A methodology for a parametric approach to estimating facilities costs worldwide for new ventures is presented. Screening estimates then can be made with minimal data and in a timely manner.
Development of a parametric approach consists of four phases: (1) The identification of sources of data and the gathering of that data; (2) Sorting of data; (3) The mathematical analysis of that data to quantify relationships that are intuitive; and (4) Reporting and updating of results periodically.
Observations include a review of how "estimates of estimates" produce an effective means of determining the future cost of new venture facilities. Parameters considered in providing estimates include, but are not limited to, recoverable reserves, peak production rates, location (onshore or offshore), terrain, water depth, distance to infrastructure, etc. Expert systems/actual costs also generate databases for this methodology.
At the same time, awareness of when certain parameters are not significant in determining capital costs is discussed. Elaboration on how precision does not equal accuracy is presented; many parameters are needlessly considered in new venture economic assessments.
The major results of this effort are the ability to estimate facilities costs, thus addressing multiple scenarios for future oil and gas development and the capacity to efficiently screen estimates related to new venture opportunities.