PetroChallenge Norway 2010

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PetroChallenge Norway 2010

  1. 1.  You are an exploration team in charge of a new petroleum province.  Multidisciplinary challenge: Enhance your overall understanding of petroleum exploration and field development.  Create a Return on Investment
  2. 2.  You start with $200 million  Create value Net value of the oil and gas discovered MINUS all costs involved Credibility points awarded Sensible decisions and correct answers CPs are a measure of ability and credibility Considered when bidding for blocks Used when applying for funds
  3. 3.  Where and how to find hydrocarbons  Corporate Social Responsibility  Licensing rounds  Farm-in and Partnerships – negotiations  Drilling rigs  Sub-contractors  Environmental issues  Economically viable volumes  Team work, Critical decision making
  4. 4. Oil Gas
  5. 5.  www.oilsim.com
  6. 6.  www.oilsim.com
  7. 7. Columns e.g C1 to C112 Rowse.g.R1toR144 Block Blocks are divided into 64 smaller cells e g. R52C110
  8. 8.  Challenge: Find three sedimentary basins  Procedure:  Buy and study magnetic and gravimetric surveys  Submit the coordinates for each centre  Column and row number for each basin centre
  9. 9.  Gravimetric surveys indicate changes in the gravitational pull of the Earth in different areas of the sub-surface.  Lower gravitational fields indicates likelihood of low density rocks –Sedimentary rocks, porous and hopefully containing hydrocarbons
  10. 10. Survey shop Gravimetric survey of North-west area
  11. 11.  Magnetic surveys show anomalies in in the expected magnetic field of the Earth in particular areas.  Sedimentary rocks in the basins have a lower concentration of magnetic materials and lower magnetic field than the surrounding crystalline rocks.
  12. 12.  Magnetic survey: North-west quadrant
  13. 13.  All four quadrant surveys in map context
  14. 14.  Locate edges of the continous basin structure  Locate the diagonals and thus basin centre
  15. 15.  Example: Top basin on both maps  Calculate the midpoint between the gravimetric and magnetic centres found  = C55 and R105 C50 R100 C60 R110
  16. 16.  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 knowledge points.
  17. 17. Message in Inbox:  Shows results  Answers submitted  CPs awarded
  18. 18.  The government has decided to put the blocks in one of the basins on offer.  Challenge  Determine 3 best blocks to bid for  Initiate Corporate Social Responsibility projects  Commit to Exploration drilling programme Licensing area
  19. 19.  Any restrictions involved? - Spawning grounds  What are we looking for? - Prospects  Where do we find prospects?  In basins, where hydrocarbons have been  1) are produced and 2) trapped  How do I find them? - Geoscientific analysis  Common Risk Segment maps, 2D seismic
  20. 20. 1. SOURCE ROCK where organic material is put under sufficient pressure 2. MIGRATION ROCK where hydrocarbons are driven through 3. CAP ROCK Impermeable rock that stops migration of hydrocarbons 4. PROSPECT
  21. 21. (c) OLF Anticline trap Fault trap Stratigraphic trap Salt dome trap  Geological “pockets”, that might contain hydrocarbons.
  22. 22. Red areas You will not be awarded blocks that contain any red spots (spawning grounds) Blue areas Blocks in area may be awarded
  23. 23. Layer 3 Eocene 1500m below the seabed Layer 2 Paleocene 2500m below the seabed Layer 1 Cretaceous 3500m below the seabed CRS. Common Risk Segment surveys tell you about the probability of a structure in the block/cell containing oil or gas Surface
  24. 24.  Traps can be found with seismic surveys and sound waves bouncing off structures  2D seismic survey is a vertical cross section of the geological layers along either a column or a row
  25. 25. Unprocessed Processed Interpreted Red is top of the sealing rock Green is top of the reservoir rock
  26. 26. 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
  27. 27.  It takes time to process your request  Created to order  Moves to surveys once processed
  28. 28.  Red circles – navigate through the 2D seismic  Yellow square – Row 1 from Column 1-56
  29. 29. Leakage?
  30. 30. Leakage?
  31. 31. Column Row Prospect, ReservoirBasin,Source
  32. 32.  Corporate Social Responsibility  Affects a company’s reputation and their credibility  Increase Credibility by initiating CSR projects  CSR points considered when bidding for a block  Commit to work programme, as part of licensing programme  State how many exploration wells you promise to drill.  Bids are evaluated based on work programme and team credibility
  33. 33. CSR summary
  34. 34.  Sport sponsorship  Geoscience Institute  Bribery  Orphanage  Business development  Wind mill  University exchange programme  Safety training center  Fact finding mission  Procurement training  Park  Environmental assessment  Primary school computers  Wave energy plant  Advertisements  Social welfare study  TV documentary  Airline frequency  Business simulation  Support singer
