The research presented in this project is about how to make a decision in phases of the field life cycle. Making a good decision is extremly important, because it will make profit, reduce the risk and uncertainty, it is safe for people and enviromenet. There are many factors that impact to the decison such as the data of discovery, exploration, appraisal, the reserves can recover from the reservoir, the economic of exploration, appraisal, and development; and the affect to enviroment. Decison maker need to analysis each factors and their risks an uncertainties to choose the best choice for the project. In this project, we present four problems. Firstly, the study indentifies what is decision analysis, the tools are used to make decision, and sensitive analysis. Secondly, we present the technique fators that influence making decision – reserves. Thirdly, we analyze economic factors impact to the decision in oil filed, especially the exploration and appraisal phase. And the last, we introduce the EIA report.
VI ETNAM NATI ONAL UNI VERSI TY, HO CHI MI NH CI TY HO CHI MI NH CI TY UNI VI ERSI TY OF Pe t rTECHNOLOGY ol e u m Pr oj e ct Topic MAKI NG I N DECI OI L FISI ELD LI FE ON CYCLE As s oc Prof Dr Tran Van Xuan Advisor N guye n The Vinh- Bui N hat HCMC, 1/ 2016 Thinh Decision Analysis Recovery Factor Reserves CONTENT Petroleum Economic EIA DECISION ANALYSIS What is Decision Analysis (DA) • The historical origins of decision analysis can be partially traced to mathematical studies of probabilities in the 17th and 18th centuries by Pascal, Laplace, and Bernoulli • However, the applications of these concepts in business and general managementn appeared only after the Second World War • Decision analysis is a scientific and practical method for making important decisions • Decision analysis involves identification, clear representation, and formal assessment of important aspects of a decision and then determination of the best decision by applying the maximum expected value criterion DECISION ANALYSIS Why use DA? DECISION ANALYSIS Steps of DA? • Determine the goal or objective • Develop a list of possible alternatives • Identify possible future conditions or states of nature for each random variable • Determine or estimate the payoff ( or value ) • Estimate the likelihood of each possible future condition for each random variable • Evaluate the alternatives according to the goal or decision criterion, and select the best alternative DECISION ANALYSIS Advantages of DA? DECISION ANALYSIS What make a good decision maker ANALYZE DECISIVE SKILLS WISE INFORMATIVE DECISION ANALYSIS Application of DA in life Apppplied mostly in industry and manufature DECISION ANALYSIS Decision tree • A decision tree is a graphical representation of the decision variables, random variables and their probabilities, and the payoffs • Decision trees are particularly useful for analyzing situations that involve sequential or multistage decisions Decision tree for a facility building Analyze the decisions from right to left 1.Determine which alternative would be selected for each possible Determine the product of the chance probabilities and their respective payoffs fo the remaining branches Determine the expected value of each initial alternative Project cashflow EMV If Z is some alternative; Y1, Y2, …, Yn represent a set of possible outcomes of some uncertain variable; X1, X2, …, Xn represent the NPVs associated with each of the possible outcomes; and P(Y1), P(Y2), …, P(Yn) represent the probabilities of each of the outcomes EMV(Z) = P(Y1)X1 + P(Y2)X2 + … + P(Yn)Xn EMV = (NPV success x probability of success) + (NPV failure x probability of failure) Project cashflow EMV The probability of a dry hole was 65% and the probability of a producing well was 35% NPV for Drill and Farm Field out is dry Field is a Producer Drill Farm out -$250,000 $0 $500,000 $50,000 If you drill yourself, you take on the risk if the field is not a producer, but if the field is a producer, you don’t need to share your profits with anyone If you farm out the drilling operation, you are not exposed to any losses if the field is not a producer but if the field is a producer, the drilling company will take the lion’s share of the profits Project cashflow EMV EMV (Drill) = P(dry hole) × -$250,000 + P(producer) × $500,000 = 0.65 × -$250,000 + 0.35 × $500,000 = $12,500 EMV (Farmout) = P(dry hole) × -$0 + P(producer) × $50,000 = 0.65 × -$0 + 0.35 × $50,000 = $17,500 In this case, you should choose to farm out the drilling operation PETROLEUM ECONOMIC Exploration economic From this expectation curve, if there are hydrocarbons present (30% probability), then the low medium and high estimates of reserves are 20, 48 and 100 MMstb Cumulative probability curve for an exploration prospect PETROLEUM ECONOMIC Appraisal economic PETROLEUM ECONOMIC Risk analysis techniques Probabily of success (POS) POS = p(source) x p(migration) x p(sealed trap) x p(reservoir) x p(timing) Volume of Recoverable Hydrocarbons Reserves = gross rock volume (GRV) x net to gross (N/G) x porosity x hydrocarbon saturation x shrinkage x recovery factor Risked reserves = POS x reserves ENVIROMENTAL IMPACT ASSEMENT EIA Definition EIA is commonly a legal procedure in which a project developer is required to provide enviromental information to a consenting body so that this information can be used for better informed decision making Usually also involves publication and public comment/ disclosure (consultation) It is a tool to indentify potential envioroment impacts of a proposed project assess how significant (important) these impact are and recommend appropriate migigation, management and monitoring