in the Oil and Gas Industry (PDF)

You have projects in the oil and gas industry when you have a goal in mind and a series of steps you need to take to get there. Due to the lack of predefined actions and guidelines, every project is unique. A specific set of inputs and outputs has been designed to complete a single project or provide a single service.

Similarly, the degree of difficulty in projects may range widely. Depending on its complexity, a project may require the oversight of a single person or a team. Often, projects in the oil and gas industry will be described by a management or executive of the client company. Projects have due dates, so it’s essential to stick to them.

Engineers working in the field of oil and gas are responsible for everything. The project’s success depends on their efforts, from initial planning and feasibility studies to actual construction and plant modifications.

Lifecycle of Oil and Gas Project

A project’s success is based on careful planning; without it, it will fail. To finish on time, under budget, and in compliance with strict regulations and standards, oil and gas projects must begin with the proper knowledge and solutions. The oil and gas project lifecycle is as follows:

·         Exploration

Exploration involves seismic surveys and well drilling to locate hydrocarbon deposits underneath the earth’s surface. A dry hole, sometimes known as a duster, results from a good drilling operation that fails to find commercially viable quantities of hydrocarbons after spending tens of millions of dollars. It’s important to remember that exploration projects can be expensive, time-consuming, and even life-threatening in the oil and gas project lifecycle.

·         Appraisal

A company’s next step after finding oil and gas reserves is to estimate the total amount of the resource and how much can be extracted without damaging the environment.

The appraisal phase of the oil and gas project lifecycle can take years and a lot of money because more wells need to be drilled, and more seismic surveys need to be done to comprehend the reservoir fully. If the evaluation goes well, then the next step is to begin building.

·         Development

Following a fruitful evaluation, the operating company will determine the most cost-effective means of hydrocarbon extraction and transportation and the viability of ramping up to full-scale production.

The field development plan is created so that the project’s CAPEX and OPEX may be calculated. Many factors can be considered, including the number of wells to be sunk, the recovery method, the type of installation used, the fluid and gas separation systems, and the method of transferring the oil and gas to a processing plant.

·         Production

A company’s primary means of recovering its initial investment and turning a profit is the revenue generated once a field begins producing. Changes will occur over time as the field’s output level decreases toward the conclusion of the oil and gas lifecycle.

Production could last anywhere from a few years to several decades, depending on the size of the oil and gas field and the expense of maintaining the wells and facilities.

·         Decommissioning

When a field has completed its useful life and can no longer be kept operational at a profit, it is decommissioned. As part of this process, all currently active infrastructure and production facilities, including oil rigs, will be decommissioned. Because this is such a challenging undertaking in offshore fields, companies will want to get as much of it back to shore as possible for dismantling and material reclamation. 

Phases in Project management and development

Project management in the oil and gas industry involves coordinating many people and resources to finish a specific task within a set time frame and budget without sacrificing quality. Many projects go over schedule, over budget, and fail to meet client expectations because of poor quality.

The project management needs a solid consumer base and open lines of contact. The primary objective of an oil and gas project is to complete the job as planned and within the allocated budget. Create a solid project strategy to help you reach your objective.

The phases of project management in the oil and gas industry are as follows:

Phase#1 Evolution of project

Any plan or theoretical rationale for possible future investments might be considered “project Evolution” in project management in the oil and gas industry. Some essential elements need for this phase are given below:

  • Investment needs, cash flows, funding schedules, and payback durations are all unknowns at this stage. 
  • Oil, oil products, and natural gas prices are exceedingly volatile, adding to the already high level of uncertainty. These costs are susceptible to the state of the international political economy and the global economy.
  • While the oil and gas business has never been known for its cutting-edge innovations or technological prowess, recent investment initiatives have been made possible through extraction tools. Oil and gas can now be successfully extracted from formerly unreachable places because of technological advancements.
  • Rising worldwide pricing for hydrocarbons, shifts in international politics, or significant advancements in technology are all factors that could lead to the development of important new projects in the oil and gas industry.

