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Abstracts

Cross Border Petroleum Pipeline Projects and their Financial Exposures due to Political Risk

Scott Randall

The Energy industry has always faced political/country risks such as expropriation, unilateral tariff and royalty increases and adverse labor conditions when operating in developing countries. International Oil Companies(IOCs) often rely on qualitative approaches such as factor analysis and/or discrete (high/low/base case) scenarios to assess their financial exposures to political risk.

However, upper management decision makers often struggle to translate these qualitative risk analyses into the impact on their project’s financial targets. Mr. Randall presents one way to quantitatively assess political risk exposure by combining a petroleum industry qualitative country risk factor analysis with an @Risk financial model. To illustrate this approach, he uses a case study of one of the world’s most ambitious, yet politically uncertain cross border pipeline projects: The Chad/Cameroon Crude Oil Pipeline.

 

A Refined Approach for Defining Construction Project Uncertainty

Jason L.G. Mewis, P.Eng.

Risk analysis is a term or concept that that has many different meanings to many different people.  Often projects include some form of qualitative risk planning, brainstorming or mitigation but few do true quantitative risk analysis at the budgeting phase.  Many experts concur that if you don’t do some sort of quantitative analysis, you’re not really doing risk analysis at all and in a lot of cases you may even be wasting your time.

Using knowledge and training from the PMI, AACE and Palisade combined with solid experience as a project manager and senior engineer in the heavy industrial sector, Jason has developed a new approach which is being adopted by industrial companies and organizations such as the Canadian Department of National Defence.  The process is used for doing project risk analysis for quantifying uncertainty on capital construction budgets.  What is unique about the approach is a dual S-Curve concept used for quantifying Contingency separate from Risk Reserve on the project.  The analysis also yields Schedule Contingency and incorporates concepts such as Escalation and Cash Flow modelling. 
The presentation will cover an overview of the process which includes concepts like Calibration Training and Risk Register Brainstorming as well as plans for future integration of other financial modeling concepts. 

 

Environmental Liability Estimation

Poh Boon Ung

Application of probabilistic, decision and risk analysis techniques is increasingly being applied in different industries and sectors to better understand and account for various uncertainties as it relates to costs, scheduling, and other project specific needs. Indeed, use of these techniques is increasingly being applied in the environmental remediation industry to address issues such as developing probabilistic cost estimates, defining strategies for reducing costs and other criteria, and estimating environmental liabilities for a site or portfolio of sites.

ARCADIS has helped our clients, including oil and gas companies and various utilities, apply probabilistic and risk analysis techniques to predict and quantify their potential environmental liabilities. The information collected is typically used to develop strategies for reducing costs, track the performance of a particular portfolio and financial liability reporting purposes. The discussion will touch on the use of @RISK in conjunction with statistical approaches to model the uncertainties around these issues. Part of the discussion will involve use of case studies to highlight these methods and results.

 

Integrated Natural Gas Supply and Marketing Optimization Model

Michael Smith & Daniel Day

Increasing world wide demand for natural gas and price volatility are driving business requirements for more sophisticated tools to assist with optimizing portfolio production scenario’s to achieve the highest profit potential.

This presentation discusses how the Palisade RiskOptimizer (SDK) is integrated into a physical asset and contract model to rapidly generate an optimal gas supply scenario to meet real-time contract quality and quantity terms. Business rules, constraints and gas flow network configurations generally include both linear and non-linear solution sets, which are ideally suited for the evolver analysis process.

The presentation material is taken from current ENSYTE client experiences as well as from a meta-analysis of similar industry initiatives.

 

Integrated Quantitative Project Risk Analysis - Structuring the Model Effectively

Jay OíConnor

A project risk analysis is only as good as the model that was used to prepare it. It is critical that the model be constructed to reflect the risks specifically associated with the project. The model must be able to accurately reflect the risks associated with schedule, quantities, cost and the residual unmitigated risk items from the qualitative risk analysis. The model should also take into account the interrelationships and dependencies of these items.

The presentation will address these issues and present examples of how results can vary based on the level of detail used in preparing the risk analysis.

 

Optimizing Oil & Gas Subsea Field Architecture

Justin E. Morse & Raja Ramachandran

Upstream operators typically outsource subsea field layout designs to engineering design firms. The operator provides constraints on the number and location of wells, flow rates, fluid properties and topsides (units where the oil / gas flow for collection, for example floating production ships or truss spars). The subsea design firm is charged with providing the layout that connects the wells to the topsides through various components, including production trees, flow lines, jumpers and manifolds. Subsea field developments typically last for several years to decades.

