Petro university dtu 2014 offshore exploration ppt w.c. and csr

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Information about Petro university dtu 2014 offshore exploration ppt w.c. and csr

Published on February 20, 2014

Author: Etly


PetroUniversity DTU 2014 OilSim Exploration

Login  See your login slip

You are an oil & gas company...

Your Role  …and your team’s challenge is to explore, develop and produce oil and gas in a fictitious petroleum province

Money and Credibility You start with $200million cash You can apply for more money later  Maximise profit – create company value   Creating highest company value possible, measured by the net value of the oil and gas fields discovered MINUS all costs involved.  Correct answers and sensible decisions are awarded with Credibility Points (CPs)

Oil and Gas Value Chain Complete Value Chain Upsteam Value Chain License promotion Exploration Upstream Appraisal Field Development Operations

PetroUniversity Exploration Value Chain Explore Sedimentary Basins Upstream License Promotion – Prospecting and Bids Partnerships, Exploration Drilling and Appraisal

Learning cycle

Learning Outcomes Where and how to find hydrocarbons Environmental issues Exploration Licensing rounds Farm-in and Partnerships - negotiations  Drilling rigs and Sub-contractors  Economically viable volumes - reducing uncertainty  Team work, Critical decision making, analytical skills  Multi-tasking and adaptability  Value of Licenses and companies  Career and job function appreciation  Learn through experience    

Challenge 1 Explore Sedimentary Basins Upstream License Promotion – Prospecting and Bids Partnerships, Exploration Drilling and Appraisal

First task Challenge:  Nominate 10 blocks to be included in the licensing round Procedure:  Buy and study Environmentally Sensitive area map  Buy and study magnetic and gravimetric surveys  View map to determine average block water depth  Study data to determine if blocks are in sedimentary basin and most suitable to be included in a Licensing Round

Map Columns e.g C1 and C54 Rows e.g R15 and R97 Blocks are divided into smaller cells e g. R45,C92

Environmentally Sensitive area map Red areas You will not be awarded blocks that contain any red area Blue areas Blocks that contain wholly blue areas are awardable

Rock cycle and sedimentary basins Sedimentary basin Source:

Gravimetric surveys • Gravity is a force of attraction between objects of mass • If the speed of attraction is lower than expected this can indicate low density rocks in the subsurface • Sedimentary rocks have a low density due to their porosity. • The lower the gravitational pull – the thicker the sedimentary rock is likely to be

Survey shop and gravimetrics     Survey tab Buy Gravimetric surveys South-east quadrant The red and yellow areas indicate basin

Earth’s magnetic fields The Earth’s core creates magnetic fields  Anomalies of the expected magnetism are found in different sub-surfaces  Lower concentration of magnetic materials can indicate sedimentary rocks  Can contain hydrocarbons  Source:

Magnetic surveys     Sedimentary rocks in the basins have a lower concentration of magnetic materials than the surrounding crystalline rocks Basins have a low magnetic field Pink area is thickest rock of low magnetism Magnetic survey: South-east quadrant

Compare basins and blocks E.g. block 650 - Inside basin? Water depth?

Check water depth

Nominate 10 blocks To nominate a block – click on it To deselect a block – click on it

Recap Environmentally sensitive? In a sedimentary basins? Water depth? Shortlist possible blocks you would be interested in buying 2d seismic for the next challenge  Click on a block to nominate  Nominate 10 blocks  Up to 100 credibility points awarded- based on water depth and position in basin    

Challenge 1 Your turn

Challenge 2 Explore Sedimentary Basins Upstream License Promotion – Prospecting and Bids Partnerships, Exploration Drilling and Appraisal

Identify promising blocks The government has decided which blocks to offer in the first licence round  Challenge: Identify the 3 most promising blocks and submit a bid to the Government for these licences  Bid includes 3 blocks, well commitments and CSR project completion 

Source and Migration 2. MIGRATION ROUTE Hydrocarbons driven through permeable and porous rock 3. RESERVOIR ROCK Rock with porosity and permeability 1. SOURCE ROCK where organic material is put under sufficient pressure and temperature 4. CAP ROCK Impermeable rock that stops migration of hydrocarbons 5. STRUCTURAL OR STRATIGRAPHIC TRAP PROSPECT

