vii
TABLE OF CONTENTS
CHAPTER TITLE
PAGE
DECLARATION
ii
DEDICATION
iii
ACKNOWLEDGEMENTS
iv
ABSTRACT
v
ABSTRAK
vi
TABLE OF CONTENTS
vii
LIST OF TABLES
xii
LIST OF FIGURES
xiii
LIST OF ABBREVIATIONS
xiv
LIST OF SYMBOLS
xvii
1 INTRODUCTION
1.1
Background
1
2
1.1.1
Floating, Production, Storage and Offloading
2
1.1.2
Life Cycle Cost Analysis
7
1.2
Problem Statement
8
1.3
Research Objectives
8
1.4
Research Questions
9
1.5
Research Scope
9
1.6
Significance of Findings
10
2 LITERATURE REVIEW
2.1
Introduction
11
11
viii
2.2
Floating Production Storage Offloading
11
2.3
FPSO Cost Elements
14
2.4
Life Cycle Cost Analysis
16
2.5
Lifecycle Cost Analysis Models
20
2.6
Core Stages of Lifecycle Cost Analysis
27
2.7
Definitions
29
2.8
Main Purpose of Lifecycle Cost Analysis
31
2.9
Scope of Lifecycle Cost Analysis
32
2.10 Period of Analysis
35
2.11 Methods of Economic Evaluation
37
2.11.1
Net Present Value (NPV)
41
2.11.2
Net Present Cost (NPC)
42
2.11.3
Payback Period (PB)
42
2.11.4
Net Savings (NS) or Net Benefit (NB)
42
2.11.5
Savings on Investment Ratio (SIR)
43
2.11.6
Internal Rate of Return (IRR)
43
2.11.7
Adjusted Internal Rate of Return (AIRR)
43
2.11.8
Annual Equivalent Value (AEV)
43
2.11.9
Cost per Standard Barrel of Oil
44
2.11.10 Taxation Issues
2.12
2.13
45
Asset Requirements
45
2.12.1
Purpose
45
2.12.2
Functionality
45
2.12.3
Key Physical Characteristics
46
2.12.4
Project Scope
47
2.12.5
Project Constraints
48
2.12.6
Project Budget
49
2.12.7
Project Schedule and Execution
49
2.12.8
Intangible Considerations
50
Cost and Time Data Assembly
50
2.13.1
Purpose
50
2.13.2
Relevant Cost
51
2.13.3
Cost Classification
53
ix
2.14
2.15
2.16
2.13.4
Time Profile
54
2.13.5
Data Source
54
Economic Evaluation
55
2.14.1
Purpose
55
2.14.2
Software Tool
55
2.14.3
Lifecycle Cost Modeling Process
56
Sensitivity Analysis
57
2.15.1
Purpose
57
2.15.2
Sensitivity Analysis Framework
57
Results Interpretation and Analysis
58
2.16.1
Purpose
58
2.16.2
Format and Extent of Analysis
58
2.16.3
Analysis and Interpretation of Results
60
2.16.4
Judgment
60
3 METHODOLOGY
62
3.1
Introduction
62
3.2
Data Collection
64
3.3
3.2.1
Literature Sources
64
3.2.2
Expert Interviews
65
Conceptual Lifecycle Costing Model
66
3.3.1
Capital Expenditure Cost
66
3.3.1.1
Vessel Acquisition
67
3.3.1.2
Existing Vessel versus Newbuild
67
3.3.1.3
Steel Renewal
67
3.3.1.4 Vessel Refurbishment and Conversion
70
3.3.1.5
Mooring Equipment
79
3.3.1.6
Topsides Equipment
81
3.3.1.7
Project Execution
83
3.3.1.8
Insurance
84
3.3.1.9
Classification
84
3.3.1.10 Finance and Legal
85
3.3.1.11 Installation
85
x
3.3.2
Operating Expenditure
86
3.3.3
Salvage
89
3.3.4
Discount Rate
91
3.3.5
Sensitivity Analysis
91
4 RESULTS
92
4.1
Introduction
92
4.2
Methodology
92
4.3
Main Purpose
93
4.4
Scope
93
4.5
Period of Analysis
93
4.6
Method of Economic Evaluation
94
4.7
Project Requirements
94
4.7.1
Field Parameters
94
4.7.2
FPSO Parameters
95
4.7.3
LCCA Parameters
95
4.8
Cost Estimation
95
4.8.1
