Your Challenge Today You are an exploration team in charge of a new petroleum exploration area. Your task is to find and drill for new reserves and to maximize return on investment (ROI). You will need to work as a company as well as in partnership with others. You will show your new understanding of exploration and be rewarded through credibility Points.
Finances You will start with $50 millionYou can apply for more later. Creating ValueProfit is measured by the net value of the oil and gas fields discovered MINUS all costs involved. Winning team has highest ROIROI is calculated as Value created DIVIDED by Funds received.
Credibility Points You get CPs for doing wellduring the simulationCorrect answers and sensibledecisions are awarded with CPs CPs are a measure of ability and credibilityA team’s CPs are considered when bidding for blocks and applying for funds from the HQ
You will learn Where and how to find hydrocarbons. Various surveys during exploration. Licensing rounds. Farm-in and Partnerships. Drilling rigs and Sub-contractors. Environmental issues. Economically viable volumes. Reducing uncertainty. Team work and negotiation. Critical decision making, analytical skills. Multi-tasking.
Oil and Gas Industry Value Chain
Map Columns e.g C1, and C54 Rows e.g. R35 and R163 Block Blocks are divided into smaller cells e g. C57,R73
First challenge Challenge: Find three sedimentary basins in the area. Basins are sedimentary rocks in the deep subsurface where oil and gas has been generated. Procedure: Buy and study magnetic and gravimetric surveys; and to submit the coordinates, column and row number for each basin centre.
Gravimetric surveys Gravimetric surveys show the gravity in the sub-surface. Measured by airborne sensors. Sedimentary rocks have lower densities than the surrounding crystalline rocks. Low gravity means high probability of a basin below. Low gravity are basins. High gravity are crystalline rocks
Surveys in OilSim
Real gravimetric survey
Survey in Oilsim Gravimetric survey:South-east quadrant
Survey in OilSim All four quadrant surveys in map context.
Magnetic surveys Magnetic surveys show similar information as gravimetric surveys. The sedimentary rocks in the basins have a lower concentration of magnetic materials than the surrounding crystalline rocks. Sedimentary basins are the areas with the lowest magnetic field. Basins have low magnetic field Non-basins have high magnetic fields.
Real magnetic survey
Survey in OilSim Magnetic survey:North-west quadrant
Survey in OilSim All four quadrant surveys in map context.
Gravimetric survey analysis Locate edges of the continous basin structure (yellow area) Locate the diagonals and thus basin centre
Magnetic survey analysis Locate edges of the continous basin structure (purple area) Locate the diagonals and thus basin centre
Finding the Midpoint
Centre may not be the same Example: Top basin on both maps Calculate the midpoint between the gravimetric and magnetic centres found = C55 and R105 C50 R100 C60 R110
Centre Midpoint calculation 3 centres – one Centre midpoint for each basin Example: C55, R105 Solve before deadline. All submissions are evaluated after the deadline (and not before). You may get 0-100 CPs. All three centres must be located to get full credibility points.
Solve task 1
Task 1 solved All teams have submitted their answers. Basin centres are located. Message in Inbox. All teams have answers and CPs awarded.
Challenge 2 : license round Sedimentary basins may contain oil and gas. The government has decided to put the blocks around one of the basins on offer. Challenge: Identify the 3 most promising blocks and offer an amount for each of them.
Challenge 2 : license round Any restrictions involved? Yes, you need to watch for Environmentally Sensitive Areas. What are we looking for? Hydrocarbon Prospects. Where do we find prospects? In sedimentary basins How do I find them? Interpreting 2D seismic and Common Risk Segment maps.
Source and migration 2. MIGRATION ROCK where hydrocarbons are driven through 3. CAP ROCK Impermeable rock that stops migration of hydrocarbons 1. SOURCE ROCK where organic material is put under sufficient pressure 4. PROSPECT
Geological “pockets”, that might contain hydrocarbons.
Anticline trap (c) OLF Stratigraphic trap Salt dome trap Fault trap
Environmentally Sensitive Areas
Sensitive Rangelands Survey Red areas You will not be allowed to bid, drill or operate in any of the red areas. Green areas Blocks in area may be awarded.
Common Risk Segments Is there a sedimentary basin and a migration route into the prospects in the area? Is there porous reservoir rock in the area, so that the oil or gas can be stored? Is there a sealing rock in the area, so that the oil and gas can be trapped? If all are positive, then green If some negative, then orange If mostly negative, then red
Common Risk Segment CRS. Common Risk Segment surveys tell you about the probability of a structure in the block/cell containing oil or gas Surface Layer 3 Eocene 1500m below the surface Layer 2 Paleocene 2500m below the surface Layer 1 Cretaceous 3500m below the surface
2D Seismic surveys Traps can be found with seismic surveys 2D seismic survey is a cross section of the geological layers along either a column or a row. 2D seismic surveys are used for locating prospects.
OilSim of 2DSeismic Unprocessed Processed Red is top of the sealing rock Green is top of the reservoir rock Interpreted
Fault traps Leakage
Leakage? Leakage Sealant rock
Buy 2D seismic from the survey shop
Order Seismic What type of data do you want?
