Petroleum, petrochemical and natural gas industries - Life cycle costing (ISO 15663:2021)

This document specifies requirements for and gives guidance on the application of life cycle costing
to create value for the development activities and operations associated with drilling, exploitation,
processing and transport of petroleum, petrochemical and natural gas resources. This document
covers facilities and associated activities within different business categories (upstream, midstream,
downstream and petrochemical).
The life cycle costing process as described in this document is applicable when making decisions
between competing options that are differentiated by cost and/or economic value. This document is not
concerned with decision-making related to the economic performance of individual options or options
differentiated by factors other than cost or economic value.
Guidance is provided on the management methodology and application of life cycle costing in support
of decision-making across life cycle phases. The extent of planning and management depends on the
magnitude of the costs involved, the potential value that can be created and the life cycle phase. It also
provides the means of identifying cost drivers and provides a cost-control framework for these cost
drivers, allowing effective cost control and optimization over the entire life of an asset.

Erdöl- und Erdgasindustrie - Betriebsdauerkosten (ISO 15663:2021)

Industries du pétrole et du gaz naturel - Estimation des coûts globaux de production et de traitement (ISO 15663:2021)

Petrokemična industrija ter industrija za predelavo nafte in zemeljskega plina - Stroški življenjskega cikla (ISO 15663:2021)

General Information

Status
Published
Public Enquiry End Date
14-Jan-2020
Publication Date
12-Apr-2021
Technical Committee
Current Stage
6060 - National Implementation/Publication (Adopted Project)
Start Date
25-Mar-2021
Due Date
30-May-2021
Completion Date
13-Apr-2021

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SLOVENSKI STANDARD
SIST EN ISO 15663:2021
01-maj-2021
Nadomešča:
SIST EN ISO 15663-1:2007
Petrokemična industrija ter industrija za predelavo nafte in zemeljskega plina -
Stroški življenjskega cikla (ISO 15663:2021)
Petroleum, petrochemical and natural gas industries - Life cycle costing (ISO
15663:2021)
Erdöl- und Erdgasindustrie - Betriebsdauerkosten (ISO 15663:2021)

Industries du pétrole et du gaz naturel - Estimation des coûts globaux de production et

de traitement (ISO 15663:2021)
Ta slovenski standard je istoveten z: EN ISO 15663:2021
ICS:
13.020.60 Življenjski ciklusi izdelkov Product life-cycles
75.020 Pridobivanje in predelava Extraction and processing of
nafte in zemeljskega plina petroleum and natural gas
SIST EN ISO 15663:2021 en,fr,de

2003-01.Slovenski inštitut za standardizacijo. Razmnoževanje celote ali delov tega standarda ni dovoljeno.

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SIST EN ISO 15663:2021
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SIST EN ISO 15663:2021
EN ISO 15663
EUROPEAN STANDARD
NORME EUROPÉENNE
March 2021
EUROPÄISCHE NORM
ICS 75.020 Supersedes EN ISO 15663-1:2006
English Version
Petroleum, petrochemical and natural gas industries - Life
cycle costing (ISO 15663:2021)

Industries du pétrole et du gaz naturel - Estimation des Erdöl- und Erdgasindustrie - Betriebsdauerkosten (ISO

coûts globaux de production et de traitement (ISO 15663:2021)
15663:2021)
This European Standard was approved by CEN on 2 February 2021.

CEN members are bound to comply with the CEN/CENELEC Internal Regulations which stipulate the conditions for giving this

European Standard the status of a national standard without any alteration. Up-to-date lists and bibliographical references

concerning such national standards may be obtained on application to the CEN-CENELEC Management Centre or to any CEN

member.

This European Standard exists in three official versions (English, French, German). A version in any other language made by

translation under the responsibility of a CEN member into its own language and notified to the CEN-CENELEC Management

Centre has the same status as the official versions.

