Code Date Venue Fees
OG080 23 - 27 Jul 2018 London - United Kingdom $5,500 Register
Home » Seminars » Oil & Gas Technology » Advanced Oil & Gas Project Economics, Risk & Decision Analysis

Introduction

The petroleum industry is one of the most important, highly capital intensive and risky business. Global exploration and production spending in 2013 was $644 billion, up 7% from $604 billion the year before. In 2014 the exploration budgets reached $654 billion but this fell to $521 billion in 2015 and in the following year, 2016, there was a further decline of 27%. This year’s global exploration and production spending is expected to increase 7%.

The upstream sector’s profit margins are under real pressure from many factors such as higher costs of developing new reserves, less oil and gas found per foot of exploration drilling, rising inflation, global oversupply and price volatility. Competition for investments, for acreage/concessions, aging of existing reservoirs, the of unconventional oil and gas revolution all contribute business risk and uncertainty.

Petroleum industry projects are by their very nature risky, the challenge however is in assessing, managing, and mitigating this risk proactively. The three biggest planning challenges are predicting costs, assessing profitability, and risk management. All these tasks occur in the early stages of capital planning and failure to adequately evaluate these elements can lead to heavy losses.

This training seminar will highlight:
  • Identification of the stages required in the risk analysis process, i.e., preparing, modeling, and running risk analysis.
  • Development of the risk model, assessing probabilities to various variables, risk analysis, and explore the impact of uncertain variables.
  • Enable the participants to create reports such as, tornados diagrams, scatter plots and cumulative probability functions, using excel.
  • Application of decision trees and Monte Carlo-based simulations to generate profitability indicators.
  • Enable the participants to develop probabilistic cash flow reports along with probabilistic profitability indicators for decision-making.

Objectives

The primary objectives of the training seminar, are to:
  • Learn how to handle uncertainty in petroleum projects
  • Understand different economic terms used in the oil & gas industry.
  • Understand the expected value concept and learn its impact on decision tree analysis
  • Learn expected theory concepts and attitudes towards risk, risk eversion and risk premium
  • Acquire spreadsheet skills including simulation software @RISK
  • Carry out cash flow analysis, for petroleum related project and use common economic indicators to evaluate between competing alternatives.
  • Carry out a comprehensive economic study evaluating petroleum related projects using risk and sensitivity analysis by means of spreadsheets.

Training Methodology

The training seminar will incorporate a mix of learning methods, including but not limited to, high quality power point slides, short videos and active class participation.

An in-depth knowledge of quantitative risk analysis techniques and hands-on problem solving skills will be developed during the training seminar. Participants will use PC’s to solve a variety of problems better enabling them to utilize the taught material. Furthermore, the training seminar will enable the training seminar delegates to reach an optimum decision in capital spending.

The training seminar approach will be facilitated using Microsoft Excel add on @Risk module and will further assist in promoting discussions among the participants.

Organisational Impact

By sending delegates on this five-day training seminar your organization will benefit by:
  • Learning how to apply economic valuation and risk assessment processes and techniques within the global oil and gas industry.
  • Help the participants to identify and analyze the risk involved in a petroleum related project.
  • Assist the participants to apply the decision-making procedures to justify the petroleum projects in terms of profitability.
  • Participants learn the decision analysis process and foundation concepts so they can actively participate in multi-discipline evaluation teams.
  • Monte Carlo simulation is discussed and experienced in detail in hands-on exercises
  • Adding value to the oil and gas company’s active projects, through the use of case studies
  • Help participants to recognize and identify the influencing parameters for oil and gas field developments.

Personal Impact

By attending this training seminar, you will:
  • Learn how to describe the elements of the decision analysis process and grasp how construct a project cash flow model incorporating sensitivity analyses.
  • Evaluate investment and design alternatives with decision tree analysis
  • Gain the operational decision making techniques using @Risk.
  • Gain valuable knowledge in identifying the important uncertainties in petroleum projects.
  • Enhance your awareness of the influential parameters in an oil and gas field development projects.

Who Should Attend?

