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VAR Cost/Schedule Risk Management to FID

Probabilistic Scenarios to 1st Oil/Gas

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- 1. Premier Oil (Vietnam) B.V. INDEPENDENT PROJECT RISKS ASSESSMENT REPORT BLOCK 12W DEVELOPMENT PRESENTATION TO BLOCK 12W STAKEHOLDERS SCHEDULE / COST RISKS ASSOCIATED WITH PROJECT EXECUTION PHASE to 1st OIL Analyses and Presentation by Angus Macleod MAPM – Head of Planning & Risk ManagementLEGAL NOTE : the material contained in this presentation is PROPRIETARY and CONFIDENTIAL and remains at all times the INTELLECTUAL PROPERTY of PREMIER OIL (Vietnam) B.V>
- 2. Block 12W Field Schematic
- 3. Contents of Report1. Introduction (Basis of Report)2. Purpose3. Methodology4. Risk Inputs • Qualitative – Risk Registers / Cost Profiles • Quantitative – 3 point duration estimates / Class 2 Estimate5. Risk Analysis / Outputs • Quantitative – Schedule : Monte-Carlo Simulation in Pertmaster • Quantitative – Cost : Monte-Carlo Simulation in @RISK6. Risk Responses, Monitoring & Control7. What if…………8. Consultant Conclusions9. Schedule / Cost Risk Appendices10. Continuous Value Improvement Process
- 4. Introduction (Basis of Report)Defined Project Risk Management an integral part of the Project Management Process
- 5. Introduction (Basis of Report)Defined Project Risk Management Process as below
- 6. Introduction (Basis of Report)Identified some key components for success of Project Risk Management in Upstream Environment
- 7. Introduction (Basis of Report)Identified some key elements to obtain Schedule/Cost risk parameters and implement the results for PSC and Project Management Decision Making
- 8. Introduction (Basis of Report)Identified Project Risk Management Process as a Six Stage Cycle
- 9. Introduction (Basis of Report)Identified the relationships between 6 stage Project Risk Management Process Total Schedule Effect / Cost (+ / -) of Risk
- 10. PurposePurposes of this Report• Provide historical basis for schedule/cost risk identification /mitigation• Map the process of Risk Management used to optimise risk mitigations• Illustrate consolidated risks that pertain to Execution of the Project• Identify risks as threats / opportunities to optimise schedule/cost to 1st Oil• Illustrate the effective use of qualitative and Quantitative methodologies used to optimise risk mitigation• Provide a basis for PSC decision-making processes with regard to • Critical Path(s) to 1st Oil ( based on probabilistic analyses) • Mitigation of Schedule/Cost “sensitivities” • Criticality of Project Sanction to achieve zero deferred production• Initiate a “Continuous Value Improvement” Process
- 11. Methodology - General Developed a flowchart to map the Risk Process & Methodologies usedConsolidate Risks and Collect p10,p50,p90 estimates Spreadsheets developed by Project Function (Subsurface, Drilling, Facilities, Project Controls)
- 12. Methodology – Qualitative Risk AnalysisUtilised the Project Risk Register with a “Boston Square Matrix ” technique to model Qualitative Risk Probability / Impact and consequences LEGEND
- 13. Methodology – Quantative Risk AnalysisUsed Project Risk Register, Boston Square Matrix and p50,p10,p90 range of Block 12 W Key Activity durations to run “Monte Carlo” simulations in Pertmaster (Schedule) and @RISK (Cost) Definition of
- 14. Risk Inputs - Qualitative - Risk Register (Extract of pre-mitigated HSE Risks)Consolidated Risk Registers from HSE, Subsea, Drilling, Facilities (FPSO, WHRP, Pipelines),
- 15. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Schedule Risks)Cross-related Qualitative Risk Register and decided which SCHEDULE RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks) Yes goes into Pertmaster Model Yes goes into @RISK Model
- 16. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Schedule Risks)Cross-related Qualitative Risk Register and decided which SCHEDULE RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and/or @RISK (Cost Risks) Yes goes into Yes Pertmaster goes Model into @RISK Model not schedule modelled in Pertmaste r not cost modelled in @RISK
