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This course provides an appreciation of the technical and managerial elements of
the upstream petroleum industry. It summarises the main features of oil and gas
exploration, engineering, reserves estimation, field development, the economics of
oil and gas investment decisions, the basics of oil industry accounting and petroleum
law.
The course aims to give people who are new to the industry a practical appreciation
of the full range of technical and managerial issues affecting the way in which the
industry operates. It also aims to fill in gaps for those who already work in the
industry, but want to round out their technical knowledge of what is involved in
exploration and field development as well as the economic, financial and legal
framework in which these activities take place.
Exploration for Oil and Gas (Day 1 - Henry Salisch)
How was oil and gas generated, how did it migrate and get trapped?
The earth’s geological structure A
description of the overall geology of the earth. The
formation of land and sea. The origin of oil and gas How
oil and gas was formed in the
deeper part of the earth’s crust. Source rocks for oil and gas The
nature and condition
of the rocks where oil and gas is generated. How organic matter is decomposed under
pressure and temperature. Oil and gas migration. - How oil and gas migrate into the
reservoirs from their source rocks. Oil and gas traps. - The nature of the rocks and
rock configurations needed to ensure that oil and gas is trapped. Reservoir
description - How we characterise oil and gas reservoirs and the conditions required
for oil and gas to flow to the surface. Techniques of locating oil and gas resources. -
The use of geological analysis, coupled with seismic and other surveys. Exploration
drilling. Measuring oil and gas reserves. - The techniques used to estimate how
much oil or gas can be recovered commercially from the earth. Measuring oil and
gas reserves - The techniques used to estimate how much oil or gas can be recovered
commercially from a reservoir. Uncertainty and reserves estimates. - The difficulty
in estimating oil and gas reserves accurately from limited information. Drilling and
completion technology – vertical, deviated, horizontal and multilateral wells. - What
different types of well can be drilled and under what circumstances. Drilling
exploration wells. - Drilling to discover oil and gas - the methods, the costs and the
uncertainties. Drilling appraisal and development wells. - Drilling to gain knowledge
of the reservoir and to produce oil and gas after it has been discovered. Completion
and production techniques. - How wells are prepared for production and how they
are maintained during field life.
Engineering Oil and Gas Developments (Day 2 - Henry Irrgang)
Reservoir analysis. -The analysis of how much and over what period oil and gas
reservoirs will produce.
Different types of petroleum reservoirs. - Crude oil, natural gas and condensate
reservoirs.
Reservoir rock properties. - Defining the critical rock properties such as porosity,
saturation, permeability, relative permeability and capillary pressure, understand
their significance and look at open hole logging, cased hole logging and coring to
estimate these properties. Again we will emphasise the uncertainties in making these
estimates.
Reservoir fluid properties. - Measurement of fluid properties in the laboratory is
generally quite reliable. However, uncertainties arise due to difficulties in obtaining
representative reservoir fluid samples. We will define the important fluid properties
and examine ways of obtaining reliable samples and analysis results.
Material balance. - Calculating the balances of fluid volumes produced from a
reservoir.
Fluid displacement. - Fluid Flow and Fluid Displacement in a porous medium is the
second fundamental calculation methodology which describes the relationship
between flow rate and pressure drop of the various fluids flowing within a petroleum
reservoir.
Reservoir simulation. - Reservoir simulation is, in principle, a very simple but
powerful tool that solves the material balance, fluid flow and equation of state
simultaneously and describes the processes occurring in different parts of the
reservoir by dividing the reservoir into thousands of small cells. We shall discuss the
strengths and weaknesses if the technique and understand the circumstances in
which it should be applied.
Forecasting oil and gas production. - Methods used to estimate the rate of
production each year in the life of an oil or gas field how much oil and gas will be
produced.
Gas reservoirs. - Gas reservoir development and operation provides its own set of
challenges which will be discussed.
Drive mechanisms. - A key determinant of how an oil or a gas field should be
developed and operated is the drive mechanism enjoyed by its reservoirs. Natural
drive mechanisms can range from depletion drive, solution gas drive, gas cap drive,
compaction drive and water drive.
Secondary recovery. - If the natural drive mechanisms in an oil reservoir do not
provide adequate energy for oil recovery, secondary recovery operations can
augment natural energy by injecting water and/ or gas.
Enhanced oil recovery. - At the end of primary and secondary recovery operations,
on a worldwide average, only about 30% of the oil-in-place is recovered. Enhanced
oil recovery techniques work on the basis of injecting fluids or chemicals into the
reservoir which alter the properties of the reservoir fluids or the fluid-rock
interaction to facilitate the improvement of the recovery factor.
Economics of Oil and Gas Development (Day 3 - Guy Allinson)
Cash flow analysis – cash flow forecasts of oil and gas developments, components of
cash flow, profit forecasts, cash flow and petroleum tax, cash flow and production
sharing contracts, real and nominal cash.
Economic Indicators – definition, use and meaning of net present value, definition,
use of internal rate of return, problems with using the internal rate of return in the
petroleum industry.
Risk analysis – choosing discount rates, expected value, Monte Carlo simulation and
probability distributions of reserves and economic indicators, investment portfolios.
Reserves – Concepts and terminology. Taking care when referring to reserves
estimates.
Fiscal analysis – the effect of petroleum fiscal regimes on oil and gas investments,
fiscal severity, fiscal efficiency.
The Gas & LNG Business (Day 4 – Michael Williams)
- Commercialization of gas reserves via pipeline developments or LNG
- Comparison with crude and NGLs
- Optimization of gas field development – market demands, impact of parallel
production of crude & NGLs
- Pipeline gas developments – size & distances, build-up rates, comparison with HT
electrical transmission
- LNG – properties, gas liquefaction, safety, storage, rollover, shipping,
regasification, lead & construction times
- Market identification and development – compatibility of gases, LNG vs LPG
- LNG as an international business – contracts, competition & future trends
Basic Petroleum Contracts (Day 5 - Bun Hung)
Petroleum Regimes – Regulatory Framework, a brief introduction to the main
regulatory systems adopted by governments, namely -
- Licensing/concessionary regimes;
- Production sharing contracts;
- Service contracts: risk contracts/fee for service contracts;
- Joint venture/back-in contracts.
Brief analysis of the role of national oil companies.
Production Sharing Contacts - the use of production sharing contracts is prevalent in
the international petroleum industry. The course will involve a review of the major
terms of a “typical” production sharing contract.
Joint Operating Agreements and Accounting Procedures - the joint operating
agreement is used by joint venture participants to govern the relations between
them. An analysis of the key provisions of a “typical” joint operating agreement will
be carried out.
Gas Sales Contracts - Gas sales contracts are becoming increasingly important in the
petroleum industry. They are amongst the most complex agreements to be found in
the oil and gas sector. A “typical” long-term gas sales contract will be analysed and
key terms and conditions discussed.
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