This training seminar is designed to provide technical and practical approaches to executing a petroleum related project in the upstream sector.

This training seminar is suitable to a wide range of professionals but will greatly benefit:
  • Planning managers
  • Oil & gas engineers
  • Project managers
  • Analysts
  • Commercial managers
  • Economists
  • Government officials
  • Geologists
  • Business advisors
  • Asset managers
  • E&P managers
  • Product managers

Seminar Outline

DAY 1

Development Economics

  • A Brief History of Energy Usage
  • Principles of Development Economics
  • Understanding of Economic terms
  • Inflation and its impact on Nominal & Real Cash Flows
  • Project Financing

DAY 2

Uncertainty in Investments

  • Handling uncertainty in Capital Projects
  • Understanding Probability Concepts
  • The expected Value Concept: Features and pitfalls
    • Expected monetary value (EMV)
    • Expected profitability index (EPI)
    • Expected opportunity loss (EOL)

DAY 3

Risks and Uncertainties

  • Risk & Uncertainty
  • Risk eversion and risk premium
  • Exploration project threats and opportunities
  • Economic decision criteria
  • Decision Tree Analysis
  • Probability Distribution
  • Case study: Monte Carlo Simulation

DAY 4

Setting up Spreadsheet Calculations Using Excel

  • Spreadsheet Calculations
    • Cash Flow Analysis
    • Sensitivity analysis calculations
    • Tornado Diagrams
  • Introduction to Monte Carlo Simulations using @Risk
  • Class exercises: Setting up an oil field Project

DAY 5

Practical use of the @Risk add-on: Oil Field Development Model

  • Developing an Integrated Economic Model of an Oil Field Development
  • Developing and using an @Risk model analysis
  • Project sensitivity analysis utilizing data from @Risk model
  • Training seminar final review and close

 

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Advanced Oil & Gas Project Economics,
Risk & Decision Analysis


Upcoming Dates

Code Date Venue Fees
OG080 23 - 27 Jul 2018 London - United Kingdom $5,500

Introduction

The petroleum industry is one of the most important, highly capital intensive and risky business. Global exploration and production spending in 2013 was $644 billion, up 7% from $604 billion the year before. In 2014 the exploration budgets reached $654 billion but this fell to $521 billion in 2015 and in the following year, 2016, there was a further decline of 27%. This year’s global exploration and production spending is expected to increase 7%.

The upstream sector’s profit margins are under real pressure from many factors such as higher costs of developing new reserves, less oil and gas found per foot of exploration drilling, rising inflation, global oversupply and price volatility. Competition for investments, for acreage/concessions, aging of existing reservoirs, the of unconventional oil and gas revolution all contribute business risk and uncertainty.

Petroleum industry projects are by their very nature risky, the challenge however is in assessing, managing, and mitigating this risk proactively. The three biggest planning challenges are predicting costs, assessing profitability, and risk management. All these tasks occur in the early stages of capital planning and failure to adequately evaluate these elements can lead to heavy losses.

This training seminar will highlight:
  • Identification of the stages required in the risk analysis process, i.e., preparing, modeling, and running risk analysis.
  • Development of the risk model, assessing probabilities to various variables, risk analysis, and explore the impact of uncertain variables.
  • Enable the participants to create reports such as, tornados diagrams, scatter plots and cumulative probability functions, using excel.
  • Application of decision trees and Monte Carlo-based simulations to generate profitability indicators.
  • Enable the participants to develop probabilistic cash flow reports along with probabilistic profitability indicators for decision-making.

Objectives

The primary objectives of the training seminar, are to:
  • Learn how to handle uncertainty in petroleum projects
  • Understand different economic terms used in the oil & gas industry.
  • Understand the expected value concept and learn its impact on decision tree analysis
  • Learn expected theory concepts and attitudes towards risk, risk eversion and risk premium
  • Acquire spreadsheet skills including simulation software @RISK
  • Carry out cash flow analysis, for petroleum related project and use common economic indicators to evaluate between competing alternatives.
  • Carry out a comprehensive economic study evaluating petroleum related projects using risk and sensitivity analysis by means of spreadsheets.

