Research Papers: Offshore Technology

Risk-Based Cost-Effectiveness Analysis of Waste Handling Practices in the Arctic Drilling Operation

[+] Author and Article Information
Y. Z. Ayele

Department of Engineering and Safety,
UiT The Arctic University of Norway,
Tromsø 9037, Norway
e-mail: yonas.z.ayele@uit.no

A. Barabadi

Department of Engineering and Safety,
UiT The Arctic University of Norway,
Tromsø 9037, Norway
e-mail: abbas.b.abadi@uit.no

E. L. Droguett

Department of Mechanical Engineering,
University of Chile,
Santiago 8370448, Chile
e-mail: elopezdroguett@ing.uchile.cl

1Corresponding author.

Contributed by the Ocean, Offshore, and Arctic Engineering Division of ASME for publication in the JOURNAL OF OFFSHORE MECHANICS AND ARCTIC ENGINEERING. Manuscript received December 18, 2015; final manuscript received January 22, 2016; published online April 1, 2016. Assoc. Editor: Søren Ehlers.

J. Offshore Mech. Arct. Eng 138(3), 031301 (Apr 01, 2016) (14 pages) Paper No: OMAE-15-1127; doi: 10.1115/1.4032707 History: Received December 18, 2015; Revised January 22, 2016

As oil and gas companies in the Arctic attempt to maximize the value of each project and optimize their portfolio of investment opportunities, it has become vital to evaluate drilling waste handling practices for their cost-effectiveness in order to support strategic decisions. Identifying cost-effective waste handling practices, which have a minimal environmental footprint, however, is one of the biggest challenges for Arctic offshore industries. The cost and potential risks of drilling waste handling practices in the Arctic offshore operation will differ vastly, depending on the operating environment such as the ice conditions and negative sea temperature. However, in the majority of the available cost-effectiveness and risk analysis literature, the influence of the operating environment on the cost and risk profile has received less attention. Hence, the aim of this paper is to propose a methodology for risk-based cost-effectiveness analysis (RB–CEA) of drilling waste handling practices by considering the complex and fast-changing nature of the Arctic. The central thrust of this paper is to highlight the fact that comparing different alternatives based on the cost elements alone is misleading. The proposed methodology uses risk assessment as a key component for the cost-effectiveness analysis (CEA). The application of the proposed methodology is demonstrated by a case study of the drilling waste handling practices of an oil field in the Barents Sea. The case study results demonstrate that the operating environment causes costs to be between 1.18 and 1.52 times greater, depending on the type of practices and operating season, in the Arctic offshore compared with the North Sea. Further, the risk of undesirable events is between 1.48 and 2.60 times greater during waste handling activities under Arctic operational conditions.

Copyright © 2016 by ASME
Your Session has timed out. Please sign back in to continue.


