SPE-196438-MS

Optimizing Operating Cost Through Production Management and

Techno-Economic Approach in Mature Field and Gross-Split Scheme

Wisnu Agus Nugroho, Pertamina Hulu Energi ONWJ; Harris Grenaldi Panaiputra and Dian Nurlita Kusuma,
Pertamina Hulu Energi; Alvin Wirawan, Pertamina Hulu Energi ONWJ; Iman Budi Hartawan and Ratna Hapsari,
Pertamina Hulu Energi

Copyright 2019, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE/IATMI Asia Pacific Oil & Gas Conference and Exhibition held in Bali, Indonesia, 29-31 October 2019.

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Abstract
Currently Indonesia apply new gross split production sharing contracts for the oil & gas industry. Regulation
of the Minister of Energy and Mineral Resources Number 8 of 2017 on Gross Split Production Sharing
Contracts sets out a new economic structure for production sharing contracts (PSC) based on dividing gross
production between the state and PSC Contractors, without a mechanism for the PSC Contractor to recover
operating costs. For mature field, high operating cost regarding low production, high maintenance, and
integrity issues are challenging for this new regulation. To optimize operating cost with robust and prudent
planning is one of the key of success in this era. Pertamina Hulu Energi Offshore North West Java (PHE
ONWJ) has started gross split scheme since January 2017 which start a new era of production sharing
contracts.
With the start of gross split scheme, prioritization of production is the main objective, to gain maximum
productivity in terms of operating and lifting cost. The methodology to optimize operating cost is by
prioritizing productive remote well platform, Normally Unmanned Installation (NUI), by ranking of
potential development and its production volume. The non-potential and non-productive NUI then be
assessed to be shut off or run to fail. The assessment conducted using technical and economic approach to
obtain optimized result. For non-potential and productive NUI, assessment to gain more production with
minimum cost is conducted. Then, development could be focused on potential and productive NUI.
Foxtrot, one of flow station in PHE ONWJ working area, has eight active NUIs that are FA, FK, FG,
FFB, FNB, FWB, HZEA, and HZEB. By conducting ranking of potential development and its production
volume, company could focus on five Foxtrot NUIs for development (FK, FG, FFB, FWB & HZEA), two
NUIs for optimization (FNB & FA), and one NUI that potential to be shut-off, HZEB. This action on the
non-potential and non-productive NUI shut off could yet decrease operating cost by IDR 8.8 Billion/ year,
eliminate potential personal hazard, and reduce system's backpressure due to its low API crude oil. Oil
and Gas Company that operates old facilities in mature field could apply this approach to maintain their
production by focusing on beneficial asset yet decrease operating cost.
Keywords: Normally Unmanned Installation (NUI), Optimization, Techno-economic, operating cost
2 SPE-196438-MS

Introduction
Pertamina Hulu Energi Offshore North West Java (PHE ONWJ) is subsidiary of Pertamina Hulu Energi
that operates in the Java Sea covers an area of approximately 8,300 square kilometres – stretching from the
North of Cirebon to Kepulauan Seribu. In 2017 it produce about 28 MBOPD crude oil and 100 MMSCFD
gas. PHE ONWJ produces oil and gas produced from 9 areas (Zulu, PAPA, MM. Lima, KLA, Uniform,
Bravo, Echo & Foxtrot) that is shown in Figure 1.

Figure 1—PHE ONWJ Area

PHE ONWJ operates old facilities in mature fields, as it's operated since 1971. Currently, PHE ONWJ
has more than 60 Normally Unmanned Installation (NUI) or remote platforms, as producer oil and gas. For
operating mature field and facility, PHE ONWJ has some challenges such as low production rate and facility
integrity issue. They contribute to high operating cost to maintain that asset.
Government sets new Regulation of the Minister of Energy and Mineral Resources Number 8 of 2017
on Gross Split Production Sharing Contracts to PHE ONWJ. The new regulation encourage oil and gas
company to more govern capital and operating cost compare to Cost Recovery Production Sharing Contract.
Thus, it has certain challenge for contractor, especially contractor that operates mature field like PHE ONWJ
thatface some issues like high operating cost regarding low production, high maintenance, and facility
integrity.
Foxtrot area has the highest operating cost among the other area in PHE ONWJ. Thus it become first
priority to be assess in this study. The objective of this research is to optimize operating cost through
production management and techno-economic approach. Other than that, the result is also intended to
provide NUI class regarding future development and operating cost.

