PETROENG 7070 - Integrated Field Development Planning and Economics Project

North Terrace Campus - Semester 1 - 2018

This project-based course covers the process and methods to create an optimal plan to develop a petroleum deposit. It starts with an overview of decision-making (to create value) and project economics (to assess value). Topics to be addressed include: decision-making process; decision-tree analysis; quantifying uncertainty/risk; Monte Carlo Simulation; petroleum project cash-flows and fiscal regimes; time-value-of-money and economic metrics. (The principles will be useful in your personal life.) Key project drivers are discussed and it is shown how multiple disciplines must interact to maximise the value of a project. It covers all aspects of field development planning - commencing with screening studies, after discovering hydrocarbons, through to project sanction. The development phase is highlighted as having the potential to add maximum value. It is shown how a good balance is needed among key elements: reservoirs, wells and facilities, to minimize costs whilst maximising recovery. The team-based project is based on a real offshore case. The first part is to develop a recommendation for the optimum field appraisal plan. The second part of involves the feasibility and derivation of the optimum development plan. Participants work in small teams and will submit written plans and give presentations in front of a panel.

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Course Details

Course Code	PETROENG 7070
Course	Integrated Field Development Planning and Economics Project
Coordinating Unit	Australian School of Petroleum & Energy Resources
Term	Semester 1
Level	Postgraduate Coursework
Location/s	North Terrace Campus
Units	6
Contact	approximately 90 - mixture of intensive-format lectures and class exercises with consultation & advice for project teams
Available for Study Abroad and Exchange	Y
Incompatible	PETROENG 7049, 7054 or 7043
Assumed Knowledge	Content of the first 8 courses in the Master of Petroleum Engineering Program plus mathematics and physics typical of a BEng or BSc Program. Proj teams will be chosen to ensure team as a whole has assumed knowledge
Restrictions	Only available to Master of Petroleum Engineering students
Assessment	Examination, Written Project Reports & Project Presentations

Course Staff

Course Coordinator: Professor Steve Begg

Part A - Professor Steve Begg

Part B - Teof Rodrigues

Course Timetable

The full timetable of all activities for this course can be accessed from .

Course Learning Outcomes

On successful completion of this course students will be able to:

1	Understand the broader oil & gas industry context within which business decisions are made, including societal and ethical factors that impact organizational (public, private and national) business goals
2	Know (recall, define, describe) and comprehend (explain) the main concepts, terminology, tools/techniques and processes that are typically used in the O&G industry for economic evaluation and decision making
3	Apply the key ideas underlying the modelling tools and techniques (eg Net Cash Flows, Discounted Cash Flows, Decision Tree Analysis and Monte Carlo Simulation), by performing calculations (including in Excel) and interpreting their output
4	Calculate and interpret metrics that measure the economic value of a DCF and be able to use them in a decision-making process to make investment recommendations, both stand-alone and portfolio
5	Comprehend and construct workflows as applied to major studies in petroleum engineering or petroleum geosciences.
6	Take on responsibility for a role (technical or project management) in a diverse, multidisciplinary team requiring a high degree of interection and communication and the ability to integrate their component in the team's broader proposal
7	Search for, evaluate, analyse and synthesize/integrate multiple, real, industry data sets, representing multiple information types and sources.
8	Decide on how to appropriately deal with safety, health and environmental issues
9	Carry out extensive literature searches, including the use of the internet, in order to broaden their knowledge and to awaken their curiosity. Innovation and creativity are stressed in finding workable solutions, applying contemporary technology
10	Write a report delailing the elements of their proposed field development plan and an economic analysis of that plan - and make an oral presentation of it to a panel of academic and industry experts acting as "management"

The above course learning outcomes are aligned with the Engineers Australia .
The course is designed to develop the following Elements of Competency:

University Graduate Attributes

This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

University Graduate Attribute	Course Learning Outcome(s)
Deep discipline knowledge informed and infused by cutting edge research, scaffolded throughout their program of studies acquired from personal interaction with research active educators, from year 1 accredited or validated against national or international standards (for relevant programs)	2,3,7,9
Critical thinking and problem solving steeped in research methods and rigor based on empirical evidence and the scientific approach to knowledge development demonstrated through appropriate and relevant assessment	3-7,9
Teamwork and communication skills developed from, with, and via the SGDE honed through assessment and practice throughout the program of studies encouraged and valued in all aspects of learning	6,10
Career and leadership readiness technology savvy professional and, where relevant, fully accredited forward thinking and well informed tested and validated by work based experiences	1-5,9,10
Intercultural and ethical competency adept at operating in other cultures comfortable with different nationalities and social contexts able to determine and contribute to desirable social outcomes demonstrated by study abroad or with an understanding of indigenous knowledges	6,8
Self-awareness and emotional intelligence a capacity for self-reflection and a willingness to engage in self-appraisal open to objective and constructive feedback from supervisors and peers able to negotiate difficult social situations, defuse conflict and engage positively in purposeful debate	6

Learning Resources

Required Resources

PDFs of powerpoints and additional readings. Additional exercises.

Online Learning

Powerpoints, Examples and Exercises (& their solutions) will be distributed on MyUni along with additional handouts.

Laptops will be provided for in-class Excel exercises

Good sources of help with learning are the downloadable learning guides (Writing, Effective Reading, Making Notes, Time Management, Exam Prep, etc) and links to other learning resources at -

/writingcentre/resources/

The “Writing and Speaking at Uni” course will help with assignments. I can provide further tips on preparing presentations for those that would like them.
Learning & Teaching Activities
Learning & Teaching Modes

The block-course format (sometimes, misleadingly, called short-course) is commonly used in industry (continued professional development) and is the norm for 4th year and post-graduate courses in the ASP.

It also represents a time when you are expected to take greater responsibility for your own learning – lectures cover the main ideas and are pointers to the topics you should learn about – rather than comprehensive coverage of the curriculum.

One of the advantages of the block-course format is that you can immerse yourself in a single subject, without distraction or having to “re-load” for each session. Another is that there is no need to force-fit the material to the 1hr lecture/tute format – each topic can be addressed in the time it needs. Yet another advantage is that it provides an opportunity for immediate feedback as exercises are carried out, and solutions presented, in-class, after the concept has been taught.

Laptops will be provided for in-class exercises – and you are welcome to bring your own if you would like. Students are expected to engage with class discussions.

A disadvantage is that the compressed time-scale means that you do not have as much time to let one concept sink in before moving on to another. For this reason

- we integrate the exercises to practice concepts immediately after learning them, before moving on to the next concept. The amount of time for in-class exercises is set such that 90% or more of students should be able to finish them.

- you are STRONGLY ADVISED to take a break after the end of class each day and then revise the day’s material for a couple of hours.

Learning tips (not just for block courses):
For most people it takes about 4 repetitions to get information into your long term memory. Apparently (can’t remember where I learnt this from) the best way to do it is to revise the information the day you learn it (2nd time) , then one week later (3rd time), then one month later (4th time).

At the start of a course section, I usually provide grey-scale versions of the PowerPoint slides shown in class Students often find it useful to have several highlighter pens for use with these handouts, because I make a lot of use of colour. PDF files of the full colour PowerPoint slides will be available on MyUni after the class.

After-class consultation and Provision of Feedback to Students

Solutions to in-class exercises will be provided in-class. Solutions to after-class exercises will be posted on My Uni within two weeks of end of class.

I will arrange several mutually convenient time-slots when I will be available, in the weeks following the class, for questions related to exercises and course content.

Workload

The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

This course involves approximately the same number of contact hours that would be delivered in a semesterised course (90 for 6 units). During a semesterised course, you would be expected to spend a approximately twice the number of hours outside of class – learning the material, revising notes, reading more widely about the topics covered, practicing examples, finishing exercises, etc. The same is true for block-course – but this must occur after the course. Do not be fooled into thinking that, apart from the follow-up assignment, “it's an intense week or two, then I’m done”. To do so is likely to lead to decreased learning and poorer performance in the exam than you would otherwise achieve – you have been advised!