Phase#2 Execution of the project

The oil and gas (O&G) industry is developing a standardized approach to project management to improve decision-making and the overall execution of projects. The systematic execution phase consists of many different sets of rules and regulations, such as:

  • Pay attention to opportunities that provide value.
  • Utilizing multifunctional systems
  • Encourage coordination and communication between the project management team, decision-makers, and stakeholders.
  • Maintain using the suggested tools, resources, and procedures.

Throughout the O&G project’s execution, however, it became apparent that there needed more time to acquire the necessary supplies, materials, or equipment. As a result, it is included in the project’s critical path. The project manager and other supplier executives attend the major equipment kickoff meeting.

Phase#3 Platform Development

The Project Management Team (PMT) for an oil and gas (O&G) project will include a Project Manager, a Resident Engineer, and engineers specializing in a wide range of fields, including but not limited to Process, Piping, Mechanical, Turbomachinery/Rotating Equipment, Electrical, Instruments, Electrical, and Structural Engineering. Some of the most important events that take place during this phase of project management in the oil and gas industry are as follows:

  • Conceptual Design: It’s the first thing to do, and it involves learning about the plans for the area’s future so that you can make the best design decisions. Since this step determines whether the project should be shelved, placed on pause, or revisited, it is considered an essential path activity.
  • Front End Engineering Design (FEED): It is the next stage after the conceptual design phase. It aims to improve the cost estimate for the chosen development concept, create a more detailed scope for the selected development concept, and plan the overall strategy for the project’s execution.
  • Acquisition of Equipment with a Long Lead Time: Delivery of essential gear, such as equipment with a long lead time, can take considerable time. The development of long-lead equipment is included in the critical route category of the overall project timetable because the delivery could take more than a year. Turbomachinery and other similarly crucial types of machinery are typically categorized as long-lead items. Therefore, it is essential to make an up-front purchase before proceeding to the subsequent stage to guarantee the project’s successful implementation.
  • Detailed design: Once the project has been given the green light to move forward with actual development, the deliverables from the conceptual and Front-End Engineering Design (FEED) stages will be expanded further for thorough engineering during this stage. Several pieces of equipment were bought simultaneously during this extensive stage, ultimately leading to the selection of a specific vendor for each part of the machinery.

Phase#4 Efficient management of oil and gas projects

The above discussion of projects in oil and gas industry demonstrates the complexity of investments and the necessity of skilled management. Quick and decisive coordination of the project’s most challenging aspects is key to ensuring a smooth and continuous building and commissioning process at the lowest possible cost. Management teams for projects have several responsibilities:

  • To manage the purchase of necessary equipment.
  • These positions are very varied in terms of required expertise and work location. For these teams to succeed, they need to be managed by people with extensive knowledge of the oil and gas industry and can work effectively under pressure.
  • Techniques for managing large-scale projects have been created to better achieve project goals, reduce costs, mitigate hazards, etc. Multiple entities, such as engineering and advisory firms, collaborate on such projects.

Problems in the oil and gas projects

Projects in the energy sector are typically challenging to finish, including oil and gas initiatives and their closely related, environmentally new renewable energy projects. They consist of several distinct types of job packages, all of which are labor-intensive, risky, and, in many cases, prohibitively expensive. Some problems in oil and gas projects are given below:

  • There needs to be clear visibility into project data, making it difficult to assess the team’s efficiency regarding its budgetary outlays.
  • There is a reliance on variable cost rates and charge-out rates, as well as on separate computer systems and contracts that are stored in different “silos.”
  • Using enormous, incoherent spreadsheets cause problems in oil and gas projects that frequently collapse due to their sheer size.
  • Monthly reports containing out-of-date information should not be relied upon.
  • A rise in the project’s overall scope causes additional work, a delay in completion, and inaccurate estimates.
  • Contractors’ poor job of overseeing and managing the building site
  • Poor management of the contractors’ schedules
  • The failure to provide the materials promptly
  • Ineffective communication between project participants.
  • There needed to be more communication with the suppliers during the planning and buying phases.