  35. 35. • Max Round spend: $30M on CSR projects • Each project: Financial cost and CPs • Projects in grey: not enough cash or CPs to do • Outcome: Positive/negative CPs earnt on completion
  36. 36. Teams can increase their competitive position by initiatingCSR projects
  37. 37. Completed projects Credibility Point page
  38. 38.  Choose 3 blocks with good prospects  Commit to a number of exploration wells  Bids evaluated using the following formula: Each well is worth 100 Credibility Points Bidding points = CP + 100 * No. of wells committed  If 2 teams choose the same block and same no. Of wells – the team with the highest CPs will be awarded the block  Government awards one block per team
  39. 39.  Select number of exploration wells that are to be drilled  1-4 wells  Team’s first choice block = block with most committed wells Penalties:  Bid disregarded if overcommit no of exploration wells  Minus 10 credibility points for each bid where the number of committed wells is higher than the number of prospects
  40. 40. Leakage?
  41. 41.  Environmentally sensitive areas – blocks to avoid  Common Risk Segment surveys – areas of higher probability of prospects  2D seismic – blocks with most structures  Final tip - Check water depth - shallow water blocks
  42. 42.  Message sent to all Results and CPs  One license per team
  43. 43.  The headquarters of your company has evaluated the license that you were awarded.  Although the possibility of finding oil is fair, the costs involved are large.Thus the headquarters want you to spread the risk.  Challenge:You shall farm-out minimum 20% from your license – and farm-in as much as you can in other good licenses.
  44. 44.  Acquire 3D Seismic interpretations for the block you operate, and study the results from the licensing round  Farm-out: Get others to invest 20% or more in your license – you can send them surveys  Farm-in: Send offers to other teams to buy shares in their viable licenses. Submit an offer for each viable license, with amount offered and share wanted in whole %.
  45. 45.  Shows the subsurface structure in a cube.
  46. 46. Layer 1 Cretaceous Layer 2 Paleocene Layer 3 Eocene Prospects are no guarantee of oil or gas
  47. 47.  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.
  48. 48. Either accept the amount or % the license owner requests, or amend the amounts to your own offer Add a message to the seller Press “Send offer” Minimum of $100000 per %
  49. 49. 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
  50. 50.  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.
  51. 51. 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
  52. 52.  Partners pay a proportional share of all future costs  Partners receive a proportional share of the net proceeds from oil and gas  The operator team makes all decisions regarding drilling  Teams can farm-out up to 70% of licence  Operators must keep 30% of licence
  53. 53. •Before choosing a rig, you need to check your water depth Find this at the bottom of the BLOCK page
  54. 54.  Choose the right rigs for your water depths  Jack-up rigs for shallow waters  Semi-submersible rigs for middle waters  Drillships for the deepest waters  Rig cost = drilling days * day rate
  55. 55.  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.
  56. 56. Upto 9 Star quality-  Good: normally costs more  Bad: cheaper, but reliability is low, so you risk extra drilling time and extra costs
  57. 57.  EIA: enviromental impact analysis shows where not to drill.  Place your mouse where to drill
  58. 58.  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 ImpactAssessment  As in real life, problems can occur randomly and these are also applied with fines levied accordingly.
  59. 59. Layer 1 Cretaceous Layer 2 Paleocene Layer 3 Eocene
  60. 60. Earn extra CPs by calculating the estimated drilling cost Oil Spill control/ Gas Blow out
  61. 61.  Proven volume (MBOE) counts  Test may increase proven volume  Remember to tick the boxes!
  62. 62.  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.
  63. 63. 25% of 8 MBOE @ $50 12% $39.9M 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
  64. 64.  From Probable volume to proven reserves
  65. 65. Exploration well:  0 to 1572 MBOE (after drilling)  11 to 1266 MBOE (after testing) First appraisal well:  25 to 1033 MBOE (after drilling)  34 to 910 MBOE (after testing) Second appraisal well:  65 to 850 MBOE (after drilling)  101 to 752 MBOE (after testing) Only proven MBOE counts
  66. 66. Cash : Initial $200million investment Funds from partnerships Funds from the bank Value: Valuation of licences (operators and partners) based on oil and gas found less expected costs if these licences were to be developed
  67. 67.  Click on Apply for More FundsTab.  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.  Expensive money if less than 10 credibility points: Apply for cash and be fined $5million for each $20million requested.
  68. 68.  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.

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