Offshore vs. Onshore: Cost Drivers of an Oil & Water Separator

The oil industry is highly competitive. Consequently, there is constant pressure to reduce costs and increase efficiency. In this article we will outline the biggest difference between cost driver's of an oil and water separator offshore vs. onshore. Identifying the biggest cost drivers is valuable information that can help you make better decisions when choosing solutions for optimization.  

As this article is one of the more extensive ones we have published here at the Process System Performance blog, we have for your convenience, highlighted its content here:

1.History

2.Onshore vs. Offshore

3.Cost Drivers

4.The Impact on Choice of Technologies

5.Conclusion


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History

The oil industry is over 160 years old and began onshore in the US, following the oil discovery at the Oil Creek area of Titusville, Pennsylvania in 1859. During the first phase of the industry, oil fields were discovered right below the surface, requiring simple equipment for the exploration and production of the hydrocarbons. However, with time, new technologies were introduced, making it possible to drill deeper and produce fields located up to different kilometres below the ground.


As the global demand for oil increased, the need for more oil pushed the technology development to allow oil exploration offshore. As a result, the production of oil became more complex - moving first from onshore to offshore in shallow waters, then from shallow waters to deeper seas with harsher environments.


Onshore vs. Offshore

“Imagine your onshore oil well needs some maintenance. All you need to do is bring a physical tool into your car, drive to the well and use it there. Offshore however, you will require a helicopter or a vessel in order to transport the tool to the field. In other words, even simple tasks become much more complicated and expensive. “

The offshore industry faces more challenges than onshore due to the environment it is in, which consequently makes the production of oil more expensive. Yet, the market price of the oil is the same, regardless of being produced onshore or offshore.

In order for the offshore oil industry to be able to compete with onshore, it must be high in efficiency. As a result, offshore technologies are much more dependent on its performances and reliability. It is crucial to have the right technologies in place, that requires less interventions, shutdowns and maintenance activities. Improvements of all these aspects have thus mainly been driven by offshore needs.

Read more: How Oil & Water Separator Optimization Improves Processing Performance


Cost drivers

Size & Weight

Any oil and water separator have a cost (CAPEX) in order to be built and acquired. However, the biggest difference between onshore and offshore, is that offshore technologies require more compactness.

Onshore, the oil and water separators have more freedom in terms of size. Meaning, the separator itself is a cost, however the size of it is “free of charge”. In contrast, every square meter of “real estate” offshore, brings with it several other costs; in order to use this square meter, a strong structure is required to keep the platform’ topside afloat.

Consquentley, it is much more costly – not just in terms of the purchase cost, but also the installation cost and the cost to make area of the platform available for the separator.

It is therefore particularly crucial to maximise the utilization of the oil and water separator on offshore processing plants. Investing in advanced instrumentation like level profilers that allow you to utilize the spare capacity within your separator is thus highly beneficial; you can utilize your separator at 95% instead of 50-60% for the same production capacity. Consequently, the separator can be smaller - which means it requires less steel to be built, as well as less topside space is needed. Offshore, this has a cascade effect that reduces dramatically the overall costs.

Just compare the cost of installing a separator that is 24 meters long to one that is 14 meters long on an offshore platform. You will quickly discover that the extra meters in dimension have a huge effect on the overall cost.

As such, any technology that allows you to build a smaller separator should be considered always as a good investment.

In terms of the oil and water separator one of the biggest OPEX item is the chemical that the operators need in order to keep the separator functioning properly. The chemical itself is of course a cost, but additionally it requires a tank to host the chemical, plus the transportation cost to bring the chemical offshore. The tank, similarly, to the separator, need an area of space to occupy. Offshore, this means that the bigger the tank, the higher the cost will be to transport and host the chemical on the platform.

 


Maintenance & Intervention Requirements

Loss of production is an indirect cost, caused by the need for interventions, maintenance, cleaning and recalibration.

The major difference between onshore and offshore oil fields is the ability to have more than one separator operating in parallel.

Onshore it is common to have multiple separators. Consequently, operators have more flexibility and they can keep one separator operating, while doing maintenance, recalibration etc on another. In other words, you can do the necessary work, without having to stop the whole production.

Offshore however, it is an entirely different story. In order to do interventions, maintenance, recalibrations etc, the production needs to be stopped. This requires several procedures to be put in place, in order to ensure safety that generates loss of production. Hence, doing maintenance offshore it is enormous cost.

Furthermore, in order to complete the maintenance activities while the production is shut down, you must transport workers by helicopters/vessels to the platform. Additionally, these workers need a place to sleep and eat. In some cases, there isn’t enough space on the platform to host all the workers while they do maintenance activities. As such, the operators rents offshore temporary accommodations like the floatels (floating hotels). Lastly, to restart the production, a sequence of events that are hugely time consuming is needed. To put it into perspective, ramping up production from 0% to 100% can take up to several weeks.

 

Safety

Particularly offshore, safety is a cost driver. Due to the platform being built very compact, there is not much space between equipment. This small proximity causes an increased safety risk; if a separator were to leak or explode, it is very likely to damage other equipment, generating a domino effect. Furthermore, if anything happens offshore, it can have damaging effects to the environment. Onshore however, there is much space availability, so the domino effect is less likely to happen and also there is a less direct concern about the leakages; if there is an oil spill into the sand, it does not have the same repercussions as if the spill went into the sea. Put simply, the environment offshore is much more delicate to such type of accidents.

 

The impact on choice of technologies

One of the most established type of advanced instrumentation for oil and water separators is Nucleonic Instrumentation. It quickly spread offshore during the 70s, 80s and 90s. Nucleonic technology requires frequent recalibration during normal operation of upstream separators. The recalibration requires a process shut down to completely empty the separator, subsequently causing numerous days of production loss. Nucleonic instrumentation therefore generates expensive maintenance activities. Due to its radioactive nature, there are also further cost-implications.

Due to the high pressure of staying efficient and competitive, offshore operators can no longer afford the loss of production which follows nucleonic instrumentation.

It does not matter if the technology works, it becomes obsolete because of its “side effects”.

To put it into perspective; the cost of fixing, replacing or recalibrating the instrumentation of an oil and water separator, is so costly that it is not uncommon for offshore operators to continue working “blindly” rather than do these activities.

In other words, it is cheaper to continue working without the technology, than it is to stop and fix it. This is of course against the need of any operator to acquire valuable data from the processing system, so to boost productivity through automation.

Taking all the above into consideration, it is not surprising that technologies which require a lot of maintenance are no longer acceptable for offshore fields. Hence, there is an industry trend of investing in high quality instrumentation that does not need to be recalibrated, nor needs maintenance. An example of such instrumentation is advanced capacitance.

Read more: Advanced Capacitance: An Alternative to Nucleonic Instrumentation 


Conclusion

The biggest difference between cost drivers on- and offshore are space, weight, maintenance- and intervention requirements, and safety. The offshore industry faces more challenges than onshore due to the environment it is in, which consequently makes the production of oil more expensive. To stay competitive, it is thus crucial for the offshore production to achieve higher performances with lower costs. In other to maximise efficiency, operators are thus investing in more advanced and compact technologies, such as advanced capacitance.

 

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