- 17. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Schedule Risks)Cross-related Qualitative Risk Register and decided which SCHEDULE RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks) Yes goes into @RISK not Model schedule modelled in Pertmaster Yes goes into @RISK Model
- 18. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Technical Risks)Cross-related Qualitative Risk Register and decided which TECHNICAL (Facilities) RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks)
- 19. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Technical Risks)Cross-related Qualitative Risk Register and decided which TECHNICAL (Facilities) RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks) Yes goes into @RISK Model Yes goes into @RISK Model
- 20. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Technical Risks)Cross-related Qualitative Risk Register and decided which TECHNICAL DRILLING RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks) not schedule modelled in Pertmaster not cost not modelled schedule in @RISK modelled in Pertmaster Yes goes into Yes goes @RISK into Model Pertmaster Model Yes goes into @RISK Model
- 21. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Technical Risks)Cross-related Qualitative Risk Register and decided which DRILLING WELL DESIGN RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks) Yes goes into Pertmaster Model Yes goes into @RISK Model Yes goes into Pertmaster Model Yes goes into @RISK Model
- 22. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Drilling Risks)Cross-related Qualitative Risk Register and decided which DEVELOPMENT DRILLING RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks) Yes goes into @RISK Model Yes goes into Pertmaster Model not schedule modelled in Pertmaster not cost modelled in @RISK
- 23. Risk Inputs - Qualitative - Risk Register (Extract post-mitigated Drilling Risks)Cross-related Qualitative Risk Register and decided which DEVELOPMENT DRILLING RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks) Yes goes into @RISK Model Yes goes into Pertmaster Model not schedule modelled in Pertmaster not cost modelled in @RISK
- 24. Risk Inputs - Qualitative - Risk Register ( post-mitigated Sub-Surface Risks)Cross-related Qualitative Risk Register and decided which GENERAL SUB-SURFACE RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks)
- 25. Risk Inputs - Qualitative - Risk Register ( post-mitigated Sub-Surface Risks)Cross-related Qualitative Risk Register and decided which CHIM SAO SUB-SURFACE RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks)
- 26. Risk Inputs - Qualitative - Risk Register (post-mitigated Sub-Surface Risks)cross-related Qualitative Risk Register and decided which CHIM SAO SUB-SURFACE RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks)
- 27. Risk Inputs - Qualitative - Risk Register (post-mitigated Sub-Surface Risks)cross-related Qualitative Risk Register and decided which DUA SUB-SURFACE RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks)
- 28. Risk Inputs - Qualitative - Risk Register (post-mitigated Commercial Risks)cross-related Qualitative Risk Register and decided which COMMERCIAL & OTHER RISKS should be modeled on a Quantative Basis in PERTMASTER (Schedule Risks) and / or @RISK (Cost Risks) TBA
- 29. Risk Outputs- Quantative – Deterministic (P50) Schedule – Page 1 of 3RAN a DETERMINISTIC SCHEDULE in Primavera P6 and tested it in Pertmaster using equal distribution of P50 durations and confirmed a DETERMINISTIC (unrisked) 1st OIL DATE OF 25th May 2010
- 30. Risk Outputs- Quantative – Deterministic (P50) Schedule Page 2 of 3(cont’d) DETERMINISTIC SCHEDULE in Primavera P6 and tested it in Pertmaster using equal distribution of P50 durations and confirmed a DETERMINISTIC (unrisked) 1st OIL DATE OF 25th May 2010
- 31. Risk Outputs- Quantative – Deterministic (P50) Schedule Page 3 0f 3)(cont’d) DETERMINISTIC SCHEDULE in Primavera P6 and tested it in Pertmaster using equal distribution of P50 durations and confirmed a DETERMINISTIC (unrisked) 1st OIL DATE OF 25th May 2010
- 32. Risk Outputs- Quantative – Deterministic (P50) ScheduleDETERMINISTIC SCHEDULE in Primavera P6 RAN IN PERTMASTER using equal distribution of P50 durations and confirmed a DETERMINISTIC (unrisked) 1st OIL DATE OF 25th May 2010
