Every exploration and production company has the difficult task of deciding between a large number of competing oil and gas projects for future investments. Many companies are developing corporate strategies and making investment decisions without considering the relationship between the two. The result is a less than optimal financial performance and failure to meet corporate goals.
The application of portfolio analysis within the strategy and investment stages provides a disciplined and systematic method of analyzing these relationships. Portfolio analysis can be used to develop and compare strategies given a “pool” of investments. Conversely, portfolio analysis can also be used to evaluate individual investments with respect to how they impact the
company’s ability to meet its strategy. Effective portfolio analysis requires high-quality data addressing such questions as: what assets are currently owned, which ones might be purchased, what stakes might be acquired, or what stakes might be developed in the near future? By taking on a particular economic project, is another opportunity missed that has a better net return?
This presentation will illustrate the use of portfolio analysis to develop and compare alternate strategies that a company might pursue. The examples illustrate how projects and corporate performance measures interact and how the interactions create new opportunities for the corporation. The interactions can be quantified in terms of simple graphical summaries that allow decision-makers to compare alternate strategies and quickly assess the business performance trade-offs they will likely face when they select one strategy over another.
3esi-Enersight Strategic Consulting Group brochure
Legacy is an intermediate upstream oil and gas company with a management team committed to aggressive, cost effective production growth. As their business grew more complex, they began to experience a number of pains in the management of capital budgets. Many of these pains centered on the consistency and transparency of their planning data.
SPE 169853 – Transforming Portfolio Optimization through Re-engineered Processes and Technologies (abstract)
The process of upstream planning for the Oil and Gas industry has historically been a time consuming and inefficient process.
The majority of effort is spent collecting data from multiple functional areas and organizational teams within an organization to form a holistic view of a company. By introducing an integrated solution that combines opportunity cataloguing, economic analysis, and optimization into a single workflow, planners can expect significant efficiency gains, reduced time spent planning, and more accurate results.
Through an analysis of the implementation of such a system at Chevron’s Gulf of Mexico business unit, the challenges and benefits of implementing an integrated system as described will be demonstrated.
SPE 169844 – Simplified Business Planning: A Business Unit’s Approach to Creating More Realistic, Higher Return Plans; Faster (abstract)
In the oil and gas industry the term “business planning” brings visions of late nights, additional meetings and countless hours spent collecting and reconciling large amounts of data. This negative connotation has been reinforced year after year as companies struggle to pull together the information required to create realistic and achievable plans to forecast future development and guide the growth of their business.
It is unfortunate that business planning has got such a bad rep as it is critical to the success of any company in any industry. In business planning the goals are to select the best projects from a portfolio of opportunities to maximize the return on investment while being able to effectively communicate and stand-behind the details of how the different scenarios were created to provide confidence in the decision to invest.
The Oxy Permian business unit saw the potential rewards that improvements to their planning process could generate by improving their planning efficiency, reducing errors and breaking out of the same painful cycle they had experienced in previous years. In this paper, we present the realized improvements and results of the improved workflow, focusing on those which were seen to have the largest impact on results including:
Consistent capture and reporting of data across all teams
P50 curves developed, compared and reviewed across teams
Improved ability to account for granular risk factors across plan
Type well scheduling:
Increased ability to rapidly build, explore and turn-around new scenarios
Increased value of the portfolio
Visibility of the plan:
Increased communication and buy-in from teams
Time to market data:
More realistic view of cash flows and activities
Increased confidence in ability to execute the plan
Using this new approach the Oxy Permian planning team was able to turn around three different investment scenarios, numerous development strategies and create a 5-year long-range plan that the entire management team could present and stand behind.
SPE162748 – An Integrated Portfolio Management Approach for More Effective Business Planning (abstract)
Portfolio management has become an important aspect of oil and gas business planning to support the efficient allocation
of capital. As oil and gas becomes more difficult and expensive to find, petroleum companies are looking to portfolio
management for providing both a more streamlined business planning process and an advantage over the competition in the
However, portfolio management has traditionally been deployed at a corporate planning level and has often missed
the opportunity to consider the operational reality at the asset team or regional level. Each capital investment decision must
be consistently evaluated for its ability to contribute to the corporate strategy while maximizing the usage of available
resources. The aim of this study is to show how an integrated portfolio management solution can provide benefits when used
at every stage in the asset development life cycle (from exploration through to production and abandonment) as well as at
different levels in the corporation (asset teams through business units to corporate planning) to drive more efficient and
effective business planning.
This robust, integrated approach to portfolio management will drive more efficient investment across the corporation.
The methodology can be applied to business planning processes at the asset team, the business unit, and at the corporate level within any petroleum company.
Over the last decade, breakthroughs in new oil and gas technologies have helped access untapped resources and allowed for their economic production. Through horizontal drilling and new completion techniques, gas trapped in low permeability tight shales is now accessible. Higher world gas prices have made gas liquefaction economic, facilitating transport of liquefied natural gas (LNG) to overseas markets. Technology, coupled with supply and demand, has initiated a new generation of mega-projects around the globe. These projects encompass the entire supply chain, from field development to pipelines feeding the LNG facilities, to shipping the product to market. As the global market for natural gas continues to grow, there is tremendous investment potential. However, due to complexities involved, accurate modeling is critical to understand the best investment strategy and to minimize risk.
This paper will explore the intricacies involved in modeling upstream field development and the scenarios required to provide reasonable estimates of the upstream asset that will feed the rest of the LNG chain. We will look at the entire upstream asset from the investor’s point of view, including investment required, growth potential, and long-term sustainability. We will compare how different decisions in field selection and development rate impact overall value. This paper will highlight the importance of using technical expertise, high quality data and specialized modeling software to produce a meaningful representation of an upstream development plan.
- Oil and Gas Industry’s First Conference Devoted to Planning Attracts More Than 70 Energy CompaniesDecember 6, 2016 - 12:29 pm
- APLNG and 3esi-Enersight Win 2016 Australian Engineering Excellence AwardSeptember 8, 2016 - 4:00 am
- Gartner Hype Cycle for Upstream Oil and Gas Technologies, 2016August 15, 2016 - 15:25 pm
Interesting linksHere are some interesting links for you! Enjoy your stay :)
- Webinar Series: Embracing Excel™ Economics for Enterprise Planning
- March 29, 2017,
- Pittsburgh Upstream Planning Happy Hour at Cioppino, April 27, 2017
- April 27, 2017,
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