Oslo 12-13 October

Overview

Purpose: Enhance your overall understanding of petroleum exploration

Multidisciplinary challenge

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

Your task is to get maximum return on investment (ROI)

Money/ROI You start with $200 Million

−You can apply for more money later

You are creating Value:−Net value of the oil fields

discovered−MINUS costs (surveys, wells, etc.)

Winning team: −highest return on investment

(ROI)−ROI = Value / Funds received

Knowledge PointsYou should strive to accumulate as many KPs possible They are an indication of accuracy, credibility and performanceKnowledge Points are a measure of how prosperous the blocks the team bid forThey are very useful later in the simulation when you are low on cash and want to request further funding from Headquarters

Learning Outcomes Where and how to find oil Surveys used in exploration Licensing rounds Farm-in and Partnerships Rigs and Sub-contractors Addressing environmental issues Reducing uncertainty Economically viable volumes Team working and negotiation Critical decision making, analytical

skills Multi-tasking

Oil & Gas Industry

Upstream−Exploration−Field Development−Production

Downstream−Refining−Distribution

Structure

Phase 1: Find Basins Phase 2: Bid for Licences Phase 3: Drilling

−3.1 Farm-in−3.2 Order Rig−3.3 Select Providers−3.4 Select Position−3.5 Testing

Map Columns (A to DL)

Row

s (1

to 1

52

)600 sea bed depth

Cell (BO,49)

Block 619

619

Login

Main screen

First task Find the 3 basins in the area Basin: Sedimentary rocks in the deep

subsurface where oil and gas was generated

Procedure1.Buy and study magnetic and

gravimetric surveys2.Submit the coordinates, column

(letter) and row (number) for the geographical centre of each basin centre

Surveys

Gravimetric surveys Gravimetric surveys show the

gravity in the sub-surface Sedimentary rocks (“basins”) have

lower densities than the surrounding crystalline rocks

The lower the gravity pull, the higher the probability that there is a basin below and vice versa

Low gravity (green) -> Basins High gravity (red) -> Crystalline

rocks

Gravimetric surveys

Magnetic surveys

Magnetic surveys show similar information as gravimetric surveys

The sedimentary rocks in the basins have a lower concentration of magnetic materials than the surrounding crystalline rocks

Sedimentary basins are the areas with the lowest magnetic field

Yellow colours indicate low magnetic field, blue colours indicate high magnetic fields.

Basins are yellow and non-basin areas blue.

Magnetic surveys

More detail

NorthEast

Quarter map survey

Enter decision

Locating basins

Find the cell that is the geographical centre for each basin

You have to locate all 3 cells to get 100 kp

Task 1

• Possible to get between 0 and 100 knowledge points (KP)– KP’s can be used e.g. when you

apply for money• Must be solved before deadline• After the deadline, all submissions

are evaluated

Task 1 solved

• All basins are located• Message sent to all teams with the

results• Oil and gas is close to the basins• Next step: First licensing round

– The blocks around one of the basins are on offer

Second task Bid to get a exploration licence Exploration licence: A permission from

the Government to explore a block Procedure

1. Buy and study Common Risk Segment Maps, 2D Seismic surveys, and Spawning Ground Maps

2. Submit 3 bids– Block number– Amount offered to Government

(“bonus”)

Spawning GroundsThere are spawning ground areas in the map – these are environmentally sensitive areas where fish breedSome spawning grounds might be in the blocks that have been offeredHowever, no licences will be awarded in blocks that are spawning groundsTo find out which blocks are spawning grounds, you can buy a Spawning Ground Survey

Spawning Ground Survey Red Area:

Spawning GroundsYou will not be awarded blocks that contain any red areaBlue Area:Not Spawning GroundsThe survey covers the whole area

Common Risk Segments Common Risk Segment (CRS) surveys tell

you about the probability of a prospect containing oil or gas

In the CRS surveys:• Green indicates that the area has all the

prerequisites to have good prospects• Orange indicates that the area might

have all what is required• Red indicates that it is highly unlikely

that the area will contain good prospects

Common Risk Segments

CRS surveys do not give information about the individual prospects that are shown in the 2D seismic surveys

There is one CRS survey for each of the three geological layers or horizons, and each CRS survey covers the whole OilSim map and take into account the prerequisites of whether:

1. there is a basin and a migration route into the prospects in the area

2. there is sealing rock in the area, so that the oil and gas can be trapped

3. there is porous reservoir rock in the area, so that the oil or gas can be stored below the trap.

