The letter r is retained for electrical resistivity in well logging usage. This course is an excellent introduction to the fundamentals of petroleum economics. Types of fiscal regime in hydrocarbon exploration and production. The petroleum industry is arguably the most influential and important industry in the world. Various factors which affect ongoing operating costs 426 technical efficiency vs. The journal of petroleum science and engineering covers the fields of petroleum and natural gas exploration, production and flow in its broadest possible sense. Factor pricing slide 1217 unobservable factors for any symmetric jxj matrix a like bb. Feb 17, 2015 new york basel tm petroleum refining technology and economics fourth edition james h.
Geological survey editorial standards or with the north american stratigraphic code. Numerous regulatory bodies around the world have developed regulations relating to the evaluation and external reporting of reserves. Ken kasriel is a senior petroleum economist with rps energy, london. Holstein, editor vi emerging and peripheral technologies. Upstream petroleum fiscal and valuation modeling in excel. Rfactor and cumulative irr to the investor for the deep water oil project. The other links add value to petroleum mainly by moving and storing it e. The letter c is retained for electrical conductivity in well logging usage. Petroleum economics and engineering crc press book this book explains how to apply economic analysis to the evaluation of engineering challenges in the petroleum industry. He would also like to thank glenn hubbard and john meyer for their useful comments on earlier. The international collaborative program in petroleum economics and management is designed for students or professionals with degrees in science, engineering or social science business school, law, seeking indepth training to develop a commanding skill set in energy techniques, energy economics and management. Pdf petroleum economics, risk and opportunity analysis. This pdf is a selection from an outofprint volume from the national.
The fiscal regime can be used to convert a governments policy into economic signals to the market, and. Daily rate of production sometimes of profit production cumulative production rfactor cumulative revenues cumulative costs contractor rate of return. The 5 days sophisticated training course in petroleum economics is an entrylevel course designed to bridge gaps in your knowledge and give you true business advantage. New york basel tm petroleum refining technology and economics fourth edition james h. Introduction to petroleum economics is about the process of gathering project data, calculating whether a project should proceed and delivering recommendations. It covers everything you need to know about the economics behind the petroleum industry, in very simple language. The r factor was defined as the associates cumulative revenues divided by its cumulative costs. The training approach is based on principles of economic evaluation of petroleum related project with focusing on step by step developing economic models, determining economic indicators, evaluating and quantifying risks and uncertainties and making the right investment decision for the project.
It is motivated by the recent record increase and subsequent. Gary colorado school of mines golden, colorado glen marcel dekker, inc. Petroleum refining at a glance petroleum refining is a unique and critical link in the petroleum supply chain, from the wellhead to the pump. An rfactor is the ratio of cumulative receipts from the sale of petroleum to cumulative expenditures. Petroleum economics distance learning training course. Petroleum industry personnel who would like to develop or increase their knowledge in basic economic analysis and profitability assessment economics is the primary link between decision making and profitable operations and it is one of the four pillars of the oil and gas industry the other three being geology, engineering, and. He would also like to thank glenn hubbard and john meyer for their useful comments on earlier versions. Submissions will only be considered after payment of the submission fee via submissionstart. The 5 day training will reveal the fundamental aspects of upstream petroleum economics and risk analysis. Guidelines for the evaluation of petroleum reserves and. Introduction to petroleum economics society of petroleum. Petroleum economics and engineering crc press book.
R factor, whereby a factor is calculated from cumulative revenue divided by cumulative costs and this ratio determines the split. Economics is the primary link between basics of petroleum. Key issues include public participation in the contracting process, the economic fairness of the deal, the degree of integration of social and environmental concerns, and the extent to which the balance between economic, social and environmental considerations can evolve over often long project durations. The symbol i is to be used in all other cases and is that preferred by asa.
Factor pricing slide 124 factor pricing setup k factors f 1, f 2, f k ef k0 k is small relative to dimension of m f k are not necessarily in m fspace spanned by f. Fundamental petroleum fiscal considerations oxford institute for. Modeling the impact of taxes on petroleum exploration and. However, there are different ways to get the factor using the factors that are in the table. Expanded basic petroleum economics training course. Arnold, editor iv production operations engineering joe dunn clegg, editor v reservoir engineering and petrophysics edward d. Scribd is the worlds largest social reading and publishing site. He has performed numerous upstream petroleum valuations of assets in africa, asia, europe, the former soviet union, the middle east and north america.