Columns or Rows
Unprocessed or processed data
Interpreted or not
Only buy maximum of 1 block of data at a time to speed up processing
License Round in OilSim Minimum bid is $250K Maximum bid is $7.5M Enter numbers without commas (ex: 250000) You will bid for 3 licenses but each team will only be awarded one license Highest bid wins the license If two teams bid the same, the team with the most CP’s gets it Random license awarded if none of your bids are high enough Submit your bid before the deadline!
Three different blocks
Block 1123 Bid 250000
Recap on Challenge 2 Study Sensitive Rangelands Survey to see which blocks to avoid Use Common Risk Segment surveys to see which blocks to examine closer (look for green) Buy and study many 2D surveys to identify which ones have the most potential traps, as well as the biggest traps.
Solve task 2
Task 2 solved 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
Challenge 3 : Exploration Drilling Company management has reviewed the licence that you were awarded and the potential cost to drill a well. Although the possibility of finding oil is fair, the costs involved are large. They have asked you to spread the risk. Challenge: Farm-out a minimum of 20% on your license and farm-in as much as you can on other good licences.
Partnerships Spread the risk: e.g Investing in other blocks divides the risks amongst all partners, much more preferable than keeping 100% of one field and all the risk. Increase probability of profit: investment in only 1 field which could be a dry prospect is possible, whereas the likelihood of investing in 5 fields which are all dry is unlikely.
Challenge 3.1 Partnering Acquire 3D Seismic interpretations for the block you operate, and study the results from the licensing round-can send under “surveys” to possible partners Farm-out: Get others to invest 20% or more in your license Farm-in: Send offers to other teams to buy shares in their viable licences. Submit an offer for each viable licence, with amount offered and share wanted in whole %.
Real 3D Seismic Shows the subsurface structure in a cube.
Enter the total amount and the total % you want to buy
Add a message to the seller
Press “Send offer”
Min bid is $25000 and max is $1250000 per %
Financing When a team receives a Farm-In offer to 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. Overview: On the main page, you can see all licenses. 1) licenses you operate, 2) licenses you have invested in, and other licenses.
Investing 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
Partnerships Partners pay a proportional share of all future costs incurred by the partnership Partners receive a proportional share of the net proceedings from any oil or gas found on the license. The operator team makes all decisions regarding acquiring 3D seismics, drilling of wells and testing of wells. Information: partners in a block can access info about drilled wells and discovered oil and gas fields.
Ready to drill Click on drill
Choose rig Truck-mounted Rigs Light Duty Rigs Heavy Duty Rigs
Choose Rig Max drilling depth is important Rig cost = drilling days * day rate
Rigs Few: limited number of rigs available. If you get one: start using it within 20 minutes. If you don’t: wait in a queue, if another team is using the rig. Price can change: rig day rates are dynamic.
Service providers 9 Star quality: Good- costs more Bad: - cheaper, but reliability is low 5 types of providers- Construction and Maintenance , Logistics, Well Services, Camp Services and Analysis
Penalties & Fines Certain problems can occur if Service Provider Selection is poor quality Other penalties can occur if you drill in areas indicated as problematic in the Environmental Impact Assessment As in real life, problems can occur randomly and these are also applied with fines levied accordingly. Oil spill control – 5% of overall drilling costs
Environmental Impact Assessment
Drill Position EIA: enviromental impact analysis shows where not to drill. Place your mouse where to drill
Drilling Result Proven volume (MBOE) counts Test may increase proven volume Remember to tick the boxes!
Testing Only if you discover a field – find Oil or Gas You decide whether you want more information about that field More information by doing a production test (and other tests) Tests costs. Tests take 10 days per field. Tests have the same day-rate as the drilling if you use the same providers.
Value and ROI Volume Range, e.g. 1-897 Proven Reserves e.g. 1
Value and ROI
Calculation of licence value
Value and ROI Costs Value of Licence
Appraisal From Probable volume to proven reserves
Narrowing ranges Exploration well: 0 to 572 MBOE (after drilling) 11 to 466 MBOE (after testing) First appraisal well: 25 to 333 MBOE (after drilling) 34 to 310 MBOE (after testing) Second appraisal well: 65 to 250 MBOE (after drilling) 101 to 152 MBOE (after testing) Only proven MBOE counts
Increasing proven volumes Appraisal wells - proven reserves increase Range between proven and possible is decreased
Effect on calculation of licence
Challenge 3B Drilling
Continue... Narrow uncertainty: Drill appraisal wells to get proven volumes Drill into other prospects to find more proven volumes. Farm-in and -out: Get into other good blocks. Two additional licensing rounds: Repeat the processes. Money: Apply for more money, if you run out of cash.
Apply For More Funds Click on Apply for More Funds Tab. 1 CP for each $100,000 applied for. Answer the questions: All correct gives cash and you can keep CPs. One wrong gives cash and you keep ½ of your CPs. Two wrong gives ½ cash and you lose all CPs. All wrong, you get no cash and lose all CPs. <10 credibility points: Apply for cash and be fined $5million for each $20million requested.