Economics of Unconventional Resources & LNG Projects

This unique course programme focuses on three main areas: The fundamentals of petroleum project economics, fiscal systems and valuation The economics of unconventional projects The economics of LNG projects The first part of the course provides delegates with a thorough understanding of petroleum economics, fiscal systems and valuation techniques. The course director has exclusive access to a wide-ranging global database of fiscal systems in order to provide delegates with case studies. Techniques learnt are then applied over the next two days when the specifics of unconventional resources and LNG projects are discussed. The unconventional part of the course discusses all the types of unconventional projects that are currently in operation around the world before moving on to the specifics of shale gas/oil and coal bed methane (CBM). We consider the characteristics of the reservoirs which in turn determine the development plan, facilities requirements and project economics. LNG is a method of developing large gas structures providing flexibility of supply. It comes with its own unique characteristics around contracts, pricing and fiscal terms. Overall project economics can only be determined by considering project returns across the whole value chain. Delegates will partake in a modelling workshop to consolidate their understanding of this subject. Delegates will be provided with electronic copies of all workshop solutions and examples. They will all have a comprehensive hard copy course manual. Who should attend? This three day practical course introduces delegates to petroleum economics and its application in both an unconventionals and LNG project setting. It is suitable for delegates of all technical and commercial disciplines from oil & gas companies, governments, banks, legal and accounting organisations. Delegates will be expected to have a working knowledge of Microsoft Excel and should bring a laptop with Microsoft Office or similar software.
Day 1 The fundamentals of cash flow analysis and valuation Introduction Objectives of undertaking an economic analysis What makes the oil and gas industry different? Cashflow equations Discounted cash flow The time value of money, compounding and discounting The cost of capital and the hurdle discount rate Real vs. nominal cash flows Delegate Q&A’s Capital budgeting techniques Discounted and undiscounted methods (PIR, payback, exposure, NPV,IRR,DPIR) When to use discounted/undiscounted techniques/what they mean Valuing an asset, making development and investment decisions Delegate Q&A’s Global fiscal structures The tax and royalty fiscal system Production sharing contracts The concept of government take Service contracts Global case studies Delegate modelling exercise The economics of unconventional projects Introduction to unconventionals What is an unconventional resource? Unconventional resources: heavy oil, bitumen, tight gas, coalbed methane (CBM), shale gas, shale oil, hydrates The economics of unconventional vs conventional development/production Unconventionals environmental considerations Day 2 Unconventionals: surface and sub-surface considerations of shale gas/oil The nature of shale gas reservoirs and how this influences the economics of development Shale gas development planning and facilities requirements Shale gas development case study Unconventionals: surface and sub-surface considerations of CBM The nature of CBM reservoirs and how this influences the economics of development CBM development planning and facilities requirements CBM development case study Fiscal systems in an unconventionals setting The unconventionals fiscal environment Appropriate fiscal incentives to encourage development Case studies: US, Canada, Australia, UK Day 3 The economics of LNG projects The LNG process and costs LNG pricing around the world Calculation of the LNG netback price Construction of the LNG economic model Determination of transfer price between the upstream project and LNG plant Consideration of the returns to the LNG project versus the returns to the upstream project LNG Workshop This workshop will be the consideration of an LNG project. Both upstream and midstream models will be constructed (in Excel ™). The total project economics will need to be calculated along with the fiscal take for each stage of the value chain. The splitting of the value chain in two or three parts will be considered in line with the calculation of the fiscal take for each stage and comparing this with total project returns. Course summary and close After the course delegates will be sent fully functioning electronic copies of the fiscal model solutions as well as all excel based examples studied during the course.