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Cost and Economics Optimization

EPCONSULT combines in-depth experience of cost estimation and economics from the oil and gas sector with many of the engineering disciplines associated with field development projects. We have developed a proprietary CAPEX estimation tool, which efficiently supports feasibility and conceptual engineering. Additionally, our analytical consultants are conversant with other support software for analysis. EPCONSULT has experience with cost estimation in the phases of feasibility and conceptual engineering, as well as pre-sanction projects in the FEED phase. Whilst CAPEX estimation is the key activity, OPEX can also be incorporated with greater client input.

Cost and Economics Optimization

We bring to client projects the high-level phasing of CAPEX/OPEX and are experienced in breaking this down into a Life Cycle Cost (LCC) estimate, which takes into account the economics of a project. We have experience with developing CAPEX estimation tools for clients from the outset of projects, customizing our regular tools for client needs, whilst making use of industry best practices and adopting tools for the software platforms of the client's choice, such as Excel, Access and Visual Basic. For such development the work breakdown structure (WBS) and norms application are of utmost importance. Our cost estimation service makes use of weight distribution norms for facilities categories and norms for distribution of cost elements. Check estimates are also carried out for clients who wish to have a fully independent cost estimate for a development option.

EPCONSULT also has experience in running economic analyzes for development projects. This includes the provision of a probabilistic analysis of the life cycle costs (LCC) in order to establish the financial risks in a development. Determination/estimation of uncertainties in input parameters is required in order to develop an understanding of these financial risks.

Monte Carlo simulations are typically applied to establish confidence intervals on the financial indicator, e.g. P10, P50, P90 estimates on the NPV, UTC, etc. Adequate uncertainty distributions are modelled for inflation rate, discount rate, insurance, taxes, hurdle rates, exchange rates, bbl costs, etc.

Benchmarking

Project benchmarking is efficient when establishing pre-sanction CAPEX estimates. It helps the client to develop confidence in the estimate and aims to establish visibility for the high risk cost elements of a project. Examples of elements that would be investigated when benchmarking are:

  • Jacket materials cost per tonne
  • Topsides equipment cost per tonne
  • Topsides bulk material costs
  • Jacket / piles fabrication cost per tonne
  • Topsides fabrication cost per tonne
  • Platform drilling facilities cost
  • Platform accommodation module cost per bed and tonne
  • Platform installation costs

Please contact us to discuss how we may be able to help you with economic analysis or benchmarking studies.


 
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