Sample psa cash flow with r factor sliding scale scenario 1 fixed scale with low oil price. Factors determining production no of wells plateau factor %. Economic analysis, design and modelling of petroleum fiscal systems contents. This course covers petroleum science, economics and management science which can be used to. Since the nineteenth century, the united states has been using petroleum as a source of energy production. Marginal fields can prove uneconomic when developed under prevailing circumstances such as technical reservoir size, infrastructure distance and remoteness, crudeoil type or commercial issues oil prices, high cost of development, lack of thirdpartyaccess. The most common business structures in the industry today are either production sharing contracts pscs or royaltytax systems r ts. Fiscal considerations oxford institute for energy studies. The journal of petroleum technology, the society of petroleum engineers flagship magazine, presents authoritative briefs and features on technology advancements in exploration and production, oil and gas industry issues, and news about spe and its members. It also reflects my path from gathering highschool level background data and learning about the basics of the market, to taking the role of a junior economist and looking into the theoretical limits and equilibriums concerned, and eventually weighing different factors in a. Petroleum economics evaluation, project cost estimation.
Petroleum economics and engineering 3rd edition knovel. Pdf economics modeling for petroleum exploration and. Introduction background to the study the petroleum industry is considered to be one of the largest and most powerful industries in the global market with its operations covering every corner of the globe and with the worlds. The eiaoea office of petroleum, natural gas, and biofuels analysis pngba is responsible for analyzing these renewable and emerging liquid fuel technologies and developing reasonable technical and economic assumptions to inform the models that project the penetration of these technologies table 1. Arnold, editor iv production operations engineering joe dunn clegg, editor v reservoir engineering and petrophysics edward d. Being an extractive industry that is exposed to a range of formidable uncertainties, the upstream petroleum industry faces particular complexity in assessing the economics of its business opportunities. The premise of my talk is that the geologist is evaluating a set of producing properties for sale and each property has hbp leasehold associated with it. Uncertainty and risk analysis in petroleum exploration and. The other links add value to petroleum mainly by moving and storing it e. Fiscal systems measures and economic indicators 17 7.
Saudi arabia responded with its longterm vision 2030 economic transformation. Petroleum industry personnel who would like to develop or increase their knowledge in basic economic analysis and profitability assessment economics is the primary link between decision making and profitable operations and it is one of the four pillars of the oil and gas industry the other three being geology, engineering, and. This course will explain how to apply tools from petroleum economics which will help in making better decisions for upstream oil and gas opportunities. This manual introduces key concepts and methodology used by the fiscal affairs. From 1978 to 1981, world events such as the iraniraq war and. Modeling the impact of taxes on petroleum exploration and. Economies of scale, interdependences, specificity 1. The fiscal analysis, however, draws on public finance and economic theory to. Roughly half of the governments of this world use pscs and the rest use r ts. Jack king, mba michael kraten, phd, cpa rick squires, ms program fee one unit. Petroleum refining and the prod uction of ulsg and ulsd october 24, 2011 page 2 2. Pdf petroleum economics, risk and opportunity analysis.
Economic analysis is a central feature of the upstream oil and gas industry, as indeed in many other industries. When the subscript i for injection, injected, or irreducib le is used, it should appear first in subscript order but after r for relative. The fiscal regime can be used to convert a governments policy into economic signals to the market, and influence. Introduction to probability distribution and petroleum. Philip cross, senior fellow, macdonald laurier insitute.
The school prepares its students to take part in the energy transition of the 21st century, combining. A field development programme is prepared technical and economic feasibility. Thiyakesh3 1 assistant professor, department of management studies, e g s pillay engineering college, nagapattinam, india. The oil prices remain sluggish for the last months when this issue was raised in december 2015. Types of fiscal regime in hydrocarbon exploration and production. Comparative economic analysis of production sharing contracts in republic of cameroon and republic of congo brazzaville semieu djimaissifou s. Engineering economics, principle of economics and rinciple of management. Distribution of major petroleum reserves in the world. Economics of worldwide petroleum production petroskills. Economic rent is defined as the true value of natural resource which. Economics is the primary link between decisionmaking and. Economics for oil and gas projects under conditions of certainty and uncertainty. R ecovery is at the heart of oil production from underground reservoirs.
