In the Gulf of Mexico offshore exploration and production (E&P) industry, oil company decision-makers desire to drill wells for exploration or development purposes. While a number of organizational arrangements are employed by firms in the E&P industry, most drilling arrangements can be categorized as one of two types of organizational structure based upon the allocation of planning and supervision responsibilities. Companies can employ internal drilling organizations (best-efforts) to plan and manage their drilling operations or choose to contract externally (turnkey) for these activities. The decision made by the exploration and production company as to which organizational form to employ can have significant impacts on the efficiency and profitability of any given well or drilling campaign. This research examines this choice of governance structure. This paper will examine the drivers of this decision using the theory of transaction cost economics. Regression models are specified and estimated for the turnkey drilling decision, and for the underlying cost functions of best-efforts and turnkey drilling. Results provide support for the transaction cost hypothesis as significant in the choice of governance. / text

Some oil refining companies have recently entered the field of exploration and production (E&P). Both the relatively high financial performances of E&P companies and the shrinking refining margin may motivate refiner’s decision to enter E&P. However, in making this decision, there are other factors to be considered. This study utilizes vertical integration and diversification theories to develop an integrated framework. This framework determines the factors which should be involved in a firm’s decision to enter another business area. In this theoretical approach and its application to Korean refining companies’ decision to enter into E&P, we discuss both the cost benefits and the advantages to acquiring strategic assets of the new business. As sources of short-term cost benefits, the paper discusses site specificity and regional performance. As long-term requirements, the paper explores the need to acquire E&P strategic assets. In early-stage decision making, the best mode may be a small equity investment in regional consortia. As a company acquires more and more strategic assets, it can decide to pursue global opportunities and/or to acquire an E&P company. / text

Governments, the community and industry expect public policy to be implemented effectively and efficiently, particularly when that policy and regulation affects the economic well being and environmental values of the nation. The offshore petroleum exploration and production industry is a case where public policy and regulation are attracting national focus through discussions on the timing of world peak oil production and the future of national and global oil and gas production. An overseas history of famous environmental disasters associated with petroleum exploration and production and transportation also ensures a specific focus on the environmental regulation of the industry. This study elaborates the history and characteristics of the offshore petroleum E&Pindustries in Australia and the US, and the systems and processes used to provide technical advice that informs and advises the regulation of those industries. The study then analyses the management of technical advice for government regulation of the offshore petroleum exploration and production (E&P) industry in Australia using the US equivalent as benchmark. Further, the analysis develops a model that incorporates strategic and operational elements of such advice. Strategic elements include openness, transparency and accountability, and operational elements include use of expertise, timeliness and peer communication. The study illustrates the relative challenges to providing technical advice under Australia�s Westminister form of government which can be less open, transparent and accountable when compared to the US Congressional form of government. The study also shows the greater use of expertise and peer communication associated with the more extensive petroleum research effort in the US, reflecting the greater age and size of its petroleum industry.

Exploration and Production (E&P) project costs within the oil industry are continuously increasing reflecting a reality of more harsh environments, remote locations with minimal existing infrastructure and cost increases for materials and skilled resources. The significant capital expenditures translate to a number of projects either for new or revamped production facilities. Successful project completion requires a series of correct decisions throughout the project life-cycle namely design, construction, operations, maintenance and decommissioning. Using a Reliability, Availability and Maintainability (RAM) model as part of the project decision process is an E&P industry best practice that recently gained acceptance in Hess Corporation. This paper presents the RAM methodology and the gains from its application in a capital project. / text

Proper management of different waste streams generated in conjunction with oil Exploration and Production (E&P) activities in Sudan is a major challenge for Petrodar Operating Company (PDOC) inter alia. PDOC generates a range of waste streams that are expected to significantly increase especially during and after the planned expansions. Therefore, there is a growing need for establishing an Integrated Waste Management System (IWMS) through a systematic approach for enhancing the attempts to redirect PDOC’s efforts towards realizing its commitment to best HSE standards. This study introduces the composition of an Integrated Waste Management System (IWMS) that incorporates better strategies and practices that particularly suit the case of PDOC’s Central Processing Facilities (CPF) (Al-Jabalayn site), Sudan in accordance with the Waste Management Hierarchy. In the first part; mainly the qualitative characterization of the past, current and the near-future situation at Al-Jabalayn site in terms of waste management strategies and practices are all described and analyzed, followed by the creation of a “waste inventory”. Accordingly the elements of a recommended set of appropriate waste management strategies and practices are identified in order to form a framework of an Integrated Waste Management System (IWMS) that particularly fits the case of Al-Jabalayn site and its operating circumstances. The model framework that has been suggested based on this case study can be promoted, replicated and applied to similar Sudanese E&P sites; operating under same conditions. The adoption of such an approach shall pave the way to diminish the gap between the current situation and the most possible sustainable waste management system in the sector.