Learning Activities Summary
The Curriculum fopr Part A is:

Business Context
- (Why study decision-making and project economics?)
- Role of Companies and Management
- Business performance
Decision-making Key Concepts
- Introductory decision
- Decision Analysis
- Decision Elements, Decisions vs Outcomes, Hard decisions
Method for Making Good Decisions
- Overview and Decision Dialogue Process
- Structuring/Framing the decision situation
- Evaluating/Modelling the decision
- Deciding, sensitivity analysis and assessing trade-offs
- Simplifications and Assessing Decision Quality
Project Economic Evaluation Key Concepts & Cash flows
- Economic evaluation principles
- Net Cash Flow (NCF)
- Cash Flow Components - Revenues & Costs
- Cash Flow Components -Taxes, Depreciation and Depletion
- ASP #1 major exercise
Fiscal (Tax) Regimes
- Overview
- Concessionary vs Production Sharing Contracts
- Australia Fiscal Regimes
Time-Value of Money
- The Earning Power of money - Interest and Financial Mathematics
- Future Value, Present Value & Economic Equivalence
- The Purchasing Power of Money – Inflation
Economic Metrics for Valuing Cash Flows
- Discounted Cash Flows (DCF)
- Key value measures: Payback, Net Present Value (NPV), Capital Efficiency (CE, PWPI), Internal Rate of Return (IRR)
- Inflation
Assessing Uncertainty
- Nature of uncertainty and its quantification
- Reasoning under uncertainty: review & development of probability rules relevant to remainder of course
Monte Carlo Simulation
- Principles: Monte Carlo Sampling
- Monte Simulation and applications
- @Risk (if time)
“Tools” for Structuring, Modelling & Solving for Best Option
- Influence Diagrams and Decision Tree Analysis (DTA)
- Application of DTA to valuing information and project flexibility
Self-directed learning on Decision-making and Project Economic Evaluation topics

After class exercises & readings
Specific Course Requirements

A thorough and comfortable ability to handle algebra and arithmetic. There is no higher math in this course but there are formulas and equations.

Basic Excel knowledge. Make sure you are comfortable with all the techniques illustrated in the Excel Tutorial.

General petroleum engineering knowledge acquired during first 8 courses of the program. Specifically Introduction to Petroleum Engineering & Geology; basic Rock-property, Drilling, Reservoir and Production concepts. Ask / interrupt me if I use terms or concepts you are not familiar with (especially sub-surface)

Basic Probability & Statistics (from your Bachelors Degree)

The University's policy on Assessment for Coursework Programs is based on the following four principles:

Assessment must encourage and reinforce learning.
Assessment must enable robust and fair judgements about student performance.
Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
Assessment must maintain academic standards.

Assessment Summary

Assessment Task	Weighting (%)	Individual/ Group	Formative/ Summative	Due (week)*	Hurdle criteria	Learning outcomes
Oral presentation	25	Group & Indiv	Summative	N/A Block mode		3. 4. 5. 6. 7. 8. 9. 10.
Written report	45	Group & Indiv	Summative	N/A Block mode		3. 4. 5. 6. 7. 8. 9. 10.
Exam	30	Individual	Summative			1. 2. 3. 4.
Total	100

* The specific due date for each assessment task will be made available at the start of the relevant block (ie Part A or Part B).

This assessment breakdown is registered as an exemption to the University's . The exemption is related to the Procedures clause(s): 1. a. i

Assessment Detail

No information currently available.

Submission

No information currently available.

Course Grading

Grades for your performance in this course will be awarded in accordance with the following scheme:

M10 (Coursework Mark Scheme)
Grade	Mark	Description
FNS		Fail No Submission
F	1-49	Fail
P	50-64	Pass
C	65-74	Credit
D	75-84	Distinction
HD	85-100	High Distinction
CN		Continuing
NFE		No Formal Examination
RP		Result Pending

Further details of the grades/results can be obtained from Examinations.

Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

Final results for this course will be made available through .

Student Feedback

The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.
Student Support
Policies & Guidelines
This section contains links to relevant assessment-related policies and guidelines - all university policies.
Fraud Awareness

Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student鈥檚 disciplinary procedures.

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Authorised by:	Deputy Vice-Chancellor and Vice-President (Academic)
Maintained by:	Course Outlines Administrator

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