2. 2
Three Part Learning System
Introduction to the Industry
Overview of the Oil & Gas
Industry Value Chain
Oilpatch EX
Classroom
Exploration 101
Drilling and Completions 101
e-Learning
Modules
OilSim
OilSim
Team Learning Simulation
3.
4. 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
Knowledge Points.
5. Finances
You will start with $50 million
You can apply for more later.
Creating Value
Profit is measured by the net
value of the oil and gas fields
discovered MINUS all costs
involved.
Winning team has highest ROI
ROI is calculated as Value created
DIVIDED by Funds received.
6. Credibility Points
You get CPs for doing well
during the simulation
Correct answers and sensible
decisions are awarded with CPs
CPs are a measure of ability and
credibility
A team’s CPs are considered when
bidding for blocks and applying for
funds from the HQ
7. 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.
9. 1010
Today’s Agenda – OilSim
AM
Team Challenge 1 – Finding Basins
Team Challenge 2 – Finding Prospects
Team Challenge 3a – Partnerships
PM
Team Challenge 3b – Drilling
Team Challenge 4 – License Round 2
Close and Feedback
12. Map
Columns e.g C1, and C54
Rowse.g.R35andR163Block
Blocks are
divided into
smaller cells
e g. C57,R73
13. 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.
14. 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
19. 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.
26. 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
28. 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 KPs.
All three centres must
be located to get full
knowledge points.
30. Task 1 solved
All teams have submitted their answers. Basin
centres are located.
Message in Inbox. All teams have answers and KPs
awarded.
31. 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.
32. 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.
33. Prospect
Prospect: An area of
interest in the
subsurface identified to
be likely to contain
hydrocarbons
What makes a
prospect?
Source rock
Migration path
Reservoir rock
Seal or cap rock
Trap
34. Traps
Geological “pockets”, that might contain hydrocarbons.
(c) OLFAnticline trap
Fault trap
Stratigraphic
trap
Salt dome trap
36. Red areas
You will not be allowed
to bid, drill or operate in
any of the red areas.
Blue areas
Blocks in area may be
awarded.
Sensitive Range-Lands
37. 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
38. Common Risk Segment
Layer 3 Eocene
1500m below the surface
Layer 2 Paleocene
2500m below the surface
Layer 1 Cretaceous
3500m below the surface
CRS. Common Risk Segment surveys tell you
about the probability of a structure in the
block/cell containing
oil or gas
Surface
39. 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.
49. 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 KP’s
gets it
Random license awarded if none of your bids are high
enough
Submit your bid before the deadline!
51. Recap on Challenge 2
Study Environmentally Sensivity Area maps 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.
53. Task 2 solved
Message sent
to all teams
with the
results
Knowledge
Points are
given for
prosperity of
the blocks you
bid for
Every team
has got one
exploration
license
54. 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.
55. 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.
56. 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 %.
58. 3D Seismic in OilSim
Layer 1 Cretaceous
Layer 2 Paleocene
Layer 3 Eocene
59. 3D Seismic in OilSim
Structures are prospects, where hydrocarbons may
be.
Prospects are no
guarantee for oil or gas
60. Farm-in
Input your amount
and %
Min bid is $25000
and max is $1250000
per %
Add a message to
the seller
Press “Send offer”
61. Financing
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
63. 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
64. 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 seismic, drilling of wells and testing of
wells.
Information: partners in a block can access info
about drilled wells and discovered oil and gas fields.
68. 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.
69. Drilling Depths
Ground level
3500 m below surface
Layer 3 Eocene
Layer 2 Paleocene
Layer 1 Cretaceous
19 days
35 days
45 days
1500 m below surface
2500 m below surface
70. 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
71. 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
72. Environmental Impact Assessment
EIA survey: more knowledge about the area.
Less probability for drilling problems.
Less severe consequences if you run into problems.
= Which drilling locations to avoid.
79. 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.
83. 25% of 8 MBOE @ $50
12% $39.9M
Expected costs if
you developed th
field (capex) and
produced
the oil (opex)
If total expenses are
higher than the sales
value, the value of the
license is zero
Value Calculation
86. Narrowing ranges
First well:
0 to 572 MBOE (after drilling)
11 to 266 MBOE (after testing)
Second well:
20 to 233 MBOE (after drilling)
55 to 210 MBOE (after testing)
Only proven MBOE counts.
88. Apply For More Funds
Click on Apply for More Funds Tab.
1 KP 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 knowledge points: Apply for cash and be fined
$5million for each $20million requested.
89. 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.
