The cost of producing a barrel of oil depends on a variety of factors related to the inherent costs (direct and indirect) associated with extracting oil from the subsoil and bringing it to surface (lifting costs), as well as the significant costs spent to explore and develop oil fields (finding costs). Yet there are also other variables that enter the already complex equation and provide the final oil price.
Like any other industry, in the oil and gas business accidents always cost money and can adversely affect the production cost.
Whenever people are injured, assets damaged, the environment polluted and business interrupted, money is unavoidably lost and company image and reputation is compromised. It is not easy to estimate nature and extent of such losses and translate this estimate in a defined algorithm.
This paper presents a methodology to estimate the so called "Cost of the risk" of a Barrel of oil that takes into account the following elements:
Process Safety Risk Costs: to manage the impact on people due to process Major accidents
Occupational Risk Costs: to manage occupational safety hazardous events
Environmental Risk Costs: to address the impact on the environment due to a Blow out event or pipeline ruptures with consequent contamination of water and soil
Asset Risk Costs: to manage the financial impact on the Asset due to process Major accidents
All these costs are qualitatively correlated to the reputational impact.
The methodology and the rationale behind the proposed approach are described through a practical example.
