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Collaborating Authors
SPE Hydrocarbon Economics and Evaluation Symposium
Correlating Natural Production, Price, Import and Export in a Neural Network Framework
Ekweanua, U. Emmanuel (University of Oklahoma) | Sharma, Suresh C. (University of Oklahoma) | Wu, Xingru (University of Oklahoma) | Zhu, Zhen (University of Oklahoma) | Callard, Jeffrey G. (University of Oklahoma)
Abstract In the United States, hydrocarbon in unconventional resources such as shale gas has been dramatically changing the fossil energy prospect and transforming the energy consumption structure. Therefore, it is imperative to study how this trend has impacted the U.S. natural gas import, export and the domestic gas price. To understand the relationships, Neural Network would be used to model these variables (gas production, price, import and export) with the ultimate goal of understanding the gas price determination. The key input parameters for the Network are gas production, import and export data and the resulting output of the Network would be the gas price i.e. how well this inputs influence gas price and there magnitude of impact would be ranked in this study. Impact of Weather would be looked into as well but it is not part of the Network inputs. Data from Energy Information Administration (EIA) of the U.S. Department of Energy will be utilized in this study. This work is motivated by the recent surging interest in converting existing gas import terminals to exporting terminals due to increase in gas production as a result of major technological advancement in getting formerly untapped gas out of the ground. The changes in the gas industry trend have prompted the government to consider policy changes as well. Our study will enable us to draw some policy implications regarding the U.S. energy policy.
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
Abstract A company's performance in a lease sale can have serious implications for future growth and sustained value. Therefore it makes sense to approach each sale armed with the most powerful tools available. Surprisingly few firms go beyond spreadsheet analysis when it comes to such an important event, most likely because it is the most familiar method. Perhaps this is why we see bid levels with a significant amount of spread, representing "money left on the table" or skewed perspectives on the value of the block. Firms that wish to move to the next level take a different view. They choose to engage their best talent in a simulation of lease sales – mythical auctions that are run thousands of times – the collective output yielding insights into the best bid strategies at appropriate levels of risk. While simulation represents the science – setting a bid strategy based upon simulation represents the art. It has been our experience that the top performers in lease sales get the balance of these two dimensions just right. Building a bid strategy capability using simulation as a centerpiece is challenging, complex work, requiring key data sets and a mastery of the underlying technology simultaneously. That does not mean that best in class bid strategy is not attainable – it comes about with a focus on execution. We will touch on many of the lessons we learned in working side by side with an aggressive lease sale bidder, and their journey from unsatisfactory auction performance to a place among the top tier of bidders: Use the talent you already have, but provide the team with an analytical system to translate knowledge into bidder intelligence. Build a serious blueprint of the bidding system before implementation Use the simulations to "steer" the bid strategy We will focus on the practical, actionable steps to build a better bid strategy through analytics, sustainable across a range of lease sales, both in the US and abroad. As of this writing, Mexico had recently announced plans to conduct auctions on offshore license blocks starting in 2015, and the US BOEM announced a major lease sale each in the Central and Eastern GoM regions scheduled for March 2014.
