Creating opportunities for lower costs and increased profits

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As the industry seeks to increase the economic life of assets, many will remain in operation longer than anticipated. Some oil and gas assets have been in service for more than four decades.

Extending the lifetime of an asset means it can continue fulfilling its intended function without compromising its design, technical or operational integrity. Small investments may lead to high returns, but the opportunity for increased profits usually involves technical and financial challenges.

There are three main categories of ageing: material degradation, obsolescence and organisational issues. As well as platform structures, pipework, and pressure vessels, ageing can involve control and instrumentation, software, staff demographics, skills, training and competencies.

The process of extending the lifetime of an ageing asset will vary according to the type of asset, company specific requirements and regulatory regimes.

As the asset matures the basis for investment decisions may change. There may be new incentives for continuing operation beyond the intended service life and fresh opportunities to maximize the use of the asset.

The incentives may be driven by technology or by market conditions. 

They can include:

• Significant remaining reserves through increased understanding of reservoir, increased recovery rate or lower production rate than anticipated 
• Reduced unit OPEX due to tie-ins with own reserves or nearby licenses 
• Cost of new-builds versus investing in current assets 
• Deferred decommissioning costs.

DNV has developed a five-step approach for all assets in the oil and gas value chain:

• Current condition assessment
• Life extension evaluation and GAP analysis
• Technical qualification for life extension
• Obsolescence preparedness
• Life extension costs and plans.

What we do:

• Assess history and current status
• Detect symptoms of ageing
• Examine options: e.g. continued service, re-rating, repair, scrapping
• Use risk-based approach to identify critical systems and equipment
• Life extension evaluation and GAP analysis
• Determine modifications required
• Perform technical qualification to operate structures and equipment beyond original design life
• Obsolescence preparedness
• Long term cost prediction.