90. Company strategy
Access to new
exploration
areas
Make new
discoveries
World class
project
performance
Increased
recovery
through
systematic plans
and actions
Exploration acreage:
Resources
Reserves
Production
91. 92929292
Oilpatch EX Learning Objectives
Describe
Industry
Articulate
Value Chain
Practice
Skills
Appreciate
Complexity
8:10 Explanation of Oilpatch EXMake a brief and relevant transition from the video.Brief review of the 3 components and how they fit together – highlight flag – you are here (today).Brief check on elearning experience. How was it? What did you learn? What stuck? Any surprises?Reinforce that you will be doing some review from the elearning, but mostly picking up on where it left off...Participant IntroductionsPoint out the diversity of this group – provide some examples of representation based on what you know about them.Quickly go around the room and get people to introduce themselves, who they represent, how they are connected to the industry... Transition to the learning objectives... “We have good representation in the room today and will try to leverage our collective experience to achieve our learning objectives over the next two days.”...
The long and bumpy road for oil from the underground to your tank, is called the oil and gas industry value chain.The value chain is divided further into these parts:Upstream is about getting the hydrocarbons up from the ground, and comprises of activities related to exploration, field development, construction, production and abandonment. By its nature, the exploration phase is common for both oil and gas, but soon afterwards, the oil and gas value chain will segregate into two parallel value chains.Midstream is about transportation and storage, as well as oil refining and gas processing.Downstream is about distribution and retail sales of gas, fuels and lubricants, plastics and other hydrocarbon derivatives to industrial and consumer markets.OilSim Exploration is all about the exploration part of the oil and gas industry. Exploration is about finding the hydrocarbons and proving that they are in sufficient quantities to start producing. OilSim Field development and Production is about actually taking the oil or gas out of the subsurface.
A prospect is a subsurface structure that is likely to contain hydrocarbons, whereThere is a source rock , where the original oil or gas was generated.Porous migration rock allowing the hydrocarbons to move into the prospectA porous reservoir rock in which the oil and gas is held and An impermeable cap rock that traps the oil and gas in placeThere are many types of r
Since the CRS show the probabilities of prospects in only one particular horizon or layer, it is necessary to purchase the CRS for all 3 layers so that you can determine which area within the licensing area contains the highest probability of containing oil and gas. So on the CRS maps shown here the area circled in black on the OilSim map and each of the CRS shows that the area in question is within the licensing area and is green on all three CRS layers, indicating high probability of oil and gas on all 3 layers within the same area or blocks. Potentially an area that requires further investigation for individual prospects.
Seismic surveys are made from sound waves that are sent into the subsurface, reflected, and measured when they get back to the surface.This slide shows an example of a real seismic line. It shows a cross-section of the subsurface with the blue and red lines indicating changes in velocity of the wave and therefore changes in the rock properties, whereas the changes in the time of the reflection echo indicate the structures (because seismic is recorded in time, not in depth)The black, red, and green lines are lines added as interpretation of the data by geophysicists.black lines are so-called faults, which have happened for instance after earth quakes or other dramatic geological events.green lines are where geophysicists think the reservoir rock beginsred lines are where the geophysicists think the sealing rock begins In this particular case there is a prospect indicated under the orange arrow, within the orange triangle.
Seismic surveys are made from sound waves that are sent into the subsurface, reflected, and measured when they get back to the surface.This slide shows an example of a real seismic line. It shows a cross-section of the subsurface with the blue and red lines indicating changes in velocity of the wave and therefore changes in geological structures in the subsurface.The black, red, and green lines are lines added as interpretation of the data by geologists.black lines are so-called faults, which have happened for instance after earth quakes or other dramatic geological events.green lines are where geophysicists think the reservoir rock beginsred lines are where the geophysicists think the sealing rock begins In this particular case there is a prospect indicated under the orange arrow, within the grey triangle.
As this figure illustrates, you can drill through all three horizons in one well.You can even drill a deviated well, so that the position is not exactly the same in all horizons.The deviation can be one cell per horizon.
Overview: On the main page, you can see all licenses. 1) licenses you operate, 2) licenses you have invested in, and other licenses.Financing – Is where a team is able to accept offers, and therefore receive money or “finance” for a % of their own blocks When a team receives a Farm-In offer it appears under financing on the right hand side of the homepage
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 blocksRemember you must have farmed-out 20% of your own block before you can drill.
