Financial decision making about found oil and gas in Ghana : real options vs. traditional methods

This research is a study of the use of capital budgeting methods for investment decisions. It uses both the traditional methods and the newly introduced approach called the real options analysis to make a decision. The research elucidates how capital budgeting can be done when analysts encounter projects with high uncertainty and are capital intensive, for example oil and gas production. It then uses the oil and gas find in Ghana as a case study to support its argument. For a clear understanding a thorough literature review was done, which highlights the advantages and disadvantages of both methods. The revenue that the project will generate and the costs of production were obtained from the predictions by analysts from GNPC and compared to others experts’ opinion. It then applied both the traditional and real option valuation on the oil and gas find in Ghana to determine the project’s feasibility. Although, there are some short falls in real option analysis that are presented in this research, it is still helpful in valuing projects that are capital intensive with high volatility due to the strategic flexibility management possess in their decision making. It also suggests that traditional methods of evaluation should still be maintained and be used to value projects that have no options or those with options yet the options do not have significant impact on the project. The research points out the economic ripples the production of oil and gas will have on Ghana’s economy should the project be undertaken. These ripples include economic growth, massive job creation and reduction of the balance of trade deficit for the country. The long run effect is an eventually improvement of life of the citizens. It is also belief that the production of gas specifically can be used to generate electricity in Ghana which would enable the country to have a more stable and reliable power source necessary to attract more foreign direct investment.

Geophysical and geological analysis of the Collingwood Member of the Trenton Formation

The Collingwood Member is a mid to late Ordovician self-sourced reservoir deposited across the northern Michigan Basin and parts of Ontario, Canada. Although it had been previously studied in Canada, there has been relatively little data available from the Michigan subsurface. Recent commercial interest in the Collingwood has resulted in the drilling and production of several wells in the state of Michigan. An analysis of core samples, measured laboratory data, and petrophysical logs has yielded both a quantitative and qualitative understanding of the formation in the Michigan Basin. The Collingwood is a low permeability and low porosity carbonate package that is very high in organic content. It is composed primarily of a uniformly fine grained carbonate matrix with lesser amounts of kerogen, silica, and clays. The kerogen content of the Collingwood is finely dispersed in the clay and carbonate mineral phases. Geochemical and production data show that both oil and gas phases are present based on regional thermal maturity. The deposit is richest in the north-central part of the basin with thickest deposition and highest organic content. The Collingwood is a fairly thin deposit and vertical fractures may very easily extend into the surrounding formations. Completion and treatment techniques should be designed around these parameters to enhance production.

