Upstream Oil and Gas Development life-cycle Costing

Course schedule

Classroom Training:
DateVenueDurationPrice
19 - 22 Aug 2024London4 days£4,250
9 - 12 Dec 2024London4 days£4,250

Please note: prices shown above are exclusive of VAT (20%).

Course Overview

Examine the life-cycle costing of upstream oil and gas projects, from exploration through to production, covering cost estimation, budgeting, and economic evaluation.

Who Should Attend

  • Upstream oil and gas industry professionals, managers and discipline experts, who need to gain a deeper understanding of upstream life-cycle costing
  • Persons involved in industry oversight, from regulators, government agencies, non-governmental organisations (NGOs), charities, special interest and campaigning groups that need to better understand the cost constraints under which oil companies operate
  • Early career professionals wishing to advance their understanding of upstream oil and gas costing and economics issues

Course Outcomes

  • Better collaborate within multidisciplinary teams on field development planning tasks leading to investment decisions
  • Give a comprehensive overview of the nature and magnitude of exploration, development, production and decommissioning costs
  • Explain how to express life-cycle costings in cash flow and economic models
  • Describe the challenges of upstream life-cycle costing, and dealing with uncertain and incomplete information

Course Topics

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

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