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  • Welcome to OilSim Exploration, the petroleum exploration business simulation. This Powerpoint presentation is an introduction to OilSim, intended for those that are going to participate in an OilSim Exploration event.CP
  • The purpose of OilSim is to improve your overall understanding of the oil and gas exploration industry. OilSim is an online business simulation, and it encompasses several – if not all – the disciplines that comprise the exploration industry. In OilSim, you work together with others in a team. Your team competes and collaborates with other teams that participate in the simulation. Your team has been sent out by an energy company to a new and promising new oil and gas area, and your task is to maximize the value compared to the money you receive from the parent company This measurement is also known as ROI, or Return On Investment.
  • In order for your team to be able to start exploring, the headquarters have provided you with 200 million US dollars in virtual money. You can spend this money on acquiring surveys, bidding for licenses, investing in other team ’ s licenses, and drilling wells. Your aim is create value for your company and a Return on Investment (ROI), which is calculated as the value divided by the funds that you receive from the headquarters, so the more money you get, the harder it is to have a high ROI. The value is calculated as the net present value of all the oil and gas fields that your team owns a share of – minus everything you spend. Later on if you run out of money, it is possible to apply for more money from the headquarters.
  • OilSim is a business simulation designed to give you an overview of the petroleum exploration industry. The key learning points include: how you find oil and gas, which surveys are used for what, the importance of having good information, how licenses are awarded, how energy companies spread the risk by going into partnerships, how drilling is done using rigs and sub-contractors, how environmental issues are addressed, how testing and appraisal wells reduce uncertainty, and finally the whole concept of economically viable volumes, to find out when do you move beyond exploration and start producing the oil or gas.
  • 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 Production is about actually taking the oil or gas out of the subsurface.
  • This is how the screen looks like when you browse to the web site. To enter the system, you need to enter your user name and your password, and then press the Return key on the keyboard. You will get the user name and password from your teacher/facilitator.
  • This is how the screen looks like when you browse to the web site. To enter the system, you need to enter your user name and your password, and then press the Return key on the keyboard. You will get the user name and password from your teacher/facilitator.
  • Main screen overview In the middle you can see the map again with a legend below. Later in the simulation the blocks in the map will have different colour codes depending on for example whether it is currently on offer or whether there has been found oil or gas there. You can click on any block on the map and get more information about that block. There is not much information in these ” block pages ” early in the simulation session, but these pages that describe each of the blocks become increasingly complex and comprehensive towards the end of the simulation. In the middle of this page you can see a description of the current task with six fields to fill out before the deadline passes. In the left hand side there is first a summary of the current standings. This includes your total value, the capital you have received from headquarters, the cash you have left, your return on investment, your rank among all the players in this simulation reality, and the knowledge points that you have accumulated. Knowledge points are awarded based on how well you solve the tasks within OilSim, and can be used when you ask for more money from the headquarters. By clicking More you can review the accounts with all financial transactions. Below the summary is a brief status, including the deadline for this task. Below the status are a number of simulation options, of which the first one (Home) is the most frequently used. In the Mailbox you can read and send messages from and to your rivals, as well your headquarters and the ministry who awards the licenses. When you click Home you get back to the first page of OilSim, and it is a good advice to go back to the home page frequently. You can also send applications to the headquarters for new funds for your exploration, but be prepared to answer some questions before you can get them to release the funds. By clicking Teams you can see how the other teams are doing, and by clicking Knowledge you can get a list of the times you have gained or lost knowledge points. Below this there are a number of helpful texts for you, including a brief description of the simulation concept, the geology, partnerships, and a glossary. The general structure of this page remains the same throughout the simulation.
  • Your first task is to identify the three basins that are in the area. A basin is an region in the deep subsurface with a high accumulation of sedimentary rocks. These sediments in general contain dead plants and animals – also known as organic material – that were deposited million of years ago. Some of the organic material has been put under enough pressure and been exposed to high enough temperatures to be converted into hydrocarbons, including oil and gas. This oil and gas has since migrated from the basins, but we will get back to that later. For the time being, you are being asked to identify the basins in the area, so that you know where the oil and gas came from. The way you do it is through buying and studying of magnetic and gravimetric surveys. When you think you have identified where the three basins are, you enter three different coordinates – one column and row for each basin centre – on the form on the home page. It should be noted that you shall enter coordinates – and not blocks – and that the coordinates you enter here are only the basin centres – and not the place you will search for oil and gas in.
