More complex refineries can change the proportion of petroleum product mix to take advantage of feedstock costs and petroleum product prices. Economic evaluations are also performed to determine reserves and the standardized measure of value for reporting purposes for publicly held companies. In all stages of a projectfrom prospect assessment to abandonment. Petroleum project economics and risk analysis workshop. Petroleum project economics and risk analysis program objectives during this oneweek program participants will learn, in a practical and realistic manner, how to analyze the financial performance of oil and gas investments from both the project and corporate reporting perspectives. Importance of petroleum economics in decision making macroeconomic condition and project evaluation upstream economic evaluation time value of money cash flow analysis and present value key economic indicators for project evaluation probability and statistics in decision making uncertainty analysis tornado diagram, sensitivity analysis decision tree and monte carlo analysis. That became possible thanks to advanced programs, additional skillsand experiences as well as the outputs of mathematical and statistical sciences. Royalty is a share of the revenue free and clear of all costs of development and production. The majority of ge 494 projects are specified such that the economic analysis is a. Orlandi encyclopedia of life support systems eolss these shows structural characteristics, relations of strength, economic and political dynamics which cannot be immediately attributed to the traditional life cycle of an industry and which indeed can no longer be repeated. Let bv be the book value of the depreciable asset, pa is the. Economic evaluation of petroleum projects basic aspects. Written in plain english for laymen and for experienced practitioners alike, it is a readerfriendly, clear, practical, stepbystep. Generating a view on expected outcome and uncertainty 4 1.
That is a good book which is opened with expectation. Petroleum refining at a glance petroleum refining is a unique and critical link in the petroleum supply chain, from the wellhead to the pump. The applicability of various probability distributions to the petroleum project development cost analysis is discussed. Upstream petroleum fiscal and valuation modeling in excel. Basic petroleum economics by mari kvaal august 2004 3rd ppm philippines case stydy workshop 2 objectives basic knowledge and techniques for performing investment analysis use the tools and concepts on petroleum investment projects a field development project an exploration project be able to understand the concepts used and do the economic. Introduction to petroleum economics is about the process of gathering project data, calculating whether a project should proceed and delivering recommendations. Petroleum economics plays a vital role in the oil and gas industry and it lies at the heart of all decisionmaking. This chapter outlines the methods and processes used to evaluate the economic potential of an oil andor gas property. Basic refinery economics in many businesses, profits or losses result primarily from the difference between the cost of inputs and the price of outputs. Performing prudent investment evaluation becomes even more critical in the lower crude oil price environment andor development of marginal fieldprojects. Also, to avoid repetition of the phrase oil andor gas, the term oil is used as a reference to both oil.
Average annual capital cost 182 project evaluation 183 discounted cash flow 183 factors which influence interest hurdle rate 184 185 internal rate of return irr 186 v. It discusses the science of petroleum economics, starting from squareone, the tools of the trade that petroleum economists use, day in and day out, and also its application. Petroleum economics net present value internal rate of return. This book is a guide to the basic economics of petroleum production as practiced. Economic evaluation is an essential step for assessing and studying and selecting new petroleum projects which involve different activities.
Kent saugier is a handson scientific, technology and business professional with twentyfive years experience in upstream oil and gas, offshore technology, economics, economic modeling, international petroleum contracts, project management, software applications and technology including design, licensing and commercialization. Project evaluation 183 discounted cash flow 183 factors which influence interest hurdle rate 184 185 internal rate of return irr 186 v. A worked examples approach demystifies fiscal analysis which, unlike disciplines such as earth sciences and engineering, can be learned from a book. Accept project a accept project b drop project c economic decision criteria. The international collaborative program in petroleum economics and management is designed for students or professionals with degrees in science, engineering or social science business school, law, seeking indepth training to develop a commanding skill set. This book explains how to apply economic analysis to the evaluation of engineering challenges in the petroleum industry. June 18 22, 2018 petroleum project economics and risk analysis during this. Energy projects are characterized by high capital investment in early years, without revenue. Our economics and planning suite plays a significant role in completing the technical insights of geoscientists and engineers with the business analysis and processes needed to support decisions through an assets lifecycle.
