You have been hired recently in KOC and during the first week of your employment, four development projects for a newly discovered field in Burgan were proposed to KOC. Due to the oil price crises and the risk associated with new projects these days because of the fluctuation in the oil and gas prices, the company is in the process of investing in ONLY one project.

Your manager has assigned you to work in the project evaluation team and this is considered as the first challenge you will face in your career life, and you must prove yourself and prove that you gained enough knowledge from ACK that made you competent to evaluate projects.

Your manager gave you 3 sets of production data for the three projects with no information on how these fields decline. In addition, the following production data for each project was provided to you (Appendix 1).

Project 1:

An onshore oil & gas well is expected to start with a daily flow rate of 10,000 STB/day and has a GOR of 1.7 MCF/STB. The reservoir section extends from 14400 to 15150 ft.

Project Life 18 years.

Project 2:

An onshore oil well is expected to start with a daily flow rate of 10,000 STB/day. The reservoir section extends from 11200 to 11970 ft.

Project Life 12 years.

Project 3:

An offshore deep gas well is expected to start with a daily flow rate of 10,000 MCF/day with a liquid to gas ratio of 8 STB/MCF. The reservoir section extends from 17000 to 17750 ft.

Project Life 9 years.

Your job is to do the following for each set of the provided data and then select the best project that would yield the highest net profit to invest in:

1. First, identify a suitable decline model using plotting techniques (Provide all the plots in your report) (You must send your Excel sheet by e-mail) (60 Marks)
2. Determine models parameters (12 Marks)
3. Predict the production rate at the end of project life (stated above) (12 Marks)
4. The total reserves that will be recovered (oil, gas, or both) at the end of project life. (12 Marks)
5. Total Revenues for each project (12 Marks)
6. Calculate the BOEc for the projects that will produce oil & gas (12 Marks)
7. Calculate the Cost/bbl or Cost/BOEc (12 Marks)
8. Net profit for each project (12 Marks)
9. Summarize all the above results in a table as shown in Appendix 2 (10 Marks)
10. Rank the three projects in terms of (6 Marks)

• The lowest cost per bbl
• The highest net profit

1. Write a report that contains the following: (40 Marks)

• Executive Summary
• Methodology
• Results
• Conclusion

Additional Information you will need for the evaluation can be found below.

The following development plan was provided for each project:

• For Project # 1 you will need 10 producers and 4 injectors
• For Project # 2 you will need 4 producer and 1 injector
• For Project # 3 you will need 6 producers and 2 injectors

The cost to drill a well is approximately $10 Million.

The cost to complete producers ONLY is $6 Million/ producer for Project # 1, $7 Million/ producer for Project # 2, and $9 Million/ producer for Project # 3

The operational costs for producing wells are as follows:

• $ 6 Million/year/well for onshore wells
• $ 12 Million/year/well for offshore wells

Oil Price is $110/STB & Gas Price is $5.85/MSCF. Production Data

Project # 1		Project # 2		Project # 3
Time (year)	q (STB/day)		Time (year)	q (STB/day)		Time (months)	q (MCF/day)
0	10000		0.00	10000		0	10000
0.1	9634		0.20	9290		1	9049
0.2	9294		0.30	8980		2	8188
0.3	8977		0.40	8680		3	7409
0.4	8682		0.50	8400		4	6704
0.5	8405		0.60	8140		5	6066
0.6	8145		0.70	7900		6	5489
0.7	7900		0.80	7670		7	4967
0.8	7670		0.90	7450		8	4494
0.9	7453		1.00	7250		9	4067
1	7248		1.10	7050		10	3680
1.1	7054		1.20	6870		11	3330
1.2	6870		1.30	6690		12	3013
1.3	6695		1.40	6530		13	2726
1.4	6529		1.50	6370		14	2467
1.5	6371		1.60	6220		15	2232
1.6	6221		1.70	6080		16	2020
1.7	6077		1.80	5940		17	1828
1.8	5940		1.90	5810		18	1654
1.9	5809		2.00	5680		19	1497
2	5684		2.10	5560		20	1354
2.1	5564		2.20	5450		21	1225
2.2	5449		2.30	5340		22	1109
2.3	5338		2.40	5230		23	1003
2.4	5232		2.50	5130		24	908
2.5	5130		2.60	5030
2.6	5032		2.70	4940
2.7	4938		2.80	4840
2.8	4847		2.90	4760
2.9	4760		3.00	4670
3	4675		3.10	4590
3.1	4594		3.20	4510
3.2	4515		3.30	4440
3.3	4439		3.40	4360
3.4	4365		3.50	4290
			3.60	4220
			3.70	4160
			3.80	4090
			3.90	4030

Summary of all the results for the three projects

	Unit	Project 1	Project 2	Project 3
Suitable Decline Model
Model Parameter (b)	1/year
Production Rate at the end of the Project	STB/day or MCF/day
Total Oil Reserve	MMSTB
Total Gas Reserve	BCF
Total BOEc	MMBOEc
Total Revenue	$Million
Drilling Cost	$Million
Completion Cost	$Million
Operational Cost	$Million
Total Technical Cost	$Million
Cost/bbl or Cost/BOEc	$/STB or $/BOEc
Net Profit	$Million