  • Here is a real example of a gravimetric survey from a Finnish field in Europe. Gravimetric surveys show how the gravitational pull of the Earth differs over the area. , and are – as the magnetic surveys – carried out by aeroplanes with sensitive measuring devices. The reason gravity is not the same all over is that the rocks in the subsurface are not the same. Different types of rocks give different gravity pulls, and more specifically the sedimentary rocks in basins are not so dense as the surrounding crystalline rocks. Therefore, the lower the gravity pull, the higher the probability that there is a basin below, and vice versa. The red areas have the lowest gravitational pull. Thus the probability of finding hydrocarbons here is relatively high. The yellow areas have low-to-medium gravitational pull. Thus the probability of finding hydrocarbons here is relatively high. The green areas have medium gravitational pull. Thus the probability of finding hydrocarbons here is relatively medium. The light blue areas have medium-to-high gravitational pull. Thus the probability of finding hydrocarbons here is relatively low. The dark blue areas have highest gravitational pull. Thus the probability of finding hydrocarbons here is relatively low.
  • In OilSim surveys can be purchased from the survey shop. There are 4 quadrants and together they show the whole area of the OilSim map. Open all four quadrant survey, and place the surveys next to each other, in order to see the full map context.
  • This is an example of a real magnetic survey for the Finnish field shown earlier. Magnetic surveys show differences in the expected magnetic fields for particular areas, which can be caused by different geological structures. The sedimentary rocks in the basins have a lower concentration of magnetic materials than the surrounding crystalline rocks. Thus the sedimentary basins are the areas with the lowest magnetic field. In the real magnetic surveys The purple areas have the lowest magnetic pull. Thus the probability of finding hydrocarbons here is relatively high. The yellow areas have medium magnetic pull. Thus the probability of finding hydrocarbons here is relatively medium. The light blue areas have highest magnetic pull. Thus the probability of finding hydrocarbons here is relatively low.
  • Again in OilSim, magnetic surveys for four quadrants can be bought.
  • So this is what it looks like when you are trying to find the midpoints for the 3 basin centres.
  • To identify the centre of the basin, you shall identify the coordinates of the extreme points of the continuous basin structure. The basin structure is coloured in red, orange and yellow. Extreme points are the most eastern, western, northern and southern points of the basin structure. When the extreme point are identified, you shall make diagonals, in order to identify the centre of the basin. The centre lies where in the diagonals intersect with each other. Identify the row number and column number of the centre.
  • Due to the natural variation between the magnetic and gravimetric characteristics of the structure, the centre location may vary. The task is then to identify the average centre, by interpolation of the different centres. Calculate the average centre, as the average centre between the gravimetric and magnetic centre: Average Row no = Row no of magnetic + Row no of gravimetric, divided by 2 Average Column no = Column no of magnetic + Column no of gravimetric, divided by 2 The average centre will then show in the middle.
  • When you have found out where you think the basin centres are, you enter your centre coordinates into the form on the home page. When you press Submit, the simulation receives your guesses. If there is a green line across the right hand side of the page when you have submitted, the coordinates have been registered in the system. You can change your mind as long as the deadline has not passed and enter altered coordinates and press the Update button below the form.
  • Once the simulation has been unpaused, you will receive a Notification in your mailbox, on the left-handside of the homepage. In the notification, you can see the basin coordinates chosen by each team and the number of credibility points awarded to each team, based upon their submitted answers. If you look at the cell coordinates of one of the teams that was awarded close to 100 points, then you can see what the correct answers were.
  • The next step is the First licensing round, where exploration licenses for blocks situated in one of these basins are being offered by the Government. Each team will be able to make bids for particular blocks. A block is a geographically two-dimensionally delimited area of the earths surface, assigned by the government. Your task now is to identify three blocks that your team believes to have the best prospects and submit license bids to the Government for them. To evaluate the blocks potential, you must identify if it has any pockets of hydrocarbons, and determine if there are any circumstances that would prohibit or limit the possibilities of exploration of the blocks resources. Your offer for the block must be wise. If it is too low, someone else may get it. If too high, you waste valuable cash, compared to the potential yield from the block.
