Oil and gas marginal field techno-economics.

Abstract

The global oil reserve reduction and the unavailability of easy to reach oil have necessitated the need for oil and gas producers and countries to look into marginal oil and gas fields. These are fields defined as abandoned, not commercially and economically viable, and not categorised as a major find. New and emerging smaller companies, especially NOCs and Indigenous oil companies, have seen these fields as opportunities to become truly oil & gas exploration and production companies. However, investment decisions were made by most of these companies without the right financial and economic tools thereby creating gaps in their decision quality and day to day knowledge of their investment profitability indices while in operation. This necessitated the need for the development of an Integrated Techno-Economic/Financial Model that can be used for investment decision and operating of Marginal oil and gas fields. In the development of this tool/model, a structured process of research and project execution known as the gate system and the PMI-5 Project Management Process was used to carry out this PhD research to develop model/tool with the required flexibility to support robust decisions on investments and operating of Marginal Field Facilities Several Techno-Economic Assessment (TEA) Methods were reviewed and the Discounted Cash Flow TEA type selected to be the best fit method for the analysis because of its ability to look at the entire field life of the opportunity. The integration of these methods with an Integrated Risk Management System led to the development of the UZO-MARG Economic and Financial Model which is one of the key deliverable for this research. The Model tool was validated with an actual operating Marginal Field development data with acceptable error Margin even while not been privy to the entire project execution data for this field. On using the UZO-MARG tool to evaluate the Shekinah field, it was observed that the PSC agreement returns better VIR, NPV and ROACE, compared to the JV agreement for the operator e.g. NPV $1219.1mln; IRR 18% for PSC terms versus NPV $35.3mln; IRR 2% for JV terms. In addition, the Model tool is also applicable for the determination of economic and financial parameters for various technology applications i.e. using Hybrid Power Generation technology (for reduced CO2 emissions) instead of a standalone renewable energy or conventional energy technology systems.