pc norway offshoreex356

PETRO CHALLENGE NORWAY

2011

OilSim – An

overview of the Oil

and Gas Upstream

value chain

Environmental issues

Team work and negotiation

Critical decision making, analytical skills,

multi-tasking

Learn through experience

Economically viable volumes- reducing

uncertainty

Return on Investment

Function appreciation

You start with $200 million

You can apply for more money later.

Create value

Measured by the net value of the oil and

gas fields discovered MINUS all costs

involved.

Correct answers and sensible decisions

are awarded with CPs

Complete Value

Chain

Upstream

www.oilsim.com

Blocks are divided into

smaller cells

e g. R1C1

Columns e.g C1 and C54

Rows e.g R15 and R97

Challenge: Find three sedimentary basins

in the area. Basins are sedimentary rocks

in the deep subsurface where oil and gas

has been generated.

Procedure: Buy and study magnetic and

gravimetric surveys; and to submit the

coordinates, column and row number for

each basin centre.

Gravimetric surveys show

the gravity in the sub-

surface. Measured by

airborne sensors.

Sedimentary rocks have

lower densities than the

surrounding crystalline

rocks. Low gravitational pull

means high probability of a

basin below.

Magnetic surveys show

similar information as

gravimetric surveys. The

sedimentary rocks in the

basins have a lower

concentration of magnetic

materials than the

surrounding crystalline rocks.

Sedimentary basins are the

areas with the lowest

magnetic field.

Example:

Top basin on both

maps

Calculate the

midpoint

between the

gravimetric and

magnetic

centres found

= C55 and R105

C50

R100

C60

R110

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 CPs.

All teams have submitted their answers.

Basin centres are located.

Message in Inbox. All teams have

answers and CPs awarded.

Sedimentary basins may contain oil

and gas

The government has decided to put

the blocks around one of the basins

on offer

Challenge: Identify the 3 most

promising blocks and submit a bid to

the Government for these licences

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

(c) OLF Anticline trap

Fault trap

Stratigraphic

trap

Salt dome

trap

Geological “pockets”, that might contain hydrocarbons

Red areas

You will not be awarded

blocks that contain any

red spots

Blue areas

Blocks in area may be

awarded

Environmentally Sensitive areas

Layer 3 Eocene

1500m below the seabed

Layer 2 Paleocene


Layer 1 Cretaceous


CRS. Common Risk Segment

surveys tell you about the

probability of a structure in

the block/cell containing oil

or gas

Surface

Traps can be found with

seismic surveys

2D seismic survey is a cross

section of the geological

layers along either a column

or a row

2D seismic surveys are used

for locating prospects

Unprocessed Processed

Interpreted

Red is top of the

sealing rock

Green is top of

the reservoir rock

Text

Anticline and Fault Traps

Leakage

What type of data

do you want?

