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    Module 2 Introduction to Oil and Gas Engineering

    Topic 4 Operational Aspects

    Module 2 Introductionto Oil and Gas

    Engineering

    Topic 4 Operational

    Aspects

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    Introduction to Subsea Engineering

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    Module 2 Introduction to Oil and Gas Engineering

    Topic 4 Operational Aspects

    Topic 4: Operational Aspects

    Operations and Maintenance

    Organisational Structure

    The organisational structure describes the hierarchy of managementand reporting relationships in a company. The details and structuremay vary from one oil company to another depending on the nature

    of their operations. Usually however, line managers haveresponsibilities for specific aspects of the job, e.g. production,safety, etc. Duties are assigned along these areas from top

    management down. All offshore production and drilling facilities aredirectly under the control of an Offshore Installation Manager(OIM). He/she is the ultimate authority for all activities that take

    place on the installation.

    Operator Contractor InteractionsOil operating companies are involved in the business of finding,

    producing and marketing oil or gas. Sometimes they also integratedownstream activities into their business chain. This means their

    operations also involve the refining, distribution, and marketing ofoil products.

    Successfully undertaking these broad responsibilities under one unit

    is a tremendous challenge. Specialty is required in different areasof the business for optimum performance and returns. Where such

    specialty is needed in the oil industry, service companies are

    engaged on a contract basis on clearly defined terms to undertakeparticular, defined jobs. Such companies provide services across

    the entire supply chain from the highly technical areas in oilexploration and production to utilities like catering.

    Joint VenturesOil exploration and production is a high risk business. Operatingcompanies usually invest in a way that spreads the investment risk

    across two or more of them. In joint venture agreements this isdone by allocating equities among the investors. The cost of

    running the business as well as profits made are shared in the ratio

    of the equities held by each investor or operator. Usually, one ofthe operating companies is elected as the operator in theagreement. The operator is responsible for the day to day running

    of the business in line with the provisions of the agreement.

    Operating ProceduresOperating procedures are documents which detail the guidelines to

    be applied when operating a facility. They are usually a sequenceof steps and decisions that have to be taken to ensure that

    optimum system performance is guaranteed.

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    Module 2 Introduction to Oil and Gas Engineering

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    Safety

    Safety is of fundamental importance in the oil industry at everyphase of a job. At the design stage, every project is safetyreviewed. This will generally involve a Hazard and Operability

    Study (HAZOP). Hazards will be identified and corrective measures

    taken. At the construction stage, rigorous procedures will be put inplace and hazards identified using tool box talks and techniques

    such as Hazard Identification (HAZID). During the offshoreinstallation phase, every activity, from loading pipes and equipmentonto a vessel to its installation on the seabed will be subject to task

    based risk assessment, using techniques such as Hazard ImpactRisk Assessment (HIRA).

    The oil industry takes safety very seriously. However, ultimately itis everyones responsibility to ensure that all activities are executedsafely.

    Permit to Work SchemesAll offshore facilities have extensive permit to work schemes inplace to ensure that all tasks are controlled and are properly safety

    assessed before taking place.

    MonitoringMonitoring is required to compare system performance againstexpected design. Monitoring helps in assessing the reliability of

    operations, preventive maintenance measures and generaltroubleshooting.

    ShutdownIt is sometimes necessary to stop operations either for repair workor operational reasons. Shutdown activities refer to the procedures

    and steps that are taken to bring the system to a halt. Underurgent circumstances, emergency shutdown procedures are used inturning off the system. In normal situations a planned shutdown is

    used. Planned shutdowns normally take longer but are safer for thesystem.

    Downstream Refining

    IntroductionRaw crude as it is removed from the ground is not very useful in its

    unrefined form. To maximise the profit from the crude it must beseparated into its hydrocarbon components and converted into the

    more valuable fractions.

    Crude RefiningCrude oil needs to be refined to produce the desired high value

    products for the market place. Refining crude oil involves a numberof complex steps. The first stage for a refinery is distillation where

    the oil is heated and broken down into its component parts.Subsequent processes, often referred to as conversion processes,focus on transforming lower value products into higher value

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    products. For example this could involve the removal of impurities

    such as sulphur. Generally it is the differences between theconversion processes that distinguish between refineries. Thesedifferences in size and specification of the conversion processes will

    mean that refineries have specific types of crude they would want

    to process.

