PetroChallengeFaroe Islands

15 and 16 December 2010

Learning objectives

• Get an overall overview of petroleum exploration

• Which surveys and which activities does petroleum exploration comprise

• How do oil companies, the Government, service companies interact

• How to determine whether a find is commercially viable

Scenario• You are an exploration team

who has been sent to Simprentis Island to discover oil and gas

• You start with $200 million, which you can spend on surveys, licenses, drilling wells, and investing in other teams

• The winner is the team that has the most Credibility Points at the end of the session

How to get Credibility Points?

• Challenge I: Can you locate the basins? 10%

• Challenge II: Identify the best 3 blocks? 30%

• Challenge III: Find out whether you have oil and gas in your blocks? 40%

• Overall: Do you have the highest value? 20%

Program

• 09:00 Introduction + Pre-questionnaire + Ch 1 Intro

• 09:30 Challenge 1: Initial Screening

• 10:00 Challenge 2 Introduction

• 10:30 Challenge 2: Prospecting

• 11:00 Challenge 3 Introduction

• 11:30 Challenge 3: Partnering and Exploration Drilling

• 13:30 Simulation ends. Post-questionnaire

• 13:45 Results and debriefing

• 14:00 End

Challenge 1• Locate the 3

sedimentary basins

• Oil and gas originates from organic material in the sedimentary basins

• Study gravimetric and magnetic surveys

Gravimetric survey

• Sedimentary rocks have lower densities (and lower metal content) than the surrounding crystalline rocks

• Low gravity (and low magnetic field) means high probability of a sedimentary basin

Locate thegeographical center

Where are the 3 basins?

Challenge 2

• Identify the 3 most promising blocks and submit a bid

• Only choose betweenorange blocks

Spawning Grounds

• This map shows the environmentally sensitive areas

• You will not be awarded blocks that contain any red

2D Seismic• Shows a cross section of the

sub surface

• Three layers of prospects: Red is top of the sealing rock and green is top of the reservoir rock

• Two prospect types: anticlinal traps (left) and fault traps (right)

• Identify at least 5 prospects in each block you bid for

Common Risk Segment

•Geologists have made one map for each of the three prospecting layers

•Green indicates that there is a high (25%) probability that a prospect (as seen in the 2D seismic) contains oil or gas

Bid• Chose which blocks you

want to bid for

• For each block, say how many exploration wells you are willing to drill

• Do NOT promise to drill more wells than there are prospects

• An estimated cost is shown

• You will initially only be awarded one block

Challenge 3a• Sell at least 20% of your

license

• Drill exploration wells

• Wild-cat and any appraisal wells

• Click on one of the blocks to get more information about it

• The block you operate is green

3D seismic

Overview of all licenses

Send Farm-In Request

Accept or Reject

Challenge 3b

• When you have sold at least 20% of the license you can start drilling exploration wells to determine the value of the block

• Click on Drill

Check water depth

Choose drilling rig

Choose Service Providers

Environmental Impact

Select drilling position

Middle layer position

Deepest layer

Oil spill control

Drilling Result(tick the box and press Next to test)

After testing

PossibleProven

Reprocess Seismic

Value Calculation

Assumptions

Value Calculation

Drill appraisal wells to improve the value

Selling your license• When you have established that either the

license is not profitable - or you are satisfied with the value of the license, please sell the license to BigOil

• You and your partners will get money for the sale and you will get up to 100 CP depending on whether you have acquired all 3D seismic, drilled in all prospects, and proved at least 50% of the possible volume for all prospects

• You will then be asked to choose a new license from the Government

Summary

• Acquire 3D seismic, and after farming out 20%, you should drill wild-cat wells into all prospects

• After each well, reprocess seismic

• Decide which discoveries to drill how many appraisal wells into

• When you are done, sell your license to NiceOil to get money, credibility points, and a new license

Winning

• The team that gets the most credibility points (CP) wins the competition

• Can you locate the basins? 100 CP

• Can you identify the best 3 blocks? 300 CP

• Can you find out whether you have oil and gas in your block? 400 CP

• Do you have the highest value? 200 CP