Method
Subsurface team provides future development related to certain NUI. The data consist of infill well and
work over program over well at Foxtrot Area. These data is used to define active NUI class. Oil and gas
flow rate each well is obtain from regular well test. Future development and flow rate are analyzed using
flow chart shown on figure 2 below.
SPE-196438-MS 3

Figure 2—Flowchart NUI Classification

This current production gain is compared for each NUI in Foxtrot area including future development
plan for each wells from Sub Surface team.
In this method, assessment of current production gain, which is include operating cost for chemical,
pigging activity, impact slug flow to another production NUI, also operational boat for regular visit NUI
is captured. Classification for non-productive NUI is limited to production < 150 BOPD classified as non-
economical NUI, which need to be re-evaluated related to necessity of operational cost. While, NUI with
> 150 BOPD also evaluated to get optimum production by assessing various debottlenecking issue (flow
assurance issue, back pressure evaluation, chemical optimization, etc.).
Engineering teams is involved and take critical scope in terms of:

• All current surface facilities condition (such as debottlenecking, intergrity issue)

• Flow assurance system for current production in Foxtrot NUI area, including its impact to stability
process in Junction platform.
• Cost of chemical injected since several Foxtrot NUI production has high wax charachteristic crude.

• Gas lift optimization, in terms of optimization of production in each Foxtrot NUI

• Interfacing with marine team and operation team for utilities support and others operational issue
(such as operational boat, historical data for operation team regularly visit operational problems
for each NUI, etc.)
All assessment is managed by engineering teams to gather all data from Sub surface, Operation, Marine
team, chemical team, and mix it for analysis purposes and come up with recommendation output to PHE
4 SPE-196438-MS

ONWJ management, which Foxtrot NUI should be shut off, run to fail, and first rank to be maintained to
give the optimum operational productivity.

Result and Discussion

Foxtrot complex has 8 active production NUIs, FA, FFB, FG, FK, FNB, FWB, FWA HZEA, & HZEB
(which no separation system), 2 junction NUIs (which has separation system) FNPRO & FU and one (1)
stations (FPRO). In 2017 Foxtrot Complex produces 2500 BOPD and 0 MMSCFD gas sales due to used as
gas lift. Refer to figure 3 below; all production is heading to Foxtrot Junction Platfrom (FPRO). NUI HZEA,
HZEB, FNB, FWB and FWA delivering 3 phase fluid to FNPRO junction (which also NUI), before two
phase separation is performed before sent Gas and Liquid in dedicated pipeline (12" Main Gas Line and 16"
Main Oil line) to FPRO Platform. Gas Compressor and Pumping system are installed in FPRO platform.
Liquid is sent to ECHO platform before entering Central Plant and Arco Ardjuna as crude Floating Storage
(FSO) while gas is compressed and distributed it gas as gas lift injection to all Foxtrot platforms. FK, FA,
FG, is another cluster in Foxtrot area which has gas production and deliver it directly to FPRO platform,
while FFB is stand alone platform in south of FPRO platform which sent its liquid to FPRO liquid system,
commingling with liquid from FNPRO.

Figure 3—Foxtrot Complex

Refer to Sub Surface Team plan of Development; future development plan for Foxtrot Active NUI is
presented in the Table 1 below.
Table 1 shows that 6 (six) NUIs (FA, FFB, FG, FK, HZEA, HZEB & FWB) classified as NUI class A due
to they have future plan development (infill and workover programs). The 2 (two) other NUIs which has no
future infill and workover potential (HZEB and FNB Platform) then be assessed using Figure 2 flowchart,
since it is classified with confirmation to Sub surface team that there will no further development for these
platform area. Technical assessment is conducted using parameters that relate to Operating Cost, which are:
– Chemical Injection cost
– Pigging activity
– Inspection, Maintenance, and Repair Program
– Gas lift consumption
SPE-196438-MS 5

Table 1—Foxtrot NUI Potential Development

Table 2 below shows that FNB platform production is still beneficial to be operated in current condition,
while operating HZEB is loss IDR 8.8 Billion/ year. However, FNB platform should be re-assessed once
production in this platform is decrease while all parameters (chemical cost, pigging maintenance cost,
inspection/repair cost), still remain same.