    As described above, the first operation at a refinery is fractionaldistillation. The process uses the fact that different hydrocarbonshave different boiling points. The major classes of hydrocarbons in

    crude oils include:

    Paraffins

    o general formula: CnH2n+2(n is a whole number, usuallyfrom 1 to 20)

    o

    straight- or branched-chain molecules

    o

    examples: methane, ethane, propane, butane,isobutane, pentane, hexane

    Aromatics

    o general formula: C6H5Y (Y is a longer, straightmolecule that connects to the benzene ring)

    o ringed structures with one or more ringso

    examples: benzene, napthalene

    Napthenes or Cycloalkanes

    o general formula: CnH2n(n is a whole number usually

    from 1 to 20)o ringed structures with one or more ringso

    rings contain only single bonds between the carbonatoms

    o examples: cyclohexane, methyl cyclopentane

    Other hydrocarbons

    Alkeneso

    general formula: CnH2n(n is a whole number, usually

    from 1 to 20)o linear or branched chain molecules containing one

    carbon-carbon double-bondo

    examples: ethylene, butene, isobutene

    Dienes and Alkynes

    o general formula: CnH2n-2(n is a whole number, usuallyfrom 1 to 20)

    o linear or branched chain molecules containing twocarbon-carbon double-bonds

    o examples: acetylene, butadienes

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    A diagram of distillation column showing approximate temperatures

    is shown below.

    Figure 2.4.1:- Distillation Column

    Once the crude has been broken down into its fractionalcomponents the less valuable fractions are passed on to a

    conversion process. Three conversion processes are used:

    Cracking - breaking large hydrocarbons into smaller pieceso

    Thermal Cracking: Heating up the large hydrocarbons

    until they fall aparto

    Catalytic Cracking: Uses a catalyst to speed up the

    cracking reaction Reformation- combining smaller pieces to make larger ones

    o Catalytic Reforming: Uses a catalyst to combine lowweight molecules to make more desirable fractions

    Alteration - rearranging various pieces to make desired

    hydrocarbons Alkylation - Rearranges straight chained molecules into a

    branched structure with a higher octane number

    Downstream Economics and Market Demands

    Oil is the world economys most important source of energy, andhence is critical to economic growth. The value of oil is driven by

    petroleum products and derivatives. Of the products, the transportsectors need for fuel contributes mainly to the price. The principal

    activities involved in moving crude from the reservoir to the

    consumer are production, refining, distribution and marketing.

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    All these activities occur in the global market place. The worlds

    demand for millions of barrels of oil is growing every day.

    Due to the market forces, global trading patterns are created as

    countries compete for the type of crude they want. As not every

    country is able to produce as much oil as they consume exporting isan important factor. Due to the export/import requirement, the

    price of oil fluctuates as a result of the geopolitical climate as wellas changing transport routes. The cost of crude oil has increased asworldwide demand has increased because of the current good

    growth in the global economies. Current growth is not just presentin developed countries, emerging countries such as China have

    growing demands for petroleum products. There has been anunforeseen spike in demand over the last few years. An associatedeffect of this is the decrease in the worlds spare capacity as new

    productions have to come on line to meet demand.

    The current oil market is more flexible and efficient than its

    predecessor. The spot and future markets are a relatively newconcept to the oil industry. From these markets the current and

    future supply and demand can be determined. Spot markets arethe current/near future transactions of a commodity. The spot

    market allows the supplier to adjust the cost of oil to meet nearterm supply and demand. Future markets are a bit different. Theyconsider the future price of buying oil products and derivatives.

    Refining Market

    As demand for more valuable components of crude increases therequirement for conversion of crude to these fractions alsoincreases. As the refineries have to produce these fractions theylook for the best ways to utilize their facilities. Hence, the demand

    for lighter, sweeter crudes is greater as they require less processingto yield the more valuable products.

    HSE: Policy and Practices

    Introduction

    The offshore oil and gas industry comes under the Hazardous

    Installations Directorate of the Health and Safety Executive (HSE).In the past major disasters, such as Piper Alpha in 1988, haveprompted in depth investigations into the health and safety of

    offshore operations. Even though specific legislation is in placethere is still a risk from fire, explosion, accidental release, etc. Now

    as the industry is changing to maximise the recoverable reserves,while using existing ageing architecture it has to keep its highstandards.

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    Using the lessons learned from the Piper Alpha disaster the

    industrial operators carried out the following:

    Improvements to the "Permit to work" management systems

    Relocation of some pipeline emergency shutdown valves

    Installation of subsea pipeline isolation systems Mitigation of smoke hazards

    Improvements to evacuation and escape systems Initiation of Formal Safety Assessments

    The Offshore Installations (Safety Case) Regulations, came intoforce in 1992 and have recently been updated to reflect the currentindustry situation. The 2005 regulations came into force on 6th

    April 2006.

    A safety case must give all the details about how the facility is

    going to be managed from a health and safety perspective. Thecase must be updated throughout the life cycle of the installation.