  • To determine which blocks are likely to offer the greatest return on investment, an analysis of data is needed. This analysis can be split into 3 parts: Finding out where you are not allowed to explore, areas that are environmentally sensitive – this means researching the Spawning grounds survey Finding out where geologists have identified subsurface structures that indicate higher probabilities of hydrocarbons. These structures are called Risk Segments. All the risk segments are combined into a common survey, the Common Risk Segment map (CRS map) which shows areas of high and low probability of hydrocarbons. Finding out where the hydrocarbons are “ trapped ” using the 2D seismic surveys The combination of this analysis will help you decide which blocks are the most likely to have the best potential hydrocarbon reserves and therefore be the blocks you should be submitting bids for.
  • This slide illustrates the relationship between the sedimentary basins you identified in the first task and the prospects which you will encounter in the second task. Oil and gas form as the result of a precise sequence of environmental conditions: The presence of organic material – like plants, algae and bacteria Organic remains being trapped and preserved in sediment The material is buried deeply and then slowly "cooked" by increased temperature and pressure. Rocks containing sufficient organic substances to generate oil and gas in this way are known as source rocks . Once it has formed, oil and gas moves away (migrates) from the source rock. This movement happens for two reasons. First the oil and gas expand to take up more room than the original organic matter therefore their pressure on the rock increases and they try to escape. Second, being less dense than the surrounding rock and water, they tend to rise upwards. The oil is held in pores of the rock and continue to rise upwards until it reaches the surface or a layer of impermeable rock (cap rock) and is trapped. A prospect is a subsurface structure that is likely to contain hydrocarbons, where There is a source rock , where the original oil or gas was generated. Porous migration rock allowing the hydrocarbons to move into the prospect A porous reservoir rock in which the oil and gas is held and An impermeable cap rock that traps the oil and gas in place
  • There are many types of traps formed by rock formations: The most common type of trap and the ones found in OilSim are Four-Way Closure Trap, a type of anticline trap that occur within the same layer which has been pushed up into an arch but where the hydrocarbons are stopped from migrating further upwards due to the cap rock. Fault traps are created where layers of rock slide up against each other and contain permeable and impermeable rock. The oil migrating through the impermeable rock is cut off by an impermeable layer and trapped against the fault. Stratigraphic traps kee p hydrocarbons in place due to changes in the rock type or sedimentary features of the area and an uneven distribution of formations. Salt Dome traps enable hydrocarbons to aggregate into pockets on both sides of the dome as stratigraphic traps, as well as above the dome as an anticline s trap.
  • Over the years governments, organisations and the Oil and Gas companies have become aware of the impact exploration and production can have on the environment. Policies are now in place during the licensing rounds to limit or even prohibit drilling in particular areas, this can include areas of special natural characteristics, areas populated by particular species or protected habitats. Spawning grounds are fish breeding grounds, and therefore very sensitive to any pollution, derived from oil and gas exploration and production. In the real world, licenses are still offered where spawning grounds exist, but exploration and production activities are limited to times of the year when the fish are not breeding. However, in the OilSim simulation the Spawning Ground Survey covers the whole map and the red areas are spawning grounds and licenses WILL NOT be awarded for blocks that contain a red area. Even if a block contains only a very small red area the license will not be awarded. So looking at this map, if you submitted blocks 88 and 102 as 2 of your choices, neither of this blocks would be awarded licenses.
  • 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.
  • Geophysicists use the physical characteristics of rocks, their magnetic and gravitational properties and how sound waves travel through different kinds of rocks to help understand the structures below the Earth's surface. Survey ships and aircraft collect data and produce gravimetric, magnetic and 2d seismic surveys. Using different techniques allows scientists to locate particular rock formations that might contain trapped oil, including the 2d seismics which can help locate the traps. 2d seismic surveys in real life are available in rows and columns within a geographical area, following the path travelled by the ship or aircraft collecting the data. In OilSim the seismic information also follows the rows and columns, but is only available for every second row and column. A seismic source, like a sledgehammer is used to generate seismic or sound waves, which are sensed by receivers and recorded on a seismograph. .  Each type of seismic survey utilizes a specific type of wave (for example, reflected waves for reflection survey) and its specific arrival pattern on a multichannel record ( Fig. 3 ).  Seismic waves for the survey can be generated in two ways: actively or passively.  They can be generated actively by using an impact source like a sledgehammer or passively by natural (for example, tidal motion and thunder) and cultural (for example, traffic) activities.  Most of the seismic surveys historically implemented have been the active type.  Seismic waves propagating within the vertical plane holding both source and receivers are also called inline waves, whereas those coming off the plane are called offline waves
  • 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 geologists think the reservoir rock begins red lines are where the geologists think the sealing rock begins In this particular case there is a prospect indicated under the o range arrow, within the grey triangle.
