OILSIM EXPLORATION Svalex 2007 Longyearbyen, Svalbard, Norway 20 - 23 August 2007 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Schedule - Example Monday 20 August 16. 00 Introduction to OILSIM Exploration 16. 30 Simulation Phase 1 starts (Find Basins) 17. 00 Phase 1 Deadline. Phase 2 (First Licensing Round opens) 18. 00 End Day 1 Tuesday 21 August 16. 00 Oilsim Exploration continues 16. 30 First Licensing Round deadline 16. 45 Phase 3 starts: Farm-In, Order Rig, Providers, Drilling Location, Testing (continues the rest of the day) 17. 45 2 nd Licensing Round opens 18: 15 2 nd Licensing Round deadline 18: 55 Simulation ends 18. 55 Debriefing 19. 00 End Day 2 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Schedule - Example Oil. Sim Field Development Wednesday 22 August 10. 00 Introduction to Oil. Sim Field Dev. 10. 30 Challenge 1 Reservoir characterization 11. 00 Challenge 2 – Design Basis 11. 30 Challenge 3 – Concept Solutions 12. 00 End first part ------------------------------------ 16. 00 Challenge 4 – Planning 16. 30 End of the 1 Cycle (Results) 17. 00 2 nd Cycle starts - Challenge 1 Reservoir characterization 17. 30 Challenge 2 – Design Basis 18. 00 Challenge 3 – Concept Solutions 18. 30 Challenge 4 – Planning 18. 50 End of simulation 18. 50 Debriefing 19. 00 Course ends Jens Petur Bærentsen Simprentis Marcos Monteferrante
Schedule - Example Oil. Sim Exploration Competition Thursday 23 August 09. 30 Simulation Phase 1 starts (Find Basins) 09. 40 Phase 1 Deadline. Phase 2 (First Licensing Round opens) 10. 20 First Licensing Round deadline 10. 20 Phase 3 starts: Farm-In, Order Rig, Providers, Drilling Location, Testing (continues the rest of the day) 10. 40 2 nd Licensing Round opens 11. 10 2 nd Licensing Round deadline 11. 45 Simulation ends 11. 45 Debriefing 12. 00 End Jens Petur Bærentsen Marcos Monteferrante Simprentis
Overview • Enhance your overall understanding of petroleum exploration • Common platform to work on • Multidisciplinary challenge • You are an exploration team in charge of a new petroleum province • Your task is to get maximum return on investment (ROI) Jens Petur Bærentsen Marcos Monteferrante Simprentis
Money • You start with $200 M – You can apply for more money later • Earnings: – Net value of the oil fields discovered – MINUS costs (surveys, wells, etc. ) • Winning team: – highest return on investment (ROI) – ROI = Earnings / Funds received Jens Petur Bærentsen Marcos Monteferrante Simprentis
Learning Points • Where and how to find oil • Surveys used in exploration • Licensing rounds • Farm-in and Partnerships • Rigs and Sub-contractors • Reducing uncertainty • Economically viable volumes Jens Petur Bærentsen Marcos Monteferrante Simprentis
Oil & Gas Industry • Upstream – Exploration – Production • Downstream – Refining – Distribution Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Map Columns (1 to 112) Rows (1 to 152) 1000 m deep Jens Petur Bærentsen Marcos Monteferrante Cell (112, 89) Block 168 Simprentis
Login www. oilsim. com Jens Petur Bærentsen Marcos Monteferrante Simprentis
Main screen Jens Petur Bærentsen Marcos Monteferrante Simprentis
First task • Find the 3 basins in the area • Basin: Sedimentary rocks in the deep subsurface where oil and gas was generated • Procedure 1. Buy and study magnetic and gravimetric surveys 2. Submit 3 block numbers; one for each basin centre Jens Petur Bærentsen Marcos Monteferrante Simprentis
Surveys Jens Petur Bærentsen Marcos Monteferrante Simprentis
Gravimetric surveys • Gravimetric surveys show the gravity in the sub-surface • Sedimentary rocks (“basins”) have lower densities than the surrounding crystalline rocks • Low gravity (green) -> Basins • High gravity (red) -> Crystalline rocks Jens Petur Bærentsen Marcos Monteferrante Simprentis
Gravimetric surveys Jens Petur Bærentsen Marcos Monteferrante Simprentis
Magnetic surveys Jens Petur Bærentsen Marcos Monteferrante Simprentis
More detail North East Jens Petur Bærentsen Marcos Monteferrante Simprentis
Quarter map survey Jens Petur Bærentsen Marcos Monteferrante Simprentis
Enter decision Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Second task • Bid to get an exploration licence • Exploration licence: A permission from the Government to explore a block • Procedure 1. Buy and study Common Risk Segment Maps and 2 D Seismic surveys 2. Submit 3 bids – Block number – Amount offered to Government (“bonus”) Jens Petur Bærentsen Marcos Monteferrante Simprentis
Migration Prospect Play Basin Migration Jens Petur Bærentsen Marcos Monteferrante Simprentis
Prospect Seal Reservoir Migration Jens Petur Bærentsen Marcos Monteferrante Simprentis
Real Seismic Jens Petur Bærentsen Marcos Monteferrante Simprentis
