Petroleum Project

Economics
Econ210D
Presentation 1
Economics in the Petroleum Industry
Week 1
1

Economics in the Petroleum

Industry Week 1

Crude Oil and Natural Gas

Production
Five Year Average Natural Gas Production & Sales Volumes Schedule
(MMscf/d)
Year

2005

2006

2007

2008

2009

Production

3,136

3,789

3,992

4,059

4,102

Sales

2,970

3,515

3,729

3,673

3,706

Crude Oil Production and Prices: Five Year Average (BBL/day)

Year

2005

2006

2007

2008

2009

Oil
Production

138,814

147,693

123,263

115,475

100,068

Economics in the Petroleum

Industry Week 1

Organizational Structure
President/CEO

Drilling
Engineering

Reservoir
Engineering

HR

Facilities
Engineering

Economics
Economics in the Petroleum
Industry Week 1

Production
Operations

IT
4

Who owns an oil company?

Shareholders jointly own an oil company
Oil companies raise finance from the sale
of shares
A person who own shares is a shareholder
Each shareholder is entitled to a share of
the companys profit which is called the
dividend

Economics in the Petroleum

Industry Week 1

Objectives of Oil and Gas

Companies
1. Find more reserves
2. Obtain optimum production rates
3. Achieve cost efficiency
4. Practice safety
5. Maximize profit or return on investment
Economics in the Petroleum
Industry Week 1

Why Economic Evaluation of

Petroleum Projects is Important ?
Profitability forecasts
Decision making recommending projects
and obtaining approval.
Reporting to shareholders
Reporting to host country government
Economics in the Petroleum
Industry Week 1