Ipaa ppt presentation 2011

PetroChallenge IPAA 2011

Purpose

You are an exploration team in charge of a new petroleum province.

Multidisciplinary challenge: Enhance your overall understanding of petroleum exploration and field development.

Create a Return on Investment

Money/CP’s You start with $200 million Create value

Net value of the oil and gas discovered MINUS all costs involved

Credibility points awardedSensible decisions and correct answersCPs are a measure of ability and credibilityConsidered when bidding for blocksUse when applying for funds

You will learn

Where and how to find hydrocarbons Licensing rounds Farm-in and Partnerships -

negotiations Drilling rigs Sub-contractors Environmental issues Economically viable volumes Team work, Critical decision making,

analytical skills Multi-tasking

Oil

Gas

Oil and Gas Value Chain

Login

www.oilsim.com

Login

www.oilsim.com

Main screen

Map Columns e.g C1 to C112

Row

s e

.g. R

1 t

o R

14

4

Block

Blocks are divided into 64 smaller cellse g. R52C110

First task

Challenge: Find three sedimentary basins

Procedure: Buy and study magnetic and gravimetric

surveys Submit the coordinates for each centre Column and row number for each basin

centre

Gravimetric surveys

Gravimetric surveys indicate changes in the gravitational pull of the Earth in different areas of the sub-surface.

Lower gravitational fields indicates likelihood of low density rocks –Sedimentary rocks, porous and hopefully containing hydrocarbons

Surveys in OilsimSurvey shop

Gravimetric survey of North-west area

Magnetic surveys

Magnetic surveys show anomalies in in the expected magnetic field of the Earth in particular areas.

Sedimentary rocks in the basins have a lower concentration of magnetic materials and lower magnetic field than the surrounding crystalline rocks.

Survey in OilSim

Magnetic survey:North-west quadrant

Survey in OilSim

All four quadrant surveys in map context

Finding the Midpoint

Survey analysis

Locate edges of the continous basin structure

Locate the diagonals and thus basin centre

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

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 CPs. All three centres must be located to get full credibility points.

Task 1 solved

Message in Inbox:

Shows results Answers

submitted CPs awarded

Task 2 license round The government has

decided to put the blocks in one of the basins on offer.

Challenge: Identify the 3 most promising blocks and offer an amount for each of them.

Licensing area

Task 2 license round Any restrictions involved? - Spawning

grounds

What are we looking for? - Prospects

Where do we find prospects? In basins, where hydrocarbons have

been 1) are produced and 2) trapped

How do I find them? - Geoscientific analysis Common Risk Segment maps and 2D

seismic

Source and migration

1. SOURCE ROCKwhere organic material is put under sufficient pressure

2. MIGRATION ROCKwhere hydrocarbons are driven through

3. CAP ROCKImpermeable rock that stops migration of hydrocarbons 4.

PROSPECT

Traps

(c) OLFAnticline trap

Fault trap

Stratigraphic trap

Salt dome trap

Geological “pockets”, that might contain hydrocarbons.

Red areasYou will not be awarded blocks that contain any red spots (spawning grounds)Blue areasBlocks in area may be awarded

Environmentally Sensitive areas

Common Risk Segment

Layer 3 Eocene1500m below the seabed

Layer 2 Paleocene2500m below the seabed

Layer 1 Cretaceous3500m below the seabed

CRS. Common Risk Segment surveys tell you about the probability of a structure in the block/cell containing oil or gas

Surface

2D Seismic surveys

Traps can be found with seismic surveys and sound waves bouncing off structures

2D seismic survey is a vertical cross section of the geological layers along either a column or a row

Real Seismic

OilSim of 2DSeismic

Unprocessed Processed

Interpreted Red is top of the sealing rock

Green is top of the reservoir rock

Order Seismic

What type of data do you want?

Columns or Rows Unprocessed or processed

data Interpreted or not

Only buy maximum of 1 block of data at a time to speed up processing

Processing Seismic

It takes time to process your request Created to order Moves to surveys once processed

View the Seismic

Red circles – navigate through the 2D seismic

Anticlinal traps

Fault traps

Leakage?

