Introduction:
The petroleum industry is one of the most important, highly capital intensive, and risky businesses. Global exploration and production spending increasingly year after year .
Course Objectives:
By the end of the course, participants will be able to:
- Learn how to handle uncertainty in petroleum projects
- Understand different economic terms used in the oil & gas industry
- Understand the expected value concept and learn its impact on decision tree analysis
- Learn expected theory concepts and attitudes towards risk, risk aversion, and risk premium
- Acquire spreadsheet skills including simulation software @RISK
- Carry out cash flow analysis, for the petroleum-related project and use common economic indicators to evaluate between competing alternatives
- Carry out a comprehensive economic a study evaluating petroleum-related projects using risk and sensitivity analysis by means of spreadsheets
Who Should Attend?
This comprehensive training course is designed to provide technical and practical approaches to executing a petroleum-related project in the upstream sector. This training course is suitable for a wide range of professionals but will greatly benefit:
- Planning managers
- Oil & gas engineers
- Project managers
- Analysts
- Commercial managers
- Economists
- Government officials
- Geologists
- Business advisors
- Asset managers
- E&P managers
- Product managers
Course Outlines:
Development Economics
- A Brief History of Energy Usage
- Principles of Development Economics
- Understanding of Economic terms
- Inflation and its impact on Nominal & Real Cash Flows
- Project Financing
Uncertainty in Investments
- Handling uncertainty in Capital Projects
- Understanding Probability Concepts
- The expected Value Concept: Features and pitfalls
- Expected monetary value (EMV)
- Expected profitability index (EPI)
- Expected opportunity loss (EOL)
Risks and Uncertainties
- Risk & Uncertainty
- Risk eversion and risk premium
- Exploration project threats and opportunities
- Economic decision criteria
- Decision Tree Analysis
- Probability Distribution
- Case study: Monte Carlo Simulation
Setting up Spreadsheet Calculations Using Excel
- Spreadsheet Calculations
- Cash Flow Analysis
- Sensitivity analysis calculations
- Tornado Diagrams
- Introduction to Monte Carlo Simulations using @Risk
- Class exercises: Setting up an oil field Project
Practical use of the @Risk add-on – Oil Field Development Model
- Developing an Integrated Economic Model of an Oil Field Development
- Developing and using an @Risk model analysis
- Project sensitivity analysis utilizing data from @Risk model