Donohue, phd, jd erhan aslan, phd charles brankman, phd bradford r. This paper shows the applicability and the value of real options analysis roa in valuing a marginal undeveloped discovery in the uk continental shelf ukcs under multiple project uncertainties, namely geology, costs, and oil prices. Many factors contributed to this precipitous decline in exploration and development expenditures. Why economic modeling economic models are mainly used for the following four reasons. Chads r factor psc dates back to law number 006pr2007 dated 20 april 2007, and perhaps earlier. Holstein, editor vi emerging and peripheral technologies. Various factors which affect ongoing operating costs 426 technical efficiency vs. Jan 01, 2004 the purpose of petroleum engineering is to examine, define, and implement methods and procedures for developing and extracting oil, gas and associated products so as to optimize profits and obtain a returnoninvestment that is commensurate with the risk incurred in making the investment. Economic and financial determinants of oil and gas. Petroleum refinery activities start with receipt of. This book is a guide to the basic economics of petroleum production as practiced throughout the world. Petroleum economics provides an overview of the key financial and economic means of project performance provides a set of risk assessment tools including sensitivity, scenario, decision tree and mote carlo simulation analysis introduces the participant to stakeholder analysis frameworks to identify stakeholder groups and their concerns. 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. Guidelines for the evaluation of petroleum reserves and resources 3 petroleum reserves and resources are important to both companies and countries.
When the subscript r for relative is used, it should appear first in subscript order. Mathematically, a rsc works like a royalty a large royalty, and by definition it has no profitsbased elements. Petroleum project economics and risk analysis workshop. The basis of this classification is legal regarding transfer of title to hydrocarbons to the oil company. The basic aspects of current petroleum refining technology and economics are presented in a systematic manner suitable for ready reference by technical managers, practicing engineers, university faculty members, and graduate or senior students in chemical engineering. 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. China united states mexico former ussr venezuela iran kuwait uae iraq saudi arabia 0 50 100 150 200 250 300 billions of barrels figure 82. This book introduces and traces the economic factors that directly affect petroleum production from its initial geological perception to its eventual sale to the refiner or the crude oil trader. Mitchell, editor iii facilities and construction engineering kenneth e. The landscape is different for each type of company or business unit. Comparative economic analysis of production sharing contracts.
Introduction to petroleum economics is about the process of gathering project data, calculating whether a project should proceed and delivering recommendations. Fuzzy value of npv calculated based on 7% error rates of p. B ig, formation volume factor of injected gas, and c ig, compressibility. The gas compressibility factor, supercompressibility factor, real gas density and gas formation volume factor are 0. This book explains how to apply economic analysis to the evaluation of engineering challenges in the petroleum industry. The economic, political and policy implications of this state of affairs are discussed in chapter 21. Influence of economic factors on performance of project. Being an extractive industry that is exposed to a range of formidable uncertainties, the upstream petroleum industry faces particular complexity in assessing the economics.
Oil and gas contracts utilizing r factors and rates of return. Currently the daily oil production comes from mature or. Petroleum economics free download as powerpoint presentation. Fuzzy value of npv calculated based on 7% error rates of price. The supply and demand for crude oil and petroleum products are key factor in determining the status of the world economy. The fiscal regime for mining and petroleum oil and gas is the combined system of. Economic analysis, design and modelling of petroleum. Course philosophy petroleum professionals need to have a thorough understanding of the value chain and the global competitive landscape in which they operate. A brief history of petroleum contracts 3 productionsharing agreements in general 3. If the average worldwide recovery factor from hydrocarbon reservoirs can be increased beyond current limits, it will alleviate a number of issues related to global energy supply. The r factor was defined as the associates cumulative revenues divided by its cumulative costs. The economics of petroleum reining understanding the business of processing crude oil into fuels and other value added products december 20 acknowledgements the canadian fuels associaion acknowledges the following contributors who provided valuable content and insights to make this document a comprehensive, accurate and useful resource. B tax and nontax components of petroleum fiscal systems.