  • There are 3 types of data available when you order Seismic surveys in OilSim. Unprocessed data, is the raw data that is available fairly soon after the seismic providors have done the surveys Processed data gives you more information about the geological layers in the ground Interpreted date has been interpreted by geologists. These surveys identify the sealing and reservoir rocks, and possible fault lines in the geological structure. The traps in OilSim are either: anticlinal fault traps
  • To buy surveys, click on survey tab and then order the Seismic surveys from the survey shop. After you ’ve clicked “buy” this screen will appear. The yellow box over the map allows you to buy all the seismic data for those particular blocks. So click and hold and move the box to the area you wish to purchase. Choose what area you want to buy. Decide if you want columns or rows Choose if you want processed or unprocessed surveys. Processed data takes more of your time, but you get better data Choose interpreted or uninterpreted data. Intrpretede data takes more of your time, but you get better data. Then order batch, The price of the order will change depending upon your requests and the data type you want.
  • it does take time to process your order and this can be seen in the top right hand corner. However, whilst this is processing: You can solve other assignments within OilSim you can drag the orange square anywhere on the map, to make sure you get the area you are interested in. The time it takes to process the data, depends upon the amount and type of data requested. When the “batch process” has reached 100% the process is finished.
  • When the “batch process” has reached 100% the process is finished. You ’ll then be able to view the batch you bought in the centre of the page. The red circles on this slide are navigation buttons and allow you to see all your 2D seismic in small icons. To focus on one specific 2D seismic, click on that icon.
  • Try and find at least 5 prospects in the block that you are going to bid for. In this example the yellow circles show prospects for block 547. The reason that 4 areas have been marked is that the green line (reservoir rock) makes a “peak” and there is a sealing rock (the red line) above them making sure that the oil and/or gas doesn’t migrate to an other area.
  • In this scenario we can see a fault line go through the geological layer. There are 2 prospects are located right beside the fault line, but because the red line (sealing rock) is on both sides of the fault line the oil/gas can ’t migrate and is trapped. The other potential prospect actually has had leakage because the reservoir rock (the green line) is above the sealing rock, which allows the oil/gas to migrate.
  • Here the area between the reservoir and the sealant rock has been shaded in to show you whether you still have a seal at the fault or a gap where leakage could occur.
  • However, you must remember that you are looking for the ” four-way trap ” , so you need to ensure that the peaks or bumps line up on both the column and row, where they intersect. In this slide you can see that a 2D seismic survey for a Column and also one for a Row. Now where they cross, or intersect there needs to be peaks, it is only then that there is likely to be a trap.
  • So to bid for a license, you look to the New Licensing Round task on the homepage on the right hand-side. You choose which blocks to bid for by finding the block numbers in drop down boxes. You then enter in whole millions and with no dollar signs, commas or points how much you are willing to bid for that block. E.g block 591 and bid 2000000 You should enter three blocks and three amounts, with the highest amount in the first choice, and the second-highest amount in the second choice. You can only bid for blocks that are within the orange licensing area shown on the main map. In fact it is a good idea to mark this area on your own map. You must enter your bids before deadline, but you can amend your choices or amounts at anytime until the deadline by changing the numbers and pressing update again. When the deadline has passed all bids will be evaluated.
  • So lets recap on the things you need to do to solve this task wisely and give you the highest probability finding prospects. First – buy and review the ESA map to check which blocks you should completely avoid Secondly - buy all three CRS surveys ato study these closely to find out which blocks have the highest probability of prospects Thirdly – Buy and assess lots of 2D seismic surveys in order to identify particular blocks where there appear to be four-way traps and therefore the highest number of prospects. Finally – consider your preferences and reviewing the water depths of the blocks, since those with shallow water will be cheaper to drill in and therefore more economically viable in the long run from a production point of view.
  • When the deadline has passed each team has one exploration teams. You can see a summary of the licensing round in a message in the Mailbox. There you can see who got which blocks for what amount, which blocks all the teams bid for, and how many credibility points each team got
  • Gentlemen, hold your horses! Exploration Drilling is not about going drilling into the ground. It is about careful planning the drilling operation , and foremost to spread the costs and risks involved upon many shoulders. Thus farm-outs are imperative activities before drilling itself can be conducted.
