petroleum economics and asset management

petroleum economics and asset management Project description You are charged with assisting the Asset Manager to obtain the most favourable possible allocation of funds, to be spent in 2017, during your companys annual corporate budgeting process in September 2016. Discretionary activities in your asset have to compete, on an individual project basis, with individual activities in other assets worldwide. Indications from Corporate Planning are that in the first cut of the annual budget exercise, $100m will be available to your asset for capital expenditure (CAPEX) on non-essential activities in2017 and $20m for revenue expenditure (OPEX) on these activities. Essential in this context, applying to all other activities, means required by law or in order to maintain the Certificate of Fitness to operate the asset, or already committed. Committed expenditure relates to projects whose budgets were approved in earlier years, including ongoing operating costs but not well workovers. Petroleum Economics & Asset Management Uncertainty in Project Variables © The Robert Gordon University 2002 1 Uncertainty in Project Variables Review n. In the discussion group: ? Give your very rough estimate of the dates of first oil production, as originally planned and as occurred in practice, with reasons; ? Comment in detail on the forecasting performance of the Ruby asset team, in the context of the difficulty in predicting each evaluation variable (which you should also describe). Remember that some changes may be the result of new technology, or of new information acquired, rather than of random variability or poor forecasting; ? Comment on any change you detect in the approach taken to economic evaluation by the asset owner, Gem Oil and Gas Operations (GOGO), between Year “-7” and Year 1; ? State whether you would have made the same development decision as GOGO, in Year “-7”, if you had all the information at that time that eventually became available by Year 1, and why.