Abstract
The requirement for computing power in economic decision making is normally underestimated. It is already recognized in the oil and gas industry that for geologic and reservoir engineering calculations parallel computing power is necessary to carry out simulations of millions of cells. This paper explores he actual requirements for parallel computing for economic analysis covering decision making at all decision gates, and the added benefits of running calculations and databases in a secure cloud solution.
Economic analysis for typical oil and gas project decisions requires extensive analysis of alternative scenarios and assumptions, and robustness evaluation such as identification of after-tax key metrics and break-even values. A specific project scenario analysis is then be added to the full analysis for exploration decisions, portfolio mergers and acquisitions (M&A) decisions or selection of optimum development scenario at front end engineering and design (FEED) stage or life-extension projects. A key challenge for economists is that other disciplines do not always recognize the complexity of the analysis involved and the time required to provide the necessary decision basis for investment in multiple-billion dollar projects. Economists need to be involved at an early stage of the work process and have access to powerful computing power provided by appropriate tools in the cloud. Economic analysis is usually the last step in a series of work steps leading up to making an investment decision by management. A framework for such tools in the cloud was developed and applied to several real-case decision gate situations, including exploration, concept select, field development including life extension/enhanced recovery projects and portfolio M&A activities. Other aspects of using this framework with respect to speed, security and user friendliness was also evaluated.
An appropriate framework for covering all requirements for timely and secure after-tax economic analysis and decision making was successfully developed and applied to several real cases. This framework allows economists to define inputs and receive results in a fast and timely manner. Traditionally the discipline of economic analysis has not been considered computer-intensive or manpower-intensive, but this paper demonstrates that cloud computing is necessary and provides significant benefits and allows economic analysis to be performed faster and more timely, and still be very secure.
This novel cloud-based approach to full and extensive economic analysis fulfills all requirements for fast, timely and secure economic decision making at all decision gates including exploration, concept select, field development incl. life extension/enhanced recovery projects and portfolio M&A activities.
