Abstract
Development of petroleum reserves on the Grand Banks offshore Newfoundland commenced in 1990 with the signing of binding agreements relating to the Hibernia development project. Financial and fiscal incentives, which were provided to Hibernia, may not be available to subsequent projects. The possibility of low world oil prices and high development costs depresses the anticipated level of profitability of Grand Banks fields. Potential price volatility, wide ranges in reserves and uncertainty with respect to reservoir performance and costs contribute to the variability of anticipated profitability of such fields.
An illustrative, partially delineated, Grand Banks oilfield is examined in this paper. The field is considered a candidate for development, given satisfactory economic returns and the relevant project risks are identified, quantified and managed. This paper summarizes an approach to assessing the expected level and variability of economic returns on the subject field.