  • First you must get other teams to invest at least 20% of your license. This means that you need to convince others to invest in you. The procedure for farming in is similar to the procedure in tasks 1 and 2. First you buy and study 3D seismic surveys for the blocks that you are the operator of. Then you negotiate either in person or by sending messages. Then you submit one offer for each license that you would like to own a share in. You submit the amount that you offer and the share that you want for that amount.
  • You need to buy and study 3D seismic interpretation in order to find out where to drill. Each 3D seismic interpretation shows the geological structure for one horizon of one of the license blocks. What you should look out for is four-way closure structural traps, as these are the only traps in OilSim.
  • Your primary target is to find the limits of each prospects, not just plounge the drill string into the middle of each reservoir. Thus you shall drill into the periphery of each prospect, not in the middle.
  • Farm-in and out is about spreading the risk, thus basic risk management must be applied: Risk Sharing.
  • 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
  • By clicking on this offer the team can then accept or reject the offer. A partnership is established every time a license owner accepts an offer. You can farm in and farm out at any time from now on, but you need to sell at least 20% to be allowed to start drilling in the block that you operate. Note, that you on the license tab can get an overview of the licenses that you operate, the licenses that you have invested in, and all the other licenses. You are not allowed to drill before at least 20% of your license has been farmed out.
  • 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 Remember you must have farmed-out 20% of your own block before you can drill.
  • When you have entered a partnership, you will pay your share of all future costs in the license. This includes your share of all exploration wells that are drilled. On the other hand, you will receive your share of the net value of any oil or gas that is found in the license. If you own 20% of a license you pay 20% of all costs, and you receive 20% of all license values. Even if there are other owners, it is the operator team that takes all decisions regarding acquirement of 3D seismic, drilling of wells, and testing of wells. When you are a partner in a license block, you get all information about the discovered oil and gas fields
  • Before you begin to drill you need to know the water depth so that you choose the right type of rig. You can find this information by clicking on your block and scrolling to the bottom of the screen where a map of the whole block ’ s water depths are shown. By scrolling over each cell you can see the water depth for each particular cell.
  • The next task is to choose which rig to use to drill the exploration well, but you will need to know how deep the water is in the area you wish to drill, so check out the water depths under your block information. There are three types of rigs: jack-up rigs for shallow waters 100m deep, semi-submersible rigs for middle waters (600m deep) and drillships for the deepest 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 that you have ordered on the home page. The rig rates are dynamic, so that popular rigs tend to have increasing prices, while less popular rigs become cheaper.
  • To determine how long it will probably take to complete drilling, check out the “ drilling Information ” tab. The 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.
  • Rig service providers are needed to operate the rig properly. Analysis, Shore base, Vessels, Well Services, Airways High-star-providers are expensive, but you may be more sure that the operation wil be smooth. Avoid though to use expensive providers everytime, as you will run out of money too soon. Medium-star-providers are medium-priced, as the risk involved are a bit higher than with the expensive ones. Few-star-providers are low-priced, and may be a good choice when you shall drill many and non-critical wells.
  • Place your drill string on a green cell. Red cells must be avoided.
  • Place your drill string on a green cell. Red cells must be avoided.
  • Service Providers are as good and bad as any providers in the real world. You may end up paying a higher bill, than originally anticipated. You must watch out for “ red cells ” in the EIA, as you will be fined if you drill into protected cells.
  • 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. When we get to the drilling phase and we get to drill exploration wells, the wells can go through all three horizons. If you choose to drill to the bottom most horizon, whatever is in the horizons above will be discovered as well. Only one in five prospects actually contain oil or gas, so you will encounter a lot of dry prospects. Thus, it makes sense to look out for prospects that are on top of each other in the 2D seismic surveys, as this increases your chances in finding something.
  • Inputting estimated cost of drilling gives you credibility 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 credibility points and cost you less to clear an oil spill if it happens.
  • Drilling is instantaneous in OilSim and this is an example of how the drilling results might look like: In this particular case the well was drilled through all three layers (horizons). Gas was found in the deepest layers, while no prospect was found in the topmost and middle layers. The area of the gas find is estimated to be between 1 and 9.4 square kilometers. The thickness of the field is estimated to be between 103 and 290 meters. The quality on a scale from 0 to 10 is estimated to be between 1.8 and 6.1. These three variables – area, thickness, and quality – together give a volume range of between 8 million and 674 million barrels of oil equivalent, MBOE. The 674 MBOE is what is possible with 10% probability, while the 8 MBOE is what is PROVEN. It is only the proven volume of 8 MBOE that we can use in the calculations of economic viability.