The intent of this simulation project is to determine the optimum subsea field architecture layout and component grades by minimizing the total system costs. These costs include the upfront capital, future intervention costs and the production revenue loss due to component failure and repairs. Though this project is based on a fictitious field development, the simulation principles can be extended to complex, real-world designs.

 

 

 

 

Daniel Day
Software Architect, ENSYTE Energy Software Intíl, Inc.

Mr. Day is ENSYTEís senior software architect/developer responsible for analyzing business requirements and establishing the application development strategies to deliver the software solution.

Jason L.G. Mewis, P.Eng.
President, ENGCOMP Engineering & Computing Professionals Inc.

As the founder and president of ENGCOMP, Jason has over 12 years of experience working on projects for the heavy industrial market in Saskatchewan, as both a Senior Structural Engineer and Project Manager. Over the course of the last seven years, Jason has concentrated his efforts on front-end project planning and risk analysis.

Jason is a registered professional engineer with permission to consult in Saskatchewan, Alberta & British Columbia for industrial, commercial, and residential projects. He is experienced in many areas including project management, estimating, planning, and structural engineering. What distinguishes him is his specialized training in risk analysis and computer programming. Combining this experience with a strong problem-solving background and project execution track record gives Jason a unique skill set that is invaluable to ENGCOMP’s clients on many fronts.

Justin E. Morse
Project Engineer, Manatee Inc.

Justin Morse is currently working as a Project Engineer at Manatee Inc., a Houston-based firm that provides engineering and project management services to major oil and gas corporations. For the past two years, Mr. Morse has been primarily contracted to BP, where he has worked extensively on BPís Thunder Horse development located in the Gulf of Mexico. Prior to his current assignment, Mr. Morse worked at Dril-Quip Inc. as a Project & Design Engineer. At Dril-Quip, he was involved with numerous projects where he managed the design, testing, and installation of a wide variety of precision-engineered subsea production equipment. Mr. Morse earned a BSME degree from Texas A&M University in 2002 and is currently pursuing an MBA degree from The University of Houston.

Jay OíConnor
Director, Turner & Townsend Inc.

With over 25 years of experience in the areas of estimating, planning and quantitative risk analysis for international projects, Jay understands the complexities that are associated with identifying and assessing project risks. His experience includes both the ownerís and contractorís side of engineering and construction projects. He has worked in the upstream and downstream oil and gas industry sectors and the pulp and paper sector. His career has taken him to the United Kingdom, Japan, Indonesia, Malaysia, Singapore and Australia.

Raja Ramachandran
Sr. Portfolio Analyst, Marathon Oil Company

Raja Ramachandran is a Sr. Portfolio Analyst with the Marathon Oil Company (Houston). His primary focus is high-level asset-level analysis for the Upstream Segment. He is an experienced user of simulation and the Analytic Hierarchy Process (AHP) decision tools. Within Marathon, he has had prior assignments in financial analysis and economic evaluations of assets in several countries, including Angola, Gabon, Russia, Syria and the US, and has been involved with Upstream procurement analysis. Prior to Marathon, Mr. Ramachandran was a process / process control engineer with The Dow Chemical Company (Plaquemine, Louisiana). He holds a BS in Chemical Engineering from The University of Alabama, an MBA from Louisiana State University and is nearly complete with an MS in Finance at The University of Houston.

Michael Smith
President, ENSYTE Energy Software Intíl, Inc.

Mr. Smith leads ENSYTEís international oil and gas software development and consultation services. ENSYTE supports business process improvement initiatives for client companies engaged in production, marketing, gathering, processing and end user distribution (gas utilities).

Poh Boon Ung
Principal Economist, ARCADIS

Mr. Ung is a Principal Economist with ARCADIS and specializes in quantitative decision analysis, risk analysis, and economic assessments of various environmental issues. He has helped numerous clients address their environmental issues including identifying optimal strategies in light of uncertainties, assessing dredging and remediation strategies, and estimating potential environmental liabilities. In addition to developing decision analysis and statistical models, Mr. Ung manages projects related to water and air regulatory programs. He has prepared cost-benefit assessments for different environmental regulations involving power generating stations, off-road engines, and other environmental impacts from air emissions. He is also experienced in conducting natural resource damage assessments (NRDAs) and analyzing the economic impacts of projects. Mr. Ung holds an M.A. in Economics from the University of Michigan and a B.A. in Economics and Mathematics from Brandeis University, summa cum laude, where he is a member of Phi Beta Kappa.

 

 

 



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