TIME LAPSE SEISMIC OBSERVATIONS AND EFFECTS OF RESERVOIR COMPRESSIBILITY AT TEAL SOUTH OIL FIELD

One of the original ocean-bottom time-lapse seismic studies was performed at the Teal South oil field in the Gulf of Mexico during the late 1990’s. This work reexamines some aspects of previous work using modern analysis techniques to provide improved quantitative interpretations. Using three-dimensional volume visualization of legacy data and the two phases of post-production time-lapse data, I provide additional insight into the fluid migration pathways and the pressure communication between different reservoirs, separated by faults. This work supports a conclusion from previous studies that production from one reservoir caused regional pressure decline that in turn resulted in liberation of gas from multiple surrounding unproduced reservoirs. I also provide an explanation for unusual time-lapse changes in amplitude-versus-offset (AVO) data related to the compaction of the producing reservoir which, in turn, changed an isotropic medium to an anisotropic medium. In the first part of this work, I examine regional changes in seismic response due to the production of oil and gas from one reservoir. The previous studies primarily used two post-production ocean-bottom surveys (Phase I and Phase II), and not the legacy streamer data, due to the unavailability of legacy prestack data and very different acquisition parameters. In order to incorporate the legacy data in the present study, all three poststack data sets were cross-equalized and examined using instantaneous amplitude and energy volumes. This approach appears quite effective and helps to suppress changes unrelated to production while emphasizing those large-amplitude changes that are related to production in this noisy (by current standards) suite of data. I examine the multiple data sets first by using the instantaneous amplitude and energy attributes, and then also examine specific apparent time-lapse changes through direct comparisons of seismic traces. In so doing, I identify time-delays that, when corrected for, indicate water encroachment at the base of the producing reservoir. I also identify specific sites of leakage from various unproduced reservoirs, the result of regional pressure blowdown as explained in previous studies; those earlier studies, however, were unable to identify direct evidence of fluid movement. Of particular interest is the identification of one site where oil apparently leaked from one reservoir into a “new” reservoir that did not originally contain oil, but was ideally suited as a trap for fluids leaking from the neighboring spill-point. With continued pressure drop, oil in the new reservoir increased as more oil entered into the reservoir and expanded, liberating gas from solution. Because of the limited volume available for oil and gas in that temporary trap, oil and gas also escaped from it into the surrounding formation. I also note that some of the reservoirs demonstrate time-lapse changes only in the “gas cap” and not in the oil zone, even though gas must be coming out of solution everywhere in the reservoir. This is explained by interplay between pore-fluid modulus reduction by gas saturation decrease and dry-frame modulus increase by frame stiffening. In the second part of this work, I examine various rock-physics models in an attempt to quantitatively account for frame-stiffening that results from reduced pore-fluid pressure in the producing reservoir, searching for a model that would predict the unusual AVO features observed in the time-lapse prestack and stacked data at Teal South. While several rock-physics models are successful at predicting the time-lapse response for initial production, most fail to match the observations for continued production between Phase I and Phase II. Because the reservoir was initially overpressured and unconsolidated, reservoir compaction was likely significant, and is probably accomplished largely by uniaxial strain in the vertical direction; this implies that an anisotropic model may be required. Using Walton’s model for anisotropic unconsolidated sand, I successfully model the time-lapse changes for all phases of production. This observation may be of interest for application to other unconsolidated overpressured reservoirs under production.

The Laboratory Evaluation of Bio Oil Derived From Waste Resources as Extender for Asphalt Binder

A shortage of petroleum asphalt is creating opportunities for engineers to utilize alternative pavement materials. Three types of bio oils, original bio oil (OB), dewatered bio oil (DWB) and polymer-modified bio oil (PMB) were used to modify and partially replace petroleum asphalt in this research. The research investigated the procedure of producing bio oil, the rheological properties of asphalt binders modified and partially replaced by bio oil, and the mechanical performances of asphalt mixtures modified by bio oil. The analysis of variance (ANOVA) is conducted on the test results for the significance analysis. The main finding of the study includes: 1) the virgin bioasphalt is softer than the traditional asphalt binder PG 58-28 but stiffer after RTFO aging because bio oil ages much faster than the traditional asphalt binder during mixing and compaction; 2) the binder test showed that the addition of bio oil is expected to improve the rutting performance while reduce the fatigue and low temperature performance; 3) both the mass loss and the oxidation are important reasons for the bio oil aging during RTFO test; the mixture test showed that 1) most of the bio oil modified asphalt mixture had slightly higher rutting depth than the control asphalt mixture, but the difference is not statistically significant; 2) the dynamic modulus of some of the bio oil modified asphalt mixture were slightly lower than the control asphalt mixture, the E* modulus is also not statistically significant; 3) most of the bio oil modified asphalt mixture had higher fatigue lives than the control asphalt mixture; 4) the inconsistence of binder test results and mixture test results may be attributed to that the aging during the mixing and compaction was not as high as that in the RTFO aging simulation. 5) the implementation of Michigan wood bioasphalt is anticipated to reduce the emission but bring irritation on eyes and skins during the mixing and compaction.

Do increases in oil prices precede U.S. recessions?

This thesis examines the relationship between oil prices and economic activity, and it attempts to address the question: do increases in oil prices (oil shocks) precede U.S. recessions? This paper also applied macroeconomics, either through the direct use of a macroeconomic point of view or using a combination of mathematical and statistical models. Two mathematical and statistical models are used to determine the ability of oil prices to predict recessions in the United States. First, using the binary cyclical (Bry-Boschan method) indicator procedure to test the turning point of oil prices compared with turning points in GDP finds that oil prices almost always turn five month before a recession, suggesting that an oil shock might occur before a recession. Second, the Granger causality test shows that oil prices change do Granger cause U.S. recessions, indicating that oil prices are a useful signal to indicate a U.S. recession. Finally, combining this analysis with the literature, there are several potential explanations that the spike in oil prices result in slower GDP growth and are a contributing factor to U.S. recessions.