Columns or

Rows

Unprocessed

or processed

data

Interpreted or

not

Only buy maximum of 4

blocks of data at a time to

speed up processing

The yellow hatched area on

map can be clicked on and

dragged to blocks of interest

Red circles – navigate

through the 2D

seismic

Yellow square – Row 1

from Column 1-56

Click on seismic to see

close up view

Column

Row

Prospect, Reservoir Basin,Source

26

• Chose which blocks you

want to bid for

• For each block, say how

many exploration wells you

are willing to drill

• Do NOT promise to drill

more wells than there are

prospects

• An estimated cost is shown

• You will initially only be

awarded one block

27

Activities that oil and gas companies do to serve the

communities they operate in

CSR projects usually to develop the local communities in

education, social welfare, and business

In OilSim teams are rewarded with CPs when choosing

their CSR projects

CPs a company has is considered by the Government

when deciding upon licence awards

28

CSR Tab

29

Some are greyed out, because the team does

not have enough CP, enough CSR budget, or

enough cash to do them

Each has a cost, and a number of possible

outcomes

Each outcome has a probability and either

negative or positive CP

In the CSR tab you can see the minimum and

maximum CP you can get, as well as the

probability for getting the maximum CP

30

This project costs $8M

If it goes well, the team gets 40 CP

The likelihood of this is 60%

If it goes badly, the team gets zero CP

Minimum required CP is zero

32

Lots of different types of Projects to choose from

You only have $30M budget for CSR in each licensing

round

CSR funds that you don’t spend in one round are

transferred to the next

You cannot initiate a project if it has the potential to

make your CP’s go into negative

You cannot initiate a project if you don’t have the cash

for it

Each project can only be run once per team

33

CSR is about caring for the local society –

and making a difference for the people

living where you operate

Not all projects are sound

Bribery does not pay

Some projects cost a lot, but do not give

so much return

Some projects are riskier than others

35

Environmental Sensitive Areas map to see

which blocks to avoid

Common Risk Segment surveys to see

which blocks to examine closer

2D surveys seismic to identify which ones

have the most (big) structures

Check water depth, and go for shallow

water blocks if possible

Remember to submit 3 bids

Choose CSR projects to increase CPs

Message sent to all

teams with the results

Credibility Points are

given for prosperity of

the blocks you bid for

Every team has got

one exploration

license

HQ is happy with the license awarded.

Challenge: Farm-out minimum 20% from your

license – and farm-in as much as you can in

other good licenses.

Acquire 3D Seismic interpretations for the block

you operate, and study the results from the

licensing round

Get others to invest 20% or more in your license

– you can show/send 3D seismic

Shows the subsurface structure in a cube.

3D Seismic

in Oilsim

Layer 3 Eocene

Layer 2 Paleocene

Layer 1 Cretaceous

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.

Enter the

percentage and

total amount for

have agreed to

offer

Minimum

$100,000 per %

Add a message

to the seller

Press “Send

offer”

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

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.

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

Partners receive a proportional share of the

net proceeds from oil and gas

The operator team makes all decisions

regarding drilling

Teams can farm-out up to 70% of licence

Operators must keep 30% of licence

•Before choosing a

rig, you need to

check your water

depth

Find this at the

bottom of the

BLOCK page

48

Commence Drilling

• When you have sold at

least 20% of the license

you can start drilling

exploration wells to

determine the value of

the block

• Click on Drill

48

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

Choose drilling rig

Scroll down the page

to see the Drillships,

Semi-subs and Jack-

ups

Upto 9 Star quality-

Good: normally costs

more

Bad: cheaper,

but reliability is low,

so you risk extra

drilling time and

extra costs

EIA survey: more knowledge about the

area.

Less probability for drilling problems.

Less severe consequences if you run into

problems.

= Which drilling locations to avoid.

Drill Position

EIA:

enviromental

impact analysis

shows where it

will cost you

more to drill.

Place your

mouse where to

drill

Layer 1 Cretaceous

Layer 2 Paleocene

Layer 3 Eocene

Oil spill or

Gas Blowout

control

Estimated

cost

Volume Range

in MBOE

counts

Test may

increase

Proven MBOE

if oil or gas

found

Proven Possible

Assumptions

Value calculation

From Probable volume to proven reserves

Exploration well:

0 to 1572 MBOE (after drilling)

11 to 1266 MBOE (after testing)

First appraisal well:



Second appraisal well:



Only proven MBOE counts

Effect on calculation of licence

Now total expenses are lower than the sales value and so we have a positive licence value

Expected cost if you developed the field (CAPEX) and produced the oil (OPEX)

After your first drill in each well, reprocess seismic

Decide which discoveries to drill how many appraisal

wells into

Ultimately, you should either:

Continue appraisal drilling to achieve positive net

present value and an ROI

Conclude that additional appraisal wells will not result

in a net present value and think about selling your

Licence to Big Oil

Decide that your value will not increase sufficiently and

decide to sell to Big Oil

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 Credit points:

Apply for cash and be fined $5million for each

$20million requested.

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