  • However, if you can get the proven volume up, the block might become economically viable. This is done through production testing, and appraisal wells 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.
  • So looking at another example of a different block. Here we can see 4 prospects that have had many appraisal wells drilled. Now the proven volumes are nearly the same as the possible volumes on 3 of the prospects.
  • So for the 4 prospects we have a Sales value of $1.473 billion , achieved through much higher proven reserves. We can deduct the expenses and have a positive value of our licence
  • If you run out of cash, you can apply for more money from the headquarters. This is done through Apply for more funds on the menu to the left.
  • When you have drilled and tested a couple of wells to narrow the uncertainties in the first field(s), you can start drilling into other prospects in your license block to see if they might make the block economically viable. You should follow what happens in the blocks you have farmed into, as well as keep an eye on new opportunities to invest. You will have the chance to get new and maybe better license blocks in the additional licensing round(s). If you run out of cash, you can apply for more money from the headquarters. This is done through Apply for more funds on the menu to the left. The winner is the team that has the highest ROI (return on investment) when the simulation stops.
  • Offshore 3.4 presentation

    1. 2. <ul><li>You are an exploration team in charge of a new petroleum province. </li></ul><ul><li>Multidisciplinary challenge: Enhance your overall understanding of petroleum exploration and field development. </li></ul><ul><li>Create a Return on Investment </li></ul>
    2. 3. <ul><li>You start with $200 million </li></ul><ul><li>Create value Net value of the oil and gas discovered MINUS all costs involved </li></ul><ul><li>Credibility points awarded </li></ul><ul><ul><li>Sensible decisions and correct answers </li></ul></ul><ul><ul><li>CPs are a measure of ability and credibility </li></ul></ul><ul><ul><li>Considered when bidding for blocks </li></ul></ul><ul><ul><li>Use when applying for funds </li></ul></ul>
    3. 4. <ul><li>Where and how to find hydrocarbons </li></ul><ul><li>Licensing rounds </li></ul><ul><li>Farm-in and Partnerships - negotiations </li></ul><ul><li>Drilling rigs </li></ul><ul><li>Sub-contractors </li></ul><ul><li>Environmental issues </li></ul><ul><li>Economically viable volumes </li></ul><ul><li>Team work, Critical decision making, analytical skills </li></ul><ul><li>Multi-tasking </li></ul>
    4. 5. Complete Value Chain Upstream
    5. 6. <ul><li> </li></ul>
    6. 7. <ul><li> </li></ul>
    7. 8. Blocks are divided into smaller cells e g. R1C1 Columns e.g C1 and C54 Rows e.g R15 and R97 Home page
    8. 9. <ul><li>Challenge: Find three sedimentary basins </li></ul><ul><li>Procedure: </li></ul><ul><ul><li>Buy and study magnetic and gravimetric surveys </li></ul></ul><ul><ul><li>Submit the coordinates for each centre </li></ul></ul><ul><ul><li>Column and row number for each basin centre </li></ul></ul>
    9. 10. <ul><li>Gravimetric surveys indicate changes in the gravitational pull of the Earth in different areas of the sub-surface. </li></ul><ul><li>Lower gravitational fields indicates likelihood of low density rocks –Sedimentary rocks, porous and hopefully containing hydrocarbons </li></ul>
    10. 11. Survey shop Gravimetric survey of North-west area
    11. 12. <ul><li>Magnetic surveys show anomalies in in the expected magnetic field of the Earth in particular areas. </li></ul><ul><li>Sedimentary rocks in the basins have a lower concentration of magnetic materials and lower magnetic field than the surrounding crystalline rocks. </li></ul>
    12. 13. <ul><li>Magnetic survey: North-west quadrant </li></ul>
    13. 14. <ul><li>All four quadrant surveys in map context </li></ul>
    14. 16. <ul><li>Locate edges of the continous basin structure </li></ul><ul><li>Locate the diagonals and thus basin centre </li></ul>
    15. 17. <ul><li>Example: </li></ul><ul><li>Top basin on both maps </li></ul><ul><li>Calculate the midpoint between the gravimetric and magnetic centres found </li></ul><ul><li>= C55 and R105 </li></ul>C50 R100 C60 R110
