Reducing ABEX Uncertainties through Hybrid LSTK Contracting: A Factory EPSm Pilot Case Study in South East Asia

Well abandonment and the associated abandonment expenditure (ABEX) are necessary stages in the post cessation of production (Post COP) phase of the asset lifecycles. There are significant risk factors present, which vary in the frequency and severity based on a multitude of factors pertaining to environment, age, well construction techniques and stratigraphy, to name a few. In the case of well isolation and abandonment operations there are opportunities to innovate through factory project execution techniques and commercial approaches, which are enhanced where standardization and commonality of well architecture is present. These techniques focus on reducing risk factors and creating value where conventional thought suggests there is marginal cashflow benefit, in asset retirement obligation expenditure. Through a reduction in the total cost of ownership (TCO), project financial performance below the estimated provisions, can unlock cashflow from relief adjustments on long term liabilities. The Engineering, Procurement, Services management (EPSm) lump sum partial turnkey contracting approach was developed to assist operators in unlocking cashflow in ABEX provisions, through risk reduction via front end well engineering and integration of service provision, allied to fixed price lump sum contracting to control project cost creep due to unforeseen events. A pilot project was undertaken in South East Asia, delivering 64 permanently abandoned wellbores in 38 consecutive days, representing over 8,300-man hours and over 3,500 operating hours. The EPSm contracting approach delivered lump sum partial turnkey well abandonment services in a high-volume factory well abandonment retirement environment. Operations were executed through a dedicated jack-up drilling rig trimmed to an asset retirement specification to reduce OPEX and increase efficiency. The operational project framework implemented pre-abandonment offline operations prior to rig arrival, then simultaneous operations (SIMOPs) concerning 2 primary worksites: the wellhead platform weather deck and the jack-up rig cantilever. Standalone concurrent Phase I slickline operations comprising of two units, were performed offline on the wellhead platform with pressure control equipment to execute primary reservoir isolation operations. Phase II & III operations were executed above, on the jack-up rig cantilever through the drilling riser and pressure control equipment, executing the overburden and surface isolation operations, minimizing online operating time of the jack-up rig. Key Learnings from the pilot project are presented, along with pilot project key performance indicators. The project learning curve, and human performance factors provide insights to areas where there are synergies and opportunities to further reduce risk and the total cost of ownership through an Engineering, Procurement, Services management (EPSm) contracting approach.