CAPEX cost

Minimize Annualized Capital Cost, CAPEX = (Cost of Membrane Unit/Membrane Life Expectancy)... 

The type and number of wells required for development will influence the surface facilities design and have a significant impact on the cost of development. Typically the drilling expenditure for a project is between 20 and 40% of the total capex. A reasonable estimate of the number of wells required is therefore important. 

Standardisation of equipment items is an area for potential cost savings, both in terms of capital expenditure (capex) and operating expenditure (opex), and is a decision which should be taken In consultation with the production operations department at the FDP stage. Standardisation can be applied to equipment items ranging from drilling platforms to valves. The benefits of standardisation are ... 

Increasingly, maintenance engineers think in terms of the performance and maintenance of equipment over the whole life of the field. This is often at the centre of the decision on capex-opex trade-offs for example spending higher capex on a more reliable piece of equipment in anticipation of less maintenance costs later in the life of the equipment. 

When estimating the operating and maintenance costs for various options, it is recommended that the actual activities which are anticipated are specified and costed. This will run into the detail of frequency and duration of maintenance activities such as inspection, overhaul, painting. This technique allows a much more realistic estimate of opex to be made, rather than relying on the traditional method of estimating opex based on a percentage of capex. The benefits of this activity based costing are further discussed in Section 13.0 and 14.0. 

Keywords economic model, shareholder s profit, project cashflow, gross revenue, discounted cashflow, opex, capex, technical cost, tax, royalty, oil price, marker crude, capital allowance, discount rate, profitability indicators, net present value, rate of return, screening, ranking, expected monetary value, exploration decision making. 

Once production commences (possibly 3-8 years after the first capex) gross revenues are received from the sale of the hydrocarbons. These revenues are used to recover the capital expenditure (capex) of the project, to pay for the operating expenditure (opex) of the project (e.g. manpower, maintenance, equipment running costs, support costs), and to provide the host government take which may in the simplest case be in the form of taxes and royalty. 

The treatment of expenditures will be specified by the fiscal system set by the host government. A typical case would be to define expenditure on items whose useful life exceeds one year as capital expenditure (capex), such as costs of platforms, pipelines, wells. Items whose useful life is less than one year (e.g. chemicals, services, maintenance, overheads, insurance costs) would then be classed as operating expenditure (opex). 

Fixed opex is proportional to the capital cost of the items to be operated and is therefore based on a percentage of the cumulative capex. Variable opex is proportional to the throughput and is therefore related to the production rate (oil or gross liquids). Hence,... 

The sum of opex and capex is sometimes termed the technical castor total cost. 

Typically, the contractor carries the cost of exploration, appraisal and development, later claiming these costs form a tranche of the produced oil or gas ( cost oil ). If the cost oil allowance is insufficient to cover the annual costs (capex and opex), excess costs are usually deferred to the following year. After the deduction of royalty (if applicable) the remaining volume of production (called profit oil ) is then split between the contractor and the host government. The contractor will usually pay tax on the contractor s share of the profit oil. In diagrammatic form the split of production for a typical PSC is shown in Figure 13.11. 

In Section 13.2, it was suggested that opex is estimated at the development planning stage based upon a percentage of cumulafive capex (fixed opex) plus a cosf per barrel of hydrocarbon production (variable opex). This method has been widely applied, with the percentages and cost per barrel values based on previous experience in the area. One obvious flaw in this method is that as oil production declines, so does the estimate of opex, which is nof the common experience as equipment ages it requires more maintenance and breaks down more frequently. 

Phenyl magnesium bromide and boronic acid trimethyl ester react to give phenyl-boronic acid with high selectivity (about 90%) even at room temperature, which saves energy costs and the respective CAPEX investment [177]. The yield was about 25% higher with respect to industrial batch production. Purity of the crude product could be enhanced by about 10%, thereby allowing purification by favorable crystallization only, avoiding thus the distillation steps needed in the conventional process. 

CSs have been widely applied in the oil and gas industry due to their cost effectiveness in procurement and fabrication. Through the extensive use of CSs, the industry has derived considerable experience and knowledge about the behavior and applicability of snch materials. CS assets require a relatively low CAPEX. However, due to lower overall corrosion resistance, the CS assets require more frequent inspection, monitoring, and chanical injection to ensnre functional integrity. These additional requirements increase the operating expenditure (OPEX) and also make the assets vulnerable to the unreliability of integrity managanent mechanisms. 

Sometimes, cost may be the only criterion in material selection. This is particularly true when it is known that the candidate materials are fairly evenly poised on all other criteria. This calls for a method that analyzes the costs associated with each candidate material. One such quantitative method is the Life-Cycle Cost Analysis (LCCA). LCCA helps ns get the overall picture of the costs associated with each material over its entire lifetime. It attempts to identify all CAPEX and OPEX heads involved in all stages enconntered over the lifetime of a particnlar asset or facility and therefore operates over a longer-term horizon. LCCA uses the discounted cash flow technique to reduce the future costs to present-day valnes. This makes LCCA an even fairer means to rationally compare the candidate materials. 

Besides feed water characteristics andproduct water quality, capital costs (CAPEX) and operating costs (OPEX), manpower, space avaUabihty, and future expansion requirements, and... 

Capex and Opex of RO systems with feed water TDS from 2500 to 40,200 ppm and flow rates from 1640 to 10,360 m /day were analysed for performance, capital and operating costs. The data are summarised in Table 5.6. The RO unit designs were modelled using Hydranautics Membrane Solutions Design software, version v. 2010. 

Indicative Marginal Abatement Cost [(capex - beneflts)/reduction] 3 = low (low cost and high reduction) 2 = medium (low cost and low reduction high cost and high reduction) 1 = high (high cost and low reduction)... 

Before the introduction of income cap regulation it was sufficient to analyse investments with respect to costs (because of cost coverage). In an income cap (or price cap) regulatory regime distribution companies also evaluate projects with respect to income effects, since the difference between the allowed income (stated by the regulatory authorities) and the total costs (opex + capex) constitute the company profit. 

The main idea is to compare results between the cases corresponding to the relevant maintenance strategies. These results are ideally expressed in terms of discounted cost, integrating all cost contributors. This is the easiest way to provide decision support, because the higher CAPEX of e.g. investing in a new system compared to a smaller upgrade can be compared with the lower operating costs (OPEX and RISKEX) of the new system. 

Traditionally, cash flow analyses have been based on the balance between potential revenue, capital expenditures (CAPEX), and the planned operational expenditures (OPEX). Little or no effort has been put into evaluating the potential for lost revenue and expensive intervention costs due to component failures. By associating economic values to these costs by introducing the term Risk Expenditures (RISKEX), a more complete comparison between alternative development scenarios can he made. 

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