Feasibility Phase

Test Your Knowledge

Feasibility Phase Quiz

Instructions: Choose the best answer for each question.

1. What is the primary purpose of the Feasibility Phase in oil and gas development?

a) To identify and secure funding for the project. b) To design and construct production facilities. c) To thoroughly evaluate the viability of a potential development. d) To begin production and extract oil and gas.

2. Which of the following is NOT a key element of the Feasibility Phase?

a) Exploration and Appraisal b) Reservoir Evaluation c) Market Research and Sales Strategy d) Environmental Impact Assessment

3. What is the primary purpose of the Economic Evaluation in the Feasibility Phase?

a) To determine the environmental impact of the project. b) To assess the project's potential profitability and financial viability. c) To identify and secure necessary permits and approvals. d) To design and implement production operations.

4. What is the relationship between the Feasibility Phase and the Development Phase?

a) The Development Phase follows the Feasibility Phase only if the project is deemed viable. b) The Feasibility Phase occurs after the Development Phase is completed. c) The Feasibility Phase and Development Phase are independent of each other. d) The Development Phase is a component of the Feasibility Phase.

5. Which of the following is NOT a benefit of conducting a thorough Feasibility Phase?

a) Minimizing risk and maximizing return on investment. b) Ensuring compliance with environmental and social regulations. c) Identifying potential challenges and developing mitigation strategies. d) Guaranteeing successful production and profitability.

Feasibility Phase Exercise

Scenario:

You are a junior engineer working for an oil and gas company. Your team has discovered a promising new oil reservoir. Your manager has tasked you with creating a preliminary Feasibility Study.

Your task:

1. Identify the key elements of a Feasibility Study that need to be considered for this new oil reservoir.
2. Explain the importance of each element and how it contributes to the overall success of the project.
3. Describe potential risks and challenges associated with each element and suggest mitigation strategies.

Techniques

The Feasibility Phase in Oil & Gas Development: A Detailed Look

This document expands on the Feasibility Phase in oil and gas development, breaking down the key aspects into separate chapters for clarity.

Chapter 1: Techniques Employed During the Feasibility Phase

The Feasibility Phase relies on a variety of techniques to comprehensively assess project viability. These techniques span multiple disciplines and integrate data from various sources. Key techniques include:

• Geological and Geophysical Surveys: Seismic surveys (2D, 3D, 4D), well logging (wireline, logging-while-drilling), and core analysis are crucial for characterizing subsurface formations, identifying potential reservoirs, and estimating hydrocarbon volumes. These techniques are used to create geological models of the reservoir.

• Reservoir Simulation: Sophisticated reservoir simulation software utilizes geological and geophysical data to model reservoir behavior under various production scenarios. This allows engineers to predict production rates, pressure depletion, and ultimate recovery. Different simulation methods (e.g., black oil, compositional) are employed depending on reservoir complexity.

• Economic Modeling: Discounted cash flow (DCF) analysis, sensitivity analysis, and Monte Carlo simulation are used to evaluate the economic viability of the project. These models incorporate various cost and revenue parameters, including capital expenditures (CAPEX), operating expenditures (OPEX), oil and gas prices, and production forecasts.

• Environmental Impact Assessment (EIA) Techniques: EIA relies on a range of techniques including baseline studies (assessing existing environmental conditions), impact prediction modeling (assessing potential impacts from the project), and mitigation strategy development. Life cycle assessment (LCA) methodologies may also be used.

• Social Impact Assessment (SIA) Techniques: SIA involves stakeholder consultation (e.g., interviews, surveys, focus groups), impact prediction modeling (e.g., modeling the impact on employment and community infrastructure), and developing mitigation strategies to minimize negative social consequences.

• Risk Assessment Techniques: Qualitative and quantitative risk assessment methods are used to identify and evaluate potential project risks (e.g., geological uncertainty, regulatory changes, cost overruns). Techniques like fault tree analysis and event tree analysis can be helpful.

Chapter 2: Models Used in the Feasibility Phase

Several models are crucial for analyzing different aspects of project feasibility:

• Geological Models: These 3D models represent the subsurface geology, including reservoir geometry, rock properties (porosity, permeability), and fluid distribution. They are essential for reservoir simulation and production forecasting.

• Reservoir Simulation Models: These mathematical models simulate the flow of fluids in the reservoir under various production scenarios. They are used to predict production rates, ultimate recovery, and the impact of different development strategies.

• Economic Models: These models project future cash flows, considering capital and operating costs, revenue streams, and discount rates. Common models include net present value (NPV), internal rate of return (IRR), and payback period calculations.

• Environmental Models: These models predict the potential environmental impacts of the project, including air and water quality, greenhouse gas emissions, and habitat disruption.

• Social Models: These models assess the potential social impacts, such as employment creation, infrastructure development, and community displacement.

Chapter 3: Software Applications for Feasibility Studies

Various software packages facilitate the data analysis and modeling required during the Feasibility Phase. These include:

• Geological Modeling Software: Petrel, Kingdom, and Schlumberger's ECLIPSE are examples of software used for building and interpreting geological models.

• Reservoir Simulation Software: ECLIPSE, CMG, and INTERSECT are commonly used for reservoir simulation.

• Economic Modeling Software: Spreadsheet software (Excel) with specialized add-ins or dedicated financial modeling software are frequently employed.

• Environmental Modeling Software: Specialized software packages are used for air quality modeling, water quality modeling, and ecological impact assessment. Examples include AERMOD and MIKE 11.

• GIS Software: Geographic Information Systems (GIS) software, such as ArcGIS, are used to integrate spatial data and analyze the geographical context of the project.

Chapter 4: Best Practices in the Feasibility Phase

Several best practices can ensure a thorough and effective Feasibility Phase:

• Clearly Defined Scope and Objectives: The scope of the feasibility study should be clearly defined at the outset, outlining the specific questions to be addressed and the level of detail required.

• Multidisciplinary Team: The study should involve a multidisciplinary team with expertise in geology, geophysics, reservoir engineering, economics, environmental science, and social sciences.

• Data Quality and Validation: The accuracy and reliability of the data used in the study are crucial. Data validation and quality control procedures should be implemented.

• Transparent and Consistent Methodology: The methods used for data analysis and modeling should be clearly documented and consistently applied throughout the study.

• Contingency Planning: The feasibility study should consider potential risks and uncertainties, and develop appropriate contingency plans.

• Stakeholder Engagement: Engaging with stakeholders (local communities, government agencies, etc.) throughout the feasibility study process is essential.

• Regular Reporting and Communication: Regular progress reports and communication with stakeholders are necessary to ensure transparency and accountability.

Chapter 5: Case Studies

Specific case studies demonstrating successful (and unsuccessful) feasibility studies would be included here. These case studies would highlight the application of the techniques and models discussed, demonstrating best practices and lessons learned. Examples could include:

• A case study of a successful deepwater oil field development, emphasizing the role of advanced reservoir simulation and risk management.

• A case study of a project that was abandoned during the feasibility phase due to unfavorable economics or environmental concerns.

• A case study illustrating the importance of stakeholder engagement in securing social license to operate.

The specific case studies would depend on the available data and would be tailored to illustrate different aspects of the feasibility phase process. Each case study would include a description of the project, the key challenges faced, the methods used, and the ultimate outcome.