The next task is to choose which rig to use to drill the exploration well.There are three types of rigs: drillships for the deepest waters, semi-submersible rigs for middle waters, and jack-up rigs for shallow waters.The rigs have different costs per day, and the drilling days depend on how deep you drill into the subsurface and which service providers you choose
In most cases there are fewer rigs than teams, so you need to be fast to get good and cheap rigs for your wells.When you order a rig you need to start using it within 20 minutes.If you do not use it within the 20 minutes, you will pay for 20 days of use.You can release a rig by going back steps and changing your choice.The rig rates are dynamic, so that popular rigs tend to have increasing prices, while less popular rigs become cheaper.
This figure illustrates the different “depths” we are working with in OilSimThe water depth is the distance from the water line to the seabed.Layer 3 is approximately 1500 meters below the seabed, layer 2 is 1000 meters further down, and layer 1 is 3500 meters below seabed.
Before you choose where to drill you should buy an Environmental Impact Assessment (EIA) survey to get more knowledge about the area. The benefit of an EIA survey is that you will be prepared for any environmental challenges you might encounter when drilling. With an EIA survey you will have lesser probability for drilling problems, and the extra costs will be less. Also, in the EIA survey you can see which drilling locations you should avoid. Some areas in your block are challenging to drill in. This can be because of marshy areas, ponds, adverse weather conditions on the surface. When you drill in those locations your costs go up 20%. You can see these locations in the EIA survey. You only have to buy one EIA survey for each licence that you operate. You can find the EIA surveys under Surveys.
As this figure illustrates, you can drill through all three horizons in one well.You can even drill a deviated well, so that the position is not exactly the same in all horizons.The deviation can be 1 cell for each horizon.
Inputting estimated cost of drilling gives you knowledge points. You need to add all the costs of the rig and the service providers together and multiply this by the number of days you think it will take you to drill. The oil spill control is voluntary but costs 5% of the drilling amount per day but will earn you more knowledge points and cost you less to clear an oil spill if it happens.
To determine how long it will probably take to complete drilling, check out the “drilling Information” tab.
When you have discovered a field the first decision you need to make is whether you want more information about that field right away and BEFORE you drill another exploration well.You can get more information by doing a production test, which is a process in which you try to produce oil or gas from the field.In OilSim production tests take 10 days per oil and gas field and you use the same providers as before.
When you have drilled the first well, you only have a small sample of the new-found oil or gas field. This is evident by the wide ranges of the area, thickness, quality, and volume variables. These wide ranges tell you that you actually do not know much about the field.After drilling and testing, your next step therefore is to drill another well – and test it. This is called an appraisal well.Normally it takes at least three or four wells into a field before the license block becomes economically viable.Sometimes it takes much more, and therefore you should not give up if the first wells into a field do not give any license value.However, you should give up if the upper boundaries of the field become so low that there is no chance that it becomes economically viable. This is often the case in deep-water blocks, where the CAPEX are very high.
8:20: Learning Objectives Explain the objectives for the overall program.Reinforce that today’s session reinforces the elearning and creates an opportunity for good discussion about the industry.Also mention that today’s session will prepare them for participation in Oilsim tomorrow.Remind people that the topic is broad, deep and complex. It is not possible to address any of the elements in detail, but you will be in a better position to…Description of ObjectivesDescribe how the industry impacts and is affected by global, regional, and local dynamicsArticulate the industry value chain and its various people, process, and technological componentsPractice skills and new knowledge by interpreting exploration data to create drillable prospectsAppreciate the complexity and critical integration of the upstream, midstream, and downstream sectorsTransition to high level agenda
Summary Ask “Are you breathless yet?” While we can’t possibly cover everything in detail we can use the value chain as a roadmap to dissecting and understanding each of the industry sector and the component parts. Let’s begin at the beginning…with the upstream sector and Exploration.
8:30 Lenses – Context for the DayRefer to today’s paper and find an example to illustrate that rarely a day goes by without some mention and/or controversy about the O&G industry.Today we will investigate the industry through many lenses. Refer to slide.Each viewpoint can be very different on many issues. To create your own informed viewpoint, you need to have some basic knowledge of the industry and how it works, how it creates value, and the impacts (both good and bad) that it has on society. That’s one of the goals of this course – for you to be able to increase your own knowledge and confidence level in learning more about issues such that you can have a great conversation with your boss, your colleague, or a friend at the cocktail party.Engage the group by asking, What are the different lenses through which the O&G industry is viewed? What is the diverse group of stakeholders? What are their respective points of view? What are the “rub points”? What are the conflicting points of view? To be informed and able to get more information because you know where to look is a very powerful tool as an employee, a partner, a citizen and a consumer. Transition to ground rules…I look forward to having a great discussion with all you today from as many angles as possible.