For instance, in the petroleum industry, managers are increasingly using decision analysis techniques to aid in making these decisions. Reiss is associate professor of economics at the stanford business school and a faculty research fellow at the national bureau of economic research. It is important to factor in the realities of obsolescence bargaining into energy investment decisions. Discount rates should be used for time value adjustments not risk adjustments.
This book offers a comprehensive introduction to the economics of oil and natural gas extraction and production along with a detailed discussion of pricing, taxing, and markets of these most valuable commodities. Petroleum economics free download as powerpoint presentation. Miller, in standard handbook of petroleum and natural gas engineering, volume 2, 1996 the purpose of petroleum engineering is to examine, define and implement the methods and procedures for developing and producing oil, gas and associated products so as to optimize profits and return on investment. The questionnaire was pretested for validity and reliability with 10 management staff. Others around 2025% are based upon an r factor or ror system. The certificate in petroleum economics is the ideal course for both individuals and corporate groups to develop this crucial knowledge. A higher factor would have a split more favourable to the state. Mitchell, editor iii facilities and construction engineering kenneth e.
Pdf economics modeling for petroleum exploration and. Oil and gas contracts utilizing r factors and rates of return. Economic reform and growth in china annals of economics. Estimation of the economic value of the predicted future production. Uncertainty and risk analysis in petroleum exploration and. Note the r factor is unaffected by operating costs.
We present a simple model of petroleum exploration and development that can be applied to study the performance of alternative tax systems and identify potential distortions. Ppm expert visit indonesia, december 69, 2004 2 why economic modeling. Although the model is a highly simplified, it incorporates many factors and some of the key tradeoffs that would influence an investors investment behavior. In this sense, the petroleum industry is a classic case of uncertainty in decisionmaking. The author thanks the olin, sloan, and fletcher jones foundations for financial support. Iranian petroleum contract ipc is a new model of upstream oil and gas fiscal. An rfactor less than 1 would mean that costs have not been fully recovered yet.
Licensing and upstream petroleum fiscal regimes semantic scholar. The major oil companies were initially opposed to this new contract form as they were reluctant to invest capital into an enterprise which they were not allowed to own or manage. An overview of heavy oil properties and its recovery and transportation methods 573 brazilian journal of chemical engineering vol. Chapters 2 and 3 provide background material on, respectively, the stages of an oil and gas. Petroleum engineering an overview sciencedirect topics. Rfactor, whereby a factor is calculated from cumulative revenue divided by cumulative costs and this ratio determines the split. An economic analysis kirsten bindemann oxford institute for energy studies wpm 25 october 1999. Oil and gas contracts utilizing r factors and rates of.
Petroleum economics provides an overview of the key financial and economic means of project performance provides a set of risk assessment tools including sensitivity, scenario, decision tree and mote carlo simulation analysis introduces the participant to stakeholder analysis frameworks to identify stakeholder groups and their concerns. Petroleum economics net present value internal rate of. It is an excellent book because it considers all economic aspects of the petroleum industry. Petroleum economics net present value internal rate of return. The purpose of petroleum engineering is to examine, define, and implement methods and procedures for developing and extracting oil, gas and associated products so as to optimize profits and obtain a returnoninvestment that is commensurate with the risk incurred in making the investment.
Our replication policy reflects this, and is applied in spirit rather than to the letter. He has 18 years of experience in petroleum finance. Review and cite petroleum economics protocol, troubleshooting and other methodology information contact experts in petroleum economics to get answers. The fg conversion is not given in the factor table. However i wish it could be updated by the authors or other scholars interested in petroleum industries. The profit splits therefore tend to come in different tiers applying different splits.
