OilSim – An overview of the Oil and Gas Upstream value chain

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Learning cycle

Challenge

Available data

Analysis

Decision

Review

Challenge 1 Finding basins

Challenge 2 ProspectingChallenge 3 Exploration DrillingChallenge 4 Depletion Plan

Challenge 5 Facilities PlanChallenge 6 Construction ProjectChallenge 7 Operations

Today’s Challenges

Additional knowledge/skills

Environmental issues Team work and negotiation Critical decision making, analytical

skills, multi-tasking Learn through experience Economically viable volumes-

reducing uncertainty Return on Investment Function appreciation

Money and Credibility

You start with $700 millionYou can apply for more money later.

Create valueMeasured by the net value of the oil and gas fields discovered MINUS all costs involved.

Correct answers and sensible decisions are awarded with CPs

Oil and Gas Value ChainComplete Value Chain

Upstream

Challenge 1 Finding basins

Challenge 2 ProspectingChallenge 3 Exploration DrillingChallenge 4 Drainage Plan

Challenge 5 Facilities PlanChallenge 6 Construction ProjectChallenge 7 Operations

Today’s Challenges

Main screen

Map Columns e.g C1, and C54,

Row

s e

.g. R

35

and R

16

3,

Block

Blocks are divided into smaller cellse g. R1C1

First task

Challenge: Find three sedimentary basins in the area. Basins are sedimentary rocks in the deep subsurface where oil and gas has been generated.

Procedure: Buy and study magnetic and gravimetric surveys; and to submit the coordinates, column and row number for each basin centre.

Gravimetric surveys

Gravimetric surveys show the gravity in the sub-surface. Measured by airborne sensors.

Sedimentary rocks have lower densities than the surrounding crystalline rocks. Low gravitational pull means high probability of a basin below.

Basins have a lower gravitational pull. Crystalline rocks have higher

gravitational pull

Gravimetric surveys

Gravimetric survey:South-east quadrant

Magnetic surveys Magnetic surveys show similar

information as gravimetric surveys. The sedimentary rocks in the basins have a lower concentration of magnetic materials than the surrounding crystalline rocks.

Sedimentary basins are the areas with the lowest magnetic field.

Basins have low magnetic field Non-basins have high magnetic

fields.

Magnetic Surveys

Magnetic survey:North-west quadrant

Centre may not be the same

Example:Top basin on

both maps Calculate the

midpoint between the gravimetric and magnetic centres found

= C55 and R105

C50

R100

C60

R110

Finding the Midpoint

Enter decision

Centre Midpoint calculation

3 centres – one Centre midpoint for each basin

Example: C55, R105 Solve before deadline. All

submissions are evaluated after the deadline (and not before).

You may get 0-100 CPs. All three centres must be located to get full CPs.

Challenge 1 Finding basins

Challenge 2 ProspectingChallenge 3 Exploration DrillingChallenge 4 Depletion Plan

Challenge 5 Facilities PlanChallenge 6 Construction ProjectChallenge 7 Operations

Today’s Challenges

Task 1 solved

All teams have submitted their answers. Basin centres are located.

Message in Inbox. All teams have answers and CPs awarded.

Task 2 license round Sedimentary basins

may contain oil and gas The government has

decided to put the blocks around one of the basins on offer

Challenge: Identify the 3 most promising blocks and submit a bid to the Government for these licences

Source and migration

1. SOURCE ROCKwhere organic material is put under sufficient pressure

2. MIGRATION ROCKwhere hydrocarbons are driven through

3. CAP ROCKImpermeable rock that stops migration of hydrocarbons 4.

PROSPECT

Traps

(c) OLFAnticline trap

Fault trap

Stratigraphic trap

Salt dome trap

Geological “pockets”, that might contain hydrocarbons.

Red areasYou will not be awarded blocks that contain any red spotsBlue areasBlocks in area may be awarded

Spawning Grounds

Common Risk Segment

Layer 3 Eocene1500m below the seabed

Layer 2 Paleocene2500m below the seabed

Layer 1 Cretaceous3500m below the seabed

CRS. Common Risk Segment surveys tell you about the probability of a structure in the block/cell containing oil or gas

Surface

2D Seismic surveys

Traps can be found with seismic surveys

2D seismic survey is a cross section of the geological layers along either a column or a row

2D seismic surveys are used for locating prospects

2D Seismic in OilSim

Unprocessed Processed

Interpreted Red is top of the sealing rock

Green is top of the reservoir rock

Anticlinal traps

Leakage?

Leakage

Sealant rock

Order Seismic

What type of data do you want?

