Petroleum Economics

John Griffith, Larry Chorn, Kara Shepherd, Erkan Karakaya, Knut Olsen

Course Outline

Petroleum Economics has a vital role to play in the Oil & Gas Industry and it lies at the heart of all decision making.  Various techniques have evolved over time in determining and calculating economic inputs, evaluating investments, quantifying risk and generating feasible portfolios. Petroleum Economics brings together information and expertise across the E&P spectrum and a clear understanding of concepts such as cash flow analysis, organizational challenges, price forecasting, cost drivers and risk management is required. This training event aims to bring together a wide industry audience including practitioners of economics and decision making, petroleum engineers & geoscientists and offers structured short interactive training sessions on topics such as Economic Modeling, Decision Analysis, Exploration Analysis and Economics of Unconventional Resources.

0730–0800

Welcome Refreshments, Badge Collection

0800–0830

Welcome and Introductions from the Moderator – Omair Hameed, Schlumberger and 2014 Petroleum Economics Workshop Programme Co-chair

0830–0930

Knut Evjen Olsen, Principal Oil and Gas Specialist, World Bank

Topic: Economic Modeling for Decision Making

  • The difference between a decision and an outcome
  • Classical methods for evaluating decisions (Bayes Rule with NPV = EMV etc)
  • Some tips for simplifying decisions and assessing probabilities
  • The difference between independent and conditional probabilities/outcomes
  • A simple method for modeling portfolios and choosing between widely varying projects, e.g. upstream vs. downstream

0930–1030

Erkan Karakaya, Schlumberger

Topic: A Decision Analysis Centric Introduction to Petroleum Economics

  • Importance of Economics for Decision Making
  • Regulatory, Project and Macro Economic Input to Project Evaluation
  • Discounted Cashflow  
  • What are the Key Economic Indicators, Pros Cons…
  • Impact of Uncertainty
  • Decision Trees
  • Value of Information
  • Stochastic Perspective & Monte Carlo Analysis
  • Portfolio Theory…
  • More complex techniques

1030–1100

Coffee Break

1100–1200

Kara Shepherd, Exploration Business Planning Manager, Petroleum Development Oman

Topic: Exploration economics, VOI (value of information)

1200–1300

Luncheon

1300–1400

Larry Chorn, Partner - Unconventional Resources, Halliburton

Topic: Unconventional Resource Economics

1400–1500

John Griffith, Baker Hughes

Topic: TBA

1500

Closing Remarks and Appreciation to the speakers

Instructor

Knut Evjen OlsenKnut Evjen Olsen is a Norwegian citizen working as a Principal Industry Specialist in the Oil & Gas Division of the International Finance Corporation (IFC), a member of the World Bank Group in Washington, DC. He holds a M.Sc. degree in Applied Physics from the Norwegian University of Science & Technology. During his 32 years in the petroleum industry he has also worked for Shell, Norsk Hydro (now Statoil) and Saudi Aramco in both technical and managerial positions, and has always had a keen interest in the practical application of economic theory in the industry.

KaraKara Shepherd is the Exploration Business Planning Manager for Petroleum Development Oman (PDO), in the Sultanate of Oman. She is responsible for business planning, E&A strategy, portfolio management, performance management, financial management, external liaison, and competitive intelligence. Kara has previously worked as a Petroleum Engineer in Oman, Brunei, Sakhalin, and the Netherlands, through secondments from Shell. She has worked with a wide variety of reservoirs, alongside conventional, EOR and unconventional opportunities, onshore and offshore. She gained her M.Sc. in Geotechnical Engineering and her B.Eng. (Hons. 1st) in Civil & Structural Engineering from U.M.I.S.T., Manchester, United Kingdom.

Larry

Larry Chorn joined Halliburton Global Consulting in December, 2012 as Partner, Unconventional Resources. He designs, manages and delivers consulting engagements in shale, tight gas and CBM assets worldwide.

His 35-year career in the upstream oil and gas business has ranged from pure technical to strategic roles with corporations ranging in size from Mobil Oil to Newfield Exploration.  He earned a PhD in Chemical Engineering from the University of Illinois and an MBA in strategy and finance at Southern Methodist University, Dallas, TX.