Gas exploration and production at sea and on land is a recent phenomenon in South Africa. The reason for the sudden interest in gas exploration and production on land is that it may prove to be a solution to the need for cleaner forms of energy and provides the possibility for South Africa to move away from coal-based energy. In order to achieve this transition while keeping economic development intact, South Africa is in need of a “greener” option. Gas is considered the most environmentally friendly fossil fuel and therefore provides South Africa with this much needed “greener” option. The uncertainty about the nature and extent of the environmental impacts regarding gas exploration and production suggests that an efficient and effective energy and environmental law and policy framework is still needed to regulate onshore and offshore gas exploration and production during all phases of its life cycle. It furthermore requires of the authorities that they establish and enhance environmental protection and sustainability during all gas exploration and production operations in order to ensure that the environmental impacts that may occur during such operations are addressed in a holistic and integrated manner. This study focuses on conventional gas. South Africa’s energy and environmental law and policy framework that regulates gas exploration does not cover the entire life cycle of onshore and offshore gas activities. It is of paramount importance that the current fragmentation in the country’s existing energy and environmental regulatory framework be addressed and that a sufficient environmental governance regime, as envisaged in this study, is established. This will enable the administering agents to actively promote and maintain the welfare of the people, the ecosystems, the essential ecological processes and the biodiversity of South Africa, while promoting the utilisation of living natural resources on a sustainable basis to the benefit of all South Africans, present and future, as pledged in the Constitution of the Republic of South Africa, 1996. / LLM (Environmental Law and Governance), North-West University, Potchefstroom Campus, 2014

Gas exploration and production at sea and on land is a recent phenomenon in South Africa. The reason for the sudden interest in gas exploration and production on land is that it may prove to be a solution to the need for cleaner forms of energy and provides the possibility for South Africa to move away from coal-based energy. In order to achieve this transition while keeping economic development intact, South Africa is in need of a “greener” option. Gas is considered the most environmentally friendly fossil fuel and therefore provides South Africa with this much needed “greener” option. The uncertainty about the nature and extent of the environmental impacts regarding gas exploration and production suggests that an efficient and effective energy and environmental law and policy framework is still needed to regulate onshore and offshore gas exploration and production during all phases of its life cycle. It furthermore requires of the authorities that they establish and enhance environmental protection and sustainability during all gas exploration and production operations in order to ensure that the environmental impacts that may occur during such operations are addressed in a holistic and integrated manner. This study focuses on conventional gas. South Africa’s energy and environmental law and policy framework that regulates gas exploration does not cover the entire life cycle of onshore and offshore gas activities. It is of paramount importance that the current fragmentation in the country’s existing energy and environmental regulatory framework be addressed and that a sufficient environmental governance regime, as envisaged in this study, is established. This will enable the administering agents to actively promote and maintain the welfare of the people, the ecosystems, the essential ecological processes and the biodiversity of South Africa, while promoting the utilisation of living natural resources on a sustainable basis to the benefit of all South Africans, present and future, as pledged in the Constitution of the Republic of South Africa, 1996. / LLM (Environmental Law and Governance), North-West University, Potchefstroom Campus, 2014

