LECTURE-1

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07.02.2018
Resource Economics and Risk
Management in Exploration
B.TECH. – GEOSCIENCE
ENGINEERING
VIII SEMESTER (2018)

Dr. S.K. Nanda

Contact: 9760372420
1. Resource
The resources constitute that part of Initially
in place Petroleum which may be
(1)Undiscovered :
Defined as Prospective resources and on the
basis of estimates classified as:
High
Best
Low
(2)Discovered :
Defined as Contingent resources and are sub
commercial in nature and on the basis of
estimates classified as:
3C,
2C and
1C
 What are resources ?
• Resources are…
Contract limit?
– The summation of the
100
90 future saleable
80
70
production
Daily Rate

60
50
– From a given date
40 forward
30
20 – Up to the economic or
10
0 contract limit
1 3 5 7 9 11 13 15 17
Years
– NOT just a volume!
Economic limit?
(price and cost
dependent)
 HYDROCARBON SCENARIO

DISCOVERED INITIALLY IN-PLACE

Production
TOTAL PETROLEUM INITIALLY IN PLACE

COMMERCIAL
3P
2P PROVED
1P PROVED + Reserves
Reserves
PROVED + PROBABLE
PROBABLE +
POSSIBLE BOOKING
BOOKING
SUB-COMMERCIAL

Contingent
Contingent
1C 2C 3C
Resources
Resources

Unrecoverable
UNDISCOVERED

Prospective
Prospective
INITIALLY

LOW BEST HIGH

IN-PLACE

ESTIMATE ESTIMATE ESTIMATE Resources

Resources
(P90) (P50) (P10)

Unrecoverable

Range of Uncertainty
2. Economics
1

3
 Risk and uncertainty
Consistent approach to assessment
of risk and uncertainty is essential
for all asset management
RISK
Project maturity
Will the project go ahead?
UNCERTAINTY…
What is the range of estimate
recoverable volumes if the
project does go ahead?
 UNCERTAINTIES

1. Production forecast uncertainties

2. Price uncertainty
3. Cost uncertainty (both Capex & Opex)
4. Commercial/legal/political uncertainty
5. Production uncertainty
3. Management

Ensures the capturing maximum

intrinsic value of its assets under
the prevailing techno economic
scenario without compromising
Company or overnment‘s policies
or ignoring stake holder‘s
concerns.
 1. Setting Asset Management Objectives,
Elements 2. Developing an Asset Management Plan.
3. Plan Deliverability.
1. Old/New Fields
2. Judicious Reservoir Development
3. Marketing Scenario
Target 4. Optimal Resources Utilization
5. Environment/Disaster Management
6. Policy changes: Financial/Technological
1. Timing of acquisition of Asset
Indicators 2. Multidisciplinary professional
3. Efficient data management program
4. Identifying Uncertainties &Risks
 Funding
Exploratory/
Development
Cost
Production
Transportation
Market Price
Profit Sharing

Technical:
Bidding, HSE

Activities
Lease Safety norms
Budgeting EPP
Surveys DMP
Drilling BOP

HR
management
Geophysics
Planning
Petroleum
Engineers
Trainings
KNOW ME WELL
 Prospect Generation and Exploration:
1 2 3 4

Approval Exploration plan

Continue to work in Basin
Exploration Strategy

Recommendation
Approve Bid
Assess Assess Sequential

& wells
Basin Lease Implementa
tion of
Exploration
Plan
Development Activities:
5 6 7 8
Appraisal

Approval Appraisal Plan Well

Reschedule Devel. Drilling

Mid Plan

Development Alternatives
Drilling
Drilling of Expl. wells

Develop- of Assessment
ment Appraisal
of wells Refine
Appraisal And Develop-
Plan Prepare ment Plan
Dev. Plan and
Reshedule
Drilling
Development Activities:
9 10 11

On going

Final Development Plan

Development Sanctions

Reservoir

Abandonment
Install Development

Approval of
Production
and Facilities
Export Expansion
Facilities.
Optimized
Production
System
Field life & Operations & Economic Share
Operations
THANKS