Columns or Rows

Unprocessed or processed data

Interpreted or notOnly buy maximum

of 4 blocks of data at a time to speed up processing

The yellow hatched area on map can be clicked on and dragged to blocks of interest

View the Seismic

Red circles – navigate through the 2D seismic

Yellow square – Row 1 from Column 1-56

Cross-sections

Column

Row

Prospect, ReservoirBasin,Source

Enter bids Three blocks Three amounts

Min: $1M Max: $30M

Awarded 1 block Pay for 1 block Highest bid wins If equal, then team with highest

CP wins

Recap on Task 2 Environmental Sensitive Areas map

to see which blocks to avoid Common Risk Segment surveys to

see which blocks to examine closer 2D surveys seismic to identify which

ones have the most (big) structures Check water depth, and go for

shallow water blocks if possible Remember to submit 3 bids

Challenge 1 Finding basins

Challenge 2 ProspectingChallenge 3 Exploration DrillingChallenge 4 Depletion Plan

Challenge 5 Facilities PlanChallenge 6 Construction ProjectChallenge 7 Operations

Today’s Challenges

Task 2 solved Message sent to

all teams with the results

Credibility Points are given for prosperity of the blocks you bid for

Every team has got one exploration license

Task 3 Exploration Drilling

HQ is happy with the license awarded.

Challenge: Farm-out minimum 20% from your license – and farm-in as much as you can in other good licenses.

Acquire 3D Seismic interpretations for the block you operate, and study the results from the licensing round

Get others to invest 20% or more in your license – you can show/send 3D seismic

Real 3D Seismic

Shows the subsurface structure in a cube.

3D Seismicin OilSim

Layer 1 Cretaceous

Layer 2 Paleocene

Layer 3 Eocene

Partnerships

Spread the risk: e.g Investing in other blocks divides the risks amongst all partners, much more preferable than keeping 100% of one field and all the risk.

Increase probability of profit: investment in only 1 field which could be a dry prospect is possible, whereas the likelihood of investing in 5 fields which are all dry is unlikely.

Licences

Farm-inEnter the percentage and total amount for have agreed to offer

Minimum $100,000 per %

Add a message to the seller

Press “Send offer”

Farm-in

When a team receives a Farm-In offer to appears under Financing. This is where a team can receive finance or money for a % of their own blocks

Farm-in license OWNER

decides whether to ACCEPT or REJECT the offer

Partnerships established every time a license owner accepts an offer.

Overview: On the main page, you can see all licenses. 1) licenses you operate, 2) licenses you have invested in, and

other licenses.

Farm-in

All your farm-in offers to other teams are shown under “Investing” on the right-hand side of the homepage . This is where a team offers investments to other teams for a % of their blocks

Partners pay a proportional share of all future costs

Partners receive a proportional share of the net proceeds from oil and gas

The operator team makes all decisions regarding drilling

Teams can farm-out up to 70% of licence

Operators must keep 30% of licence

Partnerships

Water depth

• Before choosing a rig, you need to check your water depth

Find this at the bottom of the BLOCK page

Choose Rig Choose the right rigs for your water

depths Jack-up rigs for shallow waters

Semi-submersible rigs for middle waters

Drillships for the deepest waters

Rig cost = drilling days * day rate

Service ProvidersUpto 9 Star

quality- Good:

normally costs more

Bad: cheaper, but reliability

is low, so you risk extra drilling time and extra costs

Environmental Impact Assessment

EIA survey: more knowledge about the area.

Less probability for drilling problems. Less severe consequences if you run

into problems.

= Which drilling locations to avoid.

Drill Position EIA:

enviromental impact analysis shows where it will cost you more to drill.

Place your mouse where to drill

Drilling Position

Layer 1 Cretaceous

Layer 2 Paleocene

Layer 3 Eocene

Drilling Days

Estimated cost

Oil spill or Gas Blowout control

Estimated cost

DrillingResult Volume

Range in MBOE counts

Test may increase Proven MBOE if oil or gas found

After testing

Reprocess Seismic

Value

Assumptions

Value calculation

Appraisal From Probable volume to proven

reserves

Narrowing ranges

Exploration well: 0 to 1572 MBOE (after drilling) 11 to 1266 MBOE (after testing)

First appraisal well: 25 to 1033 MBOE (after drilling) 34 to 910 MBOE (after testing)

Second appraisal well: 65 to 850 MBOE (after drilling) 101 to 752 MBOE (after testing)

Only proven MBOE counts

Drilling Summary After your first drill in each well,

reprocess seismic Decide which discoveries to drill how

many appraisal wells into

Ultimately, you should either: Get a positive net present value, Or a conclusion that additional

appraisal wells will not result in a net present value

Apply For More Funds Click on Apply for More Funds Tab. 1 CP for each $100,000 applied for. Answer the questions: All correct

gives cash and you can keep CPs. One wrong gives cash and you keep ½ of your CPs. Two wrong gives ½ cash and you lose all CPs. All wrong, you get no cash and lose all CPs.