- Oceania > Australia > Victoria > Bass Strait > Gippsland Basin (0.89)
- North America > Cuba > Gulf of Mexico (0.89)
Investigating the Effect of Improved Fracture Conductivity on Production Performance of Hydraulic Fractured Wells through Field Case Studies and Numerical Simulations
Sun, Jianlei (Texas A&M University) | Hu, Kyle (Rainbow Ceramics) | Wong, Joe (Rainbow Ceramics) | Hall, Bobby (Energy & Environmental Services) | Schechter, David (Texas A&M University)
Abstract Various analytical and numerical models have been proposed to predict production performance of hydraulic fractured wells and to investigate the effect of fracture geometry and fracture conductivity on well performance. These completion design parameters greatly impact E&P operators' return on investment (ROI). In this study, we conducted numerous field case studies in the Bakken formation to compare production performance of hydraulic fractured wells with different completion designs. Since all wells are located in the same field, the geological difference was considerably minimized. The wells were grouped and analyzed by different completion and stimulation design parameters. Specific grouped categories included percentage of upgraded proppant in the total proppant amount, lateral length, number of stages, etc. We then simulated post-fracturing production performance of these fractured wells. An advanced meshing technique was developed to honor complex fracture networks with unstructured Voronoi grids. We applied this technique to investigate the characteristics of hydraulic fractures such as fracture conductivity, aperture and permeability distribution on the long-term production of the wells. Core data and well logs were analyzed for reservoir characterization. Several assumptions were made to estimate pumped fracture width, stress-dependent fracture permeability and stimulated reservoir volume. Finally, sensitivity studies were performed to investigate the effect of fracture conductivity on production performance due to superior vs. low-quality proppants. The objective of this study was to determine if upgrading completion designs to high quality proppant materials would achieve better fracture conductivities and long-term production performance. After all well data was analyzed and the production related parameters were summarized, it was determined that upgrading the completion designs with higher quality proppants provided dramatically improved production rates. The following unstructured mesh generation algorithms successfully implemented the local grid refinement feature around fractures, which can handle non-orthogonal fractures and more complex fracture geometries. The final simulation runs and sensitivity studies further demonstrated the importance of both stimulated reservoir volume and fracture conductivities. The same long-term production performance was also predicted by using reduced amounts of upgraded proppant with improved fracture conductivities.
- North America > United States > Texas (1.00)
- North America > Canada (1.00)
- North America > United States > North Dakota > Williams County (0.15)
- Well Completion > Hydraulic Fracturing > Fracturing materials (fluids, proppant) (1.00)
- Reservoir Description and Dynamics > Unconventional and Complex Reservoirs > Naturally-fractured reservoirs (1.00)
- Reservoir Description and Dynamics > Reservoir Fluid Dynamics > Flow in porous media (1.00)
- Reservoir Description and Dynamics > Reservoir Characterization > Faults and fracture characterization (1.00)
Abstract Oil and gas companies typically use discounted cash flow analysis in determination of the value of their oil and gas investments. "PV-10" is often accepted as the present worth of an oil and gas investment, but does a 10% discount rate represent the true cost of capital and include project-specific risk premium, or is it simply a rule-of-thumb? This original paper will discuss the factors that go into and how to calculate the weighted-average cost-of-capital (WACC) as the starting point to calculate the appropriate discount rate for their investment.
Abstract The profitability of a well in an unconventional play is significantly influenced by its completion. It is widely understood that tighter rock needs more stimulation to economically recover hydrocarbons. However, how does one know if a well is being over-stimulated (fracture area created does not justify cost incurred) or under-stimulated (lost potential/profitability in productivity from a well's limited contact to the formation)? The objective of this paper is to develop and demonstrate an efficient workflow that will help stakeholders make better decisions in the area of completion planning. The workflow utilizes information from fracture modeling, production data analysis, and project economics to quantify the relationship between the key input parameters of the well completion (e.g. pumping rate, proppant and fluid pumped) and expected profitability expressed in net present value (NPV) terms. As a secondary objective, the case study demonstrates that a probabilistic approach (Monte Carlo Simulation) can be used to efficiently arrive at a consistent conclusion to the primary workflow. The output of the probabilistic model includes P90/P50/P10 production and net cash-flow forecasts, from which distributions of NPV can be obtained. This workflow is intended to help engineers compare profitability among different completion options. A shale gas field example is presented to illustrate the methodology.