We have encountered major energy crises in 1973, 1979, and 1990. Economic aspects of the business, in the business of petroleum exploration, r. The taxonomy of petroleum fiscal systems is outlined in figure classification. In azerbaijan, for shah deniz in 1996, the r factor is defined as cumulative profit oil plus recovered capital and financing costs divided by cumulative capital costs excluding financing costs. Economics, risk, and contract analysis, pennwell, 2003, pp. Steinmetz, ed aapg treatise of petroleum geology handbook of petroleum geology 2, p. Students will master this knowledge and apply this knowledge in the petroleum industry. Pdf the economic structure of the petroleum industry differs strongly from. In this sense, the petroleum industry is a classic case of uncertainty in decisionmaking. Guidelines for the evaluation of petroleum reserves and resources. Ipe is a connection course of petroleum and economics. Wood published petroleum economics, risk and opportunity analysis. Discussion progresses from an introduction to the industry, through principles and techniques of engineering economics, to the application of economic methods.
Instructor day 1 morning afternoon introduction to petroleum project economics and economic modelling upstream project lifecycle. Economic analysis of psc cost recovery and psc revenue over. Upstream oil and gas, petroleum economics, energy economics, petroleum industry, upstream oil and gas exploration petroleum pricing systems and manipulations petroleum pricing, if well understood it can be utilized for the benefit of companies that engage with the business and maximum profit can be achieved with minimum risk. Petroleum refining at a glance petroleum refining is a unique and critical link in the petroleum supply chain, from the wellhead to the pump. Organization of petroleum exporting countries opec 452 changes in the petroleum industry during the 1970s 453 international petroleum agreements 456 exploration and production contracts 457 risk and financing 457 economic return profit 457 management 458 host country objectives 458 contracting company objectives 459 ranking of priorities 460. Economics is the primary link between basics of petroleum. Fiscal analysis of resource industries fari international. The subjects treated are petroleum economics, project evaluation and corporate finance. Basic petroleum economics mai 2004 ppm 2nd workshop of the china case study 2 investment decisions investment decisions are among the most important decisions that a companygovernment can take capital intensive irreversible high riskuncertainty. Petroleum fiscal systems around the world petroleum fiscalcontractual systems or regimes around the world have for many years been classified into two main categories. Economic factors, funding, foreign currency exchange rate, foreign investments and joint venture.
In other words, when n 2no, exp r td 2 or rate of growth doubling time r td 0. The r factor is cumulative revenues cost recovery plus profit petroleum divided by cumulative costs. Numerous regulatory bodies around the world have developed regulations relating to the evaluation and external reporting of reserves. It discusses factors affecting the refinery economics, such as costs, products prices, refinery. Petroleum economics net present value internal rate of return. Pdf future prospect analysis of liquefied petroleum gas. Assessment of upstream petroleum fiscal regimes in. For a definition of r factor and ror see chapter 4. Instructor day 1 morning afternoon introduction to petroleum project economics and economic modelling.
How to scrutinise a production sharing agreement publications. Hence r t systems are often simply referred to as concessions in some areas. For instance, in the petroleum industry, managers are increasingly using decision analysis techniques to aid in making these decisions. Guidelines for the evaluation of petroleum reserves and. Petroleum economics evaluation, project cost estimation and. In physical science terminology, energy is the capacity for doing work, e. Due to the increase in demand of crude oil in southeast asia, there was an increase in the price of crude oil in 2008. Prrt petroleum resource rent tax profit oil balance of production after subtraction of oil used for cost recovery quasirents rents attributable to past investments, or to factors of production in temporarily fixed supply rents revenues in excess of all necessary costs of production including the. Financial efficiency 427 incremental economics 428 well workovers 429 equipment replacement 431. International petroleum economics ipe is a course that discusses international petroleum cooperation based on the world oil recourses and world market. To calculate the present value is often called discounting. Advanced petroleum economics notes and handouts by professor musaed alawad, king saud university, college of engineering, petroleum and natural gas engineering department, riyadh, saudi arabia. Decisions through the lifecycle of a petroleum project. Currently the daily oil production comes from mature or maturing oil fields and.
234 932 710 479 1298 1313 1463 1527 761 58 1019 340 888 1186 776 398 200 557 206 160 333 1291 79 249 552 869 889 1258 734 1476 898 25 250 1551 919 228 1287