1

UPPP2014

Competition & Game Rules

About the competition

The online competition is a turn-based strategic game aiming to imitate reality as much as possible.

However it still contains several simplifications to make the game easier to understand and more

entertaining to play.

Game concept

You are the managers of a well-established oil company with a diversified upstream and downstream

portfolio continuously seeking new upstream opportunities to replace the reserves and the production.

You and your teammates have to focus only on the upstream process/activity.

Upppland has decided to open its oil industry to international players recently, due to a lack of funds

for exploration of the country’s petroleum potential. Several companies entered the First International

Bid Round of Upppland which resulted in significant discoveries and subsequent increase of

production and oil export levels of the country. Your company owns a big exploration license in the

country. Thanks to the success of the International Bid Round, Upppland teamed up with its

neighbouring and surrounding countries and they formed the Oil Producer Upppian Countries, thus

creating the OPUC area. Thanks to your long-lasting successful international track record and your

presence in Upppland you are one of the few companies invited to operate in the OPUC area. The

upstream industry go back high in the past in this area as well, however, most acreage could not be

explored and developed according to the lack of funds in these closed economies in recent decades.

The primary objective of OPUC countries is to find operators who commit themselves to efficient

exploring, developing and producing the discovered hydrocarbon fields. Therefore an exploration

license will be granted. You are delegated exclusively to the management of the OPUC Area portfolio

and you do not have to deal with other assets of the company. Nevertheless, you have access only to

the free funds of your own portfolio to explore and develop new opportunities here.

The game is compiled of two closely linked sections:

1, Exploration

2, Development, Production, Commercialization

You are given 600 million U$ (Uppp Dollar) of cash on hand to start the upstream process.

2

Timing

Contestants are going to play for 20 turns. 1 turn in the game means 24 hours in the real world, so in

every 24 hours, there is going to be a turn change.

(GMT 12:00 Processing a turn lasts for an hour and you cannot enter the game during that time. You

are advised to return a bit later. Financial accounting and the effects of decision-making are only

shown when a turn change occurs.)

Financing

You begin the game with a budget of 600 million U$ for upstream operations. You have a revolving

credit of 500 million U$ total at a 10% interest rate. You can use this credit facility to finance 60% of

your investments at field development phase only. If you exceed the 60% limit on any of your

investments, the penalty interest rate will be 30%.

3

UPSTREAM

Playing the game

In each turn you will be offered the chance to perform exploration activites, followed by development

activities in the OPUC Area. You will have to start unveiling the geological potential and characteristics

using conventional tools of exploration. Naturally, if you judge some actions (ex. a development

activity) as not needed, you do execute. If later an action is judged to be needed, then this can still be

performed. The important issue is that one step requires a full turn; i.e. „Geological mapping” will take

a full day; likewise, „Seismic acquisition”, „Prospect generation”, „Drilling of a well” etc. will also take a

day each. Purchasing of old wells' data is optional and is available after the seismic acquisition only. If

a bad interpretation version is adopted, a new interpretation should be made with sacrifice of a next

day.

The purchased and performed analyses are available at any time by clicking on the SHOW MAP icon

found at the bottom right side of the screen.

4

You can change layers by rolling down menu found on the top left side of the screen.

At the end of the first phase your team is supposed to delineate a field by giving the crucial input

parameters (like recoverable reserves; porosity; N/G; petroleum type etc.) for development and

economic planning. These input parameters will be loaded into the second phase. With the help of this

information you will have to evaluate the fields if you have sufficient amount of funds and – of course –

the opportunity is prospective enough. Your funds are scarce so do not waste them on low return

projects. If the IRR of a project is just a few percents, it might be better to wait for more suitable

opportunities. If judged rentable, your task will be to work out and fulfil a field development program on

the field.

The phases of the game are shown by the picture below. Each icon represents an individual part of

the upstream processes.

5

The game runs by the following schedule.

1st year: Geological analysis (obligatory step)

2nd year: Seismic data acquisition (obligatory step)

3rd year: Prospect mapping (obligatory) and old wells' data acquisition (optional)

4th year: Drilling of a well and new wells' data analysis (by the team's own decision)

5th year: Starting field development (by the teams own decision)

8th year: Production (in case of adequate field development)

Drilling of a well

The drilling point can be chosen on the base of the analyses.

6

You can see country specific information or select the drilling possibilities in the Locator . By selecting

an active point, data will appear about drilling depth and cost and you can also start drilling phase

here.

Drilling takes one year, after that the well log will be opened up as a result of the drilling.

Then you will be given the chance for well testing, which provides significant input information for the

consideration of field development.

