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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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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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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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