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Petroleum Economics

Sunday, 19 January 2014, 0730–1500, Rooms 239–241, QNCC

Instructors: John Griffith, Gaffney, Cline & Associates; Larry Chorn, Halliburton; Kara Shepherd, PDO; Erkan Karakaya, Schlumberger; Knut Olsen, World Bank

Course Outline:
Petroleum Economics has a vital role to play in the oil and 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, organisational 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 and geoscientists and offers structured short interactive training sessions on topics such as Economic Modelling, Decision Analysis, Exploration Analysis and Economics of Unconventional Resources.

0730–0800

Welcome Refreshments, Badge Collection

0800–0815

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

0815–0915

Erkan Karakaya, Commercial Manager, 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 Cash Flow  
  • What are the Key Economic Indicators, Pros, Cons, etc.?
  • Impact of Uncertainty
  • Decision Trees
  • Value of Information
  • Stochastic Perspective and Monte Carlo Analysis
  • Portfolio Theory
  • More complex techniques

Speaker:
 Erkan Karakaya is Commercial Manager of Schlumberger Production Management. Before assuming this role, Erkan worked as Middle East General Manager of Petroleum Economics Solutions Business where he provided planning, economics and corporate risk assessment solutions to regional oil companies many of which are key OPEC producers. Prior to that Erkan worked for Petronas at various positions, his responsibilities included upstream M&AD, portfolio management and corporate strategy development.

Erkan has a M.Sc. degree in Petroleum Engineering from Middle East Technical University and an MBA degree from Manchester Business School. He is specialised in upstream asset valuation, multi-disciplinary upstream project risk assessment and he is a recognised Schlumberger domain leader in decision analysis and risk management.

0915–1015

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

Topic: Economic Modelling 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 modelling portfolios and choosing between widely varying projects, e.g. upstream vs. downstream

Speaker:
Knut 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. 

1015–1045

Open Q&A

1045–1100

Coffee Break

1100–1200

John Griffith, Senior Advisor, Gaffney, Cline & Associates

Topic: Petroleum Fiscal Systems

  • Evolution of Government/Oil Company Interaction
    • Management of Petroleum Resources
    • Creating the “Best” Fiscal Systems
  • Fiscal Regime Design Principles
    • Government Fiscal Regime Objectives
    • Investor Objectives/Requirements
    • Economic Rent

 

  • Types of Fiscal Regime
    • Evolution of Petroleum Fiscal Systems
      • Concession Agreements
      • Production Sharing Agreements
      • Service Contracts
  • Examples of Different Fiscal Regimes and Specific Mechanisms
    • Types of Petroleum Arrangements
      • Contractual Approaches
      • Key Contract Elements
      • Other Fiscal Issues

 

Speaker:
A Senior Petroleum Economist with over 30 years’ industry experience and an extensive background in the valuation and evaluation of petroleum projects worldwide.  John graduated from the University of the West Indies with a BA in economics and after a relatively short career as a systems engineer with International Computers Limited; he joined Gaffney Cline & Associates’ Trinidad office in 1979.  He has since lived and worked in Singapore, Kuala Lumpur and the United Kingdom where he has been based for most of this his career with GCA.

Responsible for many of the economic/financial analyses undertaken by GCA on projects located in Asia Pacific, Central Asia, North Sea, Europe, Africa and Middle East regions. John has lead the development and presentation of a number of petroleum economics and asset evaluation training courses for private and national oil companies. John has considerable expertise in international petroleum fiscal systems and has been responsible for the design and development of a range of propriety economic evaluation software used by GCA.

1200–1300

Luncheon

1300–1400

Kara Shepherd, Exploration Business Planning Manager, Petroleum Development Oman

Topic: Exploration Economics, VOI (value of information)

Speaker:
Kara 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.

1400–1500

Larry Chorn, Partner - Unconventional Resources, Halliburton

Topic: Unconventional Resource Economics

Speaker:
Larry 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.

1500

Closing Remarks and Appreciation of the Speakers

Registration:

To register or for more information, please email iptc@iptcnet.org.