CEN members are the national standards bodies of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia,

Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway,

Poland, Portugal, Republic of North Macedonia, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and

United Kingdom.
EUROPEAN COMMITTEE FOR STANDARDIZATION
COMITÉ EUROPÉEN DE NORMALISATION
EUROPÄISCHES KOMITEE FÜR NORMUNG
CEN-CENELEC Management Centre: Rue de la Science 23, B-1040 Brussels

© 2021 CEN All rights of exploitation in any form and by any means reserved Ref. No. EN ISO 15663:2021 E

worldwide for CEN national Members.
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SIST EN ISO 15663:2021
EN ISO 15663:2021 (E)
Contents Page

European foreword ....................................................................................................................................................... 3

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SIST EN ISO 15663:2021
EN ISO 15663:2021 (E)
European foreword

This document (EN ISO 15663:2021) has been prepared by Technical Committee ISO/TC 67 "Materials,

equipment and offshore structures for petroleum, petrochemical and natural gas industries" in

collaboration with Technical Committee CEN/TC 12 “Materials, equipment and offshore structures for

petroleum, petrochemical and natural gas industries” the secretariat of which is held by NEN.

This European Standard shall be given the status of a national standard, either by publication of an

identical text or by endorsement, at the latest by September 2021, and conflicting national standards

shall be withdrawn at the latest by September 2021.

Attention is drawn to the possibility that some of the elements of this document may be the subject of

patent rights. CEN shall not be held responsible for identifying any or all such patent rights.

This document supersedes EN ISO 15663-1:2006.

According to the CEN-CENELEC Internal Regulations, the national standards organizations of the

following countries are bound to implement this European Standard: Austria, Belgium, Bulgaria,

Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland,

Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Republic of

North Macedonia, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the

United Kingdom.
Endorsement notice

The text of ISO 15663:2021 has been approved by CEN as EN ISO 15663:2021 without any modification.

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SIST EN ISO 15663:2021
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SIST EN ISO 15663:2021
INTERNATIONAL ISO
STANDARD 15663
First edition
2021-02
Petroleum, petrochemical and natural
gas industries — Life cycle costing
Industries du pétrole et du gaz naturel — Estimation des coûts
globaux de production et de traitement
Reference number
ISO 15663:2021(E)
ISO 2021
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SIST EN ISO 15663:2021
ISO 15663:2021(E)
COPYRIGHT PROTECTED DOCUMENT
© ISO 2021

All rights reserved. Unless otherwise specified, or required in the context of its implementation, no part of this publication may

be reproduced or utilized otherwise in any form or by any means, electronic or mechanical, including photocopying, or posting

on the internet or an intranet, without prior written permission. Permission can be requested from either ISO at the address

below or ISO’s member body in the country of the requester.
ISO copyright office
CP 401 • Ch. de Blandonnet 8
CH-1214 Vernier, Geneva
Phone: +41 22 749 01 11
Email: copyright@iso.org
Website: www.iso.org
Published in Switzerland
ii © ISO 2021 – All rights reserved
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SIST EN ISO 15663:2021
ISO 15663:2021(E)
Contents Page

Foreword ..........................................................................................................................................................................................................................................v

Introduction ................................................................................................................................................................................................................................vi

1 Scope ................................................................................................................................................................................................................................. 1

2 Normative references ...................................................................................................................................................................................... 1

3 Terms, definitions and abbreviated terms ................................................................................................................................ 1

3.1 Terms and definitions ....................................................................................................................................................................... 1

3.2 Abbreviated terms ............................................................................................................................................................................... 8

4 Application ................................................................................................................................................................................................................. 8

4.1 Users of this document .................................................................................................................................................................... 8

4.2 Framework conditions ..................................................................................................................................................................... 9

4.3 Limitations ...............................................................................................................................................................................................10

4.3.1 General...................................................................................................................................................................................10

4.3.2 HSE considerations .....................................................................................................................................................11

4.3.3 Sustainability and climate change considerations ..........................................................................11

4.4 Benefits of life cycle costing ......................................................................................................................................................12

4.5 Life cycle costing within the life cycle phases ...........................................................................................................13

4.6 Life cycle costing subject matters ........................................................................................................................................15

4.7 Technology development ............................................................................................................................................................16

5 Management of life cycle costing ......................................................................................................................................................16

5.1 General ........................................................................................................................................................................................................16

5.2 Objectives for management of life cycle costing .....................................................................................................17

5.3 Roles and responsibilities ..........................................................................................................................................................18

5.4 Strategy and planning – life cycle costing management plan ......................................................................19

5.4.1 Life cycle costing management plan ............................................................................................................19

5.4.2 Life cycle costing process ......................................................................................................................................19

