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An Intensive 5 - Day Training Course

Advanced Oil & Gas Project Economics,
Risk & Decision Analysis

Handling Uncertain Scenarios

Current View: In-Person format Go to Online format

Advanced Oil & Gas Project Economics,  Risk & Decision Analysis

Scheduled Dates

Date: Location: Fee: Enrollment:
15 - 19 Nov 2021 London - UK $5,950
04 - 08 Jul 2022 London - UK $5,950
14 - 18 Nov 2022 London - UK $5,950

*Exclusive of VAT

Why Choose this Training Course?

The petroleum industry is one of the most important, highly capital intensive and risky business. Global exploration and production spending in 2013 was $644 billion, up 7% from $604 billion the year before. In 2014, the exploration budgets reached $654 billion but this fell to $521 billion in 2015 and in the following year, 2016, there was a further decline of 27%. This year’s global exploration and production spending is expected to increase 7%.

The upstream sector’s profit margins are under real pressure from many factors such as higher costs of developing new reserves, less oil and gas found per foot of exploration drilling, rising inflation, global oversupply and price volatility. Competition for investments, for acreage/concessions, aging of existing reservoirs, the unconventional oil and gas revolution all contribute business risk and uncertainty.

Petroleum industry projects are by their very nature risky, the challenge however is in assessing, managing, and mitigating this risk proactively. The three biggest planning challenges are predicting costs, assessing profitability, and risk management. All these tasks occur in the early stages of capital planning and failure to adequately evaluate these elements can lead to heavy losses.

This PMI® Approved PetroKnowledge training course will highlight:

  • Identification of the stages required in the risk analysis process, i.e., preparing, modeling, and running risk analysis
  • Development of the risk model, assessing probabilities to various variables, risk analysis, and explore the impact of uncertain variables
  • Enable the participants to create reports such as, tornados diagrams, scatter plots and cumulative probability functions, using excel
  • Application of decision trees and Monte Carlo-based simulations to generate profitability indicators.
  • Enable the participants to develop probabilistic cash flow reports along with probabilistic profitability indicators for decision-making

What are the Goals?

By the end of this training course, participants will:

  • 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 eversion and risk premium
  • Acquire spreadsheet skills including simulation software @RISK
  • Carry out cash flow analysis, for petroleum related project and use common economic indicators to evaluate between competing alternatives
  • Carry out a comprehensive economic study evaluating petroleum related projects using risk and sensitivity analysis by means of spreadsheets

Who is this Training Course for?

This comprehensive training course is designed to provide technical and practical approaches to executing a petroleum related project in the upstream sector. This PetroKnowledge training course is suitable to 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

How will this Training Course be Presented?

This PetroKnowledge training course will incorporate a mix of learning methods, including but not limited to, high quality power point slides, short videos and active class participation. An in-depth knowledge of quantitative risk analysis techniques and hands-on problem solving skills will be developed during the course. Participants will use PC’s to solve a variety of problems better enabling them to utilize the taught material. Furthermore, the course will enable the course delegates to reach an optimum decision in capital spending. The training approach will be facilitated using Microsoft Excel add on @Risk module and will further assist in promoting discussions among the participants.

Daily Agenda

Day One: 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

Day Two: 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)

Day Three: 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

Day Four: 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

Day Five: 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
  • Course final review and close