Economic evaluation of petroleum projects basic aspects. Tim nieman has 30 years of experience as a risk and decision analyst, economist and petroleum scientist. Students will have acquired the ability to use modern and classical industrial. This article presents basic aspects related to the economic evaluation process such as concepts and. Reiss is associate professor of economics at the stanford business school and a faculty. He has a bs in geology and an ms in geophysics from michigan state university, and an mba from rice university.
For complete understanding of project economics four major items must be discussed. Economic and financial determinants of oil and gas. These indexes can efficiently reflect the projects difference, moreover, the data can be. Consultants, the inputs, relevant project data, and reports required for the preparation of the consultant s proposal as specified in the data sheet. Gary colorado school of mines golden, colorado glen marcel dekker, inc. Introduction to probability distribution and petroleum. These are then followed by economic evaluation and analysis of a smallscale 1,000 bd insitu sagd project. It was concluded that the bank relies on the economic feasibility and engineering economics to analyses the submitted projects, having as a reference a irr parameter between 4% and. The presentation here is brief, providing the participant only with the basics that. Ieng377001, crn 510 engineering economy instructor. Definition monetary policy is concerned with deciding how much money the economy should have or perhaps more correctly deciding whether to increases or decrease the purchasing power of money. This paper presents an economic feasibility study for co2 coupled with eor in a small mature brazilian oilfield.
As a result, the economic evaluations are performed frequently and the results drive the decisions made throughout the life of each oil or gas field. Expanded basic petroleum economics training course. The existing economic evaluation index system of oilgas exploration project lacks environmental efficiency index and social efficiency index, and has no definite risk index. We are entering a postindustrial age with a very different economy and needs for a different view of wealth. Merak peep petroleum economic evaluation and decline analysis software is the industry standard for economic modeling of upstream oil and gas projects. Developed new methodology for evaluating in fill potential in tight gas reservoir. The economic, political and policy implications of this state of affairs are discussed in chapter 21. Petroleum economics net present value internal rate of. The present value of a project is the sum of discounted cash flow elements. Petroleum project economics and risk analysis ihrdc. Term end examination of 60 marks shall be held at the end of the first term.
Changing the money supply to assist the economy to achieve a full employment. To the greatest possible extent, the project impacts are evaluated in terms of economic market prices. Petroeng 4034 petroleum business and project economics. With that assumption, our project goal is to help to make development more environmentally friendly. Economic evaluation in the petroleum industry inflation prediction. Discussion progresses from an introduction to the industry, through principles and techniques of engineering economics, to the application of economic methods. Petroleum economics, risk and opportunity analysis. The premise of the intermountain oil and gas bmp project is that oil and gas development will occur. New york basel tm petroleum refining technology and economics fourth edition james h. Petroleum project economics and risk analysis workshop. Petroleum economics free download as powerpoint presentation. Campbell, analysis and management of petroleum investments 1992, and i.
Economic evaluation in the petroleum industry free ebook download as pdf. The standard of evaluation for costs and benefits is a monetary quantification. Then the net present value means the increase in value by choosing this project instead of the best alternative. Chem project economics and a great selection of related books, art and collectibles available now at. Petroleum project economics and risk analysis training. Economics for oil and gas projects under conditions of certainty and uncertainty.
International journal of research in management, economics and commerce issn 2250057x, impact factor. Econ 2000 this course introduces students to the economics of energy at the micro level. H30702 economic evaluation of oil and gas properties handbook. An introduction to basic risk analysis will also be presented. Field development planning multiwell project planning and forecasting.
In principle, a project is considered economic if the incremental economics of gas conservation generates a net present value before. View petroleum economics and project evaluation kelkar. Iranian petrochemical projects alireza nasseri department of management and economics, tarbiat modares university, iran bahram sahabi department of management and economics, tarbiat modares university, iran leili solatyavari. The main objective of this study is to estimate petroleum products demand using a. Economic evaluation of aromatics production, a case study for financial model application in petrochemical projects. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. The present study considers two important and complementary reasons. Petroleum project economics and risk analysis training in london uk, dubai united arab emirates, kuala lumpur malaysia, istanbul turkey, france paris. Economics from june 2010 g3 indian public finance s3 international economics s4 quantitative techniques and project work only for internal students quantitative techniques only for external students board of studies in economics t. Pdf evaluation and performance measurement are among the most debated and discussed issues in financial management. Merak decision tool kit provides a toolbox of complementary modules. Previous works on the economics of nigerian bitumen development, market opportunity for bitumen in road construction, and discussion on environmental footprints are also presented.
You have to use the rate of return of the best alternative use of money as the discount rate. Project evaluation is derived from a cash flow model, regarding reservoir production profile, price and costs, capital. Report of the committee on roadmap for reduction in import. Petroleum projects which involve different activities. Advanced decision analysis with portfolio and project modeling ada. Pdf financial structure analysis of indian companies. The role of engineering economics in the evaluation of. Pdf petroleum economics, risk and opportunity analysis. Guide to costbenefit analysis of investment projects european. Project economics and uncertainty are recurring themes both in course presentations and. Distribution of major petroleum reserves in the world.