5.5 Contractual strategies ....................................................................................................................................................................20

5.6 Assessment and feedback ...........................................................................................................................................................20

5.7 Training and competence ...........................................................................................................................................................21

6 Methodology ..........................................................................................................................................................................................................21

6.1 General ........................................................................................................................................................................................................21

6.2 Step 1 — Scoping ...............................................................................................................................................................................21

6.2.1 Objective ...................................................................... .........................................................................................................21

6.2.2 Define scope and measures .................................................................................................................................22

6.2.3 Identify potential options......................................................................................................................................24

6.2.4 Define options .................................................................................................................................................................24

6.3 Step 2 — Cost drivers and data collection ...................................................................................................................24

6.3.1 Objective ...................................................................... .........................................................................................................24

6.3.2 Identify potential cost drivers ...........................................................................................................................25

6.3.3 Define cost elements .................................................................................................................................................26

6.3.4 Identify and collect data .........................................................................................................................................26

6.4 Step 3 — Modelling and analysis .........................................................................................................................................26

6.4.1 Objective ...................................................................... .........................................................................................................26

6.4.2 Develop model ................................................................................................................................................................26

6.4.3 Analyse and assess ......................................................................................................................................................27

6.4.4 Consider uncertainties and sensitivities ..................................................................................................27

6.5 Step 4 — Reporting and decision-making ....................................................................................................................28

6.5.1 Objective ...................................................................... .........................................................................................................28

6.5.2 Report and recommend ..........................................................................................................................................28

6.5.3 Decide and implement .............................................................................................................................................28

6.5.4 Capture lessons learned .........................................................................................................................................29

Annex A (informative) Life cycle costing implementation ..........................................................................................................30

© ISO 2021 – All rights reserved iii
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SIST EN ISO 15663:2021
ISO 15663:2021(E)

Annex B (informative) Life cycle phases ........................................................................................................................................................50

Annex C (normative) Life cycle costing techniques ............................................................................................................................58

Annex D (informative) Data input ........................................................................................................................................................................79

Annex E (informative) Examples............................................................................................................................................................................87

Annex F (informative) Assessment and feedback ............................................................................................................................100

Bibliography .........................................................................................................................................................................................................................102

iv © ISO 2021 – All rights reserved
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SIST EN ISO 15663:2021
ISO 15663:2021(E)
Foreword

ISO (the International Organization for Standardization) is a worldwide federation of national standards

bodies (ISO member bodies). The work of preparing International Standards is normally carried out

through ISO technical committees. Each member body interested in a subject for which a technical

committee has been established has the right to be represented on that committee. International

organizations, governmental and non-governmental, in liaison with ISO, also take part in the work.

ISO collaborates closely with the International Electrotechnical Commission (IEC) on all matters of

electrotechnical standardization.

The procedures used to develop this document and those intended for its further maintenance are

described in the ISO/IEC Directives, Part 1. In particular, the different approval criteria needed for the

different types of ISO documents should be noted. This document was drafted in accordance with the

editorial rules of the ISO/IEC Directives, Part 2 (see www .iso .org/ directives).

Attention is drawn to the possibility that some of the elements of this document may be the subject of

patent rights. ISO shall not be held responsible for identifying any or all such patent rights. Details of

any patent rights identified during the development of the document will be in the Introduction and/or

on the ISO list of patent declarations received (see www .iso .org/ patents).

Any trade name used in this document is information given for the convenience of users and does not

constitute an endorsement.

For an explanation of the voluntary nature of standards, the meaning of ISO specific terms and

expressions related to conformity assessment, as well as information about ISO's adherence to the

World Trade Organization (WTO) principles in the Technical Barriers to Trade (TBT), see www .iso .org/

iso/ foreword .html.

This document was prepared by Technical Committee ISO/TC 67, Materials, equipment and offshore

structures for petroleum, petrochemical and natural gas industries, in collaboration with the European

Committee for Standardization (CEN) Technical Committee CEN/TC 12, Materials, equipment and

offshore structures for petroleum, petrochemical and natural gas industries, in accordance with the

Agreement on technical cooperation between ISO and CEN (Vienna Agreement)

This first edition cancels and replaces ISO 15663-1:2000, ISO 15663-2:2001 and ISO 15663-3:2001,

which have been technically revised. The main changes compared to the previous editions are as

follows:
— Clause 3: several new terms, definitions, symbols and abbreviations;
— Clause 4: a new clause has been introduced;

— Clause 5 and Clause 6: new clauses describing life cycle costing management and methodology

which have been restructured from previous editions;
— Annex A: contains restructured text from ISO 15663-3:2001;

— Annex C: new annex describing life cycle costing techniques which also includes text from

ISO 15663-2:2001;

— Annex B, Annex D, Annex E and Annex F are new annexes, but contain also some elements from the

previous editions.