Traps in OilSim Geological “pockets”, that might contain hydrocarbons. Anticline trap Fault trap Stratigraphic trap (c) OLF Salt dome trap

Play element mapping Source • • • • • Presence Quality Maturation Migration Timing Reservoir • Presence • Quality Seal • Presence • Capacity

Common Risk segment maps   Play elements are converted to risk segment maps Risk maps for each element are combined into Common Risk Segment map - CRS Source:

CRS surveys    On survey tab To right side of screen Might need to scroll down to find

Common risk segment maps Highest probability Moderate probability Lowest probability Surface Layer 3 Eocene 1500m below the seabed Layer 2 Paleocene 2500m below the seabed Layer 1 Cretaceous 3500m below the seabed

2D Seismic surveys Traps can be found with seismic surveys  2D seismic survey is a cross section of geological layers in one direction  2D seismic surveys are used for locating prospects 

Order 2D seismic  Survey Tab  Order from Survey Shop

Order seismic What type of data do you want?  Select the block from dropdown list  Columns or Rows  Unprocessed or processed data  Interpreted or not

View the Seismic

2D seismic in OilSim Unprocessed Interpreted Processed Red is top of the cap rock Green is top of the reservoir rock

Anticlinal traps

Fault traps Leakage? Sealing rock

Leakage? The cap rock

Whole block seismic R17 R19 R17 R19 R21 R21 R23 R23

Interpreting 2D seismic Check rows on each layer - Add line on columns where prospect seen Check columns on each layer - Add line on rows where prospect seen Dots represent anywhere within a column or row reference A prospect

Prospect counting 1  How many prospects can you see in each block? 1 2 3 5 4 6 2  5 6 Can deviate the drilling by one cell per layer

Cross section Column Row Basin,Source Prospect, Reservoir

Interpreting 2D seismic Check rows on each layer - Add line on columns where prospect seen Check columns on each layer - Add line on rows where prospect seen Dots represent anywhere within a column or row reference A prospect

Anticlinal traps

Enter bids Choose which blocks you want to bid for  For each block, say how many exploration wells you are willing to drill  Do NOT promise to drill more wells than there are prospects  An estimated cost is shown  You will initially only be awarded one block 

Corporate Social Responsibility Often part of License Bid Corporal Social Responsibility budget and proposed types of activities  Activities that oil and gas companies do to serve the communities they operate in  CSR projects usually to develop the local communities in education, social welfare, and business  

CSR tab

CSR projects Some are greyed out, because the team does not have enough CP, enough CSR budget, or enough cash to do them  Each has a cost, and a number of possible outcomes  Each outcome has a probability and either negative or positive CP  In the CSR tab you can see the minimum and maximum CP you can get, as well as the probability for getting the maximum CP 

Project Example   This project costs $8M If it goes well, the team gets 40 CP  The likelihood of this is 60%   If it goes badly, the team gets zero CP Minimum required CP is zero


Limitations   Lots of different types of Projects to choose from You only have $30M budget for CSR in each licensing round  CSR funds that you don’t spend in one round are transferred to the next You cannot initiate a project if it has the potential to make your CP’s go into negative  You cannot initiate a project if you don’t have the cash for it  Each project can only be run once per team 

Learning points CSR is about caring for the local society – and making a difference for the people living where you operate  Not all projects are sound   Bribery does not pay   Some projects cost a lot, but do not give so much return Some projects are riskier than others

Recap on challenge 2 Common Risk Segment surveys to see which blocks to examine closer  2D surveys seismic to identify which ones have the most or largest structures  Check water depth  Go for shallow water blocks if possible?  Remember to submit 3 bids 

Challenge 2 Your turn

Challenge 3 Explore Sedimentary Basins Upstream License Promotion – Prospecting and Bids Partnerships, Exploration Drilling and Appraisal

Challenge 3 Message sent to all teams with the results  Credibility Points are given for prosperity of the blocks you bid for  Every team has got one exploration license 

Review Challenge 2 results

Challenge 3a Partnerships  Compulsory: Farm-out minimum 20% from your license  Acquire 3D Seismic interpretations for the block you operate, and  Get others to invest 20% or more in your license – you can show/send 3D seismic  Optional: farm-in to other licenses   Study the results from the licensing round View other company’s 3D seismic

Why partner?   Spread the risk Increase probability of profit

Water depth If awarded an alternative block  Check your water depth  Find this at the bottom of the BLOCK page 

Real 3D seismic  Shows the subsurface structure in a cube.

