Risk Evaluation of Investment Decision During Low Oil Prices

Abstract

Profitability of investment projects for oil fields development is dropping drastically in the period of low oil prices especially if production drilling is in progress (so called "green fields"). Decision that is usually made in order to keep a positive annual profit during such period often leads to drilling suspension as the most capital-intensive process. Influence assessment of the investment project indicators in terms of fluctuating oil prices and long period of time has not been extended yet.The analysis of factors affecting the oil price and its trend building are brought in the paper. The evaluation of the investment project on the production drilling in the low oil price period is performed in two scenarios: high oil price volatility trend and current price. It was shown that in order to avoid loses in short term period the company and the government miss the benefits in the long term perspective. The case study is based on the 2008 economic crises. The methodology of project estimation by using high oil price volatility trend within its range of uncertainty is suggested in the paper.

Drilling Centers Maturity Model Evaluation Based on Integrated Operation Key Elements: A Case Study from Brazil

“…(1) gives a general idea of the Petrobras drilling centers in this context. The Petrobras drilling centers are supported by solutions that can be classified into five groups, as follows: (1) project data solutions for creating and editing well projects and long-term resources schedules, such as for boats and rigs, which are critical resources for these E&P activities; (2) operational data and key performance indicator (KPI) solutions for capturing and reporting operational status data, registering the building of wells and maintenance life cycle and resource use, and recording rig indicators' informational solutions, lost time, cost, quality indicators, operations safety data, and rig and blowout preventer (BOP) specifications; (3) real-time data solutions for transmitting data acquired offshore to shore because it is real-time data that supports most of the systems used in drilling centers; (4) operational images solutions that consist of a software and hardware set that perform the collection and transmission of camera images from the rig to the drilling centers as an assist in decision making; and (5) video conferencing solutions with voice and image integration that enable people offshore to connect with the drilling centers and other onshore environments toward assisting in decision making. Table 1 shows the main activities of a typical drilling center.…”

“…High uncertainty in the price of oil is a significant problem for oil and gas companies [1]. The recent large decrease in price and consequently projected project revenue as well as postponement and cancellation of other investments has led to a dramatic reduction in the drilling rig fleet and implementation of cost-cutting initiatives worldwide [2].…”