Understanding the Energy Project Lifecycle
Introduction
The project lifecycle provides a clear structure for managing projects, ensuring that all aspects are properly planned and executed.
This helps in avoiding confusion, maximizing efficiency, and minimizing risks.
Knowing all these steps is crucial to anticipate when one should start to be involved in a project. The right timing will ensure having the attention of all parties involved. When it comes to innovation, solutions must be pushed at an earlier stage of the lifecycle than for standard solutions.
The sector of Energy (Oil & Gas, Petrochemicals, Renewables, Energy Transition…) is following clear lifecycle plans due to the complexity and financial risk of those projects.
Suppliers being selected via tenders, they must have a deep knowledge of the different lifecycle steps to compete on those projects
The Key Stages of an Energy Project
1. Concept and Feasibility
The Feasibility study is the first stage of a project during which the End User generally supported by an engineering company will investigate the most convenient technologies or processes to be used.
The Feasibility study may also be called Pre-FEED.
This Feasibility study will also integrate all the corresponding costs aspects. The conclusions of the “Feasibility study” are barely a straight forward recommendation of go or no go but more a pragmatic list of conditions which can influence positively or negatively the execution of the project and to make it profitable over the years.
Usually, different scenarios of capacity are also considered during this stage to estimate the optimal financial performances in respect with the costs of the license, the construction costs and the local constraints which may be related to the site, the feeding resources, the market, the environment, etc…
The conclusion of this feasibility study can already impact selection of future suppliers and licensors.
Projects can change size or configuration during the execution phases following this Feasibility study.
2. Front End Engineering Design (FEED)
This acronym FEED stands for the Front End Engineering and Design of a project. The FEED may also be called “Basic Design” or even “Basic”. This phase follows the Feasibility Study to describe in more details the different technical and financial options considered during the feasibility study.
The FEED will define the process, the plot plan, the long lead items, most of the key requirements, and the preliminary vendors list. Potential licences will also be selected during this phase.
For the end users, the FEED will condition the profitability of the project and how much flawless the future construction will be in the anticipating potential risks.
For the large projects involving multiple production units, it will also prepare the break-down of the different packages to be posted for bid to the engineering companies and contractors at the execution phase.
3. Final Investment Decision (FID)
The Final Investment Decision (FID) is often prepared during the Front End Engineering and Design (FEED) stage. It will trigger the Engineering, Procurement and Construction (EPC) phase.
The Oil & Gas and Petrochemical companies use to evaluate permanently a large broad band of projects in term of:
- Return on capital employed
- Risks
- Financing structure
Synergies between upstream and downstream in respect with company’s strategy in this area and access to resources.
A positive evaluation in conclusion of the FEED does not means that the FID will come systematically because all the projects of the company are ranked according to the criteria above and only the best projects of the list may go one.
The investment decision is part of the Capital Investment Decision (CID) as part of the long term corporate finance decisions based on key criteria to manage company’s assets and capital structure.
The Capital Investment Decision (CID) is based on:
- Investment decision
- Financing decision
- Dividend decision
In practice it means that the FID will be made only when the company has completed the financing and defined its dividend strategy for the year to come.
Since the FID is attached to the financing which may have an impact on the debts level of the company and to the dividend, the FID will be made by the Board of the company based on the proposal of the Executive Committee.
The FID may be postponed until the Board and the Executive Committee are aligned.
This point takes a particular importance in large project driven by a joint venture between two or more partners.
4. Engineering, Procurement, Construction (EPC)
The acronym EPC stands for Engineering Procurement and Construction.
It refers to the execution phase following the “FEED” during which the engineering companies design all the details of the project for execution, proceed to the procurement of all the equipment and services under the name of the End User and finally construct the new plant including the commissioning and start up, until the hand over to the operator.
The operator may be the End User himself or a JV with multiple End Users being involved. Because of the level of detail requested for the execution this phase may also be called “Detailed design”.
Two different contracting models exist: Lump Sum Turn Key (LSTK) and Reimbursable
A “Lump Sum Turn Key (LSTK) Contract” refers to bidding terms and conditions between the End User and an EPC which don’t allow any financial change for a given scope of work until the EPC is able the deliver the newly built plant in full operations to the End User.
A reimbursable contract refers to a type of contract in which the EPC shall pay all direct and indirect expenditures he has incurred on the basis of actual cost without an overlay for profit. Under this contractual arrangement, the End User undertakes to pay the EPC cost (i.e. the actual cost of labor, plant and materials utilized in the execution of the construction works). In addition to the prime cost, the EPC is paid an agreed sum to cover profit and to establish charges.
5. Commissioning and Startup
Commissioning and startup mark the critical transition from construction to operational readiness. This phase involves the systematic testing of equipment and processes to ensure that everything functions safely and according to design specifications. Key activities include flushing and cleaning of piping systems, instrument calibration, pre-startup safety reviews, and energisation of electrical systems.
Operational readiness teams work closely with EPC contractors to troubleshoot issues, simulate operational scenarios, and verify system integration across mechanical, electrical, and control components. For large-scale energy facilities—such as refineries, LNG terminals, or offshore platforms—this stage can take several months and requires precise coordination and detailed procedures.
Startup is not without challenges. Unexpected faults, vendor delays, or incomplete handovers can extend timelines and increase costs. A well-planned commissioning strategy, including early testing of critical systems, can mitigate these risks and ensure a safe, smooth transition into stable operations.
6. Operations and Maintenance
Once operational, the facility enters a phase where sustained performance, safety, and reliability are paramount. During operations, teams focus on optimising production output, energy efficiency, and cost-effectiveness while complying with environmental and safety regulations.
Maintenance strategies vary based on asset type and criticality. Many operators adopt a predictive or condition-based approach, using sensors and real-time monitoring to detect issues before they escalate. This improves uptime and reduces unplanned outages.
Additionally, asset integrity management becomes a long-term discipline—especially in offshore and high-pressure environments—ensuring the structural and mechanical health of equipment over decades of use. Data from operations also feed back into continuous improvement efforts, helping to refine processes, reduce emissions, and extend asset life
7. Decommissioning
At the end of the exploitation, when production has ceased, decommissioning is the process of removing the infrastructure, so that the producing area is left in a safe and environmentally acceptable condition.
The Decommissioning must comply with several laws, regulations and environmental regulations. Several principles should be taken into consideration. Among them:
- Polluter-pay principle: The costs of pollution or damage to the environment should be paid by the responsible party
- Ecosystems approach: This refers to strategies that are based on integrated management of land, water and living resources that promotes conservation and sustainable use in an equitable way
- Precautionary principle: Threats of serious or irreversible harm to society or the environment, the lack of full scientific certainty regarding the extent of that damage should not be used as a reason for not including measures to prevent or minimize such potential adverse effects.
Conclusion
Understanding the full lifecycle of an energy project—from concept to decommissioning—is essential for successful project delivery, risk management, and long-term value creation. Each phase builds on the one before it, and missteps early in planning or design can cascade into costly delays or performance issues later on.
Whether you’re developing upstream oil fields, petrochemical complexes, or renewable infrastructure, integrating lifecycle thinking from the outset enables better decisions, stronger execution, and greater resilience. As the energy sector evolves under the pressures of decarbonisation, digitalisation, and geopolitical change, mastering the project lifecycle is more important than ever for project owners, developers, and investors alike.
Interested in knowing more about Energy Projects?
2b1st Consulting is supporting companies working on Energy projects with data, expertise and network. Our experts have extensive knowledge of projects and have access to an unique granularity for all valves and pumps manufacturers.
If you want to know more about projects subscribe to our newsletter or contact us at Ask a demo