Leakage?

Leakage?

Cross-sections

Column

Row

Prospect, ReservoirBasin,Source

Enter bids

Three blocks Three amounts

Min: $1M Max: $30M

You will only getawarded one block – and only pay for one

Highest bid wins If equal, then team with highest CP

wins

Recap on Task 2

Environmentally sensitive areas – blocks to avoid

Common Risk Segment surveys – areas of higher probability of prospects

2D seismic – blocks with most structures

Final tip - Check water depth - shallow water blocks

Task 2 solved Message sent to

all Results and CPs

One license per team

Task 3 Exploration Drilling

The headquarters of your company has evaluated the license that you were awarded.

Although the possibility of finding oil is fair, the costs involved are large. Thus the headquarters want you to spread the risk.

Challenge: You shall farm-out minimum 20% from your license – and farm-in as much as you can in other good licenses.

Task 3a Partnerships

Acquire 3D Seismic interpretations for the block you operate, and study the results from the licensing round

Farm-out: Get others to invest 20% or more in your license – you can send them surveys

Farm-in: Send offers to other teams to buy shares in their viable licenses. Submit an offer for each viable license, with amount offered and share wanted in whole %.

Real 3D Seismic

Shows the subsurface structure in a cube.

3D Seismicin OilSim

Layer 1 Cretaceous

Layer 2 Paleocene

Layer 3 Eocene

Prospects are no guarantee of oil or gas

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.

Licences

Farm-in Either accept

the amount or % the license owner requests, or amend the amounts to your own offer

Add a message to the seller

Press “Send offer”

Minimum of $100000 per %

Farm-in

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

Farm-in license OWNER

decides whether to ACCEPT or REJECT the offer

Partnerships established every time a license owner accepts an offer.

Overview: On the main page, you can see all licenses. 1) licenses you operate, 2) licenses you have invested in, and

other licenses.

Farm-in

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

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 seismics, drilling of wells and testing of wells.

Information: partners in a block can access info about drilled wells and discovered oil and gas fields.

Partnerships

Water depth

•Before choosing a rig, you need to check your water depth

Find this at the bottom of the BLOCK page

Choose Rig

Choose the right rigs for your water depths Jack-up rigs for shallow waters

Semi-submersible rigs for middle waters

Drillships for the deepest waters

Rig cost = drilling days * day rate

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.

Service ProvidersUpto 9 Star

quality- Good:

normally costs more

Bad: cheaper, but reliability

is low, so you risk extra drilling time and extra costs

Environmental Impact Assessment

EIA survey: more credibility about the area.

Less probability for drilling problems. Less severe consequences if you run

into problems.

Drill Position EIA:

enviromental impact analysis shows where not to drill.

Place your mouse where to drill

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.

Drilling Position

Layer 1 Cretaceous

Layer 2 Paleocene

Layer 3 Eocene

Drilling Days

Estimated cost

Drilling Result

Drilling Result

Proven volume (MBOE) counts Test may increase proven volume Remember to tick the boxes!

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.

Value and ROI

Discovered prospects

Assumptions

Value calcuation25% of 8 MBOE @ $50

12% $39.9M

Expected costs ifyou developed thefield (capex) andproducedthe oil (opex)

If total expenses arehigher than the salesvalue, the value of thelicense is zero

Appraisal From Probable volume to proven

reserves

Narrowing ranges

First well: 0 to 1572 MBOE (after drilling) 11 to 1266 MBOE (after testing)

Second well: 25 to 1033 MBOE (after drilling) 34 to 910 MBOE (after testing)

Only proven MBOE counts

Apply For More Funds

Click on Apply for More Funds Tab. 1 CP for each $100,000 applied for. Answer the questions: All correct

gives cash and you can keep CPs. One wrong gives cash and you keep ½ of your CPs. Two wrong gives ½ cash and you lose all CPs. All wrong, you get no cash and lose all CPs.

Expensive money if less than 10 credibility points: Apply for cash and be fined $5million for each $20million requested.

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.