measures to prevent or reduce impacts to acceptable levels EIA is a process and a tool to aid decison- making ENVIROMENTAL IMPACT ASSEMENT EIA Definition EIA is a process and a tool to aid decisionmaking Information gathered during feedback into project design EIA can Application of an EIA ENVIROMENTAL IMPACT ASSEMENT EIA Process CONCLUSION In this project, we introduced three main problems that the decision maker will encouter when they want to make a good desicion The first problem is technical factor, we mentioned the reserves of reservoir, and express uncertainty though PDF and expected curves With each reserve, 1P, 2P or 3P, has probabilities respectively The decision makers base on that probabilities to determine which reserves will be choose to appraisal or development The second problem is economic factor We presented the important of project cashflow Depend on the project cashflow, the decision makers calculate the EMV and NPV of the project ad make a decision tree to present all the chance for each phase And the last problem is the enviromental factor Depend on the natural conditions of the country, the regulations of the goverment, the impacts of exploration and production to enviroment and so on the decision maker introduce the EIA report to make sure that the petroleum activities will work fortunately and control the pollution REFERENCE CHAPTER [1] McGraw Hill Education, Decision Analysis [2] Steve Begg (2013), Decision making and risk analysis CHAPTER [1] Frank Jahn, Mark Cook, and Mark Graham (1998), Hydrocarbon exploration and production 2ndediton [3] Fiona Macmillan (2000), Risk, Uncertainty and Investment Decision- [2] Larry W Lake, Editor-in-Chief , H.R Warner J.R, editior, Petroleum Engineering Handbook Volume VI Making in the Upstream Oil and Gas Industry [3] Economic evaluation, http://www.mhnederlof.nl/economics.html#pv [4] Howard, R.A (2004) Speaking of Decisions: Precise Decision Language Decision Analysis [4] Expected Monetary Value and Value at Risk, https://www.e-education.psu.edu/eme801/node/578 [5] Net present value, https://en.wikipedia.org/wiki/Net_present_value CHAPTER CHAPTER [1] Frank Jahn, Mark Cook, and Mark Graham (1998), Hydrocarbon exploration and production 2ndediton [1] Frank Jahn, Mark Cook, and Mark Graham (1998), Hydrocarbon exploration and production 2ndediton [2] Reserves estimation From AAPG , http://wiki.aapg.org/Reserves_estimation [2]Craig.A Reid Partner (2014), Enviromental Impact Assessment (EIA) for Oil & Gas and Power Project [3] Larry W Lake, Editor-in-Chief, Edward D Holstein, editor , Petroleum Engineering Handbook Volume V [4] Oil reserves , https://en.wikipedia.org/wiki/Oil_reserves THANK YOU [...].. .DECISION ANALYSIS Expected value The expected value for an uncertain alternative is calculated by multiplying each possible outcome of the uncertain alternative by its probability, and summing the results Expected value decision in developing temperature sensor Example : Product decision The expected values for the Special Instrument Products decision are designated by “EV" These are determined... Alternative B is best from the point P2 = 0 to the point where the alternative B line intersects the alternative C line: 16 − 14 P2 = 12 − 4 P2 → P2 = 0.4 +Alternative C is best from that point until its line intersects alternative A’s line : 4 + 8 P2 = 12 − 4 P2 → P2 = 0.67 RECOVERY FACTOR AND RESERVES Recovery factor Estimate of recoverable oil Recovery factor = Estimate of in- place oil Drive mechanism has... and Farm Field out is dry Field is a Producer Drill Farm out -$250,000 $0 $500,000 $50,000 If you drill yourself, you take on the risk if the field is not a producer, but if the field is a producer, you don’t need to share your profits with anyone If you farm out the drilling operation, you are not exposed to any losses if the field is not a producer but if the field is a producer, the drilling company... : Microscopic sweep Soi Efficency Estimating recovery factor by analogue RECOVERY FACTOR AND RESERVES Reserves Proven Reserves 1P P90 Unproven Reserves 2P P50 3P P10 Schematic graph illustrating petroleum volumes and probabilities Resever Estimation Volumetric Material Balance Change in pore volume = Change in oil volume + change in free gas volume + change in water volume The material balance technique... Rate of production at time t qi = Rate of initial production qec = Economic limit rate of production Np = Cumulative production −1/ n n q 1 t = i ÷ − qec nDi D = Decine rate (decimal) Di = Initial decline rate (decimal) t = Time (years) Expected curve for discovery For convenience, the probability axis may be split into three equal sectors in order Again for convenience, the curve three values... • for higher values of P2 → A is the best Sensitivity analysis of 3 alternatives • To find exact values of the ranges, determine where the upper parts of the lines intersect • Because these are straight lines, they have the form : y = a + bx Where: a is the y-intercept value at the left axis b is the slope of the line x is P2 The slopes and equations are: #1 A 4 B 16 C 12 #2 12 2 8 Slope 12-4=+8 2-16=-14... three points.toEach point represents the probabilities (85, and 15%) average value of 50 reserves within the sector Expection curve for a discovery Expected curve for exploration When an explorationist constructs an expectation curve, the above approach for the volumetrics of an accumulation is taken, but one important additional parameter must be taken into account : the probability of there being hydrocarbons... lifetime > 1year) Tariffs received Operating expenditure e.g maintenance, salaries, insurance, tariffs paid (asset with lifetime