Jens Petur Bærentsen Simprentis Marcos Monteferrante OILSIM EXPLORATION Svalex 2007 Longyearbyen, Svalbard, Norway 20 - 23 August 2007

Jens Petur Bærentsen SimprentisMarcos Monteferrante

OILSIMEXPLORATION

Svalex 2007Longyearbyen, Svalbard, Norway20 - 23 August 2007


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 1Tuesday 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 2nd Licensing Round opens 18:15 2nd Licensing Round deadline 18:55 Simulation ends 18.55 Debriefing 19.00 End Day 2


Schedule - Example

OilSim Field DevelopmentWednesday 22 August 10.00 Introduction to OilSim 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 2nd 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


Schedule - Example

OilSim 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 2nd Licensing Round opens 11.10 2nd Licensing Round deadline 11.45 Simulation ends 11.45 Debriefing 12.00 End


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)


Money

• You start with $200M– 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


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


Oil & Gas Industry

• Upstream– Exploration– 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


MapColumns (1 to 112)

Row

s (1

to 1

52)

1000 m deep

Cell (112,89)

Block 168


Login

www.oilsim.com


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 3 block numbers; one for 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

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

rocks


Gravimetric surveys


Magnetic surveys


More detail

NorthEast


Quarter map survey


Enter decision


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 an exploration licence• Exploration licence: A permission from

the Government to explore a block• Procedure

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

2. Submit 3 bids– Block number– Amount offered to Government (“bonus”)


Migration

Basin

Prospect

Play

Migration


Prospect

Migration

ReservoirSeal


Real Seismic


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


2D Seismic example


Prospects

Top of sealing rock

Top of reservoir rock


Cross-sections

Column

Row

Prospect, ReservoirBasin, Source


Wells

179


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 -)


Common Risk Segment

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


Tips

• 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


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


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 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)


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 2D Seismic surveys

2.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 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 prospects


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


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


Available Rigs


Drilling days


Drilling Depths

Seabed

3500 m below seabed

Layer 3

Layer 2

Layer 1

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

– 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


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


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


Three targets

Layer 1

Layer 2

Layer 3

Column 60, Row 79

Column 60, Row 78


Select Positions


Summary


Drilling position 3


Drilling position 2


Conf. & 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


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

Documents

Jens Petur Bærentsen Simprentis Marcos Monteferrante OILSIM EXPLORATION Svalex 2007 Longyearbyen, Svalbard, Norway 20 - 23 August 2007