OilSim Greenland 2007 Intro


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  • Welcome to OilSim, the petroleum exploration business simulation. This presentation is an introduction to OilSim, intended for those that are going to participate in an OilSim event or training course.
  • OilSim Greenland 2007 Intro

    1. 1. OilSim Greenland 2008 January, 2008
    2. 2. Overview <ul><li>Enhance your overall understanding of petroleum exploration </li></ul><ul><li>Common platform to work on </li></ul><ul><li>Multidisciplinary challenge </li></ul><ul><li>You are an exploration team in charge of a new petroleum province </li></ul><ul><li>Your task is to get maximum return on investment (ROI) </li></ul>
    3. 3. Money <ul><li>You start with $200Millions </li></ul><ul><ul><li>You can apply for more money later </li></ul></ul><ul><li>Earnings: </li></ul><ul><ul><li>Net value of the oil fields discovered </li></ul></ul><ul><ul><li>MINUS costs (surveys, wells, etc.) </li></ul></ul><ul><li>Winning team: </li></ul><ul><ul><li>highest return on investment (ROI) </li></ul></ul><ul><ul><li>ROI = Earnings / Funds received </li></ul></ul><ul><li>Government Bonus given to the 10 best teams in Greenland the 1st day to be used in the 2nd OilSim day </li></ul>
    4. 4. Government Bonus <ul><li>$ 50.000.000 </li></ul><ul><li>$ 30.000.000 </li></ul><ul><li>$ 20.000.000 </li></ul><ul><li>$ 14.000.000 </li></ul><ul><li>$ 12.000.000 </li></ul><ul><li>$ 10.000.000 </li></ul><ul><li>$ 8.000.000 </li></ul><ul><li>$ 6.000.000 </li></ul><ul><li>$ 4.000.000 </li></ul><ul><li>$ 2.000.000 </li></ul>
    5. 5. Learning Points <ul><li>Where and how to find oil </li></ul><ul><li>Surveys used in exploration </li></ul><ul><li>Licensing rounds </li></ul><ul><li>Farm-in and Partnerships </li></ul><ul><li>Rigs and Sub-contractors </li></ul><ul><li>Reducing uncertainty </li></ul><ul><li>Economically viable volumes </li></ul>
    6. 6. Oil & Gas Industry <ul><li>Upstream </li></ul><ul><ul><li>Exploration </li></ul></ul><ul><ul><li>Development </li></ul></ul><ul><ul><li>Production </li></ul></ul><ul><li>Downstream </li></ul><ul><ul><li>Refining </li></ul></ul><ul><ul><li>Distribution </li></ul></ul>
    7. 7. Structure <ul><li>Phase 1: Find Basins </li></ul><ul><li>Phase 2: Bid for Licences </li></ul><ul><li>Phase 3: Drilling </li></ul><ul><ul><li>3.1 Farm-in </li></ul></ul><ul><ul><li>3.2 Order Rig </li></ul></ul><ul><ul><li>3.3 Select Providers </li></ul></ul><ul><ul><li>3.4 Select Position </li></ul></ul><ul><ul><li>3.5 Testing </li></ul></ul>
    8. 8. Schedule <ul><li>09.30 Introduction to OilSim </li></ul><ul><li>Phase 1 starts (Find Basins) </li></ul><ul><li>Phase 1 Deadline </li></ul><ul><li>Phase 2 (First Licensing Round) intro </li></ul><ul><li>First Licensing Round deadline </li></ul><ul><li>Lunch </li></ul><ul><li>Phase 3 (Partnering) intro </li></ul><ul><li>Deadline Partnering </li></ul><ul><li>Drilling intro </li></ul><ul><li>2 nd Licensing round opens </li></ul><ul><li>2 nd Licensing round deadline </li></ul><ul><li>Simulation end </li></ul><ul><li>Debriefing </li></ul><ul><li>15.30 End </li></ul>
    9. 9. Map Columns (1 to 112) Rows (1 to 152) 600 sea bed depth Cell (73,66) Block 134 134
    10. 10. Login www.oilsim.com
    11. 11. Main screen
    12. 12. First task <ul><li>Find the 3 basins in the area </li></ul><ul><li>Basin: Sedimentary rocks in the deep subsurface where oil and gas was generated </li></ul><ul><li>Procedure </li></ul><ul><ul><li>Buy and study magnetic and gravimetric surveys </li></ul></ul><ul><ul><li>Submit 3 block numbers; one for each basin centre </li></ul></ul>