Starting field development on the given well is possible in case of discovery.

If the team needs more accurate information for the calculation of oil in place, appraisal drilling can be

performed. Appraisal drilling takes one year, it is the team's own decision to start it.

7

FIELD DEVELOPMENT

When you successfully drill a well, you will be navigated to another screen where the map of the

license area will appear. By selecting a point, a list of input data will appear and you can also start the

field development phase.

Here you can also find 5 buttons that navigate to 5 panels.

8

Development panel contains facilities that can be constructed. For detailed information about building,

please see section “Field development, facilities and costs”.

Before the beginning of construction the capacities of the necessary facilities can be set. Total

investment can be checked by clicking on Investment Calculation .

By clicking the Development field, development starts. If the team decides to request credit, it is

possible but note that the amount of credit cannot exceed 60% of all investment.

Please note that the oil processing train starts operating in the 3rd year of investment, production is

possible only after construction.

9

Further investment and increasing capacities can be performed later on the production field.

Development can be started only once in a year thus new investment can be launched after

development is completed.

Field details panel shows the wells and facilities in operation and under construction and the field’s

production performance.

10

Financial data panel indicates the main financial results relating to the given license area.

Repaying credit - In this panel your team can repay from the all existing amounts of credit. Credit repayment can occur any time when the team wishes but interest of the credit is subtracted immediately in the same round the credit is requested.

Abandon field button shall be used if the player wants to stop the operation of a field.

You can leave the field by clicking on the ABANDON icon. Note that if you leave a field, it cannot be

developed later.

11

Other icons and their functionalities

This icon navigates back to the locator panel.

Pushing this icon opens a panel with the actual and previous years' oil prices

Financial data of all upstream activity

Selling the produced hydrocarbons

Crude oil

The oil quantity that leaves the license area is sold on the average international market price at the

end of the year. Note that there can be several bottlenecks of oil sales. (See the facilities section for

details.)

Natural gas

The associated natural gas is used for power generation or transferred to the government for free,

according to the license agreements in force in the OPUC area. (This is done automatically; the teams

do not have to deal with gas at all.)

Fiscal regime

If the teams want to plan their revenues precisely, they have to model the fiscal regime of the license

agreements as well. The country has its own tax regime which means 70% tax is levied.

12

Inputs & miscellaneous rules

The following data will be provided for each field.

Field data

Depth [ft] reservoir depth

API° API gravity

Rsi [scf/bbl] Gas-Oil Ratio

Area [acre] Area of the field

Average thickness [ft] Average thickness of the reservoir

Porosity [%] Porosity of the reservoir rock

Heff/H 1/1 The ratio of effective and average thickness

Initial water saturation [%] Initial water saturation in the reservoir

Permeability [md] Permeability of the reservoir rock

Distance from main

road [miles]

In case a CPU (Central Production Unit) is built, its distance

from the closest main road

Distance from main train

line [miles]

In case a CPU is built, its distance from the closest main rail

line

Distance from main

pipeline [miles]

In case a CPU is built, its distance from the closest main

hydrocarbon route.

Furthermore, information for the country in which the field is located will also be provided. These data

are constant throughout the game. These are the following:

Country data

Average

temperature [F°] average atmospheric temperature

Geothermal

gradient

[F°/1000

ft] average geothermal gradient

OPEX & CAPEX

parameter OPEX and CAPEX levels in the country you operate

Government take The % of the generated oil revenue withdrawn by the

government

13

There are some technical parameters which are constant regardless of the country or field. These are:

Constants

Atmospheric

pressure 14.7 psia

Methane density 0.037463 pound / cubic ft

Wellbore radius 0.29 ft the diameter of the well sections that cross the

reservoir

Oil price varies throughout the game. In the first period the price is 100 U$ (Uppp Dollar)/bbl

Evaluation of fields – production curve

Before purchasing a development concession you will need to evaluate it. To do this, you have to

calculate the oil in place, the recoverable reserves and finally the production profile while also

considering the necessary investment, operating costs and taxes. The recoverable reserve size (i.e.

the recovery ratio) and the production profile are dependent on your field development scheme.

(Please see next section for detailed information on field development.) Note that the fields are

developed with pressure maintenance technology and ESPs (electronic submersible pumps) are used

at each production wells.

With the above specified data set and by using the Vasquez and Beggs formula (1980), you can

calculate the bubble point pressure, the oil formation volume factor and the original reserve for

undersaturated reservoir.

Following that original oil in place (OOIP) can be calculated.

During the recoverable reserve calculation use the Beggs and Robinson formula (1975) for the oil

viscosity calculation.