- 33. Quantative – Probabilistic Schedule - Critical Path Report – Page 1 of 5RAN a PROBABLISTIC SCHEDULE with Monte-Carlo Simulations in PERTMASTER using original Deterministic Critical Path Schedule + collected 3 point estimates + Post-Mitigated Qualative Risk Registers Project Sanction July 08
- 34. Quantative – Probabilistic Schedule - Critical Path Report – Page 2 of 5RAN a PROBABLISTIC SCHEDULE with Monte-Carlo Simulations in PERTMASTER using original Deterministic Critical Path Schedule + collected 3 point estimates + Post-Mitigated Qualative Risk Registers
- 35. Quantative – Probabilistic Schedule - Critical Path Report – Page 3 of 5RAN PROBABLISTIC SCHEDULE with Monte-Carlo Simulations in PERTMASTER using original Deterministic Critical Path Schedule + collected 3 point estimates + Post-Mitigated Qualative Risk Registers
- 36. Quantative – Probabilistic Schedule - Critical Path Report – Page 4 of 5RAN PROBABLISTIC SCHEDULE with Monte-Carlo Simulations in PERTMASTER using original Deterministic Critical Path Schedule + collected 3 point estimates + Post-Mitigated Qualative Risk Registers
- 37. Quantative – Probabilistic Schedule - Critical Path Report – Page 5 of 5RAN PROBABLISTIC SCHEDULE with Monte-Carlo Simulations in PERTMASTER using original Deterministic Critical Path Schedule + collected 3 point estimates + Post-Mitigated Qualative Risk Registers
- 38. Risk Outputs – Quantative – “Base Case” Probabilistic Schedule Finish DatesExtrapolated p10, p50, p90 Probabilistic Finish Dates from PROBABLISTIC SCHEDULE ANALYSIS based on Monte-Carlo simulation of 3 point duration estimates – and produced 1st Pass range of 1st Oil dates 1st Pass “Base Case” Probabilistic Dates to 1st Oil P90 1st Oil Date = 26th Aug 2010 P50 1st Oil Date = 7th Jul 2010 P10 1st Oil Date = 25th May 2010
- 39. Risk Outputs- Quantative–Tornado Graph – Schedule Sensitivity IndexRAN Monte-Carlo Simulations in PERTMASTER and produced TORNADO GRAPHS depicting SCHEDULE SENSITIVITY INDEX – (Top Ten Schedule Sensitivities)
- 40. What-if….Deterministic Schedule “Best” Scenario if Sanction DelayTurner & Townsend–ran DETERMINISTIC SCHEDULE SCENARIOS in Primavera P6 to model the BEST CASE schedule scenarios under theoretical “what-if” conditions to identify threats to 1st OIL DATE OF 25th May 2010 If Project Sanction Delayed by 2 Months then deterministic “best case” then 1st Oil delayed by 4 months (deferred production)
- 41. What-if….Probabilistic Schedule P50 Scenario if Sanction Delay (Page 1 of 4)RAN PROBABLISTIC SCHEDULE SCENARIO in PERTMASTER to model the P50 CASE schedule if Project Sanction delayed 2 months and P50 net result 1st OIL DATE slips to Dec 2010 Jacket & Topsides cannot install until Q2 2010
- 42. What-if….Probabilistic Schedule P50 Scenario if Sanction Delay (Page 2 of 4)RAN PROBABLISTIC SCHEDULE SCENARIO in PERTMASTER to model the P50 CASE schedule if Project Sanction delayed 2 months and P50 net result 1st OIL DATE slips to Dec 2010 Template drilling $$ trade-off to maintain schedule
- 43. What-if….Probabilistic Schedule P50 Scenario if Sanction Delay (Page 3 of 4)RAN PROBABLISTIC SCHEDULE SCENARIO in PERTMASTER to model the P50 CASE schedule if Project Sanction delayed 2 months and P50 net result 1st OIL DATE slips to Dec 2010 FPSO Schedule slips resulting from later major contract award
- 44. What-if….Probabilistic Schedule P50 Scenario if Sanction Delay (Page 4 of 4)RAN PROBABLISTIC SCHEDULE SCENARIO in PERTMASTER to model the P50 CASE schedule if Project Sanction delayed 2 months and P50 net result 1st OIL DATE slips to Dec 2010 All Jacket & Topsides heavy lifts slip to post-monsoon 2010 Most Likely “Sanction Delay Case” 1st Oil Date slips 5 months to 24th Oct 10
- 45. Risk Outputs – Quantative – “Sanction Delay Case” Probabilistic Schedule Finish DatesExtrapolated p10, p50, p90 Probabilistic Finish Dates from PROBABLISTIC SCHEDULE ANALYSIS based on Monte-Carlo simulation of 3 point duration estimates – and produced new range of 1st Oil dates“Sanction Delay Quantative – Probabilistic Schedule Finish Dates Risk Outputs – Case “ Probabilistic Dates to 1st Oil P90 1st Oil Date = 6th Dec 2010 P50 1st Oil Date = 4th Nov 2010 P10 1st Oil Date = 5th Oct 2010