    13. 13. Surveys
    14. 14. Gravimetric surveys <ul><li>Gravimetric surveys show the gravity in the sub-surface </li></ul><ul><li>Sedimentary rocks (“basins”) have lower densities than the surrounding crystalline rocks </li></ul><ul><li>Low gravity (green) -> Basins </li></ul><ul><li>High gravity (red) -> Crystalline rocks </li></ul>
    15. 15. Gravimetric surveys
    16. 16. Magnetic surveys
    17. 17. More detail North East
    18. 18. Quarter map survey
    19. 19. Enter decision
    20. 20. Task 1 <ul><li>Possible to get between 0 and 100 knowledge points (KP) </li></ul><ul><ul><li>KP’s can be used e.g. when you apply for money </li></ul></ul><ul><li>Must be solved before deadline </li></ul><ul><li>After the deadline, all submissions are evaluated </li></ul>
    21. 21. Task 1 solved <ul><li>All basins are located </li></ul><ul><li>Message sent to all teams with the results </li></ul><ul><li>Oil and gas is close to the basins </li></ul><ul><li>Next step: First licensing round </li></ul><ul><ul><li>The blocks around one of the basins are on offer </li></ul></ul>
    22. 22. Second task <ul><li>Bid to get a exploration licence </li></ul><ul><li>Exploration licence: A permission from the Government to explore a block </li></ul><ul><li>Procedure </li></ul><ul><ul><li>Buy and study Common Risk Segment Maps and 2D Seismic surveys </li></ul></ul><ul><ul><li>Submit 3 bids </li></ul></ul><ul><ul><ul><li>Block number </li></ul></ul></ul><ul><ul><ul><li>Amount offered to Government (“bonus”) </li></ul></ul></ul>
    23. 23. Migration Basin Prospect Play Migration
    24. 24. Prospect Migration Reservoir Seal
    25. 25. Common Risk Segment <ul><li>Prospect probability </li></ul><ul><ul><li>Red : low </li></ul></ul><ul><ul><li>Orange : medium </li></ul></ul><ul><ul><li>Green : high </li></ul></ul>There is one CRS for each geological layer
    26. 26. Common Risk Segment Band 3 Eocene Band 2 Paleocene Band 1 Creataceous
    27. 27. Real Seismic                                                                                                                                                                         
    28. 28. 2D Seismic surveys <ul><li>A 2D Seismic survey is a cross section of the geological layers </li></ul><ul><ul><li>along either a column or a row </li></ul></ul><ul><li>Is used for locating prospects </li></ul><ul><li>Look out for traps </li></ul><ul><li>Three separate geological layers </li></ul>
    29. 29. 2D Seismic example
    30. 30. Prospects Top of sealing rock Top of reservoir rock
    31. 31. Cross-sections Column Row Prospect, Reservoir Basin, Source
    32. 32. Wells 179
    33. 33. Remarks <ul><li>In OilSim, there is only one type of trap: the four-way closure structural trap </li></ul><ul><ul><li>in reality, there are several other types </li></ul></ul><ul><li>Three prospecting systems </li></ul><ul><ul><li>3. Eocene (1.500 m below seabed) </li></ul></ul><ul><ul><li>2. Paleocene (2.500 m -) </li></ul></ul><ul><ul><li>1. Cretaceous (3.500 m -) </li></ul></ul>
    34. 34. Spawning Grounds <ul><li>There are spawning ground areas in the map – these are environmentally sensitive areas where fish breed </li></ul><ul><li>Some spawning grounds might be in the blocks that have been offered </li></ul><ul><li>However, no licences will be awarded in blocks that are spawning grounds </li></ul><ul><li>To find out which blocks are spawning grounds, you can buy a Spawning Ground Survey </li></ul>