2 D Seismic surveys • A 2 D 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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
2 D Seismic example Jens Petur Bærentsen Marcos Monteferrante Simprentis
Prospects Top of sealing rock Top of reservoir rock Jens Petur Bærentsen Marcos Monteferrante Simprentis
Cross-sections Column Row Basin, Source Jens Petur Bærentsen Marcos Monteferrante Prospect, Reservoir Simprentis
Wells 79 1 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Remarks • 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 – 3. Eocene (1. 500 m below seabed) – 2. Paleocene (2. 500 m -) – 1. Cretaceous (3. 500 m -) Jens Petur Bærentsen Marcos Monteferrante Simprentis
Common Risk Segment • Prospect probability – Red: low – Orange: medium – Green: high Jens Petur Bærentsen Marcos Monteferrante Simprentis
Tips • Use CRS to see which blocks to study • Buy and study many 2 D 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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Enter bid Jens Petur Bærentsen Marcos Monteferrante Simprentis
Remarks • Minimum bonus: 1000000 • 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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Task 2 • Submit your bid before the deadline • After the deadline, all bids are evaluated, and each team gets one and only one licence Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Farm-in & -out • The headquarters of you company has evaluated the licence that you got 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) Jens Petur Bærentsen Marcos Monteferrante Simprentis
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. 2. Study 2 D Seismic surveys Submit one offer for each viable licence – Amount offered – Share wanted (in whole %) Jens Petur Bærentsen Marcos Monteferrante Simprentis
Farm-in Jens Petur Bærentsen Marcos Monteferrante Simprentis
Send an offer Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 3 D seismic, drilling of wells and testing of wells Jens Petur Bærentsen Marcos Monteferrante Simprentis
Task 3. 1 • Study 2 D 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 prospects Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 • Next task: order rig Jens Petur Bærentsen Marcos Monteferrante Simprentis
Task 3. 2 Rig • 3 rig types – Drillships – Semi-submersibles – Jack-up rigs • Different water depths, Different day rates – Rig cost = drilling days * day rate Jens Petur Bærentsen Marcos Monteferrante Simprentis
Available Rigs Jens Petur Bærentsen Marcos Monteferrante Simprentis
Drilling days Jens Petur Bærentsen Marcos Monteferrante Simprentis
Drilling Depths Seabed “water depth” Layer 3 1500 m below seabed Layer 2 2500 m below seabed Layer 1 3500 m below seabed Jens Petur Bærentsen Marcos Monteferrante Simprentis
Seabed Depth Jens Petur Bærentsen Marcos Monteferrante Simprentis
Task 3. 2 Rigs Jens Petur Bærentsen Marcos Monteferrante Simprentis
Rigs • Limited number of rigs available • You can order a rig – use it within 20 minutes • Not enough for all – Wait in a queue, if another team is using the rig • Rig day rates are dynamic Jens Petur Bærentsen Marcos Monteferrante Simprentis
Task 3. 3 Providers Jens Petur Bærentsen Marcos Monteferrante Simprentis
Track Record Jens Petur Bærentsen Marcos Monteferrante Simprentis
Select Providers Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
3 D Seismic • Shows the structure: – in one (of the three) horizons – in one block • Look out for “tops” – a top = a trap = a prospect Jens Petur Bærentsen Marcos Monteferrante Simprentis
3 D Seismic Jens Petur Bærentsen Marcos Monteferrante Simprentis
Three targets Layer 3 Column 60, Row 79 Layer 2 Layer 1 Column 60, Row 78 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Select Positions Jens Petur Bærentsen Marcos Monteferrante Simprentis
Summary Jens Petur Bærentsen Marcos Monteferrante Simprentis
Drilling position 3 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Drilling position 2 Jens Petur Bærentsen Marcos Monteferrante Simprentis
Conf. & Budget Jens Petur Bærentsen Marcos Monteferrante Simprentis
Drilling results Jens Petur Bærentsen Marcos Monteferrante Simprentis
Drilling result Jens Petur Bærentsen Marcos Monteferrante Simprentis
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) Jens Petur Bærentsen Marcos Monteferrante Simprentis
Test decision Jens Petur Bærentsen Marcos Monteferrante Simprentis
Field value Jens Petur Bærentsen Marcos Monteferrante Simprentis
Prospects Jens Petur Bærentsen Marcos Monteferrante Simprentis
Licence Value Jens Petur Bærentsen Marcos Monteferrante Simprentis
Appraisal Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
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 Jens Petur Bærentsen Marcos Monteferrante Simprentis
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