Athens2006 Course
1. Brief
2. Methods
3. Principles
4. Intelligence
5. Modelling
6. Geospatial
7. Satellite
8. Economics
9. Data stack
10. Spills
11. Integration
12. Prospect
13. Development
14. Future
8. Economics

From oil finds to full cycle economics
R. Sinding-Larsen - NTNU, Trondheim - Norway

Topics :

ExxonMobil
Building partnerships in Africa
June 26, 2003


@ ExxonMobil

 
 

 1 - Using a dedicated economics modelling tool - GeoX

    GeoX is a family of knowledge based tools providing an integrated decision support solution for prospectivity and economic analysis of oil investment projects

 2 - The GeoX application model

    Volumetric model :

    • closure
    • thickness
    • net/gross
    • porosity
    • saturation
    • trap fill
    • volume formation
    • %gas
    • recovery factor

    Two levels risk model. Risks of :

    • source rock
    • migration
    • timing
    • reservoir
    • trap
    • accumulation

    HC resources and dry hole risk

    Full cycle prospect valuation :

    • well production rate
    • plateau rate
    • decline rate
    • duration development
    • duration exploration
    • CAPEX
    • OPEX
    • HC prices
    • inflation
    • fiscal regime

    After tax NPV and IRR

 3 - Full Cycle Economic Modelling

  • Well production rate - production capacity of a well
  • Plateau rate - max yearly production capacity
  • Decline rate - % annual decline in production
  • Duration development - time spent to develop the production facilities
  • Duration exploration - time spent before drilling a prospect
  • CAPEX - capital expenditures
  • OPEX - operational expenditures
  • HC prices - anticipated prices during production
  • Inflation - anticipated cost increases during production
  • Fiscal regime - system used to generate government take

 4 - Life cycle model

    • Seismic Acquisition
    • Exploration drilling
    • Appraisal drilling
    • Construction & production drilling
    • Oil production
    • Gas production
    • Disposal

    Timing of operations : seismics, exploration, development, oil & gas production and decommissioning

 5 - The oil production curve

The oil production over time as a result of GeoX simulation

Oil production of the Doba fieldOil production of the Doba field 

 6 - Full Cycle Overall Modelling Framework

  • In : oil resource estimates
  • Expl, Dev & Production
  • Costs & Revenues
  • Corporate Model
  • Out : Cash flow
  • Fiscal Regime
  • Economic Value
  • Out : NPV, IRR, EMV

 7 - Cash flow chronology

The cash flow diagram results from oil pricing and tax draws.

Cash flow diagram for DobaCash flow diagram for Doba 

Compare with the cash flow diagram of a copper mine

Cash flow diagram for copper mine 

 8 - Profitability and risks

Monte Carlo simulation of profitability provided by GeoX

Monte Carlo simulation of profitabilityMonte Carlo simulation of profitability 

Financial risks are inequally distributed through the time cycle of a project !

 

 9 - Oil project decisional diagram

    Exploration : (activities, duration & costs)
    Appraisal, Development, Production : (activities, duration, costs & revenues)

    Events

    • dry : - NPV (exploration C)
    • non-commercial discovery (do not develop) : - NPV (exploration + appraisal C)
    • commercial discovery (develop) : NPV (after tax FC net cash flow)

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