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Reducing the lifecycle cost of oil and gas facility by use of simulation - Essay Example
Author : annabeljakubows
Design & Technology
Pages 3 (753 words)
During operations, oil and gas industries incur lifecycle costs that affects their production capacity and cost of production. Lifecycle costs include recurring and other nonrecurring costs incurred by a company during a certain operational period…
During operations, oil and gas industries incur lifecycle costs that affects their production capacity and cost of production. Lifecycle costs include recurring and other nonrecurring costs incurred by a company during a certain operational period. Oil and gas companies incur lifecycle cost through installation of new facilities, maintenance, and upgrading of the existing facilities. Facilities in the companies have definite life span and therefore the companies experience an additional when closing them down With these costs to consider, the companies are concerned with the possible alternatives to cut or reduce the effects of the lifespan cost. In order to eliminate or minimize lifecycle cost, oil companies rely on planning making simulations a useful tool. Simulations are models applied by the companies to determine the viability of a facility before its inception (Gorski, 2006). This paper therefore analyzes the benefits achieved from application of simulations in the reduction of lifecycle cost in oil and gas companies. Some of the ways in which simulation is applied to reduce lifecycle cost Evaluation and comparison of different approaches for replacement Evaluation and comparison of alternative strategies for product use Evaluation and comparison of different designs Optimal allocation of available funds of activities in the process of product development During their lifespan, most companies are confronted with situations where they need to make important decisions on whether to close down a facility or to change a business strategy. ...