Austrian Development Optimisation

This month I went back in Austria to lead another event.  The weather was pretty nice when I arrived and there were a lot of pleasure craft on the Alte Donau, an isolated section of the Donau (Danube) river in Vienna.

I led a team of 16 production engineers, reservoir engineers, geologists, operations engineers, process engineers, project managers and others focused on discovering opportunities in the development of a relatively new field.  The field already has some producing wells and has about the same number of wells already planned.  The team's goal was to identify a subsequent set of new wells, improvements to the existing wells and the facilities modifications that would be required. We found 25 subsurface opportunities that could be pursued in 12 options, combinations of surface and subsurface scenarios.  Also, unlike a normal PtL, economics had to be run on each opportunity before the scenarios could be assembled into those scenarios and ranked.  I put together a macro to automatically run all the economics once a table of data had been assembled.


Shell originally came up with the idea of a 'creaming curve' (a derivative of Pareto cost-benefit analysis) to show the benefit additional exploration wells have in terms of cummulative discovered oil.  The curve normally shows less and less benefit for more and more exploration wells.   We use this in Produce-the-Limit type events to show management what they would lose in benefit if they cut a portion of the capital costs spent on a particular project, and which portion should be the first to be cut. 

In this case I turned the preferred case into a creaming curve of NPV vs CAPEX and included the overall and incremental NPV/CAPEX as separate curves.  You can see from this that the last opportunities on which you would spend CAPEX are to the right in the curve, these have the lowest incremental NPV/CAPEX (gold line) and lower the overall NPV/CAPEX for the project (red line).  The result is a flattening of the total NPV vs CAPEX (blue line) as the CAPEX increases.


The currently planned wells will double the current production. In this event we found sufficient additional economic opportunities that the company will be able to again double the planned  production level, still at a low upfront investment level.