EVALUATING THE OIL SANDS RECLAMATION PROCESS: ASSESSING POLICY CAPACITY AND STAKEHOLDER ACCESS FOR GOVERNMENT AND NON-GOVERNMENTAL ORGANIZATIONS OPERATING IN ALBERTA’S OIL SANDS

By employing interpretive policy analysis this thesis aims to assess, measure, and explain policy capacity for government and non-government organizations involved in reclaiming Alberta's oil sands. Using this type of analysis to assess policy capacity is a novel approach for understanding reclamation policy; and therefore, this research will provide a unique contribution to the literature surrounding reclamation policy. The oil sands region in northeast Alberta, Canada is an area of interest for a few reasons; primarily because of the vast reserves of bitumen and the environmental cost associated with developing this resource. An increase in global oil demand has established incentive for industry to seek out and develop new reserves. Alberta's oil sands are one of the largest remaining reserves in the world, and there is significant interest in increasing production in this region. Furthermore, tensions in several oil exporting nations in the Middle East remain unresolved, and this has garnered additional support for a supply side solution to North American oil demands. This solution relies upon the development of reserves in both the United States and Canada. These compounding factors have contributed to the increased development in the oil sands of northeastern Alberta. Essentially, a rapid expansion of oil sands operations is ongoing, and is the source of significant disturbance across the region. This disturbance, and the promises of reclamation, is a source of contentious debates amongst stakeholders and continues to be highly visible in the media. If oil sands operations are to retain their social license to operate, it is critical that reclamation efforts be effective. One concern non-governmental organizations (NGOs) expressed criticizes the current monitoring and enforcement of regulatory programs in the oil sands. Alberta's NGOs have suggested the data made available to them originates from industrial sources, and is generally unchecked by government. In an effort to discern the overall status of reclamation in the oil sands this study explores several factors essential to policy capacity: work environment, training, employee attitudes, perceived capacity, policy tools, evidence based work, and networking. Data was collected through key informant interviews with senior policy professionals in government and non-government agencies in Alberta. The following are agencies of interest in this research: Canadian Association of Petroleum Producers (CAPP); Alberta Environment and Sustainable Resource Development (AESRD); Alberta Energy Regulator (AER); Cumulative Environmental Management Association (CEMA); Alberta Environment Monitoring, Evaluation, and Reporting Agency (AEMERA); Wood Buffalo Environmental Association (WBEA). The aim of this research is to explain how and why reclamation policy is conducted in Alberta's oil sands. This will illuminate government capacity, NGO capacity, and the interaction of these two agency typologies. In addition to answering research questions, another goal of this project is to show interpretive analysis of policy capacity can be used to measure and predict policy effectiveness. The oil sands of Alberta will be the focus of this project, however, future projects could focus on any government policy scenario utilizing evidence-based approaches.

ECONOMIC PROFITABILITY OF THE BAKKEN, NORTH DAKOTA UNCONVENTIONAL OIL PLAYS BASED ON A TYPICAL WELL PERFORMANCE WITH CURRENT MARKET CONDITIONS

Increases in oil prices after the economic recession have been surprising for domestic oil production in the United States since the beginning of 2009. Not only did the conventional oil extraction increase, but unconventional oil production and exploration also improved greatly with the favorable economic conditions. This favorable economy encourages companies to invest in new reservoirs and technological developments. Recently, enhanced drilling techniques including hydraulic fracturing and horizontal drilling have been supporting the domestic economy by way of unconventional shale and tight oil from various U.S. locations. One of the main contributors to this oil boom is the unconventional oil production from the North Dakota Bakken field. Horizontal drilling has increased oil production in the Bakken field, but the economic issues of unconventional oil extraction are still debatable due to volatile oil prices, high decline rates of production, a limited production period, high production costs, and lack of transportation. The economic profitability and viability of the unconventional oil play in the North Dakota Bakken was tested with an economic analysis of average Bakken unconventional well features. Scenario analysis demonstrated that a typical North Dakota Bakken unconventional oil well is profitable and viable as shown by three financial metrics; net present value, internal rate of return, and break-even prices.