Capital Expenditure
95
4.8.1.1
Vessel Acquisition
96
4.8.1.2
Steel Renewal
96
4.8.1.3
Vessel Refurbishment and
97
Conversion
4.8.1.4
Topsides
98
4.8.1.5
Mooring System
98
4.8.1.6
Total Asset Cost
99
4.8.1.7
Project Execution
99
4.8.1.8
Insurance
99
4.8.1.9
Classification
100
4.8.1.10
Finance and Legal
100
4.8.1.11
Installation
100
4.8.1.12
Total Capital Expenditure
101
4.8.2
Operating Expenditure
101
4.8.3
Salvage Cost
104
xi
4.9
4.8.3.1
Residual Cost
104
4.8.3.2
Decommissioning Cost
104
4.8.3.3
Total Salvage Cost
105
Economic Evaluation
105
4.9.1
Net Present Value
105
4.9.2
Cost per Standard Barrel of Oil
106
4.10 Revenue
109
4.11 Sensitivity Analysis
110
5 DISCUSSION
115
5.1
Introduction
115
5.2
Discussion of Research Findings
115
5.3
Future Work
119
6 CONCLUSION
REFERENCES
120
124
xii
LIST OF TABLES
TABLE NO.
TITLE
PAGE
2.1
VLCC Tanker Average Sale Price (source: Biasotto et al, 16
2005)
2.2
LCCA Core Stages
28
2.3
LCCA Definitions
29
2.4
Definitions of Life Terminology
36
2.5
Effect of Discount Rate
38
2.6
Key Factors of Discount Rate Selection
40
2.7
Generic Cost Classification
51
3.1
Comparison of Topsides
Characteristics (SBM)
4.1
Operational Expenditure
103
4.2
LCCA Economic Evaluation
108
Equipment
Weight
and 82
xiii
LIST OF FIGURES
FIGURE NO.
TITLE
PAGE
3.1
Flowchart of Research Methodology
63
3.2
Decommissioning Cost Breakdown
90
4.1
Typical Operating Expenditure Breakdown
102
4.2
NPV vs. Discount Rate
110
4.3
NPV vs. Analysis Period
111
4.4
NPV vs. Conversion Cost
112
4.5
NPV vs. Topsides Cost
112
4.6
NPV vs. Operating Cost
113
4.7
Spider Diagram - Comparison of NPV and Input 114
Variables
xiv
LIST OF ABBREVIATIONS
AC
-
Air Conditioning
AEV
-
Annual Equivalent Value
AHU
-
Air Handling Unit
AIRR
-
Adjusted Internal Rate of Return
BOA
-
Bill of Activities
BOM
-
Bill of Material
CALM
-
Catenary Anchor Leg Mooring
CAPEX
-
Capital Expenditure
CBS
-
Cost Breakdown System
CCR
-
Central Control Room
CCTV
-
Closed Circuit Television
CER
-
Cost Estimation Relationship
COPT
-
Cargo Oil Pump Turbine
COW
-
Crude Oil Washing
DOE
-
Department of Energy
DP
-
Dynamic Positioning
E&I
-
Electrical & Instrument
ECR
-
Engine Control Room
EU
-
European Union
FEMP
-
Federal Energy Management Program
FPSO
-
Floating Production Storage Offloading
FSO
-
Floating Storage Offloading
GMDSS
-
Global Maritime Distress and Safety System
HFO
-
Heavy Fuel Oil
HOSCO
-
Hebei Ocean Shipping Company
HSE
-
Health, Safety & Environment
xv
HVAC
-
Heating, Ventilation & Air Conditioning
ICPP
-
Impressed Current Cathodic Protection
IG
-
Inert Gas
IMO
-
International Maritime Organization
INMARSAT
-
International Maritime Satellite Organization
IRR
-
Internal Rate of Return
ISO
-
International Standards Organization
ISPS
-
International Ship and Port Facility Security
LCCA
-
Life Cycle Cost Analysis
LAN
-
Local Area Network
MGO
-
Marine Gas Oil
NB
-
Net Benefit
NIST
-
National Institute of Standards and Technology
NPC
-
Net Present Cost