Common Risk Segment

Prospect probability– Red: low– Orange: medium– Green: high

There is one CRS for each geological layer

Common Risk Segment

Band 3 Eocene

Band 2 Paleocene

Band 1 Creataceous

Migration

Basin

Prospect Play

Migration

Prospect

Migration

Reservoir

Seal

SealReservoir

2D Seismic surveys

A 2D Seismic survey is a cross section of the geological layers−along either a column or a row

Is used for locating prospects Look out for traps Three separate geological layers

Traps and Horizons

In OilSim, there is only one type of trap: the four-way closure structural trap

– in reality, there are several other types

Three prospecting systems or horizons– 3. Eocene (1500m below the seabed)– 2. Paleocene (2500m below the

seabed)– 1. Cretaceous (3500m below the

seabed)

Real Seismic

                                                                                                                                                                       

2D Seismic example

Prospects

Top of sealing rock

Top of reservoir rock

Cross-sections

Column

Row

Prospect, ReservoirBasin,Source

Wells

659

Tips

Study spawning ground maps to see which blocks to avoid

Use CRS to see which blocks to study Buy and study many 2D surveys Focus on shallow water blocks

– It is cheaper to drill exploration wells in shallow water

– It is more economically viable to produce oil and gas in shallow water

Enter bid

Remember to submit if you change you answer

Bidding

Minimum bonus: 1000000 Maximum bonus: 30000000 You will only get one licence Highest bid gets the licence If you lose on all three blocks, you will

get a random licence (of the ones that are left)

Do submit 3 bids -> more KP’s and higher probability for success

Task 2

• Submit your bid before the deadline

• After the deadline, all bids are evaluated, and each team gets one and only one licence

Task 2 solved

Every team has got one exploration licence

Message sent to all teams with the results

Knowledge Points: a measure of how prosperous the blocks the team bid for were

Next step: Farm-in

Farm-in & -out The headquarters of your company has evaluated the licence that you were awarded

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

This is accomplished by:– investing in other licences (farm-in),

and– letting other invest in your licence

(farm-out)

Task 3.1 Farm-out• Get other’s to invest 20% or more in

your licence (“farm-out”)• You can only send farm-in offers (!)

– Offers to buy parts of other licences• Procedure for farming in:

1.Study CRS and 2D Seismic surveys2.Submit one offer for each viable

licence–Amount offered–Share wanted (in whole %)

Farm-in

Send an offer

Partnerships

Partners pay their share of all future costs incurred by the partnership.

Partners receive their share of the net proceedings from any oil found on the licence

The operator team takes all decisions regarding acquirement of 3D seismic, drilling of wells and testing of wells

Task 3.1 Study CRS and 2D seismic surveys

of the other licences Submit your bids

Minimum amount 100,000 for 1% You are not allowed to drill before at

least 20% of your licence has been farmed out

You can farm-in & -out at any time Partners in a block get all info about

drilled wells and discovered oil and gas fields

3D Seismic

Shows the structure:– in one (of the three) horizons– in one block

Look out for “tops”– a top = a trap = a prospect

3D Seismic

Layer 1 Creataceous

Layer 2 Paleocene

Layer 3 Eocene

Column 60, Row 79

Column 60, Row 78

Three targets

Task 3.1

Partnerships will be established every time a seller accepts an offer

On the main page, you can see all the licences– The licences you operate– The licences you have invested

in– Other licences

Environmental Impact Assessment

Buy an EIA survey to get more knowledge about the areaEIA equals

−Less probability for drilling problems

−Less severe consequences if you run into problems

In the EIA you can also see which drilling locations to avoid

Task 3.2 Rig

• Next task: order rig• 3 rig types

– Drillships– Semi-submersibles– Jack-up rigs

• Different water depths, Different day rates– Rig cost = drilling days * day rate

Available Rigs

Drilling days

Drilling Depths

Seabed

3500 m below seabed

Layer 3 Eocene

Layer 2 Paleocene

Layer 1 Cretaceous

1500 m below seabed

2500 m below seabed

“water depth”

Seabed Depth

Task 3.2 Rigs

Rigs

Limited number of rigs available You can order a rig

−Start using it within 20 minutes Not enough for all

−Wait in a queue, if another team is using the rig

Rig day rates are dynamic

Task 3.3 Providers

Track Record

Select Providers

Task 3.4 Position

You have to choose where to drill– Which cells?

..and how deep to drill– Either to the Eocene horizon– Through the Eocene to the

Paleocene horizon, – or through the Eocene, the

Paleocene, and to the Cretaceous horizon

Penalties & Fines

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 EIA

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

Select Positions

Drilling position 3

Drilling position 2

Budget

Drilling results

Drilling result

Task 3.5 Testing

If you discover a field-> decide whether you want more information about that field

You get more information by doing a production test (and other tests)

Tests take 10 days per field Tests have the same day-rate as the

drilling (you use the same providers)

Test decision

Field value

Prospects

Licence Value

Appraisal

Appraisal– From Probable volume to proven reserves

Narrowing ranges

First well:– 0 to 572 MBO (after drilling)– 11 to 266 MBO (after testing)– Proven volume: 11 MBO

Second well:– 11 to 233 MBO (after drilling)– 35 to 210 MBO– Proven volume: 35 MBO

Continue...

Drill appraisal wells to narrow the uncertainty (get proven volumes)

Drill into other prospects Farm-in and -out Two additional licensing rounds Apply for more money, if you run

out of cash−Winner: highest ROI

Apply For More Funds

Click on Apply for More Funds Tab 1 KP for each $100,000 applied for Answer the questions

Get all 3 and you get cash and keep KP’s Get one wrong you get the cash and lose half

the KP’s Get two wrong and you get half the cash and

lose all KP’s Get all 3 wrong, you lose the lot

When you have less than 10 knowledge points you can still apply for cash, but you will be fined £5million for each £20million requested.