offshore 3.4 presentation

You are an exploration team in charge of a new petroleum province.

Multidisciplinary challenge: Enhance your overall understanding of petroleum exploration and field development.

Create a Return on Investment

You start with $200 million Create value

Net value of the oil and gas discovered MINUS all costs involved

Credibility points awardedSensible decisions and correct answersCPs are a measure of ability and credibilityConsidered when bidding for blocksUse when applying for funds

Where and how to find hydrocarbons Licensing rounds Farm-in and Partnerships - negotiations Drilling rigs Sub-contractors Environmental issues Economically viable volumes Team work, Critical decision making,

analytical skills Multi-tasking

Complete Value Chain

Upstream

www.oilsim.com

www.oilsim.com

Blocks are divided into smaller cellse g. R1C1

Columns e.g C1 and C54

Rows e.g R15 and R97

Home page

Challenge: Find three sedimentary basins

Procedure: Buy and study magnetic and gravimetric

surveys Submit the coordinates for each centre Column and row number for each basin

centre

Gravimetric surveys indicate changes in the gravitational pull of the Earth in different areas of the sub-surface.

Lower gravitational fields indicates likelihood of low density rocks –Sedimentary rocks, porous and hopefully containing hydrocarbons

Survey shop

Gravimetric survey of North-west area

Magnetic surveys show anomalies in in the expected magnetic field of the Earth in particular areas.

Sedimentary rocks in the basins have a lower concentration of magnetic materials and lower magnetic field than the surrounding crystalline rocks.

Magnetic survey:North-west quadrant

All four quadrant surveys in map context

Locate edges of the continous basin structure

Locate the diagonals and thus basin centre

Example:Top basin on

both maps Calculate the

midpoint between the gravimetric and magnetic centres found

= C55 and R105

C50

R100

C60

R110

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 credibility points.

Message in Inbox:

Shows results Answers

submitted CPs awarded

The government has decided to put the blocks in one of the basins on offer.

Challenge: Identify the 3 most promising blocks and offer an amount for each of them.

Licensing area

Any restrictions involved? - Spawning grounds

What are we looking for? - Prospects

Where do we find prospects? In basins, where hydrocarbons have been 1) are produced and 2) trapped

How do I find them? - Geoscientific analysis Common Risk Segment maps and 2D seismic

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

(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 spots (spawning grounds)Blue areasBlocks in area may be awarded

Layer 2 Paleocene

Layer 1 Cretaceous

Surface

Which blocks? Shortlist blocks to

investigate further. Review Common Risk

Segment -Green indicates highest probability of containing prospects

Check block water depths Layer 3 Eocene Block

tab shows water depth

Traps can be found with seismic surveys and sound waves bouncing off structures

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

Unprocessed Processed

Interpreted Red is top of the sealing rock

Green is top of the reservoir rock

What type of data do you want?

Columns or Rows Unprocessed or processed

data Interpreted or not

Only buy maximum of 4 blocks of data at a time to speed up

processing

It takes time to process your request Created to order Moves to surveys once processed

Red circles – navigate through the 2D seismic

Leakage?

Leakage?

Column

Row

Prospect, ReservoirBasin,Source

Three blocks Three amounts

Min: $1M Max: $30M

You will only getawarded one block – and only pay for one

Highest bid wins If equal, then team with highest CP

wins

Environmentally sensitive areas – blocks to avoid

Common Risk Segment surveys – areas of higher probability of prospects

2D seismic – blocks with most structures

Final tip - Check water depth - shallow water blocks

Message sent to all Results and CPs

One license per team

The headquarters of your company has evaluated the license that you were awarded.

Although the possibility of finding oil is fair, the costs involved are large. Thus the headquarters want you to spread the risk.

Challenge: You shall 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

Farm-out: Get others to invest 20% or more in your license – you can send them surveys

Farm-in: Send offers to other teams to buy shares in their viable licenses. Submit an offer for each viable license, with amount offered and share wanted in whole %.

Shows the subsurface structure in a cube.

Layer 1 Cretaceous

Layer 2 Paleocene

Layer 3 Eocene

Prospects are no guarantee of oil or gas

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.

Input the % you would like to own of their licence Input amount for the whole % - minimum offer is $100000 per %Add a message to the sellerPress “Send offer”

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

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.

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 incurred by the partnership

Partners receive a proportional share of the net proceedings from any oil or gas found on the license.

The operator team makes all decisions regarding acquiring 3D seismics, drilling of wells and testing of wells.

Information: partners in a block can access info about drilled wells and discovered oil and gas fields.

•Before choosing a rig, you need to check your water depth Find this at the bottom of the BLOCK page

Choose the right rigs for your water depths Jack-up rigs for shallow waters Upto 100m

Semi-submersible rigs for middle waters Upto 600m

Drillships for the deepest waters Over 600m

Rig cost = drilling days * day rate

Limited number of rigs

20 minutes to use Queues Prices can change

Upto 9 Star quality-

Good: normally costs more

Bad: cheaper, but reliability

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

EIA: enviromental impact analysis shows where not to drill.

Place your mouse where to drill

EIA: enviromental impact analysis shows where not to drill.

Place your mouse where to drill

Certain problems can occur if Service Provider Selection is poor quality

Other penalties can occur if you drill in areas indicated as problematic in the Environmental Impact Assessment

As in real life, problems can occur randomly and these are also applied with fines levied accordingly.

Layer 1 Cretaceous

Layer 2 Paleocene

Layer 3 Eocene

Proven volume (MBOE) counts Test may increase proven volume Remember to tick the boxes! Tests Take 10 days

25% of 8 MBOE @ $50

12% $39.9M

Expected costs ifyou developed thefield (capex) andproducedthe oil (opex)

If total expenses arehigher than the salesvalue, the value of thelicense is zero

From Probable volume to proven reserves

Appraisal wells - proven reserves increase Range between proven and possible is decreased

397 MBOE @ $50 including 25% recovery factor, 0.8 production factor, 10% discount factor)12% $39.9M

$6 of $50 = 12% tax)

Expected costs ifyou developed thefield (CAPEX) andproducedthe oil (OPEX)

Now total expenses are lower than the sales value and so we have a positive licence value

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 credibility points: Apply for cash and be fined $5million for each $20million requested.

Narrow uncertainty: Drill appraisal wells to get proven volumes

Drill into other prospects to find more proven volumes.

Farm-in and -out: Get into other good blocks.

Two additional licensing rounds: Repeat the processes.

Money: Apply for more money, if you run out of cash.