3D Seismic in OilSim Layer 3 Eocene Layer 2 Paleocene Layer 1 Cretaceous Prospects are no guarantee of oil or gas


Farm-in Enter the percentage and total amount you have agreed to offer Minimum $100,000 per % Add a message to the seller Press “Send offer”

Farm-in All your farm-in offers to other teams are shown under “Investing” on the right-hand side of the homepage . This is where a team offers investments to other teams for a % of their blocks

Farm-in  When a team receives a Farm-In offer it appears under Financing. This is where a team can receive finance or money for a % of their own blocks

Farm-in   License OWNER decides whether to ACCEPT or REJECT the offer Partnerships established every time a license owner accepts an offer.

Partnership terms Partners pay a proportional share of all future costs Partners receive a proportional share of the net proceeds from oil and gas  Original operator makes all decisions regarding drilling  Operators can farm-out up to 70% of license, but must retain 30%  

Partnership choices       What do you need to know about your block? What proposition do you have? What do you need to know about potential partners? Information about their block? Team involvement in choices and offers Overall partnership plan

Ready to drill?

Challenge 3a Your turn

Choose Rig  Choose the right rigs for your water depths  Jack-up rigs for shallow waters  Up to 100m  Semi-submersible rigs for middle waters  Up to 600m  Drillships for the deepest waters  Over 600m  Rig cost = drilling days * day rate

Rigs available Limited number of rigs 20 minutes to complete each drill  Queues  Dynamic prices  

Service providers Up to 9 Star quality More stars - better reputation/health and safety record  Less stars - cheaper, but reliability is low  

Environmental Impact Assessment

Drill Layer 3 Eocene Layer 2 Paleocene Layer 1 Cretaceous

Selecting drill cells  Can choose a cell on all three layers  Deviate by only one cell per layer, either vertically, horizontally or vertically

Controls and estimated costs Oil spill or Gas Blowout control Estimated cost

Drilling days

Drilling Result    Proven volume (MBOE) counts Test may increase proven volume Remember to tick test boxes!

After testing Proven volumes (MBOE) has increased Possible volumes have reduced

Reinterpret seismic

Block information

Discovered prospects

Value if developed

Value calculation 25% of 8 MBOE @ $50 Expected costs if you developed the field (capex) and produced the oil (opex) If total expenses are higher than the sales value, the value of the license is zero

Appraisal  From Possible volume to proven reserves

Drilling – Wildcats & Appraisals Wildcats Drill wildcats – establish reservoirs  Continue appraisal drilling to increase the proven reserves  Appraisals

Appraisal drilling

Increasing proven volumes   Appraisal wells - proven reserves increase Range between proven and possible is decreased

Effect on calculation of licence Expected costs if you developed the field (CAPEX) and produced the oil (OPEX) Now total expenses are lower than the sales value and so we have a positive licence value

Challenge 3 decisions    After your first drill into a prospect, reinterpret the seismic Decide how many appraisal wells to drill for each discovery Continue partnerships – value of licences increasing - % offered must ≥ % value in real money (e.g Licence Value now $500m, buying a 10% share would give min. bid of $50m)  Ultimately, you should:  Get a positive net present value,  Or conclude that additional appraisal wells will not result in an improvement in net present value

Apply for more funds    Click on Apply for More Funds Tab. 1 CP for each $100,000 applied for. Answer three questions: Outcome Credibility Points All Correct Full Amount Keep All One Wrong Full Amount Keep Half Two Wrong Half Lose All All Wrong  Cash None Lose All Expensive money if less than 10 credibility points: Apply for cash and be fined $5million for each $20million requested.

Challenge 3b Your turn

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