Life cycle cost analysis of a floating production storage offloading vessel

Abstract

The focus of this study is to understand the essential characteristics of various lifecycle cost methodologies and tools available. Life cycle cost (LCC) analysis is summarized as an economics model for evaluating the total cost of ownership of an asset. In combination with the technical aspects of a Floating, Production, Storage and Offloading (FPSO) vessel, the aim of this study is to develop a lifecycle cost estimation framework for an FPSO as per the problem statement discussed in Section 1.2. Various conceptual lifecycle cost models were reviewed with emphasis on the lifecycle stages and the correlation to the specific lifecycle activities assessed. Consequently, a standard conceptual life cycle costing model and its cost breakdown structure were developed and integrated into a proposed LCC framework for an FPSO. The main elements of the lifecycle cost model are the capital, operating and salvage expenditure. The breakdown of the capital expenditure into several key areas made this LCC model distinctive. Following the development of a lifecycle cost model is the application of the framework to a high level cost estimation case study. Following that is the identification of the critical factors that influence the FPSO economic evaluation criteria through a sensitivity analysis of the LCC model followed by the discussion of results and the findings presented. The results of the LCCA identified that the main cost drivers of the FPSO are the topsides capital expenditure and the operating cost. The discount rate used in the LCCA has also significant impacts on the net present value (NPV) of the LCCA. Key areas for future work were identified based on the consequent research findings. The deployment of the findings of this research within the industry could offer various strategic benefits that come with the formalization of the life cycle cost framework.