Oil and Gas
Oil and Gas | Commercial and Risk Analysis
Petroleum Economics, Risk and Uncertainty
Format and Duration:
3 days
5 sessions
The course focusses on the fundamentals of estimating risk and uncertainty to improve decision making and introduces both probabilistic and deterministic approaches. Included, is the examination of factors contributing to uncertainty throughout subsurface, drilling, facilities, production cost and economics. The underlying conjecture is that if a greater understanding of risks and uncertainty can be developed then unwanted surprises in delivering estimates of production, reserves and value can be lessened.
Business impact: Participants in this course will develop an understanding of economic evaluation techniques and their related financial concepts that are used in business to assist decision making in the face of risk and uncertainty. This will allow volumes to be converted to value and an assessment can be made of whether, for example, additional reservoir appraisal is worthwhile.
Schedule
Duration and Training Method
This is a classroom or virtual classroom course comprising a mixture of lectures, discussion, case studies, and practical exercises.
Course Overview
Learning Outcomes
Participants will learn to:
- Illustrate what is critical to the business decision-making process.
- Understand the basics principles of economic analysis such as the time value of money, discounting, and other project cash flow measures
- Calculating the economic indicators Net Present Value and Rate of Return along with the Cost of Capital (Weighted Average Cost of Capital).
- Understand risk ranking and bow-tie models to manage risks through project life
- Assess the sources of the wide range of data which contribute to the understanding and development of hydrocarbon reservoirs, their use and associated uncertainty.
- Develop decision trees to lay-out the logic and evaluate the robustness of the decision.
- Recognize the various types of heuristics and biases and be able to distinguish between them.
- Practice through exercises on range and probability estimation the need to keep ranges wide as possible.
- Evaluate how to combine uncertainties for projects at different stages of the E&P lifecycle and select key variables in a probabilistic evaluation to manage uncertainty by acquiring additional data (appraisal) or design of interventions (contingency) within a Value of Information framework.
- Appreciate Bayes theory and illustrate pertinence when evaluating risk mitigation cost.
Course Content
Part 1
- Heuristics Questionnaire
- Introduction
- Petroleum Economics
- Principles of cash flow analysis and discounted cash flow
Part 2
- Risk and Uncertainty
- Heuristics and Biases
- Exercise: Range Estimation
- Exercise: Probability Estimation
Part 3
- Decision trees
- Risk Management
- Bow-Tie Models
- Exploration Risking
Part 4
- Decisions with Uncertainty
- Probability distributions
- Basic Statistics
- Combining Uncertainties
Part 5
- Mitigation techniques
- Bayes Theory
- Value of Information
- Appraisal or Intervention?
Who Should Attend and Prerequisites
The course is designed for reservoir / petroleum / production / facility / drilling engineers, geoscientists, team leaders and managers.
Instructors
Pete Smith
Background
Pete Smith is Director of ReganSmith Associates, a company offering training and consultancy to the Oil and Gas Industry. Pete trained as a reservoir engineer and researcher firstly at the UK government research Institute of Hydrology, Oxford, before joining BP’s research team to lead the development of novel modelling methods; building the first stochastic models to describe multi-phase fluid-flow in reservoir rocks. Moving into BP operational activities, he was responsible for creating the processes for managing the uncertainty in value and reserves in new field developments that became the BP standard approach.
Assignments with BP included lead engineer on Dukhan, Arab C Reservoir, Qatar; the appraisal and financial sanction of the Harding, Andrew, Foinaven and Schiehalion fields in the UKCS and managing the operated production in the Gulf of Mexico. Pete was also the founding director of the BP Institute at Cambridge University concerned with fundamental research in fluid-flow and was responsible for building their environmental technology across the BP group as Technology Vice President.
Pete helped establish the new Engineering University in Trinidad & Tobago as Associate Provost (R&D) and Professor of Petroleum Engineering between 2004 and 2008. On return to the UK, Pete became Principal Advisor in Reservoir Engineering at RPS Energy leading company reserve audits. In 2010 Pete led the Upstream Risk Management advisory activity and in 2011 became Chief Reservoir Engineer.
Affiliations and Accreditation
BSc Mathematics
MSc Differential Equations
PhD Earth Sciences
C Eng. FEI Chartered Petroleum Engineer
Courses Taught
N401: Multi-Disciplinary Skills for Field Development Planning and Approval
N412: A Critical Guide to Reservoir Appraisal and Development
N415: Reservoir Characterisation for Appraisal and Development
N541: Petroleum Economics, Rick and Uncertainty
N584: Storage Exploration – Screening and Selection of CO2 Sites
N680: Multi-Disciplinary Skills for Sustainable Field Development Planning for Hydrocarbon and CCS Projects
N716: Reservoir Engineering Aspects of Reservoir Modelling
N721: Resource Risk and Economic Evaluation
N952: Resource Assessment and Assurance
N954: Practical Approaches to Increased Recovery
N995: Managing Uncertainty and Risk in Appraisal and Development
N996: Gas Reservoir Engineering
Accreditation and Certification
CEU: 2.1 Continuing Education Units
PDH: 21 Professional Development Hours
Certificate: Certificate Issued Upon Completion
RPS is accredited by the International Association for Continuing Education and Training (IACET) and is authorized to issue the IACET CEU. We comply with the ANSI/IACET Standard, which is recognised internationally as a standard of excellence in instructional practices.
We issue a Certificate of Attendance which verifies the number of training hours attended. Our courses are generally accepted by most professional licensing boards/associations towards continuing education credits. Please check with your licensing board to determine if the courses and certificate of attendance meet their specific criteria.