O Brasil vem passando por um período de mudanças na regulação do mercado de exploração e produção (E&P) de petróleo e gás com o intuito de promover o seu desenvolvimento econômico, tecnológico e científico. Duas destas mudanças foram responsáveis por drásticas modificações no mercado de E&P brasileiro, sendo a primeira, a quebra do monopólio da Petrobras em 1997 com o início da utilização do regime de concessão e, a segunda, a utilização do regime de partilha de produção a partir de 2013 para as áreas estratégicas, especialmente o pré-sal. A busca por um regime regulatório adequado para o mercado de E&P é uma tarefa bastante complexa, porque cada agente envolvido busca defender seus próprios interesses e critérios, o que acaba por resultar em um problema em grupo. Neste trabalho pioneiro, uma nova metodologia é proposta, combinando uma abordagem de tomada de decisão multicritério (MCDM/A) e a teoria de jogos, com o intuito de compreender e analisar mais profundamente este problema e encontrar soluções de equilíbrio. Esta metodologia inovadora é uma das contribuições deste trabalho e propõe modelar a escolha de um regime regulatório mais adequado como um jogo de negociação, levando em consideração as diferentes preferências e perspectivas de todos os agentes envolvidos no mercado brasileiro de E&P de petróleo e gás. Três aplicações práticas do modelo foram realizadas, sendo que as duas primeiras aplicações foram realizadas com dados teóricos e a terceira a partir de coleta de dados com especialistas do mercado de E&P brasileiro. Como principal resultado, verificou-se que a lógica destas aplicações práticas se assemelham ao jogo clássico da Batalha dos Sexos, onde as melhores soluções acontecem quando os agentes coordenam suas ações, mesmo com interesses opostos. Esta dinâmica de conflito de interesses torna a busca por soluções desafiante, sendo improvável que os objetivos de todos os jogadores sejam adequadamente atendidos por somente uma opção, independentemente da alternativa escolhida. / Brazil is facing a period of changes in its regulatory frameworks aiming to promote the economic, technological and scientific development of its entire oil and gas exploration and production (E&P) market. Two of these changes have drastically modified the Brazilian E&P market, which the first one was the utilization of the concession regime breaking the Petrobras monopoly after 1997 and the second one, the adoption of production sharing contracts (PSCs) after 2013 for all the strategic areas, especially the pre-salt. Finding a suitable regulatory framework for the E&P market is a quite complicated task, because every agent involved seeks to defend its own interests and criteria, resulting in a group problem. In this pioneering work, a new methodology is proposed by combining a multicriteria decision-making (MCDM/A) and a game theory approach, targeting to understand and analyze more deeply this complex problem in order to find equilibrium solutions. This innovative methodology is one of the main contributions of this work and proposes to model the choosing of an appropriate regulatory framework as a negotiation game, taking into account the different preferences and perspectives of all agents involved in the Brazilian E&P market. Three practical applications were performed, where the first two were carried out with theoretical data and the third one by using data collected with Brazilian E&P market experts. The main outcome identified that the logic behind these practical applications is similar to the classical game of Battle of sexes, where the best solutions happen when players coordinate their actions, even with opposing interests. This dynamic of conflict of interests makes the search for adequate solutions a challenging task, being unlikely that the objectives of all the players will be sufficiently accomplished by only one option, regardless of the alternative chosen.

Exploration and production (E&P) involves the upstream activities from looking for promising reservoirs to extracting oil and selling it to downstream companies. E&P is the most profitable business in the oil industry. However, it is also the most capital-intensive and risky. Hence, the proper assessment of E&P projects with effective management of uncertainties is crucial to the success of any upstream business. This dissertation is concentrated on developing portfolio optimization models to manage E&P projects. The idea is not new, but it has been mostly restricted to the conceptual level due to the inherent complications to capture interactions among projects. We disentangle the complications by modeling the project portfolio optimization problem as multistage stochastic programs with mixed integer programming (MIP) techniques. Due to the disparate nature of uncertainties, we separately consider explored and unexplored oil fields. We model portfolios of real options and portfolios of decision trees for the two cases, respectively. The resulting project portfolio models provide rigorous and consistent treatments to optimally balance the total rewards and the overall risk. For explored oil fields, oil price fluctuations dominate the geologic risk. The field development process hence can be modeled and assessed as sequentially compounded options with our optimization based option pricing models. We can further model the portfolio of real options to solve the dynamic capital budgeting problem for oil projects. For unexplored oil fields, the geologic risk plays the dominating role to determine how a field is optimally explored and developed. We can model the E&P process as a decision tree in the form of an optimization model with MIP techniques. By applying the inventory-style budget constraints, we can pool multiple project-specific decision trees to get the multistage E&P project portfolio optimization (MEPPO) model. The resulting large scale MILP is efficiently solved by a decomposition-based primal heuristic algorithm. The MEPPO model requires a scenario tree to approximate the stochastic process of the geologic parameters. We apply statistical learning, Monte Carlo simulation, and scenario reduction methods to generate the scenario tree, in which prior beliefs can be progressively refined with new information. / text

The authors bring us a general approximation of the regulatory model related to hydrocarbon exploration and production activities in Spain. In this sense, the analysis is focused in the increased use of the hydraulic fracturing technique, better known as «fracking». In particular, the authors analyze the case of the refusal of some Spanish Autonomous Communities regarding the implementation of this technique and how the Central Government has faced that opposition. / Los autores nos brindan una aproximación general al modelo regulatorio de las actividades de exploración y producción de hidrocarburos en España. En ese sentido, centran su análisis en el uso, cada vez más extendido, de la técnica de la fractura hidráulica, más conocida como fracking. En particular, analizan el caso de la negativa de algunas Comunidades Autónomas españolas respecto a la implementación de esta técnica y cómo ha afrontado el Gobierno Central dicha oposición.