Training Methodology

The training seminar will incorporate a mix of learning methods, including but not limited to, high quality power point slides, short videos and active class participation.

An in-depth knowledge of quantitative risk analysis techniques and hands-on problem solving skills will be developed during the training seminar. Participants will use PC’s to solve a variety of problems better enabling them to utilize the taught material. Furthermore, the training seminar will enable the training seminar delegates to reach an optimum decision in capital spending.

The training seminar approach will be facilitated using Microsoft Excel add on @Risk module and will further assist in promoting discussions among the participants.

Organisational Impact

By sending delegates on this five-day training seminar your organization will benefit by:
  • Learning how to apply economic valuation and risk assessment processes and techniques within the global oil and gas industry.
  • Help the participants to identify and analyze the risk involved in a petroleum related project.
  • Assist the participants to apply the decision-making procedures to justify the petroleum projects in terms of profitability.
  • Participants learn the decision analysis process and foundation concepts so they can actively participate in multi-discipline evaluation teams.
  • Monte Carlo simulation is discussed and experienced in detail in hands-on exercises
  • Adding value to the oil and gas company’s active projects, through the use of case studies
  • Help participants to recognize and identify the influencing parameters for oil and gas field developments.

Personal Impact

By attending this training seminar, you will:
  • Learn how to describe the elements of the decision analysis process and grasp how construct a project cash flow model incorporating sensitivity analyses.
  • Evaluate investment and design alternatives with decision tree analysis
  • Gain the operational decision making techniques using @Risk.
  • Gain valuable knowledge in identifying the important uncertainties in petroleum projects.
  • Enhance your awareness of the influential parameters in an oil and gas field development projects.

Who Should Attend?

This training seminar is designed to provide technical and practical approaches to executing a petroleum related project in the upstream sector.

This training seminar is suitable to a wide range of professionals but will greatly benefit:
  • Planning managers
  • Oil & gas engineers
  • Project managers
  • Analysts
  • Commercial managers
  • Economists
  • Government officials
  • Geologists
  • Business advisors
  • Asset managers
  • E&P managers
  • Product managers

SEMINAR OUTLINE

DAY 1

Development Economics

  • A Brief History of Energy Usage
  • Principles of Development Economics
  • Understanding of Economic terms
  • Inflation and its impact on Nominal & Real Cash Flows
  • Project Financing

DAY 2

Uncertainty in Investments

  • Handling uncertainty in Capital Projects
  • Understanding Probability Concepts
  • The expected Value Concept: Features and pitfalls
    • Expected monetary value (EMV)
    • Expected profitability index (EPI)
    • Expected opportunity loss (EOL)

DAY 3

Risks and Uncertainties

  • Risk & Uncertainty
  • Risk eversion and risk premium
  • Exploration project threats and opportunities
  • Economic decision criteria
  • Decision Tree Analysis
  • Probability Distribution
  • Case study: Monte Carlo Simulation

DAY 4

Setting up Spreadsheet Calculations Using Excel

  • Spreadsheet Calculations
    • Cash Flow Analysis
    • Sensitivity analysis calculations
    • Tornado Diagrams
  • Introduction to Monte Carlo Simulations using @Risk
  • Class exercises: Setting up an oil field Project

DAY 5

Practical use of the @Risk add-on: Oil Field Development Model

  • Developing an Integrated Economic Model of an Oil Field Development
  • Developing and using an @Risk model analysis
  • Project sensitivity analysis utilizing data from @Risk model
  • Training seminar final review and close

 


Quality Logo

GLOMACS is registered with NASBA as a sponsor of Continuing Professional Education (CPE) on the National Registry of CPE Sponsors. NASBA have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org.

 

All Training Seminars delivered by GLOMACS by default are eligible for CPE Credit.



© 2017. Material published by GLOMACS shown here is copyrighted.
All rights reserved. Any unauthorized copying, distribution, use, dissemination, downloading, storing (in any medium), transmission, reproduction or reliance in whole or any part of this course outline is prohibited and will constitute an infringement of copyright.

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