Decision Making in the Upstream Oil and Gas Sector
2 DAY COURSE
Course overview
This course covers the fundamentals of decision making, within the context of the upstream oil and gas industry.
The course provides an overview of petroleum economics concepts, before covering in more detail the techniques used in the industry to manage uncertainty and aid decision making.
The course is designed for
Oil company upstream professionals (managers, geoscientists, planners and engineers) wishing to gain an understanding of the application of decision analysis and portfolio management within the field development lifecycle.
Course outline
Decision Analysis
Sensitivity analysis (spider and tornado diagrams)
Expected value, expected outcome,
Prospect risking, exploration expected value
Decision Trees
Tools available to assist process
Constructing trees
Solving trees (with expected value of outcomes)
Monte Carlo Simulation
The Monte Carlo Method
Deterministic vs. probabilistic distributions
Continuous vs. discrete distributions
Types of distributions
Correlation
Value of Information
Value delta between a project with and without a data acquisition program, employing Bayes theory of conditional probability
Portfolio and Advanced Theories
Portfolio theory
Options theory (Also known as 'Theory of Real Options'
Preference theory Also known as 'Utility Theory'
Project Economic Analysis
Upstream Oil & Gas Asset and Development Project Life Cycles
Cash Flow Analysis, Nominal and Discounted.
Cost, Revenue and Cash Flow Profiles
Net Present Value (NPV), Discount Rate, Inflation
Contracts & Licences
Regulation & Legislation
Types of Contracts and Licences
Regulatory Approaches
Economic, Fiscal, Financial, Commercial Provisions
Investment & Profitability Indicators
An overview of the various indicators that feed into the decision making process, for example: Maximum Cash Exposure; Payback Time; Internal Rate of Return (IRR); Return On Capital Employed; Average Net Income Per Barrel; P/I Ratio (PIR), Capital Productivity Index (CPI),
Decision Framing
Overarching project goal defines sensitivity analysis and optimisation
Framing the problem
Economic factors
Risk, uncertainty & chance