Economic decision criteria in this part we will see how how to use cashflow and discounting to decide whether a project is economic or not. Involved in reservoir description field projects and integrated studies. Mohan kelkar is a williams endowed chair professor and chairman of the petroleum engineering department at the university of tulsa. Better investment decisions through accurate economic forecasting, proven global standards, openness and personalization options. Stockholm school of economics, susana mourato london school of economics. His professional experience includes 20 years in leading and conducting projects of various sizes and scopes involving the application of decision and risk analysis methodologies in the energy and environmental sectors, and 10 years as a practicing petroleum geophysicist. This paper analyzed the existing economic efficiency indexes, added the social efficiency and environmental efficiency indexes. Economic evaluation of prospects and producing properties. The financial performance is also useful for the measurement of the overall financial health of the organization over a given period of time. Engineering economy project by imad mohammad mujeeb alarab. Textbooks can only be purchased by selecting courses. By learning how to calculate the cost of projects, risk exposure.
This book explains how to apply economic analysis to the evaluation of engineering challenges in the petroleum industry. The economic decisions continue throughout the producing life of the project. Economic evaluation of aromatics production, a case study for. The economic indicators calculated using the initiated financial model were found to match with the actual status of emethanex project. Engineering economy project by imad mohammad mujeeb al. China united states mexico former ussr venezuela iran kuwait uae iraq saudi arabia 0 50 100 150 200 250 300 billions of barrels figure 82. For project evaluation and technical and economic analysis of the reference. Economic evaluations provide the main source of the organizations information by which investment and operational decisions are made regarding the most. Tools and techniques to evaluate unconventional and conventional. Overview india was the thirdlargest energy consumer in the world after china and the united states in 20, and despite having notable fossil fuel resources, the country has become increasingly dependent on energy imports. Academic partnership for a masters of science degree in. Economics from june 2010 g3 indian public finance s3 international economics s4 quantitative techniques and project work only for internal students. The proposed project will be fuelled by lowquality coal produced by kuyasas delmas coal mine.
Economists corner dennis smith, chief economist of ihs energy, analyzes the factors of upstream project commerciality. By running the developed financial model on emethanex project the project achieves 20% irr, mmusd 577 npv and 8 years pbp in the case of 20% taxes. Nieman has also taught numerous training seminars in decision analysis, economics and quantitative modeling. Study on economic evaluation index system of oilgas. The subjects treated are petroleum economics, project evaluation and corporate finance. The 5 day training will reveal the fundamental aspects of upstream petroleum economics and risk analysis. Basic petroleum economics by mari kvaal august 2004 3rd ppm philippines case stydy workshop 2. Energy project economics and measures of performance project cash flow analysis, discounting cash flow to obtain present value and internal rate of return, the cost of capital and the effect of debt financing, other measures of project performance. The course is designed for learning the basics of petroleum economics and uses a combination of instruction and exercises to ensure participants absorb both the theory and the practical application of the topics. Definition and discussion of all major economic indicators such as npv, irr, and payout are. Feb 17, 2015 new york basel tm petroleum refining technology and economics fourth edition james h.
Economic evaluation of oilproduction project with eor. Due to similarity in content, petroskills recommends that participants take this course if they have no previous experience in this subject. Several key concepts that will be covered are the time value of money, cash flow basics, common economic indicators, fiscal systems and project selection fundamentals. J stermole, economic evaluation and investment decision methods 1993. Decisions through the lifecycle of a petroleum project 3 d. The applicability of various probability distributions to the petroleum project development cost analysis is discussed. Literature on economics also has a reference to accounting and financial management. Business theory draws heavily from economics and social. Flow chart for analysing the oil and gas projects economics economic and commercial aspects of indonesian psc cost recovery, ftp, dmo, incentives packages, ring fences, block basis vs. Petroleum economics and engineering crc press book. Please visit the course list builder to get started. Access the economics data from merak peep economic evaluation and decline analysis software, then use the power of these tools to make more informed decisions. Review of the applications of decision tree analysis in petroleum.
Analysis of financial performance of hindustan petroleum. Screening of the petroleum projects based on evaluating the investment opportunities. This chapter covers the basic economic principles that govern the oil and gas industry. The last section of the chapter presents a petroleum economic evaluation example which presents a complete risk analysis leading to net present values npvs of the example project. Economic evaluation of oil and gas projects onepetro. Real cases study in economic evaluation of upstream projects discussions.
Course philosophy petroleum professionals need to have a thorough understanding of the value chain and the global competitive landscape in which they operate. This article presents basic aspects related to the economic evaluation process. Economic evaluation is an essential step for assessing and studying and selecting new petroleum projects which involve different activities. This pdf is a selection from an outofprint volume from the national. This course is designed for learning the basics of petroleum economics and project selection. In this important new book, mohan kelkar, a respected author and professor, presents the quintessential guide for gas engineers, emphasizing the practical aspects of natural gas production. Economic evaluation of aromatics production, a case study. This practical course will help you understand the way oil and gas projects are financially assessed. The first phase of this proposed project will be the development of a 600 mw gross power plant project, which will be constructed on a site located approximately 80 km east of johannesburg and about 20 km southeast of delmas. Impact of petroleum sector revenue and economic growth abstract the basic reasons for taxation in any economy cater on the need to raise revenue for economic. Scribd is the worlds largest social reading and publishing site. Economic evaluation of petroleum projects basic aspects dr. Readers will learn to incorporate cuttingedge research in estimating reserves, evaluating the performance of fractured wells, processing gas, and material balance analysis. He has taught the gas production engineering course to more than 1,000 industry professionals over the last years.
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