- North America > United States (1.00)
- North America > Canada > British Columbia (1.00)
- Geology > Rock Type > Sedimentary Rock > Clastic Rock > Mudrock > Shale (1.00)
- Geology > Petroleum Play Type > Unconventional Play (1.00)
- Geology > Geological Subdiscipline > Geomechanics (1.00)
- North America > Canada > British Columbia > Western Canada Sedimentary Basin > Horn River Basin > Otter Park Formation (0.99)
- North America > Canada > British Columbia > Western Canada Sedimentary Basin > Horn River Basin > Muskwa Field > Muskwa Formation (0.99)
- North America > Canada > British Columbia > Western Canada Sedimentary Basin > Horn River Basin > Horn River Shale Formation (0.99)
- Information Technology > Artificial Intelligence (0.48)
- Information Technology > Data Science (0.34)
Abstract The process of upstream planning for the oil and gas industry has historically been a time consuming and inefficient process. The majority of effort is spent collecting data from multiple functional areas and organizational teams within an organization to form a holistic view of a company. By introducing an integrated solution that combines the opportunity catalog, economic analysis, and optimization into a single workflow, planners are experiencing efficiency gains, reduced time spent planning, and more accurate results. Through an analysis of the implementation of such a system at Chevron's Gulf of Mexico Business Unit (GOMBU), the challenges and benefits of implementing an integrated business planning approach as described will be demonstrated. This paper will reflect on the systems, processes and workflows involved in the planning process at GOMBU both before and after deploying an integrated planning solution consisting of an opportunity catalog and linear optimization tool. This paper will also describe the challenges faced during the implementation and the benefits gained after the solution was deployed. Method: Define "Vision" and reason for move to linear optimization Discuss state prior to deployment Evaluate technical challenges with current state Review state after deployment Examine results and gained benefits Proposed model for integrated planning framework Results & Observations: Improved efficiency of portfolio optimization was significant, optimization time went from several weeks to days Portfolio optimization process was more fluid and responsive to changing business environments Secondary value generated to the entire organization in data integrity, consistency, management visibility into data, and traceability through opportunity maturation. Conclusions: Significant improvement in planning efficiency and accuracy achieved through implementation and execution of proposed architecture Integrated planning saves time, money and leads to significant value realization Applications: Learnings are applicable to any mid-to-large sized organization with any aspect of the planning process Innovations: Combination of opportunity tracking and planning into a single workflow Combination of Opportunity Catalog, Economics Engine, and Linear Optimizer into a single portfolio analysis package Cross-functional visibility and input into the plan and communication of results
- North America > United States > Gulf of Mexico (0.46)
- North America > United States > Texas (0.28)
Abstract Governments, regulatory agencies, the petroleum and mining industries, the financial community, international organizations and professional societies worked together under the umbrella of the United Nations (UN) to develop a principles-based resource classification system -- United Nations Framework Classification for Fossil Energy and Mineral Reserves and Resources ("UNFC-2009") -- that is suitable for all extractive activities, whether mined as a solid or produced as a fluid through wells. The system is designed to be fully compliant with the SPE/WPC/AAPG/SPEE Petroleum Resources Management System (PRMS). A key benefit of UNFC-2009 is that it provides a platform for harmonizing (mapping) classification systems in use around the world, and for translating volumes both within and between commodity sectors. Another benefit of UNFC-2009 is that it uses numbers instead of words for classification. Numbers transcend communication barriers created by differences in language and cultural references. The system is designed as a three-dimensional framework where volumes are classified based on: (1) economic and social viability, (2) project status and feasibility, and (3) geological knowledge; however, it can also be represented in a practical, two-dimensional, abbreviated version. A task force formed by a UN expert group, the Expert Group on Resource Classification (EGRC), is studying the application of UNFC-2009 to classify injection projects. Work is also underway to extend the utility of UNFC-2009 to atomic energy and renewable resources. If successful, it will allow, for the first time, classifications and comparisons of projects across most energy sectors.
- Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
Abstract Digital Energy (DE) describes broad initiatives to improve asset performance and boost corporate value through operational excellence and engineering design. It has been described in many papers presented at SPE meetings such as Digital Energy in Houston and Intelligent Energy in Europe and the Middle East. Digital energy introduces new principles and information technology (IT) tools, frequently requiring new work processes, workforce adoption, and changes in behavior. One description of digital energy (Davidson and Lochmann 2011) includes: Fully-integrated, multi-disciplinary operations Task and process automation Digitally-enabled technology Business or operational intelligence Innovative, efficient methods to maximize performance The move from ‘good enough’ practices to operational excellence is a transformational change (evolving from one ‘look’ to another or one culture to another)and poses challenges and opportunities for organizations. Applying DE principles to promote operational excellence inevitably leads to new ways of working and unfortunately, organizational stress. Some of the challenges include aligning people, technology, and the organization to the new vision. The first step in the digital energy process, regardless of a project’s size, should bean assessment of an organization’s current state including its level of understanding of DE, readiness to change, and what a digital energy initiative may contain. An assessment is a way to look into the world of DE and identify the functionality that may be best suited for a company’s operating environment and assess its impact on performance. Assessments have proven essential for success when organizations undertook major projects to improve asset performance and increase corporate value. Assessments often uncover unexpected paths to better performance. The objective of an assessment is to identify and articulate the organization’s operational vision (different than broad IT or engineering objectives) and follow a structured approach to uncover and identify how DE initiatives can support and solidify the organization’s strategic objectives. During an assessment, information is gathered to identify and understand business drivers and goals while analyzing business priorities and developing value propositions. Through the evaluation and analysis of this information, a working solution roadmap is produced. Because E&P organizations are largely unfamiliar with the practical aspects of DE, the assessment step is often undervalued and, in some cases, skipped altogether. This means suboptimal results, increased project risk, and diminished returns.
