PurposeThe purpose of this paper is to discuss operation and maintenance challenges under Arctic conditions and to propose a methodology to assess systems' reliability, maintainability and maintenance costs under the influence of the Arctic operational environment.Design/methodology/approachA model is suggested for quantifying maintenance costs while taking into account uncertainty due to lack of appropriate data and operational experience using the proportional hazard model and proportional repair model as well as Monte Carlo simulation.FindingsThe results show that the operating environment has a considerable influence on the number of failures, the maintenance and repair times and consequently on maintenance cost. Forecasting the maintenance costs based on technical characteristics (e.g. reliability and maintainability) and considering the operational environment, as well as including uncertainty analysis using Monte Carlo simulation, provide more trustworthy information in the decision‐making process.Practical implicationsThere are few data and little experience available regarding the operation of offshore oil and gas production systems in the Arctic region. Using the available data collected from similar systems, but in a different operational environment, may result in uncertain or incorrect analysis results. Hence, the method that is used for maintenance cost analysis must be able to quantify the effect of the operating environment on the system reliability and maintainability as well as to quantify the uncertainty.Originality/valueThe paper presents a statistical approach that will be useful in predicting maintenance cost considering the lack of appropriate reliability data from equipment operated in Arctic conditions. The approach presented is valuable for the industrial practitioners in the Arctic region, and may also be adapted to other areas where there is lack of data and operational experience.

Petroleum exploration and production in the Arctic region is becoming of increasing interest as the world needs more energy. However, since there is little experience and data on Arctic oil and gas production, the design of production facilities and equipment to be used in the Arctic region is fraught with high cost and risk. Conventional life cycle costing (LCC) approaches have been discussed in literature for many years, but it is difficult to perform such analysis due to the need for a large amount of data and the inherent uncertainty in the results. There is also little evidence in the literature on the practical usage of LCC. In this paper we discuss the differences between conventional LCC and activity-based LCC (AB-LCC) cost systems. Moreover, based on an analytical comparison between the two methodologies we find that the AB-LCC methodology may be a better alternative to use for cost analysis in the design of production facilities to be used in unfamiliar environments such as the Arctic. A simple example is used to demonstrate the differences between conventional LCC and AB-LCC analysis.

Abstract. Due to reduction in petroleum production and aging production facilities, the Norwegian oil and gas industry is interested in optimization maintenance strategies and reducing costs. Currently the maintenance strategies are based on predetermined periodic (calendar or use time) preventive maintenance strategies that are developed based on statistical data and/or recommendation from the manufacturers. One possibility currently being explored is to use condition monitoring data available in the process monitoring system, to update and improve the predetermined periodic preventive maintenance strategies. Furthermore, we discuss some issues and challenges of the integration of available condition monitoring data in the planning and optimization of predetermined preventive maintenance strategies.

Abstract. Many of the production facilities and technologies operated on the Norwegian Continental Shelf are getting older and need to be modified to maintain the production performance at the desirable level. Each modification project is unique, and therefore needs to be evaluated and verified with consideration to all specifications. However, the oil and gas industry experience shows that the execution of modification projects within predefined time and cost are rather an exception, than a rule. In this paper we identify and discuss some of the factors that cause time and cost overruns in offshore facility modification projects. Furthermore, we discuss alternative cost methods to improve the quality and the accuracy of costs and time assessments.

Abstract. Many of the oil and gas fields on the Norwegian Continental Shelf are entering their tail-end phase of the production life cycle, and the production in temperate areas is slowly declining. Thus, the oil and gas industry looks northwards, and this trend can be seen in all countries bordering the Arctic. Arctic conditions in the form of climate, darkness, ice, remoteness from infrastructure, etc. will cause different and bigger strains on the human factor of the working personnel and machinery than can be seen in more temperate areas. Furthermore, the fact that less data exists -in the form of both statistics and experience of the operation and maintenance strategies to be executed in the Arctic areas -poses additional challenges for the design of offshore production facilities to be used in the less familiar environment of the Arctic. This paper introduces and discusses a method for maintenance cost and time assessments and their uncertainty, using the Monte Carlo simulation method. The method is to be employed when designing for operation and maintenance in Arctic conditions of offshore production facilities. The proposed method can enable a decision maker to assess and adjust maintenance time and cost data more realistically.