Geehan, T. , Gilmour, A. , and Guo, Q. , 2007, “ The Cutting Edge in Drilling Waste Management,” http://www.slb.com/∼/media/Files/resources/oilfield_review/ors06/win06/p54_67.pdf
Ayele, Y. Z. , Barabadi, A. , and Barabady, J. , 2013, “ Drilling Waste Handling and Management in the High North,” 2013 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM), Bangkok, Thailand, Dec. 10–13, pp. 673–678.
Veil, J. , 2002, “ Drilling Waste Management: Past, Present, and Future,” SPE Annual Technical Conference and Exhibition, San Antonio, TX, Sept. 29–Oct. 2, Paper No. SPE-77388-MS.
Getliff, J. , Silverstone, M. , Shearman, A. , Lenn, M. , and Hayes, T. , 1998, “ Waste Management and Disposal of Cuttings and Drilling Fluid Waste Resulting From the Drilling and Completion of Wells to Produce Orinoco Very Heavy Oil in Eastern Venezuela,” SPE International Conference on Health, Safety, and Environment in Oil and Gas Exploration and Production, Caracas, Venezuela, June 7–10, Paper No. SPE-46600-MS.
Paulsen, J. , Norman, M. , and Getliff, J. , 2002, “ Creating Near-Zero Discharge in Norway: A Novel Environmental Solution,” World Oil, 223, pp. 37–41.
Svensen, T. , and Taugbol, K. , 2011, “ Drilling Waste Handling in Challenging Offshore Operations,” SPE Arctic and Extreme Environments Conference and Exhibition.
Paulsen, J. E. , Hoset, J. E. , Rørhuus, T. , Larsen, V. , Alm, D. , Birkeland, O. , and Marker, R. , 2005, “ Exploration Drilling in the Barents Sea; Prevailing Zero Discharge Regime Challenges and Learning From Two Recent Exploration Wells,” SPE Asia Pacific Health Safety and Environment Conference and Exhibition, Kuala Lumpur, Malaysia, Sept. 19–21, Paper No. SPE-96507-MS.
Ayele, Y. Z. , Barabadi, A. , and Barabady, J. , 2014, “ Effectiveness Assessment for Waste Management Decision-Support in the Arctic Drilling,” IEEE International Conference on Industrial Engineering and Engineering Management (IEEM), Bandar Sunway, Malaysia, Dec. 9–12, pp. 559–564.
Lindholt, L. , and Glomsrød, S. , 2012, “ The Arctic: No Big Bonanza for the Global Petroleum Industry,” Energy Econ., 34(5), pp. 1465–1474. [CrossRef]
Ball, A. S. , Stewart, R. J. , and Schliephake, K. , 2012, “ A Review of the Current Options for the Treatment and Safe Disposal of Drill Cuttings,” Waste Manage. Res., 30(5), pp. 457–473. [CrossRef]
Finnveden, G. , Björklund, A. , Moberg, Å. , and Ekvall, T. , 2007, “ Environmental and Economic Assessment Methods for Waste Management Decision-Support: Possibilities and Limitations,” Waste Manage. Res., 25(3), pp. 263–269. [CrossRef]
Gentil, E. C. , Damgaard, A. , Hauschild, M. , Finnveden, G. , Eriksson, O. , Thorneloe, S. , Kaplan, P. O. , Barlaz, M. , Muller, O. , Matsui, Y. , Ii, R. , and Christensen, T. H. , 2010, “ Models for Waste Life Cycle Assessment: Review of Technical Assumptions,” Waste Manage., 30(12), pp. 2636–2648. [CrossRef]
Levin, H. M. , and McEwan, P. J. , 2001, Cost-Effectiveness Analysis: Methods and Applications, Vol. 4, Sage Publication, Oxford, Pergamon, Thousand Oaks, CA.
Kazanowski, A. , 1968, “ A Standardized Approach to Cost-Effectiveness Evaluations,” Cost-Effectiveness: The Economic Evaluation of Engineering Systems, J. M. English , ed., Wiley, New York, pp. 113–115.
Kazanowski, A. D. , 1968, “ Cost Effectiveness Fallacies and Misconceptions Revisited,” Cost-Effectiveness: The Economic Evaluation of Engineering Systems, J. M. English , ed., Wiley, New York, pp. 151–165.
Minton, R. , and McGlaughlin, J. , 2003, “ Rising Drilling-Waste Costs Promote Novel Technologies, Approaches,” Oil Gas J., 101(31), pp. 51–55.
Abimbola, M. , Khan, F. , and Khakzad, N. , 2014, “ Dynamic Safety Risk Analysis of Offshore Drilling,” J. Loss Prev. Process Ind., 30, pp. 74–85. [CrossRef]
Guo, Q. , Geehan, T. , and Pincock, M. , 2005, “ Managing Risks and Uncertainties in Drill Cuttings Re-Injection in Challenging Environments–Field Experience From Sakhalin Island,” SPE/EPA/DOE E&P Environmental Conference, Galveston, TX, Paper No. SPE 93781.
Ayele, Y. Z. , Barabady, J. , and Droguett, E. L. , 2015, “ Risk Assessment of Arctic Drilling Waste Management Operations Based on Bayesian Networks,” Safety and Reliability of Complex Engineered Systems: ESREL 2015, Zurich, Switzerland, pp. 1907–1915.
Khakzad, N. , Khan, F. , and Amyotte, P. , 2013, “ Quantitative Risk Analysis of Offshore Drilling Operations: A Bayesian Approach,” Saf. Sci., 57, pp. 108–117. [CrossRef]
Abimbola, M. , Khan, F. , Khakzad, N. , and Butt, S. , 2015, “ Safety and Risk Analysis of Managed Pressure Drilling Operation Using Bayesian Network,” Saf. Sci., 76, pp. 133–144. [CrossRef]