For water viscosity calculation use the McCain formula (1991). Water is assumed to be fresh water

without any salt content.

For estimation of the recovery factor with pressure maintenance technology use the correlation issued

in API Bulletin D14 (1967).

The production is separated into two phases, waterless production and production with water. The

total liquid (water + oil) production level of a field with a given well network is constant in the entire life

14

of a field (without taking into consideration the bottlenecks of the surface infrastructure) but watercut of

the production changes in time. For the calculation of the production profile you may use the following

formulas:

For waterless production portion (from sensitivity calculation made by numerical simulation)

Wlp= waterless (till 1% of water contain) production portion of the total production

Wlp=0.6047-0.035*log(µo/µw)+0.02861*log(Wd)-0.0342*log(h)+0.06*(heff/h)-0.0067*log(k)

where;

(Wd) Well distance interval = 2000 < distance between the injectors and producers < 10000 [ft]

Reservoir total thickness interval (h) = 40 < thickness < 300 [ft]

Permeability interval = 1 < k < 1000 [mD]

Over (or below) the limits the maximal (minimal) limit value has to be used

Distance between injectors and producers = 2*(A/(n+m)/3.14)^0.5

where:

A: field area [sq ft]

n: number of producers

m: number of injectors

ROOIP in the waterless production phase =ROOIP*Wlp* Sp, where

Sp= Scheme parameter, a correction factor depending on the injection well pattern:

At five point system (producer -injector ratio = 1) Sp=1

At seven or four point system (producer -injector ratio = 2) Sp=0.9

At nine point system (producer -injector ratio = 3) Sp=0.8

Sp can be calculated directly from the final producer-injector rate for a middle point.

15

When the produced oil amount in the waterless production phase exceeds ROOIP*Wlp* Sp, the

waterless phase alters to production with water phase.

In production with water phase

For Field level Water Oil Ratio prediction use Timmermann (1971) formula, where;

Np= cumulative oil production [bbl], its domain: ROOIPWlp < Np < ROOIP

a, b = reservoir specific constants, can be determined from the first and last point of the curve

1st point (starting of the water production) WC=1%, Np=ROOIPWlp

2nd point (end of potential production) WC=99%, Np= ROOIP

For well level estimations you may use the following equations

Average producer productivity equation:

where:

qf = qo+qw [bbl/d]

re = drainage radius [ft]

rw = wellbore radius [ft]

re = (A/n/3.14)^0.5

A: field area [sq ft]

n: number of producers

16

Estimation of the average injector final productivity:

where

iw [bbl/d]

Kw= average water permeability (assumed to be equal to k)

rei = middle distances between the injectors and producers

rei = (A/(n+m)/3.14)^0.5

where:

A: field area [sq ft]

n: number of producers

m: number of injectors

As the game itself, the model for the estimation of the production of a field should also be built using 1

year long periods.

Field Development, facilities and costs

To bring up the precious oil from the depths of the earth, you will need to develop the field. For this

purpose, producer and injector wells are needed as well as a well-designed surface facility. Your task

also includes the design of the transportation capability.

For a well-functioning field development program you need to focus on the produced amount, the

capacities of the equipment (bottleneck effect) and the timing of your development. Both the

production and injection capacity, as well as the surface processing or transportation capacity can be

the bottleneck in the system. Also, according to the rules of OPUC, the daily oil production of a field

cannot be greater than one third of its storage capacity. It is important to optimise the number of wells

and capacity of the surface infrastructure to make the operation of the field as efficient as possible.

17

Before starting the field development you have to take into account that

• the granted concession rights are valid for 20 years or turns.

• all fields need to be developed with pressure maintenance technology.

• for security reasons the maximal drawdown pressure at water injector wells is 1500 psia.

• minimal bottom hole pressure at producer wells is 50% of reservoir pressure. Pressure build-

up follows hydrostatic tendency. g is 10 m/s2.

In the Development panel you will find the facilities that can be constructed (producer well, injector

well, oil processing train, storage tanker, road, rail and pipeline transportation units). By clicking on

Investment Calculation button, you can see the CAPEX of the units to be construced.

You can select the number of units (in case of wells) or the capacity (in case of other facilities). When

you have set the desired number or capacity of all the facilities, you may select Development . Keep in

mind that there are certain limitations for the construction of production facilities.

Note that in one turn you are able to access the build panel only once. That means that you have one

opportunity in each turn to decide what facilities are to be constructed.