Top 4 oil and gas projects in the world

Here are the most significant projects in oil and gas industry that have been started worldwide:

1.       Pluto Train 2 and Scarborough

The Scarborough field can be found in the Carnarvon Basin, some 375 km off the coast of Western Australia. To explore the Scarborough gas potential, a second LNG train (Pluto Train 2) will be housed in the Pluto LNG onshore plant. Approximately 430 kilometers in length pipeline will link the new offshore facilities to Pluto Train 2.

Pluto LNG, for instance, refines gas from the Pluto and Xena fields off the coast of Western Australia. A trunkline of 180 kilometers transports gas to a single onshore LNG processing train. Tokyo Gas and Kansai Electric own 5% of the project and have signed long-term sales contracts supporting Pluto LNG.

A semi-submersible floating production unit (FPU) will be anchored in 950 meters of water close to the Scarborough field, and a total of eight wells will be drilled in the very first phase, with a further thirteen wells drilled later in the development process.

2.       Development of the Payara Deepwater Oil Field

The plan calls for enlarging the existing Payara deepwater oil field in the Stabroek block, located about 200 kilometers from the coast of Guyana.

Starting in Q4 2021 construction of the project is expected to be completed in Q4 2024. They are for construction is relatively unexplored because there have been so few drilling operations.

3.       Alaska LNG

This massive endeavor will be one of the most significant natural gas projects ever constructed. The project comprises an 800-mile pipeline from the North Slope to the facility, an LNG liquefaction plant, a storage and shipping terminal, and a gas treatment plant, all located in the industrial community of Nikiski on Alaska’s Kenai Peninsula.

The North Slope of Alaska has proven gas reserves worth 35 Tcf, and this project will link to those reservoirs. The plant will have a 20mtpa liquefaction capacity and a daily liquefaction rate of 2.9Bcf. The shipping terminal features two or three 160,000 cubic meter LNG storage tanks, a marine unloading facility, and two docks. Similarly, its design was based on LNG tankers from the year 1520.

4.       Gas revolution industrial park of Ogidigben

A downstream refinery and petrochemical complex costing $20 billion is planned to be developed in Nigeria’s Delta Region as part of the Ogidigben Gas Revolution Industrial Park. Nigeria’s state-run oil company has complete authority over it.

Construction of the industrial park, which would encompass more than 27 km2 result in the creation of more than 250,000 employees. Aluminum, petrochemical, and fertilizer plants, as well as methanol and petrochemical plants, will utilize Nigeria’s abundant natural gas resources as feedstock.

Conclusion

Regarding the choice between now and never, some people are deciding to never, as new projects in oil and gas industry continue to support the production of fossil fuels worldwide. Following the construction and aerospace industries as potential leaders in project management adoption is the upstream exploration sector of the oil and gas industry. Every project should have a thoroughly defined business case and an explanation of its logic.

FAQs

Why is it so necessary that oil and gas be produced?

It is necessary because the oil and gas business is responsible for maintaining millions of jobs in the United States, lowering the cost of energy for consumers, and ensuring the nation’s energy security in projects in oil and gas industry.

What are the three types of oil production in oil and gas projects?

Three primary divisions make up the oil and gas industry: the upstream, the midstream, and the downstream. These types of production are necessary for projects in oil and gas industry.

Which firm is the world’s largest producer of LNG?

QatarEnergy, formerly known as Qatar Petroleum, possesses the largest export capacity for liquefied natural gas of any natural gas firm in the globe. The LNG export capacity of the corporation owned by the state stood at 56.2 million metric tons per year as of July 2022.

Yasir Khan

Hello Everyone! This is Engr. Yasir Khan. I am a Mechanical Engineer, professional content writer, and SEO expert with extensive experience. My work experience includes niches of technology news, parenting, online selling, product description, Amazon (B2B), and Mechanical blogs. On this website, we look forward to serving you.

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