Øien, K. , 2013, “ Remote Operation in Environmentally Sensitive Areas: Development of Early Warning Indicators,” J. Risk Res., 16(3–4), pp. 323–336. [CrossRef]
Boesch, D. F. , and Rabalais, N. N. , 2003, Long-Term Environmental Effects of Offshore Oil and Gas Development, Taylor & Francis, Abingdon, Oxfordshire.
Vinnem, J.-E. , 2007, Offshore Risk Assessment: Principles, Modelling and Applications of QRA Studies, 3rd ed., Vol. 2, Springer-Verlag, London.
Rosqvist, T. , and Tuominen, R. , 1999, “ Expert Judgment Models in Quantitative Risk Assessment,” http://www.iaea.org/inis/collection/NCLCollectionStore/_Public/31/016/31016454.pdf
Barabadi, A. , Gudmestad, O. T. , and Barabady, J. , 2015, “ RAMS Data Collection Under Arctic Conditions,” Reliab. Eng. Syst. Saf., 135, pp. 92–99. [CrossRef]
Markeset, T. , 2008, “ Design for High Performance Assurance for Offshore Production Facilities in Remote Harsh and Sensitive Environments,” Q. J. Oper. Res. Soc. India, OPSEARCH, 45(3), p. 275.
Ayele, Y. Z. , Barabadi, A. , and Barabady, J. , 2015, “ Dynamic Spare Parts Transportation Model for Arctic Production Facility,” Int. J. Syst. Assur. Eng. Manage., 7(1), pp. 84–98. [CrossRef]
Kayrbekova, D. , Barabadi, A. , and Markeset, T. , 2011, “ Maintenance Cost Evaluation of a System to be Used in Arctic Conditions: A Case Study,” J. Qual. Maint. Eng., 17(4), pp. 320–336. [CrossRef]
Barabadi, A. , and Markeset, T. , 2011, “ Reliability and Maintainability Performance Under Arctic Conditions,” Int. J. Syst. Assur. Eng. Manage., 2(3), pp. 205–217. [CrossRef]
Hora, S. C. , 2009, “ Expert Judgment in Risk Analysis,” Non-Published Research Reports, http://research.create.usc.edu/nonpublished_reports/120
Monier, V. , Abbayes, C. , Görlach, B. , Jarvis, A. , Medhurst, J. , Kuik, O. , Vanner, R. , Ekins, P. , Jantzen, J. , van der Woerd, H. , Vercaemst, P. , Huybrechts, D. , and Meynaerts, E. , 2006, “ Ex-Post Estimates of Costs to Business of EU Environmental Legislation,” Final Report, Institute for Environmental Studies, Vrije Universiteit, Report No. ENV.G.1/FRA/2004/0081.
Kiker, G. A. , Bridges, T. S. , Varghese, A. , Seager, T. P. , and Linkov, I. , 2005, “ Application of Multicriteria Decision Analysis in Environmental Decision Making,” IEAM, 1(2), pp. 95–108. [CrossRef] [PubMed]
Higgins, J. P. T. , and Green, S. , 2011, “ Cochrane Handbook for Systematic Reviews of Interventions Version 5.1.0 [updated March 2011],” accessed Apr. 15, 2011, www.cochrane-handbook.org
Cellini, S. R. , and Kee, J. E. , 2010, “ Cost-Effectiveness and Cost-Benefit Analysis,” Handbook of Practical Program Evaluation.
Stern, N. H. , 2006, Stern Review: The Economics of Climate Change, Vol. 30, HM Treasury, London.
Lopez, H. , 2008, “ The Social Discount Rate: Estimates for Nine Latin American Countries,” World Bank Policy Research Working Paper No. 4639.
PSA, 2013, “ Regulations Relating to Conducting Petroleum Activities (the Activities Regulations), Section 68-Discharge of Cuttings, Sand and Solid Particles,” accessed Aug. 27, 2013, http://www.psa.no/activities/category399.html#_Toc407534829
Statoil, 2013, 11/06, “ Planning an Oil Terminal at Veidnes,” http://www.statoil.com/en/NewsAndMedia/News/2013/Pages/12feb_Skrugard.aspx
Det Norske Veritas, 2009, Barents 2020: Assessment of International Standards for Safe Exploration, Production and Transportation of Oil and Gas in the Barents Sea, Det Norske Veritas (DNV), Oslo, Norway.
Ortiz, N. , Wheeler, T. , Breeding, R. , Hora, S. , Meyer, M. , and Keeney, R. , 1991, “ Use of Expert Judgment in NUREG-1150,” Nucl. Eng. Des., 126(3), pp. 313–331. [CrossRef]
Chang, S. E. , McDaniels, T. , Fox, J. , Dhariwal, R. , and Longstaff, H. , 2014, “ Toward Disaster-Resilient Cities: Characterizing Resilience of Infrastructure Systems With Expert Judgments,” Risk Anal., 34(3), pp. 416–434. [CrossRef] [PubMed]
Cooke, R. M. , 1991, Experts in Uncertainty: Opinion and Subjective Probability in Science, Oxford University Press, New York.
Nicholson, C. , and Wesson, R. L. , 1990, “ Earthquake Hazard Associated With Deep Well Injection,” U.S. Environmental Protection Agency, Report No. I 19.3:1951.
Wipertrip, 2014, “ Waste Management–Transport of Cuttings to Shore for Disposal,” http://www.wipertrip.com/qhse/waste-management/29-waste-management-transport-of-cuttings-to-shore-for-disposal.html
Martin, A. , 2004, “ Drilling Waste Handling,” U.S. Patent No. US6796379 B1.
DNV, 2013, “ Winterization for Cold Climate Operations (Tentative),” https://rules.dnvgl.com/docs/pdf/DNV/codes/docs/2013-10/OS-A201.pdf
Ryerson, C. C. , 2009, “ Assessment of Superstructure Ice Protection as Applied to Offshore Oil Operations Safety,” U.S. Army Research, http://digitalcommons.unl.edu/usarmyresearch/49


