RISK ANALYSIS APPLIED IN OIL EXPLORATION AND PRODUCTION

CE Mbanugo; JC Agunwamba; MN Eke

doi:10.4314/njt.302.40

RISK ANALYSIS APPLIED IN OIL EXPLORATION AND PRODUCTION

Authors

CE Mbanugo Department of Civil Engineering, University of Nigeria, Nsukka, Enugu State, Nigeria
JC Agunwamba Department of Civil Engineering, University of Nigeria, Nsukka, Enugu State, Nigeria
MN Eke Department of Mechanical Engineering, University of Nigeria, Nsukka, Enugu State, Nigeria

DOI:

https://doi.org/10.4314/njt.302.40

Keywords:

risk analysis, oil field, risk management, projects, investment opportunity

Abstract

This research investigated the application of risk analysis to Oil exploration and production. Essentially, different organizations approach risk analysis from various perspectives depending on the company’s policies. Some problems were identified as the causes of poor risk analysis procedures such as wrong concepts and miscommunication by the risk analysis staff. The risk associated with investments in oil exploration and production among others include: risk of storm damage to offshore installations; risk relating to future oil and gas prices; risk of exploration or development of dry hole and environmental risk. The analysis in this work is based on the actual field data obtained from Devon Exploration and Production Inc. The Net Present Value (NPV) and the Expected Monetary Value (EMV) were computed using Excel and Visual Basic to determine the viability of these projects. Although the use of risk management techniques does not reduce the uncertainty in Oil field projects; it reduces the impact of the losses should an unfavourable event occur.

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Issue

Vol. 30 No. 2 (2011)

Section

Research papers of General Interest

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