Norwegian value creation related to development of offshore oil and gas fields
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The development of petroleum field generates substantial values for Norway. In every development project there is always “local” and “global” contentment and Norwegian value creation depends on the combination of the two. Principally, Norwegian value creation is equal to contract value minus the value of imported goods and services for fabrication in Norway and value of Norwegian goods and services used in the fabrication for fabrication outside Norway. In this thesis, Norwegian value creation is defined as a fraction of field development cost that is delivered by Norwegian companies, measured in percentage. Cost estimation is performed using Acona Cost Estimation Software (ACES) software which breakdown field development cost into facilities-based costs and activity-based costs. This thesis estimates and analyzes Norwegian value creation in four different development projects namely Edvard Grieg, Ivar Aasen, Aasta Hansteen, and Gjøa. The four projects are chosen to represent the combination of fixed and floating production platform, dry tree and wet tree (subsea) wells, and local and foreign fabrication of platform. The analysis encompasses analysis of Norwegian value creation in facilities development and well development. Analysis of facilities development comprises 5 main facilities: (1) topside, (2) substructure, (3) subsea system, (4) export pipelines, and (5) power/fiber optic cables, and for every facility 5 main activities are examined: (i) fabrication, (ii) engineering, (iii) procurement, (iv) marine operation, and (v) project management. Analysis of well development covers 2 main activities: drilling service and well completion. The estimation result shows for facilities development Edvard Grieg generates the largest Norwegian value creation among the four projects estimated at 64% of facilities development cost. Subsequent analysis then shows fabrication and procurement activities of topside account for the biggest development cost in a project. It indicates that location of topside fabrication and origin of goods and services used in topside development have significant effect in increasing Norwegian value creation of a project. For Edvard Grieg case, as both topside and substructure were fabricated in Norway and utilized more Norwegian suppliers in comparison to other projects it generates the highest Norwegian deliveries. This thesis also aims to analyze the competitiveness of local fabrication (i.e. fabrication in Norway) with respect to Norwegian krone exchange rates to US Dollar (NOK/USD). The analysis reveals that competitiveness of local fabrication increases when Norwegian krone depreciates against US Dollar in a long run. As for well development the four projects have comparable Norwegian value creation in a range 55% - 61% of respective well development cost. The comparable result is achieved because supply arrangements in drilling activities are practically the same between different projects and eventually similar suppliers are utilized.
Master's thesis in Offshore technology: Industrial asset management