I NEED SOMEONE TO SOLVE THIS AND ACTUALLY DO THE MATH

There are some costs at n$=0($PV$).$ Estimate costs with factors for capacity $36000$ bbl$.$ For larger facility use power$-$sizing. Some costs are annual plus revenues are annual and $10\%$ royalty to govt, find net annual revenues. Then determine NPW$.$ Case Study as presented in pdf is basically a bigger problem $($bigger than the class or HW problems, this is why this is a part of project$).$ Whatever you need to solve this problem is provided $($I have also included $$suggestions for the student$).$ Now you all as a group need to sort out given info in order to solve for the answers for Options $1$ and $2.$ Submit only one report per group. The case study report should include a title page mentioning title of the case study, names of the students, course number, instructor$$s name, and peer$-$evaluation describing the contribution $($specific work and overall effort$)$ of each member in the group. The following pages may contain a summary of the case study and finding, detail solution for the case study, and conclusion.

HERE IS THE CASE STUDY

$57$

Case $3$

Wildcat Oil in Kasakstan

by

Herb Schroeder

University of Alaska Anchorage

Wildcat Oil has recently discovered a new $500$ million barrel crude oil reservoir in Kasakstan.

Reservoir engineers predict recovery of about $300$ million barrels with current technology.

The firm needs a preliminary cost estimate for a feasibility study of a facility to produce the

oil and prepare it for pipeline transmission. Wildcat has paid the Kasakstan government

$$400$M in up$-$front lease costs. Additionally, the Kasakstan government will receive $10\%$ of

the net revenues $($value$/$barrel $[$bbl$]$ minus operating costs minus transportation costs$).$ After

$100$ million barrels have been produced, all facilities and the remaining oil will belong to the

Kasakstan government.

The feasibility study should optimize the trade$-$off between capital investment and

production capacity in barrels$/$day $($bbl$/$day$).$ Engineering on a generic $36,000$ bbl$/$day facility

identified the major equipment items. Vendors have provided equipment costs for the five

classes of major equipment $($see Table $3-1)$ for this size facility. The factor estimates shown

in Table $3-1$ for all equipment, piping, and controls linked with each class of major

equipment have been compiled from Wildcat$$s database based on past experience. For

example, the total cost linked with the turbines is $2\mathrm{.}5$ times the $$33\mathrm{.}2$ million $($including the

turbine cost$).$

Wildcat Oil uses a price of $$19\mathrm{.}50/$bbl for oil of this quality delivered to the Kasakstan

tanker facility. Facility operating costs are estimated at $$4\mathrm{.}50/$bbl$,$ and transportation to the

tanker facility is estimated at $$1\mathrm{.}25/$bbl$.$ Production of all oil fields follows a decline curve;

Cases in Engineering Economy $2$ nd by Peterson & Eschenbach

$58$

however, negotiations between the government and Wildcat Oil have sized the facility so that

production is basically constant through the period of Wildcat$$s ownership of the facility.

For estimating the cost of different size facilities, the production facility can be classed as

a large refinery $($with a power sizing or capacity exponent or Lang factor of $\mathrm{.}67).$

Table $3-1$ Cost Estimation Basis

Item Cost $($Millions of $$)$ Factor Estimates

Turbines $33\mathrm{.}22\mathrm{.}5$

Compressors $24\mathrm{.}82\mathrm{.}8$

Vessels & tanks $25\mathrm{.}62\mathrm{.}7$

Valves $7\mathrm{.}23\mathrm{.}8$

Switchgear $4\mathrm{.}82\mathrm{.}4$

Suggestions for the Student:

$1.$ What point of view should you take for analyzing this project?

$100$M barrel should be used for the company. The fixed volume means the larger

facility will have a shorter life. Operating cost for larger facility is also $$4\mathrm{.}50/$bbl$.$

The $$400$M upfront lease cost is paid before drilling, so it's a sunk cost. How

much should be budgeted for the $36,000$ bbl$/$day production facility?What

additional costs and benefit$($s$),$ if any, are there to be derived from resizing the

facility to process an additional $5,000$ bbl$/$day$?$

Options:

$1.$ What is the present worth of this project with a $36,000-$bbl$/$day facility? An

interest rate of $15\%$ per year is appropriate for this type of investment.

$2.$ Is the larger facility a wise investment?