Any feedback or questions on this document should be directed to the user’s national standards body. A

complete listing of these bodies can be found at www .iso .org/ members .html.
© ISO 2021 – All rights reserved v
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SIST EN ISO 15663:2021
ISO 15663:2021(E)
Introduction

Cost management within the petroleum, petrochemical and natural gas industries is important and

will benefit from the adoption of a common and consistent approach to life cycle costing.

Life cycle costing is the systematic consideration of costs and revenues associated with alternative

options required to fulfil the objectives of the business. It is an iterative process of planning, estimating

and monitoring costs and revenue differences throughout an asset's life. It is used to support the

decision-making process by evaluating alternative options and performing trade-off studies. While the

largest benefits are typically achieved in the early life cycle phases, it is equally applicable to all life

cycle phases and at many levels of detail.

The petroleum, petrochemical and natural gas industries have historically assessed the financial

viability of project options based on minimum capital expenditure and achieving project schedule,

whilst operating expenditures and lost revenue have received less focus in the decision-making process.

This has ignored potentially large cost factors and has in some cases resulted in selecting non-optimal

solutions.

Recognizing this situation, life cycle costing is increasingly being applied by a variety of organizations

within the industry. All participants in the process — operators, contractors and vendors — can have a

substantial impact on the life cycle cost, and it is not until all are involved that the benefits sought from

the use of life cycle costing will be realized.
vi © ISO 2021 – All rights reserved
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SIST EN ISO 15663:2021
INTERNATIONAL STANDARD ISO 15663:2021(E)
Petroleum, petrochemical and natural gas industries —
Life cycle costing
1 Scope

This document specifies requirements for and gives guidance on the application of life cycle costing

to create value for the development activities and operations associated with drilling, exploitation,

processing and transport of petroleum, petrochemical and natural gas resources. This document

covers facilities and associated activities within different business categories (upstream, midstream,

downstream and petrochemical).

The life cycle costing process as described in this document is applicable when making decisions

between competing options that are differentiated by cost and/or economic value. This document is not

concerned with decision-making related to the economic performance of individual options or options

differentiated by factors other than cost or economic value.

Guidance is provided on the management methodology and application of life cycle costing in support

of decision-making across life cycle phases. The extent of planning and management depends on the

magnitude of the costs involved, the potential value that can be created and the life cycle phase. It also

provides the means of identifying cost drivers and provides a cost-control framework for these cost

drivers, allowing effective cost control and optimization over the entire life of an asset.

2 Normative references

The following documents are referred to in the text in such a way that some or all of their content

constitutes requirements of this document. For dated references, only the edition cited applies. For

undated references, the latest edition of the referenced document (including any amendments) applies.

ISO 14224:2016, Petroleum, petrochemical and natural gas industries — Collection and exchange of

reliability and maintenance data for equipment

ISO 19008:2016, Standard cost coding system for oil and gas production and processing facilities

ISO 20815:2018, Petroleum, petrochemical and natural gas industries — Production assurance and

reliability management
3 Terms, definitions and abbreviated terms
For the purposes of this document, the following terms and definitions apply.

ISO and IEC maintain terminological databases for use in standardization at the following addresses:

— ISO Online browsing platform: available at https:// www .iso .org/ obp
— IEC Electropedia: available at http:// www .electropedia .org/
3.1 Terms and definitions
3.1.1
abatement cost
cost generated for the removal or reduction of an undesirable item

Note 1 to entry: An item can be several types of avoided emissions, e.g. emissions to air and water, but most

commonly used for CO emission reductions. See further information in Clause C.7.
© ISO 2021 – All rights reserved 1
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SIST EN ISO 15663:2021
ISO 15663:2021(E)
Note 2 to entry: Abatement cost can be both CAPEX and OPEX cost elements.
3.1.2
asset
item, thing or entity that has potential or actual value to an organization

Note 1 to entry: Physical assets usually refer to equipment, inventory and properties owned by the organization.