NS
-
Net Saving
OOL
-
Oil Offloading Line
OP
-
Operation Profile
OPEX
-
Operating Expenditure
P&I
-
Protection & Indemnity
P/V
-
Pressure / vacuum
PABX
-
Private Automatic Branch Exchange
PAGA
-
Public Address/General Alarm
PB
-
Payback
POB
-
Personnel on Board
PV
-
Present Value
ROI
-
Return on Investment
SBM
-
Single Buoy Mooring
SCCS
-
Standard Cost Coding System
SIR
-
Saving to Investment Ratio
SURF
-
Subsea, Umbilical Riser and Flowline
TEG
-
Triethylene Glycol
TLP
-
Tension Leg Platform
UPS
-
Uninterruptible Power Supply
xvi
UWILD
-
Underwater Inspection in Lieu of Dry-docking
VELPA
-
Vertically Loaded Plate Anchor
VLCC
-
Very Large Crude Carrier
VSAT
-
Very Small Aperture Terminal
WBS
-
Work Breakdown System
xvii
LIST OF SYMBOLS
CII-1
-
Acquisition or procurement cost
CII-2
-
Initial logistic cost
CII-3
-
Recurring cost
CIII-1
-
Research and development cost
CIII-2
-
Cost of associated systems
CIII-3
-
Investment cost
CIII-4
-
Termination cost
CIII-5
-
Operating and support cost
CVI-1
-
Research and development cost
CVI-2
-
Investment cost
CVI-3
-
Operating and support cost
CADF
-
Activity definition
CADV
-
Activity driver
Ccapex
-
Capital expenditure cost
CCDV
-
Cost driver
Ccls
-
Classification cost
Ccomm
-
Communication cost
Ccons
-
Consumables cost
Cconv
-
Conversion cost
Ccp
-
Conceptual phase cost
Cctrg
-
Catering cost
Cdcm
-
Decommissioning cost
Cdemo
-
Demolition cost
Cdp
-
Definition phase cost
Cfc
-
Fuel cost
Cfl
-
Finance & legal cost
xviii
CIA
-
Initial acquisition cost
Cins
-
Insurance cost
CIS
-
Initial spares cost
Cistl
-
Installation cost
Cl/o
-
Lube oil cost
Clbr
-
Labor cost
Clfext
-
Life extension cost
Clog
-
Logistic cost
CM
-
Maintenance cost
Cmaint
-
Maintenance and repair cost
Cme
-
Mooring equipment cost
Cmh
-
Maintenance healthcare cost
Cmo
-
Major overhaul cost
Cmr
-
Major repair cost
Cnb
-
Newbuild vessel cost
Cnm
-
Normal maintenance cost
Cnr
-
Normal repair cost
Copex
-
Operating expenditure cost
Cops
-
Operating cost
Cops
-
Operational phase cost
Cos
-
Operation and support cost
COV
-
Overhaul cost
Cpc
-
Production and construction cost
Cpe
-
Project execution cost
Cpp
-
Procurement phase cost
Crc
-
Vessel refurbishment & conversion cost
CRD
-
Resource driver
Crd
-
Research and development cost
Cre
-
Rental equipment cost
CriskEX_A
-
Accident risk expenditure
CriskEX_F
-
Failure risk expenditure
Crpr
-
Repair cost
Crsdl
-
Residual cost
xix
Crt
-
Retirement and disposal cost
Csb
-
Shore base cost
Cscrp
-
Scrap cost
Cslv
-
Salvage cost
Cspr
-
Spares cost
Csr
-
Vessel steel renewal cost
Cte
-
Topsides equipment cost
Ctl
-
Tool cost
Ctrn
-
Transport cost
Ctrv
-
Travel cost
Cva
-
Vessel acquisition cost
E
-
Energy cost
I
-
Investment cost
LCC
-
Lifecycle cost
NRC
-
Operating expenditure cost
OM&R
-
Non-fuel operating, maintenance & repair cost
RC
-
Capital expenditure cost
REPL
-
Capital replacement cost
RES
-
Residual value less disposal cost
RI
-
Revenue impact
Wa
-
Water cost