Upstream Oil and Gas Development Life-Cycle Costing

Upstream Oil andamp; Gas life-cycle Costing

• Aspects of the upstream oil and gas exploration development and production industry
• The asset (oil or gas field) life-cycle from acquisition and exploration through to production and decommissioning
• Relationship to cost estimation and cost engineering
• Approaches to costing
• Bottom-up vs. top-down approaches
• Analog benchmarking parametric and cost metrics approaches
• Provision for engineering growth contingency unallocated provision operator’s reserve
• Types of cost: exploration; capital (capex) operating (opex) and decommissioning (abex)

Upstream Oil and Gas life-cycle Cost Components

• Description of the items (activities services wells facilities) that add to life-cycle costs (so they mean more than just numbers in a spreadsheet)
• Illustrative costs for all components
• The parameters (‘key-drivers’) that most influence the cost of components
• Cost metrics and rules-of-thumb
• Building of a cost model

Field Development Planning

• Introduction of the time element
• Time value of money discounted cash flow basic petroleum economics
• Cost production revenue cash-flow profiles
• Building of an economic model

The Wider Context

• Issues relevant to how costs are prepared used and influenced
• Petroleum production licences and contracts
• Cost ‘train wrecks’ – when costs go out of control
• The wisdom (and cost) of front end loading (FEL)
• Current and future challenges to oil and gas production (and hence to costing)
• Human aspects (biases irrationality vested interest) that can skew costing
• Dealing with risk uncertainty and incomplete information
• Decision making
• Regional and host-country factors including productivity and local content issues