    Legislation Offshore

    There are four sets of legislation that apply offshore:

    The Offshore Installation (Safety Case) Regulations 1992(Updated 2005) - these require all offshore installationsoperating in UK waters to have a safety case that must be

    accepted by the HSE. The Offshore Installation and Pipeline Works (Management

    and Administration) Regulations 1995 - these set outrequirements for the safe management of offshoreinstallations and the use of permit-to-work schemes.

    The Offshore Installations (Prevention of Fire and Explosion,

    and Emergency Response) Regulations 1995 (PFEER) - thesedeal with the need for protection from fire and explosion, andhaving an effective emergency response plan.

    The Offshore Installations and Wells (Design andConstruction, etc) Regulations 1996 these deal withensuring the installations meet the set standards and ensure

    the safety aspect of the offshore workplace environment ismaintained.

    Enforcement

    The main method of enforcement is inspection from the HSE.During offshore visits HSE inspectors will be seeking to ensure that

    management systems are in place to address health and safetyissues. As well as inspecting the installations, the HSE runs manyprogrammes to keep the industrial operators involved.

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    Decommissioning and Abandonment

    IntroductionAfter many years of production from a field, oil (or hydrocarbon)

    production takes a natural course of decline as the resource gets

    depleted. A point is reached when the production from the field nolonger justifies the cost of running it. At this point in the field life

    operating companies begin the last phase of field development:Decommissioning and Abandonment. Depending on the regulatoryenvironment, location and the scope of the project,

    decommissioning and abandonment projects are highly capitalintensive activities. Provision is usually made by setting aside some

    part of the revenue during operation for the decommissioningphase.

    Decommissioning Requirements

    Three important requirements must be satisfied in a successfuldecommissioning programme. They are:

    The environment

    Safety

    Cost

    Oil field development plans involve the mobilisation of massivephysical infrastructure to an otherwise pristine location. This is

    especially true for offshore locations where platforms or vessels willhave to be set up. At the decommissioning phase, regulatory

    expectations are that all the structures will be decommissioned andremoved from the location such that the environment is restored toits original conditions as much as possible. A field decommissioningprogramme must be environmentally responsible, in terms of both

    short and long term impact on the environment. While safety is ofconcern to regulatory bodies on one hand, minimising or managing

    the cost of decommissioning is the responsibility of the company.The challenge of satisfying these two criteria thus becomes veryimportant when undertaking a decommissioning programme. It is

    most effective to plan for decommissioning right from the start, atthe conceptual development stage.

    Legislative Framework/ Decommissioning ProcedureThe legislative framework guiding decommissioning programmes

    varies from country to country. It must, however, spell out theguidelines which should be followed by the companies when

    undertaking a field development programme.

    The OSPAR Convention 98/3 on disposal of disused offshore

    installations is used in the UKCS. It details what companies areexpected to do with offshore facilities at the decommissioningstage.

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    Under the OSPAR Convention, the disposal at sea and the leaving

    wholly or partly in place of disused offshore installations isprohibited. There are, however, some exceptions. The table belowindicates the options which may be considered for various

    categories of offshore installations located on the UKCS:

    Installation(excludingtopsides)

    Weight(tonnes)

    CompleteRemovalto land

    PartialRemovalto land

    Leavewhollyinplace

    Re-use

    Disposalat Sea

    Fixed Steel 10,000 Yes Yes (1)(2) NoYes(3)

    No

    Concrete -gravity

    Any Yes Yes(2) Yes Yes Yes

    Floating Any Yes No No Yes No

    Subsea Any Yes No No Yes No

    Table 2.4.1: Options for Decommissioning

    1.

    The topsides of all installations must be returned to shore for

    re-use or recycling or final disposal on land. Under theOSPAR Convention topsides are defined as those parts of anentire offshore installation which are not part of the

    substructure and include modular support frames and deckswhere their removal would not endanger the structural

    stability of the substructure.

    2.

    All steel/concrete installations weighing less than 10,000tonnes must be completely removed for re-use or recycling

    or final disposal on land. Any piles should be severed belowthe natural seabed level at such a depth to ensure that any

    remains are unlikely to become uncovered.

    3. At the end of field life installations may be floated off locationand re-used elsewhere as a production or storage facility. In

    those cases where re-use does not prove possible it will benecessary to return the facility to shore for storage or

    dismantling in line with the hierarchy of waste disposal

    options.

    For pipelines, the Pipeline Safety Regulations 1996, provide

    requirements for their safe decommissioning. It specifies theconditions under which pipelines should be removed (in whole orpart) or left in place.

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    Introduction to Subsea Engineering