- Europe (0.87)
- North America > United States > Texas (0.68)
- Energy > Power Industry (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- North America > United States > Texas > Permian Basin > Yeso Formation (0.99)
- North America > United States > Texas > Permian Basin > Yates Formation (0.99)
- North America > United States > Texas > Permian Basin > Wolfcamp Formation (0.99)
- (23 more...)
- Information Technology > Information Management (0.68)
- Information Technology > Data Science (0.68)
- Information Technology > Communications (0.46)
Abstract This article presents a probabilistic methodology for estimating the Net Present Value (NPV) of oil and gas production development projects. This methodology takes into account the uncertainties of important variables present in the economic evaluation, such as oil and gas production, prices, investments and operational costs. Furthermore, this paper aims to understand the impact of oil price change in the behavior of costs. It also presents a case study which allows indentifying and analyzing the results of the methodology implementation. The results show the importance of evaluating and quantifying the uncertainties in the economic appraisal, as well as the need to consider the effect of oil price changes. Hence, it points out an alternative to estimate the expect returns on investments according to a probabilistic approach, which can impact one of the most important variables for the economic project decision-making, the Net Present Value.
Abstract Energy, coming in its great majority from oil and gas has become a strategic factor in global geopolitics. It is key to national power and a major requirement for economic growth. Energy consumption has become the most palpable national characteristic that separates rich from poor countries. The United States, the richest nation in the "room" is also the most intense user of energy per capita. There is a substantial imbalance in the location of energy producers and consumers, an imbalance that has precipitated world conflicts and one that will likely cause future upheavals. There is huge activity by China buying energy resources all around the world. Russia's recent ascendancy in the energy world has been an important counterbalance to the power of OPEC. However, recent events surrounding Russia's energy industry have exposed fissures within the economic and political makeup of the country. The United States Shale Revolution has, and will, bring market distortions throughout the entire nation and to many others such as the energy-starving, Southeast Asia markets of China and Japan. The recent removal of restrictions on LNG exports by the American government means that new forces will be implemented on both demand and supply of those markets. I believe that the globalization of gas trade will make prices of natural gas to converge and thus we will witness a more "unified" price regime in the not-too-distant future. Predictions of the future supply of petroleum have typically been far less accurate than predictions of demand. Flawed predictions have caused public bewilderment, distrust and, more importantly, government inaction or poorly conceived reactions. The cause of every energy crisis, like oil climbing to $150 per barrel in 2008 before dropping to $40, is above the ground geopolitics and never behind the valve issues. This paper applies basic economic principles to assess the effects of present-day geopolitical forces on energy markets, particularly those of natural gas, around the globe arriving on a number of interesting conclusions. Topics touched include Chinese urbanization, United States LNG exports, Keystone XL Pipeline, Russian nationalization over its energy industry and its relationship with former Soviet Union countries.
- Europe (1.00)
- Asia > Russia (1.00)
- North America > United States > Texas > Harris County > Houston (0.28)
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- Energy > Oil & Gas > Midstream (1.00)
- Europe > Poland > Baltic Basin (0.99)
- Europe > Middle East > Cyprus > Mediterranean Sea > Cyprus EEZ > Levant Basin > Block 12 > Aphrodite Field (0.99)
- North America > United States > Louisiana > China Field (0.98)
- Reservoir Description and Dynamics > Unconventional and Complex Reservoirs > Shale gas (1.00)
- Management > Energy Economics (1.00)
- Health, Safety, Environment & Sustainability > Environment (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (1.00)