Grahic Jump Location
Fig. 1

The proposed RB–CEA methodology for the Arctic offshore drilling waste handling practices

Grahic Jump Location
Fig. 2

Generic offshore discharge flowline

Grahic Jump Location
Fig. 3

Johan Castberg oil field Statoil [39]

Grahic Jump Location
Fig. 4

Interexpert variation in 5%, 50%, and 95% estimates of undesirable events in the North Sea offshore drilling waste handling operation

Grahic Jump Location
Fig. 5

Cost elements for skip-and-ship operation in the Arctic

Grahic Jump Location
Fig. 6

A semilogarithmic plot of the total cost of skip-and-ship in North Sea and Arctic versus number of wells. Notice that while the horizontal (No. of drilled wells) axis is linear, with the number of drilled wells evenly spaced, the vertical (total cost of skip-and-ship) axis is logarithmic with the evenly spaced division being labeled with log [cost of skip-and-ship]




Some tools below are only available to our subscribers or users with an online account.

Related Content

Customize your page view by dragging and repositioning the boxes below.

Related Journal Articles
Related eBook Content
Topic Collections

Sorry! You do not have access to this content. For assistance or to subscribe, please contact us:

  • TELEPHONE: 1-800-843-2763 (Toll-free in the USA)
  • EMAIL: asmedigitalcollection@asme.org
Sign In