Table 2—Comparison Economical Assessment HZEB & FN B

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HZEB is one of the farthest NUI at Foxtrot North Area. It has crude characteristic of heavy oil (API 17°
& wax content 11%). With its produce high waxy oil, chemical injections with different types are needed.
Parrafin inhibitors and Pour Point Depressant (PPD) are injected to avoid any accmumulation wax (or even
pipeline plugging) which resulting to high backpressure to upstream wells in HZEB and lead to shut off
platform. Refer to table 2 above, it is seen that operating HZEB will give negative cost per year since
operational cost is higher than profit gain due to production. This condition gives strong justification that
production HZEB needs to be re-evaluated before final decision is taken to shut down platform.
By shut in HZEB, PHE ONWJ has some benefits that are:

• Decrease Operating Cost

• Decrease Chemical Injection (Water Corr. Inhibitor, Paraffin Inhibitor, Biocide, PPD)

• Decrease IMR cost (Inspection, Maintenance, Repair, Pigging)

• Decrease Vessel Fuel Consumption

• Decrease Personal Risk related to personel safety issue

• "Potential" additional benefit:

◦ Divert G/L consumption to another NUI (reduce system slugging effect)

◦ Decrease system backpressure (low degree API)

◦ No-TAX and asset rental cost (Platform & 2 pipelines)

Analysis and recommendation are delivered to management to give guideline for final decision.
Optimising operational cost for Foxtrot area is the main objective resulting in decreasing Operational
Expenditure (OPEX) cost in overall PHE ONWJ area. Technical analysis is accepted; however, several
inputs related to non technical issue such as personel optimization in Foxtrot area are also applied and
result in re-arrangement operation personel necessity in all PHE ONWJ stations, since several projects and
program also conducted in some area. Optimising personel in Foxtrot area will also give reduce cost for
Foxtrot station operational cost.

Conclusion
The summaries of research and analysis are:

• HZEB Platform is recommended to be shutdown to optimize overall Foxtrot area operating cost,
with analysis of current production gain/flow rate, further production development, chemical cost,
maintenance cost (pigging activity, integrity issue), operational de-bottlenecking issue due to waxy
liquid, optimizing gas lift consumption (which can be maximize to other NUI which require gas
lift injection), also operation cost (such as boat fuel and cost) and safety operational aspect. HZEB
platform is the farthest NUI in Foxtrot area.
• By shutdown HZEB, PHE ONWJ will save operating cost HZEB is loss IDR 8.8 Billion/ year,
refer to table 2 above. Furthermore, potential personel safety issue also decrease since Foxtrot
operation team can be more focus on remaining active production platform after shutting down
HZEB.
• Optimisation of other Foxtrot NUI need to be continuously conducted. Especially FNB platform
which classified as non-productive NUI and has no further development. Other productive
production platform should also be re-assessed to optimize current operational bottleneck issue.
• Chemical assessment for other NUI (especially which has unique crude characteristic liquid such
as high wax, high pour point, heavy oil,etc.) should be conducted to get optimum dosage injection
SPE-196438-MS 7

refers to operational necessity, based on current and future production flow rate. Cost of chemical
can be optimized by annually conducting re-evaluation and operational assessment.
• Gas lift optimization assessment should be conducted regularly refer to wells performance, to give
more efficient gas lift usage. With optimization, require gas lift consumption can be reduced and
Foxtrot will be able to send sales gas.
• IMR (Inspection, Maintenance, Repair) and pigging maintenance program should be re-assessed
and updated based on prioritization related to production gain, to get optimized and efficient
program, which will related to cost and safety issue.
• Hydraulic network and flow assurance evaluation should be continuously assessed as part of
optimizing well performance related to backpressure and de-bottlenecking issue. Optimizing
hydraulic network system can reduce backpressure to pipeline system and lead to wells
optimization to get more production flow rate.
• Further assessment need to be conducted to other area at PHE ONWJ to optimize production NUI
with objective to decrease operational cost and lifting cost.

Figure 4—HZEB Platfrom Location

Acknowledgement
We would like to thank the Management team for their comments and suggestions regarding assessment of
the study through Breakthrough Program. We would also like to thanks Foxtrot Operation Team for their
support to discuss and encouragement during research and field implementation.

Reference
Foxtrot Well Test from AVOCET, Jun-Nov 2018
Foxtrot monthly Chemical Injection Cost (email)
IMR Cost PHE ONWJ 2018-2020
Foxtrot Future Potential Development (email)