A Proprietary Complex Model for Atmospheric
API 650 Storage Tank Cost Estimation
in National Oil Company
FEATURED PAPER
By Samuel Yonathan Montang
Semarang, Indonesia
ABSTRACT
In the complex landscape of cost estimation for large-scale oil and gas projects, this study addresses the critical need for a precise and reliable model to estimate the cost of atmospheric API 650 storage tanks within a National Oil Company. The urgency of this issue is further emphasized in light of Hubbert’s peak theory, which predicts a peak in oil production followed by a decline.
The paper introduces an innovative methodology, developing Company Developed Complex Models (CDCMs) using Solver for Excel. This approach is rigorously validated through statistical measures, including R-square, Mean Squared Error (MSE), F, and Significant F values, ensuring the model’s accuracy and reliability.
An essential contribution of this research is the development of a Log-Linear Model, identified as the preferred solution among the CDCMs. This model is presented as a practical and robust tool for cost estimation, designed to adapt to the unique challenges of large-scale projects in the oil and gas sector.
Acknowledging the dynamic nature of cost estimation, the paper outlines a systematic approach for recalibrating the model, ensuring its responsiveness to changing conditions.
In conclusion, this paper contributes significantly to parametric cost estimation, presenting a comprehensive, validated, and adaptable model designed to meet the demanding standards of large-scale oil and gas projects, especially for Atmospheric API 650 storage tanks cost estimation.
Keywords: Parametric Model, Company Developed Complex Models, API 650, Atmospheric Tank, Cost Estimate, Estimation, AACE, Feasibility Study, National Oil Company, Hubbert’s Peak Theory
INTRODUCTION
The global oil and gas industry is grappling with a significant concern known as the concept of Peak Oil, more famously known as “Hubbert’s Peak Theory”[1]. This term refers to the hypothetical point at which global oil production will reach its maximum rate, after which production will gradually decline. As this peak approaches, the industry faces increasing pressure to optimize its operations and reduce costs. The implications of Peak Oil are far-reaching, affecting not only the oil and gas industry but also the broader global economy and environment. The decline in oil production signifies a transition towards more sustainable energy sources, but it also presents significant challenges, particularly for major oil and gas industry players.
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How to cite this paper: Montang, S. Y. (2023). Revolutionizing Feasibility Studies: A Proprietary Complex Model for Atmospheric API 650 Storage Tank Cost Estimation in National Oil Company; PM World Journal, Vol. XII, Issue X, October. Available online at https://pmworldlibrary.net/wp-content/uploads/2023/10/pmwj134-Oct2023-Montang-revolutionizing-feasibility-studies-a-proprietary-complex-model.pdf
Editor’s note: This paper was originally prepared during a 6-month long Graduate-Level Competency Development/Capacity Building Program developed by PT Mitrata Citragraha and led by Dr. Paul D. Giammalvo to prepare candidates for AACE CCP or other Certifications. https://build-project-management-competency.com/our-faqs/
About the Author
Samuel Yonathan Montang
Semarang, Indonesia
Samuel Yonathan Montang is an engineer with 8 (eight) years of professional experience in the oil and gas sectors. He works as an engineer at Indonesia’s largest National Oil Company. During his career, he has an experience as a Design Engineer and Cost Estimator. He has been involved in several projects, including Fuel Terminal Facilities, Aviation Fuel Supply Facilities, Piping/Pipeline Construction, and Jetty Facilities throughout South Sumatera, Java, Bali, and Nusa Tenggara Island.
He holds a bachelor’s degree in Engineering Physics from Bandung Institute of Technology (ITB), a master’s degree in Master of Business Administration (MBA) from Gadjah Mada University (UGM), and a certified engineer from The Institution of Engineers Indonesia (PII).
He is attending a distance learning mentoring course under the tutorage of Dr. Paul D. Giammalvo, CDT, CCE, MScPM, MRICS, Senior Technical Advisor to PT. Mitratata Citragraha (PTMC), to attain Certified Cost Professional certification from AACE International.
Samuel lives in Semarang, Indonesia, and can be contacted at sam.yonathan@gmail.com.
[1] Investopedia. (2007). Peak oil: Predictions and possible consequences. https://www.investopedia.com/terms/p/peak_oil.asp
