Abandonment Roadmap from Operator's Perspective

摘要

Abandonment is becoming a major focus as an operator and also by regulators with a single prominentobjective - to reduce its overall operation expenditure. From an operator's perspective, striking balancebetween abandonment expenditures asset integrity, regulator's requirement and funding for growth projectsis key to ensure safe & reliable operations, sustained growth and profatibility. Sarawak Oil (SK Oil) is a brownfield operator with a huge number of legacy asset; some reaching morethan 40 years of age. These assets are constantly being monitored closely for any integrity issue that mightemerge due to assets operating beyond their original design life. There is also major development projectcurrently on going which requires huge investments each year. These projects are vital to sustain the positivecash flow for SK Oil operations. Thus, there is a need to diligently balance between the expenditure forgrowth projects, routine operations and abandonment activities. In view of the business & operational requirements, a comprehensive abandonment execution outlook,stretching out until the end of field life was developed. The main consideration is the total free cashflow taking into account investments for development projects. The basic formula isOperating Cash Flowminus Capital expenditure where the balance will be used to fund abandonment activities. Another keyconsideration is the stakeholder management, agreement and consensus have to be met with these partnersas well. Thus, the phasing strategy is crucial in determining the prioritization of the candidates which aredue for abandonment to ensure minimal cash outflow for a non-cash generating activity. SK Oil has developed an abandonment roadmap which narrows down to the next five (5) yearsabandonment outlook. This roadmap has been presented to the regulator and has been agreed upon. Thus,this five (5) years abandonment outlook will be a guiding principle to plan for the actual abandonmentexecution. This paper is intended to highlight the approach in developing an abandonment database and key criteriathat has been considered to phase out the abandonment activities. This paper is beneficial to operators thatmanage a huge high number of assets with mostly aging facilities, which need to be abandoned in order toreduce the operating expenditure in the long run.