    16. 18. <ul><li>3 centres – one Centre midpoint for each basin </li></ul><ul><li>Example: C55, R105 </li></ul><ul><li>Solve before deadline. All submissions are evaluated after the deadline (and not before). </li></ul><ul><li>You may get 0-100 CPs . All three centres must be located to get full credibility points. </li></ul>
    17. 19. <ul><li>Message in Inbox: </li></ul><ul><li>Shows results </li></ul><ul><li>Answers submitted </li></ul><ul><li>CPs awarded </li></ul>
    18. 20. <ul><li>The government has decided to put the blocks in one of the basins on offer. </li></ul><ul><li>Challenge : Identify the 3 most promising blocks and offer an amount for each of them. </li></ul>Licensing area
    19. 21. <ul><li>Any restrictions involved? - Spawning grounds </li></ul><ul><li>What are we looking for? - Prospects </li></ul><ul><li>Where do we find prospects? </li></ul><ul><ul><li>In basins, where hydrocarbons have been </li></ul></ul><ul><ul><li>1) are produced and 2) trapped </li></ul></ul><ul><li>How do I find them? - Geoscientific analysis </li></ul><ul><ul><li>Common Risk Segment maps and 2D seismic </li></ul></ul>
    20. 22. 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. 23. (c) OLF Anticline trap Fault trap Stratigraphic trap Salt dome trap <ul><ul><ul><li>Geological “ pockets ” , that might contain hydrocarbons. </li></ul></ul></ul>
    22. 24. Red areas You will not be awarded blocks that contain any red spots (spawning grounds) Blue areas Blocks in area may be awarded
    23. 25. <ul><li>Shortlist blocks to investigate further. </li></ul><ul><li>Review Common Risk Segment - Green indicates highest probability of containing prospects </li></ul><ul><li>Check block water depths </li></ul>Layer 2 Paleocene Layer 1 Cretaceous Surface Which blocks? Layer 3 Eocene Block tab shows water depth
    24. 26. <ul><li>Traps can be found with seismic surveys and sound waves bouncing off structures </li></ul><ul><li>2D seismic survey is a vertical cross section of the geological layers along either a column or a row </li></ul>
    25. 27.                                                                                                                                                                         
    26. 28. Unprocessed Processed Interpreted Red is top of the sealing rock Green is top of the reservoir rock
    27. 29. <ul><ul><li>What type of data do you want? </li></ul></ul><ul><ul><li>Columns or Rows </li></ul></ul><ul><ul><li>Unprocessed or processed data </li></ul></ul><ul><ul><li>Interpreted or not </li></ul></ul>Only buy maximum of 4 blocks of data at a time to speed up processing
    28. 30. <ul><li>It takes time to process your request </li></ul><ul><li>Created to order </li></ul><ul><li>Moves to surveys once processed </li></ul>
    29. 31. <ul><li>Red circles – navigate through the 2D seismic </li></ul>
    30. 33. Leakage?
    31. 34. Leakage?
    32. 35. Column Row Prospect, Reservoir Basin,Source
    33. 36. <ul><li>Three blocks </li></ul><ul><li>Three amounts </li></ul><ul><li>Min: $1M </li></ul><ul><li>Max: $30M </li></ul><ul><li>You will only get awarded one block – and only pay for one </li></ul><ul><li>Highest bid wins </li></ul><ul><li>If equal, then team with highest CP wins </li></ul>
    34. 37. <ul><li>Environmentally sensitive areas – blocks to avoid </li></ul><ul><li>Common Risk Segment surveys – areas of higher probability of prospects </li></ul><ul><li>2D seismic – blocks with most structures </li></ul><ul><li>Final tip - Check water depth - shallow water blocks </li></ul>
    35. 38. <ul><li>Message sent to all Results and CPs </li></ul><ul><li>One license per team </li></ul>
    36. 39. <ul><li>The headquarters of your company has evaluated the license that you were awarded. </li></ul><ul><li>Although the possibility of finding oil is fair, the costs involved are large . Thus the headquarters want you to spread the risk . </li></ul><ul><li>Challenge : You shall farm-out minimum 20% from your license – and farm-in as much as you can in other good licenses. </li></ul>
    37. 40. <ul><li>Acquire 3D Seismic interpretations for the block you operate, and study the results from the licensing round </li></ul><ul><li>Farm-out: Get others to invest 20% or more in your license – you can send them surveys </li></ul><ul><li>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 %. </li></ul>
    38. 41. <ul><li>Shows the subsurface structure in a cube. </li></ul>
    39. 42. Layer 1 Cretaceous Layer 2 Paleocene Layer 3 Eocene Prospects are no guarantee of oil or gas
