As reviewed on W11 blog posting for the Production Sharing Contractor (PSC) cash flow based on production point of view, the next step is to analyze the opportunity of electrical supply as a critical driver to deliver oil production.
Currently the electric has been supplying by other PSC Contractor since year 2002 and the Power Supply Agreement (PSA) will be expired on year 2011.
Government has to decide the two options:
- Push PSC A to extent current Power Supply Agreement till the end of PSC contract.
- PSC B to find the source of electrical which fit for purpose.
The previous blog is referring to the oil production curve which triggered by reservoir condition. Now, we are evaluating the alternatives for getting the electrical supply to support previous cash flow strategy as per given condition:
Development of the outcomes
The table below is showing a graph of electrical cost compared to the production cost to lifting the oil :
The electrical production cost declined is based on the offering from other independent power producer benchmarking against cost of electricity which applied in Indonesia. It is also triggered by depleted of oil production as matured over time.
Minimum Acceptable requirements
The criteria of economic selection are:
- The Highest Net Income for Government.
- The lowest Operating cost including electrical price.
- The lowest Capital Expenditure.
Analyze and compare the alternatives
Why is the electrical price going down? Actually the forecast is developed based on current Independent Power Producer which currently running in Indonesia as per given table:
The current PSA is running with 10 cent / kwh which is too high and there is no option when the contract was signed in year 2002 to keep maintaining the oil production.
Develop preferred alternative
BUY electric from independent power producer, is this worth Doing? Estimated revenue generated as calculated is US$ 2,500 Million.The best Government Take is US$2,240 Million for12 years operation.
How is the Life Cycle Cost look like?
By having the other power supply tie in will give the flexibility to run all production wells in case the power shut down to one another.
Monitor and Evaluation (Post Mortem)
The successful of the project will be critical to accelerate the availability of power to production wells as oil price is maintaining high.
Performance Metrics (Lagging Indicators)
- Throughput gas volume
- Operating cost
Process Metrics (Leading Indicators)
- Spills – zero.
- Industrial Accident / LTI – zero
- Cost performance – +/- 10% of budget
- Schedule performance – +/- 10% of milestone dates.
- Peters, Max S & Timmerhaus, Klaus D. (1991), Plant Design and Economics for Chemical Engineers 4th Edition, Singapore: McGraw-Hill, Inc.
- Sullivan, William G., Wicks, Elin M. & Koelling, C. Patrick (1942), Engineering Economy 15th Edition, Singapore: Prentice Hall, Inc.