Project Management in the Oil and Gas Industry

1.3.2 Feasibility 
Study
Each phase of a project has a different importance and impact on the 
project as a whole, but each phase differs depending on the nature, the 
circumstances of the project, and its value and target.
The phase of the feasibility study is the second step after the emergence 
of the idea of the owner. The owners in an oil and gas project are the geolo-
gist and petroleum engineering team, whose idea is based on oil and gas 
reservoir characteristics.
The economic study for the project will be performed by personnel 
from a high level of the organization and with high skill, as this study will 
include the expected fluctuation of the price for oil and gas and other pet-
rochemical products during the project lifetime. Their experience is based 
on similar, previous projects so they have records and lessons learned from 
the previous projects.
In this initial phase, the selection of the team or the consultant office 
that will perform this feasibility study is important. In some cases, there 
may be input from an engineering firm to perform a generic engineering 
study about the project and estimate the cost based on their experience.
This is calculated by using quantitative risk assessment by using the 
Monte-Carlo simulation technique, as it needs to take a decision for a big 
decision.

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How to Manage Oil and Gas Projects 11
There are many factors to consider in this study. For example:
• The agreement between the partners
• The expectation of the oil and gas price trend
• Political situation for the country that has the products
• Government laws, regulations, and taxes
The phase of the feasibility study is matched by the technical project 
stage, which is appraised for the preliminary (FEED) study phase. These 
two phases are very essential because they set the objective of the project 
and identify engineering ideas through the initial studies. It is preferred 
to apply the Japanese proverb, “think slowly and execute quickly,” espe-
cially in the feasibility study stage. This is the stage of defining the goal of 
the project and determining economic feasibility from this phase should 
determine the direction to move also.
For those reasons, we must make this phase take advantage of its 
time, effort, study, research, and discussions with more care about the eco-
nomic data.
The economic aspect is important at this stage, but the engineering 
input is very limited.