Cost Optimization and Risk Management Program for the Fuel Supply Network in an Oil & Gas Swamp Operation

Abstract

Marine activity is a critical part of an oil & gas company that operates in the swamp area. The company utilizes rigs, barges, and boats to achieve maximum production. Fuel supply for marine fleets is highly essential to ensure smooth operation. Since fuel cost becomes one of the biggest components of operating expenses (OPEX), the stakeholders highly encourage cost optimization programs to ensure business profitability. However, any optimization program shall have a robust risk management program to avoid disturbance in the operation and potential financial losses. The research aims to select the best fuel supply network in the swamp operation area of an oil & gas company using four criteria (operational expenses, service reliability, value creation, and health safety & environment) based on the literature review and subject matter experts’ analysis. The study will analyze several alternatives using the Analytical Hierarchy Process (AHP) as a decision-making tool and Failure Mode Effect Analysis (FMEA) as the risk management method. The result shows that the hybrid network has the highest rating in AHP with a 33.7% rating and the lowest total risk priority number with 212 points.