Limits for players' inputs

Maximum unit/

capacity built in

period

Step/interval

on the slider

Maximum pieces/

capacity built per

concession

Production wells+Injector wells piece 10 1 N/A

Oil processing train bbl/d 50,000 1,000 4 trains*

Storage tanker bbl 150,000 1,000 6 tanks*

Export route - road bbl/d 50,000 1,000 50,000

Export route - rail bbl/d 100,000 1,000 100,000

Export route - pipeline bbl/d 500,000 1,000 500,000

* Note: The number of units is maximised not the capacity.

It can happen that the revenues of a field will not cover the OPEX and the taxes payable for the given

field. In this case you can abandon the field at zero charge in each period. However, you cannot

abandon a field if there are ongoing construction works within its perimeters.

Below you will find a summary of the different equipment and facilities that could be developed and the

cost-functions of the CAPEX and OPEX related to them.

CAPEX is charged when the construction order is given (except for oil processing train). When the

processing train is being constructed, the first part of the CAPEX is charged on the spot while the

18

remaining parts are charged at the beginning of the following turns. Facilities start the operation in the

turn following the construction except for the processing train that is in operation from the 3rd year

following the start of construction.

Production wells are the elemental tools of oil mining. CAPEX of one unit depends on the depth to be

drilled and geological factors. The construction costs contain the installation of ESP (Electrical

Submersible Pump), pipelines connecting to the CPU (Central Processing Station) and other well site

infrastructure. As pressure maintenance technology is used for field development, injector wells must

be also drilled. Injector wells are fed by the water of nearby rivers and lakes. Significant part of

operational costs of wells connected to the amount of liquid produced, however, the regular

maintenance of wells requires notable financials as well. Capital and operational costs for producer

and injector wells can be calculated as follows:

Production

well

CAPEX - fix Production or injector wells drilled in period [#] * U$ 5 mln/well

CAPEX -

variable

Production or injector wells drilled in period [#] * U$ 0.2 mln/1000 ft * Reservoir

depth [1000feet]^1.5

OPEX - fix Production or injector wells in operation [#] * U$ 0.25 mln/well/year

OPEX -

variable Produced or injected liquid amount [MMbbl/year]^0.8 * U$ 0.3 mln/MMbbl

Oil processing train or CPU is the heart of each oil field. Their main task is to transform the produced

raw oil into a transportable and marketable quality product. The construction of an oil processing train

takes 3 years. CAPEX emerges as follows: in the first year 30%, in the second year 50%, in the third

year 20% of total cost. As evident as it is the construction cost depends on the capacity of the unit with

significant initial investment. The OPEX of the unit is also related to the maximal capacity. One

processing train can be built in each period (until reaching 4 trains) of which the minimal capacity is

1,000 bbl/day while the maximal capacity is 50,000 bbl/day.

Oil processing train

CAPEX - fix U$ 20 mln

CAPEX - variable Processing train capacity built in period [Mbbl/d]^0.9 * U$ 8 mln/(Mbbl/d)

OPEX - fix Processing trains in operation [#] * U$ 0.5 mln/train/year

OPEX - variable Processing train capacity [MMbbl/year] ^0.8 * U$ 1.8 mln/MMbbl

Storage tankers are required for temporary oil storage, as in some cases the transportation is not

possible immediately. CAPEX of these facilities are proportional to the size and capacity of the unit.

However the operational costs are unit based. One tanker can be built in each period (until reaching 6

tanker units) of which the minimal capacity is 1,000 bbl/day while the maximal capacity is 150,000

bbl/day.

19

Storage tanker

CAPEX - fix U$ 1 mln

CAPEX - variable Storage capacity constructed in period [Mbbl]^0.9 * U$ 0.5 mln/Mbbl

OPEX - fix Storage tankers in operation [#] * U$ 0.1 mln/#/year

OPEX - variable N/A

Players may choose between three different means of transportation. One transportation system can

be built in each period from all types of transportation infrastructures.

For road transportation a road connecting to the main system must be built together with truck filling

heads. Road CAPEX must be paid in the first year road is constructed and only have to be paid.

Whereas filling station CAPEX must be paid each time additional road transport capacity is

constructed. OPEX of road has fix part due after a road is constructed and a variable part depending

on the length of the road. Fix filling station OPEX must be paid based on the number of filling stations

in operation. The external transportation cost in case of road transport is 7 U$/bbl (in excess of the

CAPEX and OPEX of the facilities). One road transportation unit can be built in each period (until

reaching the total road transportation capacity of 50,000 bbl/d) of which the minimal capacity is 1,000

bbl/day while the maximal capacity is 50,000 bbl/day.

