training specialists to the upstream oil and gas industry

Project Decision and Risk Analysis

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Course overview

Participants will gain an overview of important concepts and examples of decision analysis. A key concept that will be covered is the use of a proven decision analysis process, incorporating sensitivities, decision trees, and the value of information, in both deterministic and probabilistic approaches to evaluating oil and gas projects. Participants will learn multiple approaches to modeling decisions for oil and gas projects, but the course will highlight a proven process and technology for decision analysis, which is used by companies worldwide.

The course is designed for

  • Geologists
  • Geophysicists
  • Drilling engineers
  • Production engineers
  • Reservoir engineers
  • Exploration managers and team leaders
  • Commercial managers or land men
  • Business development managers
  • Personnel involved in assessing the value and viability of exploration projects
  • Other personnel, including non-technical, that need to improve their understanding of risk analysis, prospect evaluation and petroleum economics

Learning objectives 

The objective of this course is to provide participants with the necessary skills to apply the methods of risk analysis, prospect evaluation and exploration economics. These skills combined with the appropriate decision analysis techniques will provide participants with knowledge and tools to evaluate and rank exploration prospects, undertake exploration basin analysis and manage exploration portfolio’s to maximize long term value and align with strategic organizational goals.

The program will include a review of probability and statistics fundamentals necessary for the risking of prospects, the development of reserves distributions and commonly used probabilistic estimation skills. Participants will also cover more advanced risk based estimation techniques such as Monte Carlo analysis as well as commonly used probabilistic software. The calculation and use of expected monetary value (EMV) which is commonly used in evaluating and ranking exploration and appraisal projects will be covered in detail. Participants will also be introduced to decision analysis techniques used in oil and gas, value of information and portfolio management fundamentals.

The program will focus on enabling participants to understand and apply the tools and methods of identifying, quantifying and managing risks and uncertainties involved with prospect evaluation, resource assessment and project execution through the exploration, development and production life cycle. Mastering these concepts and the learning of the methods of analysing and making risk based decisions is expected to result in improved evaluation and management of exploration projects. 

The program will include cash flow model development, extensive calculation exercises, sensitivity analysis and group breakout sessions designed to generate participant interaction, develop competence and confidence.  Modelling will include fiscal terms and commonly used taxation regimes such as production sharing contracts and profit based royalty regimes used in the oil and gas industry . Participants will gain an appreciation of the effect of fiscal terms on project value and risk.

The discussion of economics will include an in depth review of key physical project assumptions including reserves, production rate, capital costs, operating costs and project schedule. In addition to project assumptions the course will include an introduction to financial markets and commodity markets to develop an appreciation of the external influences affecting exploration and production projects. This discussion will include current trends and likely ranges for commodity pricing, inflation and international exchange rates.

In addition to theoretical analysis techniques participants will review case studies to appreciate important risk management techniques to mitigate exploration risks, manage costs and reduce the time frames of the exploration investment cycle. This course will also enable course participants to appreciate the likely operational risks, the uncertainty of reserves estimation and the potential vulnerability of development projects that determine the commercial success or failure of a project. The understanding of these concepts and the learning of the methods of analysing and making risk based decisions is expected to result in improved management of exploration projects.

The decision analysis module will include fundamentals of decision analysis, decision trees, sensitivity analysis and simulation, value of information, real option valuation, prospect evaluation and portfolio evaluation. Participants will also review and analyse the effects of commonly used commercial constructs used in exploration portfolio management such as joint ventures, acreage swaps and farm outs.

Participants will also discuss the importance of developing in house teams which are capable of competently evaluating exploration projects and portfolios as well as the presentation of exploration project assessments and economics to enable consistent, informed decision making within their organisation.

The course will also include many relevant case studies illustrating the attributes of both successful and unsuccessful exploration projects and programs. All topics will be complemented with in-class examples, case studies and breakout sessions.

Course outline

Day 3: Simple Decision Models, Part 2

  • Modeling upstream oil and gas decisions
  • Identify and incorporate key uncertainties
  • Simple decision models

Participants will continue analyzing given problems and make recommendations. Groups will work to identify the best projects from a given portfolio of projects.

Day 4: Complex Decision Models, Part 1

  • Complex decision models with probabilistic analysis
  • Case studies and practice problems

Participants will prepare and evaluate more complex decision models, incorporating probabilistic analysis. Case studies will be presented and practice problems will be worked in order to reinforce the understanding of the concepts.

Day 5: Complex Decision Models, Part 2

  • Group problem challenge

Participants will prepare and evaluate a complex project. Groups will present a brief overview of their project and recommendation to the class.


Day 1: Concepts of Decision and Risk Analysis

  • Concepts of decision and risk analysis including decision criteria
  • Decisions in the oil and gas industry
  • Essentials of uncertainty, risk, probability and statistics
  • A proven process for decision analysis

Participants will learn the concepts of decision and risk analysis and the important decision criteria. Decisions in the oil and gas industry will be discussed, specifically how to address them and more importantly how NOT to address them. Participants will also examine the essentials of uncertainty, risk, probability, and statistics including problem framing and eliminating bias. A proven process for decision analysis will be highlighted as well.

Day 2: Simple Decision Models, Part 1

  • Modeling upstream oil and gas decisions
  • Identify and incorporate key uncertainties
  • Simple decision models

Upstream oil and gas decisions, which incorporate key uncertainties, will be modeled. Participants will build simple decision models and decision analysis case studies will be reviewed. Participants will also analyze given problems and make recommendations.




Location Start Date End Date Cost Trainer Book
Upon request     £2,950 Jeannine Smith Make enquiry

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"Excellent in-depth training from an experienced professional."
- Ronald Braber, Panalpina, Switzerland

Website: Studio Beam Ltd