The precipitous fall of oil prices in the fall of 2014 left most deepwater oil and gas developments at a huge disadvantage. Long lead time to First Oil, constricted supply chain and inflated development objectives put a squeeze on them such that the Final Investment Decisions on deepwater developments came to a screeching halt. Since then deepwater projects have become increasingly cost competitive. While there are multiple deepwater basins under evaluation and development across the globe, the recent discoveries of US shale oil having shorter cycle time, the penetration of electric vehicles in the automobiles market and the emergence of greener alternatives have significantly added competition. Even though crude oil prices have recovered significantly from the low levels observed in 2016, the deepwater industry is on the continuous lookout for strategies to remain cost competitive in the anticipated "lower-for- longer" price environment.
Based on the Industry trends in exploring new unproven horizons in mature basins, multiple development scenarios are developed with a goal to compare CAPEX, OPEX, NPV, schedule effectiveness and cost efficiency. Options are divided in two broad categories of Full Field Development and Phased Field Development. Appropriate economic models are developed for each categories and various components are studied for sensitivity.
Annual cash flows along with revenue and profit margins are estimated and compared for the two options in deepwater US Gulf of Mexico. Risk tornado graphs showing the sensitivity of Net Present Value and payback period to important project parameters e.g. CAPEX, Oil Price and Project Schedule are presented. Conclusions are based on comparing the cash flows of the options through efficient capital planning and schedule management.
In this work, the most promising concepts are identified for their cost-competitiveness in a global and diverse asset portfolio. Key financial parameters are studied with a view to providing a roadmap that can assist in efficient planning of future deepwater field developments. Conventional industry wisdoms for project scoping, financial goals, scheduling, execution philosophy, etc. are challenged to develop a robust screening approach for competitive deepwater investments.