Expensive money if less than 10 Credit points: Apply for cash and be fined $5million for each $20million requested.

Challenge 1 Finding basins

Challenge 2 Prospecting

Challenge 3 Exploration Drilling

Challenge 4 Depletion Plan

Challenge 5 Facilities PlanChallenge 6 Construction ProjectChallenge 7 Operations

Challenge Make a well plan for

each reservoir in your block, choosing: Number of production

wells Tubing size

Aiming to choose a plan that

maximises value of block Increased sales value Decreased drilling costs

Where to find the surveys

Click the Surveys tab

Nodal analysis

Expected Production Profile

Nodal analysis

Highest well flow rate

Read the maximum well flow rate Most suitable Tube size

Most suitable tube

Expected Production Profile

Reservoir information

1. Click the Reservoir tab

2. Click the magnifyingglass for the reservoir

3. Study the data forthe reservoir

Production Wells

Click on Drilling Rig

Reservoir Information

Submit a well plan

Combined Plan

Improve value – revise well plan1. Submit plans with different number of wells

and tubing sizes1. Review Reservoir information after each

revised plan 2. Aiming to maximize sales value and

minimize drilling costs, whilst increasing Recovery Factor

3. You can amend your well plans until the deadline

4. Credibility points – upto 100 kp if plans are optimal for all your reservoirs

5. After deadline – Value of Licence will be adjusted based on final Well Plan submitted

Challenge 1 Finding basins

Challenge 2 Prospecting

Challenge 3 Exploration Drilling

Challenge 4 Depletion Plan

Challenge 5 Facilities PlanChallenge 6 Construction ProjectChallenge 7 Operations

Challenge Plan the facilities to

produce the oil and gas that has been found in the block

Maximize the value of the license block Maintain sales value Decrease facilities

costs Reduce risk

Metocean data Environmental surveys

Earthquake survey legend

Waveheights

Hurricanes

Choose platform type

Impact of discount rate Value Shown = income less

expenses Discount factors: 0%-20%

1 4 7 10 13 16 19 22 25 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1 4 7 10 13 16 19 22 25 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1 4 7 10 13 16 19 22 25 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

0% 5% 20%

189M 118M 48M

Block Water depth

1. Click the Reservoir tab

2. Click the magnifyingglass for the reservoir

3. Average seabed depthvisible here

Detailed production profile Determine maximum production

volumes of values of oil, gas and water(In gas fields it is gas, condensate and

water)

Platform parameters

Transport volumes Estimated no. of barrels

can be transported per day Different flowline (riser) and pipeline sizes = Different no. of barrels

Flowline size : Multiphase fluid from seabed

to platform (acting as flowline and riser)

Pipeline size : Oil and condensate to

storage tanks Gas to processing plant

Transport connections

Connect pipelines to Gas terminal and an Oil terminal

Facility overview

Flow overview

Challenge 1 Finding basins

Challenge 2 Prospecting

Challenge 3 Exploration Drilling

Challenge 4 Depletion Plan

Challenge 5 Facilities PlanChallenge 6 Construction ProjectChallenge 7 Operations

Challenge Plan the construction of facilities

required to operate your platform Submit a financial summary of the

plan Execute construction plan Minimize capital expenses Amend construction plan as issues

occur Get to FIRST oil!

Activity hierarchy

Choose only 1 activity – where a Dotted line

Where a solid line exists, the task below the line must be completed before starting the task above the line

Vendor Resource analysis

Considerations: Reach First Oil

within 21 periods of 90 days – TOTAL 1890 days

Time V. Cost Local Content

Planning Summary

Construction execution

Activities in 1st period

Activity feedbackActivity completed

Activity delay – still ongoing

Issue with activity

Progress of activity

Period information

Timeline

Updated hierarchy

First Oil and bonuses

RecapPART A Activity Hierarchy Survey – study activity

dependencies Vendor report - compare providers/local

content Prepare construction plan Submit Planning Summary

PART B Execute Plan - as many activities as possible

within each period; provider for each activity Check Timeline chart to see progress Reassess/alter providers as issues occur

Challenge 1 Finding basins

Challenge 2 Prospecting

Challenge 3 Exploration Drilling

Challenge 4 Depletion Plan

Challenge 5 Facilities PlanChallenge 6 Construction ProjectChallenge 7 Operations

Operations

Operations

Strategy discussions Financial consequences of your

decision? Other major drivers of decision Did country strategy play a role? Above-ground risks? Changeable market conditions? Impact on commercial contracts? Operating agreements affected? Other information to consider?