Training for the Future


Petroleum Project Economics and Risk Management

Course Code: PPERM

Dates: 18 Mar - 22 Mar | 10 Jun - 14 Jun | 12 Aug - 16 Aug | 18 Nov - 22 Nov

Price: £3250 Plus VAT

Duration: 1 Week /s

Course Objectives

The course will enable participants to apply a structured approach to project justification, investment appraisal and decision making in the upstream petroleum business



Who Should Attend?

Those with little or no previous project investment appraisal experience



Prerequisite Course

None



Course Overview

  • Basic concepts

    • Identifying project cash flows and sources of information

  • How to calculate the Accounting Rate of Return (ARR)

    • Project payback. Net present value (NPV). Internal rate of return (IRR)
    and the cost of Capital. Profitability index (PI). Strengths & limitations
    of each method

  • Project ranking - how to choose the best alternative

    • How to optimise expenditure

  • How to deal with inflation

    • Taking account of taxation

  • Accounting measures vs. Economic measures

    • Understanding other financial criteria for decision making. Balancing short
    term vs. long term business objectives

  • Economics, risk and decisions - decision to points are risk points

    • Decision points for oil fields and gas fields. Risk & probability
    definitions and concepts. Risk identification, measurement & management.
    Forecasting as risk management. Assumptions, sensitivities & risk
    premia

  • Exploration and appraisal decisions, uncertainty, risk and exposure Monte Carlo Simulation

    • Economic models and spreadsheet design
    Development decisions
    Work scope definition and options. Decommissioning economics & risks. Cost
    estimating and Contingencies. Financing options. Construction contracts

  • Further development decisions and economic cut off


  • Preparing convincing project proposals


  • Post project appraisal





  • Learning Goal

    Upon completion of the course, participants should be able to:

  • apply economic and risk management evaluation tools for the oil & gas project proposals

  • identify and quantify key uncertainties during field development and full life cycle economics

  • calculate the economic and financial viability of expenditure proposals projects under risk conditions

  • develop a structured approach to measuring, managing and combating commercial risk

  • assess the ranking of alternative projects

  • prepare convincing project proposals in a way that will win management, partner and government approval

  • improve project and business outcomes



    • Course Materials

    Course notes
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