Petroleum and Natural Gas Life Cycle Costing

We have greatly discussed life-cycle thinking in previous posts. This idea is significant today because of the need to prevent environmental damage in any way possible. Life-cycle thinking is also an important component of ISO 14001:2015. Managing the externalities at every point of the product life-cycle is important for almost every industry, since it not only prevents environmental damage but also helps different organizations save money and resources. Life-cycle thinking is especially important for industries that produce conventional fuel resources. ISO 15663-3:2001 – Petroleum and natural gas industries - Life-cycle costing - Part 3: Implementation guidelines details the proper methods of implementing life-cycle analysis into the petroleum oil and natural gas industries.

 ISO 15663-3:2001 – Petroleum and natural gas industries - Life-cycle costing
Oil (petroleum) and methane (natural gas) are some of the primary resources that contribute to the massive collection of greenhouse gas emissions in the United States. However, they are also the resources that we greatly depend upon for our day-to-day lives. Methane has become a key source of electricity generation in the past several years, producing 27% of all electricity in the United States in 2014. Gasoline accounts for almost half of the petroleum products that are consumed in the country, which is used to power combustion engines in automobiles. According to the EPA, in 2013, transportation contributed to 27% of the total greenhouse gases in the United States, 90% of which was petroleum-based. Even though this is such a contributing factor of greenhouse gas pollution, gasoline-powered cars are a necessity, since they are the foremost cost-effective method of traversing the population-scattered nation of the United States.

Oil and methane should be monitored at each stage of the product life-cycle to limit environmental damage. While the principal objective of ISO 15663-3:2001 is not necessarily to reduce environmental impacts, its interests actually align with those of more green intentions. While life-cycle thinking is used as a means to save money in this standard, many of its recommendations are also beneficial for the environment. For example, the standard recommends several possibilities for a methane or petroleum power plant at the end of its life. One of these is the option to reuse part or all of it. While this will help to save costs with disposal and possible establishment of another power plant, it will also limit the amount of pollution and emissions that would come with wasting the materials and having to acquire new ones.

The guidelines in ISO 15663-3:2001 specify how life-cycle costing within an organization should be organized, coordinated, and managed. This helps to guarantee sufficient communication between the operator, contractor, and vendor, and to help them all better manage uncertainty. Since it is meant to apply to many different organizations in a vast range of places and cultures, it provides many different possibilities, leaving the final decision to the organization itself.

ISO 15663-3:2001 is part 3 of a group of standards that are intended to manage life-cycle costs in petroleum and natural gas industries. The other standards in this series include:



Life-cycle thinking does not have to focus primarily on the product and solving its direct impacts. It is possible to solve two somewhat-unrelated problems with the same effort. For example, municipal solid waste (MSW) landfills are the third-largest human-generated source of methane emissions in the United States. From the EPA’s Landfill Methane Outreach Program, landfill gas (LFG) is captured and used for purposes such as powering generators and providing homes with cooking gas. This helps to capture some of the methane that could go into the atmosphere otherwise and use it in a more-sustainable way. While this is the solution for the problem of methane pollution from landfills, it actually benefits the product life-cycle of methane for electricity generation, since it cheapens the procurement of resources stage.
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