Taking a look at the Petroleum Industry

634 WordsFeb 22, 20182 Pages
STAGES OF INVESTMENT There are five investment phases with varying level of uncertainty namely: 1. Exploration 2. Appraisal 3. Development 4. Production 5. Decommission The exploration phase takes about 5 years. It involves looking for oil and gas using seismic surveys. There is about 10% certainty to find oil and 75% certainty to find any oil at all. The exploration costs for a conventional oil and gas onshore is $10 - $15 million whereas it is $10 - $100 million in the deepwater’s. The Appraisal phase takes about 5 years. It involves drilling another well (or wells) to show the amount of oil and gas present. The development phase involves setting up wells to produce oil. This is followed by the production phase which involves extracting oil and gas by the use of wells. During the decommissioning phase, the wells are sealed to prevent any environment damage due to oil or gas leakage from the wells. LICENSES Governments across the globe issue various licences or permits to the oil and gas industries. They are of three types:- 1. Exploration licences 2. Production licences 3. Retention licences EXPLORATION LICENCES Petroleum Exploration Licences (PEL) are permits issued by the government to the companies to look for oil and gas. These are also called Authority to Prospect (ATP). These licences are given to the companies through a bidding auction conducted by the government. Apart from the licence fee, the companies pay a bonus which is the signature money
Open Document