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FWS 07 L 16 - ProspectsCourtesy of ExxonMobil Lecture 16 - Prospects.

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Presentation on theme: "FWS 07 L 16 - ProspectsCourtesy of ExxonMobil Lecture 16 - Prospects."— Presentation transcript:

1 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil Lecture 16 - Prospects

2 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil A Prospect A prospect is a location and depth that has been identified as a good place to drill for oil and/or gas For us to find oil or gas, certain conditions must be meet –There needs to be a source for the oil or gas –The source rocks need to be cooked to the right degree –There needs to be a porous rock to hold the oil or gas –There needs to be a subsurface trapping geometry –There need to be a seal –There needs to be plumbing connecting source and reservoir

3 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil Prospect Analysis Our geological and geophysical analysis helps us identify and characterize prospects in terms of these critical elements Geoscientists will work a prospect such that: –The volume of oil or gas that is most likely to be present and recovered is determined, –The range of possible volumes is estimated (maximum and minimum cases), and –The chance of success is estimated All this information is presented to management

4 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil Now for Some Fun – The Prospect Game INTRODUCTION You are part of an exploration management team with 20 prospects that your staff has worked up for your approval to drill. Your prospect portfolio is rather diverse ranging from low risk, low reward prospects to high risk, high reward opportunities. All 20 prospects are possible oil fields. YOUR CHALLENGE You have a drilling budget of $400 million. Headquarters has set a goal for you to discover 500 million barrels of oil. You want to keep the cost per barrel as low as possible (< $1.00/barrel).

5 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil The Prospect Game Starting Point Your staff has been hard at work 'maturing' each prospect. Their work for each prospect is summarized by: An estimated drilling cost A prediction of the most-likely amount of oil (in millions of barrels, MBO) The likely range of possible oil volumes (high-side and low-side cases) An estimate of the chance of success for the prospect. These data are provided on tables. If you only drill the low risk prospects, the probability of your reaching your goal is extremely low - but not zero.

6 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil The Prospect Game USING YOUR BUDGET Your team can spend some of your budget on improving the seismic data to get better predictions of the amount of oil and its range of values, and the chance of success. You can reprocess the existing seismic data over a prospect at a cost of 10% of the well cost. Alternatively, you can acquire better seismic data at a cost for acquisition and processing of 25% of the well cost. OR you can spend all your money on drilling wells.

7 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil The Prospect Game GAME PLAN 1.We will divide you up into 3 or 4 teams 2.We will go over the instructions 3.Your team will have 5 minutes to develop a strategy. 4.We will rotate through each team allowing them to: Drill one prospect without additional data, OR Ask for reprocessing on a prospect, see the new estimates, and then either drill the same prospect or pass, OR Ask for a new survey, see the new estimates, and then either drill the same prospect or pass NOTE: No clear decision after 30 seconds is an automatic pass. The first team to discover 500 million barrels of oil WINS

8 FWS 07 Drilling a Well L 16 - ProspectsCourtesy of ExxonMobil Drilling a well is a three-step process: 1.Drill based on the data at hand or spend some money to either re-process or re-acquire & re-process the seismic 2.Roll 2 dice to determine the success of the well (function of the wells risk and the total on the dice) 3.If the well is an oil discovery, roll 2 dice a second time to determine the volume of oil discovered.

9 FWS 07 Drilling with the Data on Hand L 16 - ProspectsCourtesy of ExxonMobil Prospect NumberProspect Name Drilling Cost ($M) Most-Likely Volume (Unrisked) (MBO) Low-Side Case High-Side Case Chance of Success Discovery if Total on 2 Dice 1Mouse10.20.10.497%3 - 12 2Canary20.40.20.897%3 - 12 3Kitten40.60.31.292%4 - 12 4Terrier60.90.451.892%4 - 12 5Goat101.80.93.672%5 - 12 6Ram152.31.154.672%5 - 12 7Kangaroo184.42.28.858%6 - 12 8Bull2094.51858%6 - 12 9Stallion27178.53458%6 - 12 10Zebra322110.54242%7 - 12 11Lion38502510042%7 - 12 12Bear42904518042%8 - 12 13Elk4912562.525028%8 - 12 14Moose5529014558028%9 - 12 15Hippo8045022590017%10 - 12 16Gorilla100600300120017%10 - 12 17Elephant12084042016808%11 - 12 18Whale130118059023608%11 - 12 19T-Rex140190095038003%12 20Brontosaurus1604500225090003%12 TABLE 1: Prospects with key assessment parameters

10 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil Determining the Volume of a Discovery If the well is a discovery, a team member rolls 2 dice a second time to see how much oil is present. This chart indicates a multiplier for the most-likely amount (range is from 1/2 to double). e.g., for the Bull prospect (#8), the most-likely volume is 9 MBO and if the second roll has a total of 10, the volume = 9 * 1.25 = 11.25 MBO.

11 FWS 07 Data Re-Acquisition or Re-Processing L 16 - ProspectsCourtesy of ExxonMobil If your team decides to re-acquire or re-process the data for one prospect, what happens? 1.Money will be subtracted from your total 2.You will get a revised set of numbers (privately) for the prospect 3.Given the updated most-likely volume of oil (could be higher or lower) and a new chance of success (always higher), your team can drill the prospect or pass. 4.If you make a discovery, a revised set of multipliers will be used Keep the revised numbers confidential; you paid for more accurate numbers and you do not want another team to benefit at your expense!

12 FWS 07 L 16 - ProspectsCourtesy of ExxonMobil End of the Game We will keep a running total of the money spent and the volumes of oil discovered for each team. We will continue drilling if we do not run out of time. If time runs out, we will use the finding cost (MBO/Dollars spent) as a measure of success. HINT You do not want to spend money on better seismic for the small prospects where the chance of success is high and the range of MBO is low, even though the cost is small. It is difficult to decide on spending money on better seismic data for the large prospects - the cost is high but it could save you a dry hole.


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