    35. 35. Spawning Ground Survey Red Area: Spawning Grounds You will not be awarded blocks that contain any red area Blue Area: Not Spawning Grounds The survey covers the whole area
    36. 36. Tips <ul><li>Use CRS to see which blocks to study </li></ul><ul><li>Buy and study many 2D surveys </li></ul><ul><li>Focus on shallow water blocks </li></ul><ul><ul><li>It is cheaper to drill exploration wells in shallow water </li></ul></ul><ul><ul><li>It is more economically viable to produce oil and gas in shallow water </li></ul></ul>
    37. 37. Enter bid
    38. 38. Remarks <ul><li>Minimum bonus: 1000000 </li></ul><ul><li>Maximum bonus: 30000000 </li></ul><ul><li>You will only get one licence </li></ul><ul><li>Highest bid gets the licence </li></ul><ul><li>If you lose on all three blocks, you will get a random licence (of the ones that are left) </li></ul><ul><li>Do submit 3 bids -> more KP’s and higher probability for success </li></ul>
    39. 39. Task 2 <ul><li>Submit your bid before the deadline </li></ul><ul><li>After the deadline, all bids are evaluated, and each team gets one and only one licence </li></ul>
    40. 40. Task 2 solved <ul><li>Every team has got one exploration licence </li></ul><ul><li>Message sent to all teams with the results </li></ul><ul><li>Knowledge Points: a measure of how prosperous the blocks the team bid for were </li></ul><ul><li>Next step: Farm-in </li></ul>
    41. 41. Farm-in & -out <ul><li>The headquarters of you company has evaluated the licence that you got awarded </li></ul><ul><li>Although the possibility of finding oil is fair, the costs involved are large, and the headquarters wants you to spread the risk. </li></ul><ul><li>This is accomplished by: </li></ul><ul><ul><li>investing in other licences (farm-in), and </li></ul></ul><ul><ul><li>letting other invest in your licence (farm-out) </li></ul></ul>
    42. 42. Task 3.1 Farm-out <ul><li>Get other’s to invest 20% or more in your licence (“farm-out”) </li></ul><ul><li>You can only send farm-in offers (!) </li></ul><ul><ul><li>Offers to buy parts of other licences </li></ul></ul><ul><li>Procedure for farming in: </li></ul><ul><ul><li>Study 2D Seismic surveys </li></ul></ul><ul><ul><li>Submit one offer for each viable licence </li></ul></ul><ul><ul><ul><li>Amount offered </li></ul></ul></ul><ul><ul><ul><li>Share wanted (in whole %) </li></ul></ul></ul>
    43. 43. Farm-in
    44. 44. Send an offer
    45. 45. Partnerships <ul><li>Partners pay their share of all future costs incurred by the partnership. </li></ul><ul><li>Partners receive their share of the net proceedings from any oil found on the licence </li></ul><ul><li>The operator team takes all decisions regarding acquirement of 3D seismic, drilling of wells and testing of wells </li></ul>
    46. 46. Task 3.1 <ul><li>Study 2D seismic surveys of the other licences </li></ul><ul><li>Submit your bids </li></ul><ul><ul><li>Minimum amount 100,000 for 1% </li></ul></ul><ul><li>You are not allowed to drill before at least 20% of your licence has been farmed out </li></ul><ul><li>You can farm-in & -out at any time </li></ul><ul><li>Partners in a block get all info about drilled wells and discovered prospects </li></ul>
    47. 47. Task 3.1 <ul><li>Partnerships will be established every time a seller accepts an offer </li></ul><ul><li>On the main page, you can see all the licences </li></ul><ul><ul><li>The licences you operate </li></ul></ul><ul><ul><li>The licences you have invested in </li></ul></ul><ul><ul><li>Other licences </li></ul></ul><ul><li>Next task: order rig </li></ul>