- 46. Cost Risk Inputs Quantative – Class 2 EstimateUsed the following Class 2 Estimate to run Cost Probability Simulations in @RISK
- 47. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCBS -Extrapolated based on Monte-Carlo simulation of Class 2 Cost Estimate a range of p10, p50, p90 Probabilistic Cost Profiles (using values probabilistic around the base case costs)
- 48. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCBS -extrapolated based on Monte-Carlo simulation of Class 2 Cost Estimate a range of p10, p50, p90 Probabilistic CostProfiles (using values probabilistic around the base case costs)
- 49. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCBS-extrapolated based on Monte-Carlo simulation of Class 2 Cost Estimate a range of p10, p50, p90 Probabilistic Cost Profiles (using values probabilistic around the base case costs)
- 50. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCBS –extrapolated based on Monte-Carlo simulation of Class 2 Cost Estimate a range of p10, p50, p90 Probabilistic Cost Profiles (using values probabilistic around the base case costs)
- 51. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCBS –extrapolated based on Monte-Carlo simulation of Class 2 Cost Estimate a range of p10, p50, p90 Probabilistic Cost Profiles (using values probabilistic around the base case costs)
- 52. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCBS –extrapolated based on Monte-Carlo simulation of Class 2 Cost Estimate a range of p10, p50, p90 Probabilistic CostProfiles (using values probabilistic around the base case costs)
- 53. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCBS - extrapolated based on Monte-Carlo simulation of Class 2 Cost Estimate a range of p10, p50, p90 Probabilistic Cost Profiles (using values probabilistic around the base case costs)
- 54. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCBS -extrapolated based on Monte-Carlo simulation of Class 2 Cost Estimate a range of Probabilistic Cost Profiles (using values probabilistic around the base case costs)
- 55. Risk Outputs :Quantative – Cost : Monte-Carlo Simulation in @RISKCALCULATED based on Monte-Carlo simulation of Class 2 Cost Estimate a range of Probabilistic Cost Profiles (using values probabilistic around the base case costs)
- 56. Risk Outputs :Quantative – Cost Sensitivity in @RISKBased on Spearmans Rank Correlation simulation of cost centre sensitivity (relative Coefficient values) of Class 2 “Total Project Value”
- 57. Risk Outputs :Quantative – Cost : Simulation in @RISKCalculated Cumulative Ascending Cost Distribution Curve based on values inherent in Class 2 “Total Project Value” Cost Estimate
- 58. Template Drilling Costs (if EPCI miss 2009-2010 weather window)
- 59. CONCLUSIONSConclusions of this Report • The original Deterministic Schedule is “aggressive but achievable” provided no slippage occurs in Approvals Process and Project Sanction is not delayed beyond July 2008 • EPCI LL Procurement manageable with a schedule benefit and slight cost risk ahead of Project Sanction • Much effort has gone into ensuring that “team effort” at 2 x risk workshops contributed to refinement both of quality, content and appropriate detail of Risk Registers • A “face-to-face” knowledge management process was adopted to refine accuracy of schedule 3 point activity duration estimates – this proved a valuable exercise and encouraged risk “ownership” • Using a structured Risk Assessment Process and latest risk analysis methodologies applied to state of the art Risk Analysis software the consultant was able to : • Link Qualitative Risk Registers to Level 2 Schedule activities • Run probabilistic algorithms on Quantitative 3 point duration estimates and Class 2 Estimate • Risk Analysis / Outputs • Schedule : Monte-Carlo Simulation in PERTMASTER ( “Base Case” assumes Sanction Jul 08”) • P10 = 25th May 2010 (originally the P50 Deterministic Case) • P50 = 7th July 2010 • P90 = 26th August 2010 • Schedule : Monte-Carlo Simulation PERTMASTER (“Sanction Delay Case” assumes Sep 08”) • P10 = 5th Oct 2010 • P50 = 4th Nov 2010 • P90 = 6th Dec 2010
- 60. Continuous Value Improvement ProcessTO BE DEVELOPED AFTER PROJECT SANCTION

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