Ror or r factor systems can be made much less susceptible to manipulation i by using continuous functions rather than stair steps, ii for r factors, by using ratios that are insensitive to operating costs, which are easier to manipulate in the production phase than development costs, and iii by using functions with relatively low slopes, ie avoiding very large changes in shares for any small change in profitability metric. The study made use of a survey questionnaire administered through drop and pick later method. Growing refining overcapacity has resulted in recent refin. Ror or r factor systems can be made much less susceptible to manipulation i by using continuous functions rather than stair steps, ii for r factors, by using ratios that are insensitive to operating costs, which are easier to manipulate in the production phase than development costs, and iii by using functions with relatively low slopes, ie avoiding very large changes in shares for any small. Introduction to petroleum economics print and digital. An attempt is made in all issues to balance the subject matter and to appeal to a broad readership. This book is a guide to the basic economics of petroleum production as practiced throughout the world. Annals of economics and finance 5, 127152 2004 economic reform and growth in china gregory c. In physical science terminology, energy is the capacity for doing work, e. Spe member price usd 75 introduction to petroleum economics is about the process of gathering project data, calculating whether a project should proceed and delivering recommendations. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. This course will introduce a variety of fundamental petroleum economic principles including revenue, expenditures, fiscal systems, risk analysis, and investment analysis.
Within north america, recent demand for refined petroleum. Exploration and petroleum production licences to any person or entity. Exploration geologic risk assessment and prospect evaluation. Packed with realworld examples and case studies demonstrating how to calculate rate of return, discounted cash flow, payout period, and more, petroleum economics and engineering, third edition assists petroleum engineers, chemical engineers, production workers, management, and executives in sound economic decisionmaking regarding the design. Psas were regarded as acceptable because the government upholds national ownership of resources. On the side of the producing countries there are economic and political complexities. Orlandi encyclopedia of life support systems eolss these shows structural characteristics, relations of strength, economic and political dynamics which cannot be immediately attributed to the traditional life cycle of an industry and which indeed can no longer be repeated. Petroleum economics is one of the most influential players in the world economy, so having a comprehensive understanding of this vital area is key for anyone working within the oil and gas or energy industries. Discussion progresses from an introduction to the industry, through principles and techniques of engineering economics, to the application of economic methods. Petroleum refining and the prod uction of ulsg and ulsd october 24, 2011 page 2 2.
Petroleum refining at a glance petroleum refining is a unique and critical. Fuzzy value of npv calculated based on 7% error rates of price. Basic petroleum economics mai 2004 ppm 2nd workshop of the china case study 2 investment decisions investment decisions are among the most important decisions that a companygovernment can take capital intensive irreversible high riskuncertainty. Economic and financial determinants of oil and gas. Pdf the economic structure of the petroleum industry differs strongly from. We encourage the submission of replication studies.
This purpose of this thesis is to form a general understanding on price formation of crude oil in the short and the long run. Fiscal regimes, petroleum contracts, and natural gas. Financial efficiency 427 incremental economics 428 well workovers 429 equipment replacement 431. The objective of the journal of petroleum science and engineering is to bridge the gap between the engineering, the geology and the science of petroleum and natural gas by publishing explicitly written articles intelligible to scientists and engineers working in any field of petroleum engineering, natural gas engineering and petroleum natural gas geology. Evaluating fiscal regimes for resource projects international. The relationship between oil price and costs in the oil and gas industry. In a segmented chain, agreements set the price and level of economic rent achieved in each link may or may not be at arms length government may own one or more links of the chain and take economic rent where there is common ownership but different tax systems for each link, there are no. Profit petroleum sharing wide range of mechanisms for sharing profit oil usually sliding scale with proxy for profitability. Evaluation of economics of fiscal terms and alternative regime. Prepared for pesa may 2015 pesa petroleum equipment. Gerhard toewsaand alexander naumovb a oxford centre for the analysis of resource rich economies, department of economics, university of oxford b economics team bp january 2015.
Chow department of economics, princeton university, usa email. Guidelines for the evaluation of petroleum reserves and resources 3 petroleum reserves and resources are important to both companies and countries. Uncertainty risk and opportunity analysis is a key component in the decision making process and in establishing appropriate fiscal designs and incentive mechanisms in the energy sector. What factor will convert a gradient cash flow ending at t 8 to a future value. Energy economics publishes an eclectic mix of papers using a wide variety of methods to shed light on a range of topics. The united states asserts that iran is a state sponsor. It discusses the science of petroleum economics, starting from squareone, the tools of the trade that petroleum economists use. Petroleum economics, risk and opportunity analysis. Within north america, recent demand for refined petroleum products has been flat to declining and is forecast to continue on this path. Petroleum project economics and risk analysis workshop.
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