W6_Candra Nugraha_Sand Handling


Opportunity Statements

The increasing sand deposition in the production tanks will cause shortage in overall treating capacities. The project is to remove the sands accumulated in the bottom of Tanks of Oil Treating Plant (OTP), while still being able to manage the sands coming out from those tanks to meet the requirements for further management methods, e.g., disposal or others.

 The following improvement areas are aimed to be achieved:

  • Providing more settling time for crude oil dehydration process.
  • Reducing the sand deposited at the bottom of the Tanks.
  • Providing higher oil and water quality from tanks.

Root Cause

  • The production fluid from reservoir with high content of sand will be accumulated in the tanks.
  • Sludge in the tanks will make lower tank capacity.
  • At the end, Oil and Water Treating Plant will have bad performance.

 Develop Alternatives

The above mentioned deliverables will be achieved by performing the following key action items:

  • Develop selection criteria for the Tanks to be desludged.
  • Develop tank desludging priority to help define the schedule and work sequences during the project execution.
  • Evaluate and select the best acceptable tank desludging technology based on the acceptance criteria agreed.
  • Develop and implement the efficient contract strategy for tank desludging work.
  • Monitor the contract implementation benchmarked with the forecasted schedule and cost.

Since this tank cleaning project directly links to other initiatives such as tank inspection, sand pans modification, tank repair and others, close coordination among those different projects is essential to ensure the overall project success.

Development of the outcomes

Project Team developed an influence diagram to help understand and identify key important variables and how their relationship toward achieving the success in addressing the opportunity identified.  From this diagram, the final value measured is the NPV, which directly links to the Treating Cost (consisting of Oil Treating Plant/OTP and Water Treating Plant/WTP).  Project team also identified that tank cleaning technology and type of tank included in the scope are key decisions to be made, which both will drive the schedule and the cost for doing the tank cleaning. 

Minimum Acceptable requirements

Considering the values offered by this project and the importance of having production tanks cleaned to allow other projects/initiatives move forward, the opportunity identified in this project is very obvious.  While the dollars amount of saving that this project can contribute might be hard to quantify, however, this project may safe in the following areas:

  1. Ensure Safe & Incident Free Operations by allowing tank inspection program in place and make the repair work, if required, is possible.
  2. Help reduce the operating cost of crude oil dehydration process due to the improvement in tank performance as the results of sand pans modification work can be carried out.
  3. Have better flexibility in terms of GS’s treating volume so that surface facility constraints can be minimize, e.g., fluid dispatching issues.

Analyze and compare the alternatives

The economic analysis at this phase only focus on class  3 cost estimate and apply the following basic assumptions:

  • Focus on tank cleaning work and combination with sludge processing/treatment.
  • Focus only on OTP tanks only (FWKO Tanks, Wash Tanks and Shipping Tanks).
  • Estimate cost data from various tank cleaning and sludge processing companies.
  • Tank bottom sludge is relatively easier to treat rather than pit sludge (if sludge processing is considered in the scope of tank cleaning work).

 The following cost data were used for the estimate:

  • Owner estimate (as reference for the contract development):
    • ­Tank cleaning:                    $ 20/m3 of sludge.
    • ­Sludge processing:             $ 60/m3 of sludge.
  • Third party service providers:
    • ­Tank cleaning:                    $ 25 – 35/m3 of sludge (at maximum $ 35/m3 of sludge).
    • ­Sludge processing:             $ 50 – 90/m3 of sludge (at maximum $90/m3 of sludge).

Based on the above data, the class 3 cost estimate for this project:

Cost Estimate Class 3                                           Low End                        High End

Tank Cleaning Only:                                          $    835 M                      $  1,460 M

Tank Cleaning and Sludge Treatment:           $ 3,475 M                       $ 5,215 M

 Develop preferred alternative

Since the project is on early phase of development,  the pilot project is required to have option : Cleaning only and manual technology due to:

  • Many contractors are available.
  • Lowest cost and simple.
  • Fastest impact on Tank settling and the output of oil and water.
  • Used as data reference for the next phase of development.

The following summaries the information considered before it made as Go or No Go Decision:

Monitor and Evaluation (Post Mortem)

After the Authorization for Expenditure (AFE) is approved, the following Success Planning is monitored and shall be achieved.

Success Metrics

Performance Metrics (Lagging Indicators)

  • Throughput oil and water
  • Operating cost

Process Metrics (Leading Indicators)

  • Spills – zero.
  • Industrial Accident / LTI  – zero.
  • Cost performance – +/- 10% of budget.
  • Schedule performance – +/- 10% of milestone dates.

 Success Factor

The following action items are a must for achieving the Success Metrics above:

  • Good team work & coordination – meet on regular basis, good cross functional participation and good team commitment.
  • Follow the project management practices.
  • Follow HES procedures and approved standards & codes.
  • Utilize Best Practices.
  • Involve the right resources (e.g., contract development).

References:

  1. Peters, Max S & Timmerhaus, Klaus D. (1991), Plant Design and Economics for Chemical Engineers 4th Edition, Singapore: McGraw-Hill, Inc.
  2. Sullivan, William G., Wicks, Elin M. & Koelling, C. Patrick (1942), Engineering Economy 15th Edition, Singapore: Prentice Hall, Inc.

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About Candra Nugraha

I'am living in jakarta, indonesia
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One Response to W6_Candra Nugraha_Sand Handling

  1. DrPDG says:

    Hmmmmmm, Pak Candra…… While you did an OUTSTANDING job in selecting a very real problem and solving it using a structured and rational approach, I am curious why you didn’t perform a more robust analysis, by using “better” or “more appropriate” tools/techniques in your analysis? It appears to me like the decision was made without really quantifying it very well?

    You have enough data for a three point estimate
    Cleaning- BC, $20, WC $35 and ML of $25
    Sludge- BC, $50, WC $90 and ML of $60
    So why didn’t or don’t you apply PERT? Then come up with a cost estimate at the 75th, 85th or 90th percentile on the costs? And then see if the savings would offset the costs? (Break Even Analysis, Chapter 11 or Risk Analysis, Chapter 12)

    Also, why didn’t you consider the use multi-attribute decision making (Chapter 14 in your Engineering Economy) for a problem of this type. (It is clear that more than financial considerations alone were being used in making the decision)

    As for monitoring, because it is a PILOT PROJECT, you also want to consider running a SENSITIVITY ANALYSIS or BREAK EVEN analysis (See Chapter 11 in Eng Econ) on the actual numbers to see what parameters had the greatest impact on the costs and whether the savings justified the investment. This will help you develop a COST ESTIMATING MODEL (See page 89 – 90 in Engin Economy) to use on FUTURE PROJECTS (“lessons learned”)

    Bottom line, even though you picked a very good project, rich in potential to use the tools/techniques we are learning, I was somewhat disappointed in how you QUANTIFIED the support for your decision, so I am rejecting this weeks posting and asking that you revised it showing a more robust use of the tools & techniques you are learning- either using PERT (See Chapter 12 in Engin Econ) or Multi-attribute decision making. (Chapter 14)

    (Not that you aren’t doing a good job, but I am trying to challenge you by “raising the bar” a bit)

    Keep up the good work, as you are clearly on the right track, but as we progress, I am looking for more sophistication in your use of the tools/techniques.

    BR,
    Dr. PDG, Jakarta

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