Capital Debottlenecking Opportunity Debated for Four Years, Brought to Resolution in Six Weeks

A senior oil & gas operator was seeking to debottleneck an offshore gas development through a brownfield capital project. Over the course of 4 years, the local team had twice developed, and then rejected, proposed design concepts because they were only marginally economic. Having entered a period of increased cost scrutiny, the concept development team needed to either come up with a third (and miraculously stronger) design concept in a hurry or abandon their expansion plans.

Failing to find an attractive debottlenecking concept would bode poorly for the local team in terms of delivering on commitments to the national government and positioning themselves to win future capital allocations. While the prior efforts to develop a desirable concept had been diligent and well resourced, they seemed to lack the penetrating focus required to explore all “corners” of the opportunity in a swift and decisive manner.

In short, they were stuck and desperately needed a breakthrough. Stroud was engaged to help them achieve one.

Instead of brainstorming debottlenecking ideas or trying to copy solutions created for other applications, the team focused first on defining success (“max. IRR for a capital spend no greater than $’X’”) and then determined the value drivers of this success definition (the increase in production rate achieved, the increase in oil recovery achieved, etc.)

Each of these value drivers was controlled by physical properties of the operation (fluid pressure, fluid viscosity, etc.), each of which could be influenced by investing capital. These potential investments were then arranged by themes (water injections, energy addition, etc.) and all feasible combinations of them were developed into potential project concepts.

Drastically Accelerating Conceptual Design Decisions Tree.png

The team used this structured approach to:

  • Identify 60+ distinct design concepts for the debottlenecking expansion

  • Align on a new best case concept with an IRR 71% greater than the previous best case

  • Agree to advance this concept to the next phase of development within six weeks of kicking off the effort

Drastically Accelerating Conceptual Design Decisions Graph.png

Following this exercise, the project rapidly advanced through the design phases to a final investment decision and is now in execution. It has served as a pocket of excellence, inspiring other project teams to challenge what new possibilities remain to be discovered in their respective projects.

 

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