PETROENG 7054 - Petroleum Business & Project Economics

Petroleum engineers perform technical work to support the "business" objectives of the organization they work for (corporation, government). It is therefore important that they understand that "business" because it will influence the judgments they make. Economic evaluations provide the main source of the organization's information by which investment and operational decisions are made regarding the most effective use of resources. There are many subtleties and assumptions that underlie the apparently straight-forward economic calculations that are often seen. Consequently, a fundamental understanding of the concepts behind economic evaluation and of techniques for performing them within a petroleum context, are essential skills. Topics to be included are: oil & gas business context, economic and business concepts, cash-flows and petroleum fiscal regimes, time-value of money, discounted cash flow, net present value and other economic metrics, case study and portfolio management. If time permits, there will be an introduction to real options analysis and its application to valuing flexibility and risk.