Road

CAPEX – fix U$ 1 mln

CAPEX - variable Road length [mile] * U$ 0.5 mln/mile

OPEX – fix U$ 0.1 mln/year

OPEX - variable Road length [mile] * U$ 0.1 mln/mile/year

Truck filling station

CAPEX – fix U$ 1 mln

CAPEX - variable Truck filling capacity built in period [Mbbl/d]^0.8 * U$ 0.5 mln/(Mbbl/d)

OPEX – fix Truck filling stations in operation [#] * U$ 1 mln/#/year

OPEX - variable N/A

For transportation with train to a pipeline a filling station at the nearest rail line must be constructed.

Pipeline CAPEX has a notable large fix part and a variable part dependent of the length and the

capacity of the pipe. CAPEX of filling station follows the same logic, self-evidently without taking into

consideration the distance. Note that each time a new pipeline is constructed a new filling station must

also be built. Fix OPEX of both units is based on the number of facilities built while variable OPEX of

the pipeline depends on its capacity. The external retransportation cost in case of rail transport is 5

20

U$/bbl (in excess of the CAPEX and OPEX of the facilities). One rail transportation unit can be built in

each period (until reaching the total rail transportation capacity of 100,000 bbl/d) of which the minimal

capacity is 1,000 bbl/day while the maximal capacity is 100,000 bbl/day.

Pipeline to rail filling

station

CAPEX - fix U$ 10 mln

CAPEX – variable Pipeline capacity built in period [Mbbl/d]^0.5 * U$ 0.16 mln/(Mbbl/d) *

Pipeline length [mile] * U$ 1 mln/mile

OPEX – fix Pipelines to filling stations in operation [#] * U$ 0.1 mln/#/year

OPEX - variable Pipeline capacity in operation [MMbbl/year] * Pipeline length [mile] * U$

0.002 mln/MMbbl

Rail filling station

CAPEX – fix U$ 5 mln

CAPEX - variable Rail filling capacity built in period [Mbbl/d]^0.8 * U$ 2 mln/(Mbbl/d)

OPEX – fix Rail filling stations in operation [#] * U$ 2 mln/#/year

The third mean of transporting the crude oil to the international market is using a pipeline. In this case

a pipeline to the nearest international transportation pipeline and a connection point must also be

constructed. If pipeline capacity has to be increased, a new pipeline and a separate connection point

has to be built. The CAPEX and OPEX functions of these facilities are quite similar to that of the

railway units, however they have significantly higher initial costs. Meanwhile the external

transportation cost in case of pipeline transport is 3 U$/bbl (in excess of the CAPEX and OPEX of

the facilities). One pipeline transportation unit can be built in each period (until reaching the total road

transportation capacity of 500,000 bbl/d) of which the minimal capacity is 1,000 bbl/day while the

maximal capacity is 500,000 bbl/day.

Pipeline

CAPEX - fix U$ 10 mln]

CAPEX -

variable

Pipeline capacity built in period [Mbbl/d]^0.5 * U$ 0.16 mln/(Mbbl/d) * Pipeline length

[mile] * U$ 1 mln/mile

OPEX - fix Pipelines in operation [#] * U$ 0.1 mln/#/year

OPEX -

variable

Pipeline capacity in operation [MMbbl/year] * Pipeline length [mile] * U$ 0.002

mln/MMbbl

21

Connection point

CAPEX - fix U$ 20 mln

CAPEX - variable Pipeline capacity [Mbbl/d] * U$ 3 mln/(Mbbl/d)

OPEX - fix Connection points in operation [#] * U$ 0.5 mln/#/year

OPEX - variable N/A

OPEX is incurred from the year the facility is in operation. OPEX is charged at the end of each turn.

Parts of OPEX that not depend on the actual throughput of a unit are paid for all the commissioned

infrastructure irrespective of their utilisation.

It is important to note that:

All costs are multiplied by a country factor.

Construction of facilities takes 1 year (except for oil processing trains). The operation begins in the

year following the construction year.

Facilities operate 300 days a year, taking into consideration the time spent on repair, adjustment and

maintenance.

In case more than one means of transportation is available, oil is transported via the cheapest way. If

the capacity is not enough the rest of the production is transported via other existing means.

Ranking & Final Scoring

Your performance and the final scoring is based on the cash generated by Uppplandian portfolio to

your company. We will also take into consideration and evaluate the effects of your decisions made in

the final turn (Round #20). By running a 21st turn automatically without the opportunity to make any

decisions right at the end of the game.

Thereafter, teams are ranked by their overall amount of cash earned by the end of the game. Note that

we subtract the remaining unpaid credit from the final result. After then ranking the teams is based on

the score of their overall performance. At the end of the online competition 10 teams with best overall

score will get the chance to take part in the Semifinal.