    48. 48. Task 3.2 Rig <ul><li>3 rig types </li></ul><ul><ul><li>Drillships </li></ul></ul><ul><ul><li>Semi-submersibles </li></ul></ul><ul><ul><li>Jack-up rigs </li></ul></ul><ul><li>Different water depths, Different day rates </li></ul><ul><ul><li>Rig cost = drilling days * day rate </li></ul></ul>
    49. 49. Available Rigs
    50. 50. Drilling days
    51. 51. Drilling Depths Seabed 3500 m below seabed Layer 3 Eocene Layer 2 Paleocene Layer 1 Cretaceous 1500 m below seabed 2500 m below seabed “ water depth”
    52. 52. Seabed Depth
    53. 53. Task 3.2 Rigs
    54. 54. Rigs <ul><li>Limited number of rigs available </li></ul><ul><li>You can order a rig </li></ul><ul><ul><li>use it within 20 minutes </li></ul></ul><ul><li>Not enough for all </li></ul><ul><ul><li>Wait in a queue, if another team is using the rig </li></ul></ul><ul><li>Rig day rates are dynamic </li></ul>
    55. 55. Task 3.3 Providers
    56. 56. Track Record
    57. 57. Select Providers
    58. 58. Task 3.4 Position <ul><li>You have to choose where to drill </li></ul><ul><ul><li>Which cells? </li></ul></ul><ul><li>..and how deep to drill </li></ul><ul><ul><li>Either to the Eocene horizon </li></ul></ul><ul><ul><li>Through the Eocene to the Paleocene horizon, </li></ul></ul><ul><ul><li>or through the Eocene, the Paleocene, and to the Cretaceous horizon </li></ul></ul>
    59. 59. Environmental Impact Assessment <ul><li>Buy an EIA survey to get more knowledge about the area </li></ul><ul><li>EIA equals </li></ul><ul><ul><li>Less probability for drilling problems </li></ul></ul><ul><ul><li>Less severe consequences if you run into problems </li></ul></ul><ul><li>In the EIA you can also see which drilling locations to avoid </li></ul>
    60. 60. 3D Seismic <ul><li>Shows the structure: </li></ul><ul><ul><li>in one (of the three) horizons </li></ul></ul><ul><ul><li>in one block </li></ul></ul><ul><li>Look out for “tops” </li></ul><ul><ul><li>a top = a trap = a prospect </li></ul></ul>
    61. 61. 3D Seismic
    62. 62. Three targets Layer 1 Creataceous Layer 2 Paleocene Layer 3 Eocene Column 60, Row 79 Column 60, Row 78
    63. 63. Select Positions
    64. 64. Summary
    65. 65. Drilling position 3
    66. 66. Drilling position 2
    67. 67. Conf. & Budget
    68. 68. Drilling results
    69. 69. Drilling result
    70. 70. Task 3.5 Testing <ul><li>If you discover a field-> decide whether you want more information about that field </li></ul><ul><li>You get more information by doing a production test (and other tests) </li></ul><ul><li>Tests take 10 days per field </li></ul><ul><li>Tests have the same day-rate as the drilling (you use the same providers) </li></ul>
    71. 71. Test decision
    72. 72. Field value
    73. 73. Prospects
    74. 74. Licence Value
    75. 75. Appraisal
    76. 76. Appraisal <ul><ul><li>From Probable volume to proven reserves </li></ul></ul>
    77. 77. Narrowing ranges <ul><li>First well: </li></ul><ul><ul><li>0 to 572 MBO (after drilling) </li></ul></ul><ul><ul><li>11 to 266 MBO (after testing) </li></ul></ul><ul><ul><li>Proven volume: 11 MBO </li></ul></ul><ul><li>Second well </li></ul><ul><ul><li>11 to 233 MBO (after drilling) </li></ul></ul><ul><ul><li>35 to 210 MBO </li></ul></ul><ul><ul><li>Proven volume: 35 MBO </li></ul></ul>
    78. 78. Continue... <ul><li>Drill appraisal wells to narrow the uncertainty (get proven volumes) </li></ul><ul><li>Drill into other prospects </li></ul><ul><li>Farm-in and -out </li></ul><ul><li>Two additional licensing rounds </li></ul><ul><li>Apply for more money, if you run out of cash </li></ul><ul><li>Winner: highest ROI </li></ul>