Physical assets are the opposite of intangible assets, which are non-physical assets such as leases, brands, digital

assets, licenses, intellectual property rights, reputation or agreements.

Note 2 to entry: A grouping of assets referred to as an asset system (see ISO 55000:2014, 3.2.5) could also be

considered as an asset.
[SOURCE: ISO 55000:2014, 3.2.1, modified — Note 1 to entry not included.]
3.1.3
best available techniques
BAT

latest stage of development (state of the art) of processes, of facilities or of methods of operation which

indicates the practical suitability of a particular measure for limiting discharges, emissions and waste

[SOURCE: OSPAR Convention: 1992, Appendix 1]
3.1.4
break-even price
price which applied flat to the production sold gives N =0

Note 1 to entry: The production can be related to material such as oil, equipment or services. See further

information in C.6.3.8.
3.1.5
break-even volume
volume where a stream of revenues and cost balance results in N =0

Note 1 to entry: The volume can be related to material such as oil, equipment or services that generates income.

See further information in C.6.3.7.
3.1.6
capital efficiency index
CEI

NPV of a project after tax divided by the absolute value of the NPV of cash flow after tax up to a defined

end point

Note 1 to entry: The capital efficiency index illustrates value creation relative to capital exposure. See further

information in C.6.3.9.

Note 2 to entry: The absolute value of the net present value of cash flow after tax applies until the point where

annual cash flow becomes positive [see Formula (C.8)].
3.1.7
capital expenditure
CAPEX
investment used to purchase, install and commission an asset

Note 1 to entry: See further information regarding estimation of CAPEX in Clause C.2.

2 © ISO 2021 – All rights reserved
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SIST EN ISO 15663:2021
ISO 15663:2021(E)
3.1.8
code of resource
COR

hierarchical structure of SCCS that classifies all project resources according to the type of contract/

resource that is involved in the activity and has an associated set of rates

Note 1 to entry: Specific code of resource structure exist, i.e. SCCS is described in ISO 19008:2016. COR codes can

be found at https:// standards .iso .org/ iso/ 19008.
[SOURCE: ISO 19008:2016, 2.1]
3.1.9
committed costs

fixed costs that cannot be eliminated or even cut back without having a major effect on profits or on the

organization's objectives
3.1.10
constraint

limit imposed externally or internally by the project that rules out the selection of an option if the limit

is exceeded
3.1.11
cost breakdown structure

structure related to the methods that an organization employs to record and report costs

Note 1 to entry: Specific cost breakdown structure exists, i.e. SCCS is described in ISO 19008:2016. See https://

standards .iso .org/ iso/ 19008.
3.1.12
cost data
cost information associated with a defined cost element
Note 1 to entry: Cost data can be qualitative or quantitative cost information.
3.1.13
cost driver

major cost element which, if changed, will have a major impact on the life cycle cost of an option

3.1.14
cost element
subset at any level of the total cost for a cost breakdown structure

Note 1 to entry: The cost of an object/item, resource, activity or a combination of those.

Note 2 to entry: Specific cost element exists when ISO 19008:2016 is applied, i.e. the term ‘cost item’ as defined

in 3.1.16.
3.1.15
cost issue

cost element which, if changed, will not have a major impact on the life cycle cost of an option

3.1.16
cost item
particular part/level that is coded/classified using the SCCS
[SOURCE: ISO 19008:2016, 2.2]
© ISO 2021 – All rights reserved 3
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SIST EN ISO 15663:2021
ISO 15663:2021(E)
3.1.17
discount rate
rate of return used in determining the net present value of future cash flow

Note 1 to entry: The discount rate is normally given on an annual basis, but can also be given based on another

time period, e.g. a monthly or quarterly basis.
Note 2 to entry: See further information in C.6.2.
3.1.18
economic evaluation measure
quantitative measure used to quantify economic characteristics

Note 1 to entry: Economic evaluation measures may apply for the economic comparison where only subsets of

costs are needed (e.g. subset of CAPEX, OPEX and revenue factors).
Note 2 to entry: See further information in C.6.3.
3.1.19
fixed cost
cost that does not vary with produc
...

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