    40. 43. <ul><li>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. </li></ul><ul><li>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. </li></ul>
    41. 45. <ul><li>Input the % you would like to own of their licence </li></ul><ul><li>Input amount for the whole % - minimum offer is $100000 per % </li></ul><ul><li>Add a message to the seller </li></ul><ul><li>Press “ Send offer ” </li></ul>
    42. 46. 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
    43. 47. <ul><li>License OWNER decides whether to ACCEPT or REJECT the offer </li></ul><ul><li>Partnerships established every time a license owner accepts an offer. </li></ul><ul><li>Overview: On the main page, you can see all licenses. 1) licenses you operate, 2) licenses you have invested in, and other licenses . </li></ul>
    44. 48. 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
    45. 49. <ul><li>Partners pay a proportional share of all future costs incurred by the partnership </li></ul><ul><li>Partners receive a proportional share of the net proceedings from any oil or gas found on the license. </li></ul><ul><li>The operator team makes all decisions regarding acquiring 3D seismics, drilling of wells and testing of wells. </li></ul><ul><li>Information: partners in a block can access info about drilled wells and discovered oil and gas fields. </li></ul>
    46. 50. <ul><li>Before choosing a rig, you need to check your water depth </li></ul><ul><li>Find this at the bottom of the BLOCK page </li></ul>
    47. 51. <ul><li>Choose the right rigs for your water depths </li></ul><ul><ul><li>Jack-up rigs for shallow waters </li></ul></ul><ul><ul><li>Upto 100m </li></ul></ul><ul><ul><li>Semi-submersible rigs for middle waters </li></ul></ul><ul><ul><li>Upto 600m </li></ul></ul><ul><ul><li>Drillships for the deepest waters </li></ul></ul><ul><ul><li>Over 600m </li></ul></ul><ul><li>Rig cost = drilling days * day rate </li></ul>
    48. 52. <ul><li>Limited number of rigs </li></ul><ul><li>20 minutes to use </li></ul><ul><li>Queues </li></ul><ul><li>Prices can change </li></ul>
    49. 54. <ul><li>Upto 9 Star quality- </li></ul><ul><li>Good : normally costs more </li></ul><ul><li>Bad : cheaper, </li></ul><ul><li>but reliability is low, so you risk extra drilling time and extra costs </li></ul>
    50. 55. <ul><li>EIA: enviromental impact analysis shows where not to drill. </li></ul><ul><li>Place your mouse where to drill </li></ul>
    51. 56. <ul><li>EIA: enviromental impact analysis shows where not to drill. </li></ul><ul><li>Place your mouse where to drill </li></ul>
    52. 57. <ul><li>Certain problems can occur if Service Provider Selection is poor quality </li></ul><ul><li>Other penalties can occur if you drill in areas indicated as problematic in the Environmental Impact Assessment </li></ul><ul><li>As in real life, problems can occur randomly and these are also applied with fines levied accordingly. </li></ul>
    53. 58. Layer 1 Cretaceous Layer 2 Paleocene Layer 3 Eocene
    54. 60. <ul><li>Proven volume (MBOE) counts </li></ul><ul><li>Test may increase proven volume </li></ul><ul><li>Remember to tick the boxes! </li></ul><ul><li>Tests Take 10 days </li></ul>
    55. 64. 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
    56. 65. <ul><li>From Probable volume to proven reserves </li></ul>
    57. 66. <ul><li>Appraisal wells - proven reserves increase </li></ul><ul><li>Range between proven and possible is decreased </li></ul>
    58. 67. 397 MBOE @ $50 including 25% recovery factor, 0.8 production factor, 10% discount factor) 12% $39.9M $6 of $50 = 12% tax) Expected costs if you developed the field (CAPEX) and produced the oil (OPEX) Now total expenses are lower than the sales value and so we have a positive licence value
    59. 68. <ul><li>Click on Apply for More Funds Tab. </li></ul><ul><li>1 CP for each $100,000 applied for. </li></ul><ul><li>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. </li></ul><ul><li>Expensive money if less than 10 credibility points: Apply for cash and be fined $5million for each $20million requested. </li></ul>
    60. 69. <ul><li>Narrow uncertainty : Drill appraisal wells to get proven volumes </li></ul><ul><li>Drill into other prospects to find more proven volumes. </li></ul><ul><li>Farm-in and -out: Get into other good blocks. </li></ul><ul><li>Two additional licensing rounds: Repeat the processes. </li></ul><ul><li>Money: Apply for more money, if you run out of cash. </li></ul>