Importance of Economic and Risk Analysis on Today's Petroleum Engineering Education

Abstract

fax 01-972-952-9435. AbstractGraduate students in a master or PhD program tend to naturally concentrate their efforts on the understanding of theoretical issues related to their main research area of interest. This will frequently lead to a cultural shock when they, after concluding their program, enter or return to the job market.Commonly these professionals are asked to analyze, develop and/or implement projects based not only on technical premises but also on solid and very well supported economical feasibility studies. Frequently the common graduate academic background does not prepare students for those tasks.The importance of a thorough understanding of economic issues and associated risks is even more noticeable in the oil industry, where uncertainties related to oil and gas reserves, prices and government regulations make any long term project extremely risky.Based on the abovementioned factors, a graduate course was designed and implemented in order to prepare the students to deal with the main economic issues and challenges faced by the industry. Besides the basics on economic engineering, the course covers advanced material related to budgeting, scheduling and corporate planning.Monte Carlo simulation, economic decision tools, risk analysis for oil industry projects, investment risk and simulation, economic analysis of operations, production forecasts and its associated costs and expected profits are also studied.Furthermore, the students are also required to prepare a project where actual challenges from the industry are analyzed under the perspective of the risks and uncertainties involved. In the project, associated costs and economic results also have to be determined and scrutinized. All projects are presented in a seminar at the end of the course. In addition, a "Newsletter" analyzing current problems, challenges and industry development is produced weekly by the group during the duration of the course.These two tools, the project and the Newsletter, have raised in participants a great deal of interest for economic matters related to each one's individual area of expertise.The paper details the course experience providing examples of main projects developed as well as participants' feedback.