This book offers a comprehensive introduction to the economics of oil and natural gas extraction and production along with a detailed discussion of pricing, taxing, and markets of these most valuable commodities. These developments make some associated works easier and may help to increase the available information, decrease cost and risks, and. Discussion progresses from an introduction to the industry, through principles and techniques of engineering economics, to the application of economic methods. Pdf petroleum economics, risk and opportunity analysis. The best economic evaluations are team efforts consisting of geologists. This highly interactive and scenariobased training programme will enable you to apply a structured approach to project justification, investment appraisal and decisionmaking in the upstream petroleum business. Our books about petroleum, gas and oil focus on their economical and environmentally safe production. In all stages of a projectfrom prospect assessment to abandonmentgeox exploration risk and resource assessment software and merak planning, risk, and reserves software promote an integrated and consistent approach to empower better business decisions. The last section of the chapter presents a petroleum economic evaluation example which presents a complete risk analysis leading to net present values npvs of the example project. The practical exercises in the workshops will cover cashflow and. Risk free discount rate is 7% but the company is very. Expanded basic petroleum economics training course. The major landmarks that have guided the present book are organization for economic cooperation and development. Pdf economics modeling for petroleum exploration and.
He has an mba from the cranfield school of management and a degree in engineering from cambridge and is a member of the society of petroleum engineers spe. Also, to avoid repetition of the phrase oil andor gas, the term oil is used as a reference to both oil and gas unless specific reference. Petroleum engineering books are you studying petroleum engineering. In freegas reservoirs or in the gas cap of oil reservoirs, the volume of gasinplace is. Petroleum economics free download as powerpoint presentation. H30702 economic evaluation of oil and gas properties.
Since its establishment in 1975, the institute of geoenergy engineering ige at heriotwatt university has delivered its internationally renowned. However i wish it could be updated by the authors or other scholars interested in petroleum industries. Guidelines for the evaluation of petroleum reserves and. When designing a project, 90% of the work should go into project planning and development and only 10% in the writing of the application. Petroleum engineering is central to safe, efficient and sustainable development of oil and gas assets to meet global energy and resource demands.
Petroleum economics and engineering third edition pdf. Introduction to probability distribution and petroleum. Economics modeling for petroleum exploration and production projects considering risk and imprecise data thesis pdf available january 2016 with 11,273 reads how we measure reads. Petroleum refining and the prod uction of ulsg and ulsd october 24, 2011 page 2 2. The following discussion briefly covers some of the topics contained in their book. This course will introduce a variety of fundamental petroleum economic principles including revenue, expenditures, fiscal systems, risk analysis, and investment analysis. Petroleum economics and risk analysis course agenda highlights. Accept all projects with npv 0 drop all projects with npv project economic decision criteria net present value mai 2004 ppm 2nd workshop of the china case study 30 project cashflow present value a 200, 120,140 25 b 390, 270, 220 37 c 600, 300, 350 38 discount. Chapter 8 petroleum for the foreseeable future, oil will remain a critical fuel for the united states and all other industrialized nations. Petroleum economics net present value internal rate of. The training approach is based on principles of economic evaluation of petroleum related project with focusing on step by step developing economic models, determining economic indicators, evaluating and quantifying risks and uncertainties and making the right investment decision for the project. Field development planning multiwell project planning and forecasting. The other links add value to petroleum mainly by moving and storing it e. Central concepts in petroleum economics justeringskopi petrad.
This article presents basic aspects related to the economic evaluation process such as concepts and requirements as well as the nature of petroleum projects. The course will be delivered through a series presentations, project examples and handson excel modelling workshops that will reinforce your understanding of the subject. Economic model for oil and gas property evaluation. In this discussion, the terms property and project are used interchangeably as the objects of evaluation. Introduction to probability distribution and petroleum project economics c o n t e n t s part 1. The total cost over the life of the project is the same in the cash flow. The book includes tools, theories, techniques and examples covering. It is an excellent book because it considers all economic aspects of the petroleum industry. Designs an evaluation process and sustainability strategy for measuring project outcomes and continuing those outcomes after the end of project funding. H30702 economic evaluation of oil and gas properties handbook. These free textbooks range from facts about the 2010 bp oil spill to fundamentals of engineering thermodynamics. The petroleum industry is arguably the most influential and important industry in the world. Economics drives the entire oilgas producing industry. The economics of petroleum refining home canadian fuels.
Otherwise, however, costbenefit analyses were generally limited in application or at least, limited. This book is a guide to the basic economics of petroleum production as. Prior to working as an independent consultant, peter was director petroleum economist at indeva energy consultants and a project engineer at doris engineering in paris. Economics of worldwide petroleum production petroskills. Most oil and gas development projects will likely have initial production data available. The book therefore is offered as a contribution to the literature on project analysis rather than as an official statement of world bank policy. Petroleum economics and engineering crc press book. H30702 economic evaluation of oil and gas properties handbook table of contents page chapter i. Guidelines for the evaluation of petroleum reserves and resources. Decisions through the lifecycle of a petroleum project. Scribd is the worlds largest social reading and publishing site. This course is an excellent introduction to the fundamentals of petroleum economics. The last section of the chapter presents a petroleum economic evaluation example which.
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