When performing an oil and gas risk assessment, a business can use a wide array of tools, such as software that creates digital maps of underground reservoirs, programs that predict fluctuations of prices and devices that determine the values of specific wells. Moreover, a company may utilize software programs that evaluate the seismic amplitude in a particular area, and this system can create predictions of geological activity.
The Number of Wells and the Volume of Oil
Once a company has calculated the average amount of oil that each reservoir is providing, the enterprise should multiply that figure by the number of active oil wells in order to determine the daily output of oil. Subsequently, the business will calculate the cost of operating the necessary machinery and add the resulting figures to the equation for capital investment purposes.
The Supply and the Demand
By choosing the services of a business that specializes in oil and gas industry cost engineering, an investor can analyze a chart that indicates the recent market values of oil and natural gas, and by evaluating trends, experts may predict the future prices for each commodity. An investor should also analyze geopolitical situations that could raise the worldwide values of oil and gas, such as a reduction in a country’s production of oil or a large increase in the number of drivers.
According to several studies, enterprises that are in the energy sector have produced approximately $1.5 trillion of cumulative profits during the last five years. Furthermore, companies that focus on oil and gas generated more than $850 billion of capital in the same time period.
An Investor’s Profits
When conducting an oil and gas risk analysis, a business will calculate the total cost of the land, and an enterprise can determine the amount of time for which a well will consistently provide new oil. Consequently, a company will be able to predict the market value of every reservoir.
After determining the overall cost of extracting and transporting a certain amount of oil, an enterprise can create a chart that indicates an investor’s profits for each barrel when the value of oil is relatively high. Moreover, some companies offer analyses that show a trader’s prospective return on investment if the price for a barrel of oil drops to $35.
Analyzing the Properties of the Rock
Experts can determine the porosity of an area’s rock, and porous materials generally have open spaces. Shale and limestone are typically more porous than other types of rock, and the openings may contain natural gas, water or oil. Furthermore, a company can determine rock’s permeability, and the business will calculate the cost of strategies that can substantially increase the permeability of shale.
Creating Detailed Maps
Before drilling in a certain area, companies may utilize a device that determines the size of the reservoir and the types of rocks that are above the oil. The equipment can calculate the age of the property’s layers of rock, and some devices are able to detect the presence of water near the well. By estimating the amount of oil in the reservoir, an expert can calculate the likely value of the well.
Evaluating the Risks
Some businesses utilize software programs that analyze approximately 10,000 data points in order to create charts that indicate the likelihood of certain events. Particular software programs can predict the probability that a partially explored reservoir will have a certain amount of oil. The software will also utilize geometric correction and a system of distributed parameters.
The program may analyze shrinkage, and when performing this equation, experts can consider the conditions of the well and the presence of other fluids. The result of this calculation will indicate the difference between the amount of oil that is extracted from a well and the level of oil that enters the pipelines.