As engineers and scientists, we are very familiar with analysing technical risks, developing mitigation plans and implementing the plans that are safe and technically feasible. At the same time, dealing with subsurface projects has made us adept at analysing and understanding technical uncertainties. Furthermore, because of the large investments involved in upstream projects we are regularly exposed to commercial issues. However, the optimum situation is when the technical and commercial risks and uncertainties are evaluated in an integrated fashion.
Although many organisations combine technical and commercial evaluations, there are many examples that such integration is either superficial or is done in a series. Often the economic evaluation is performed at the end of the process, by which time it may be too late to influence the decisions or the changes may be too expensive to implement.
Techno-economic integration becomes absolutely essential when our industry faces "game-changing" technologies, for example:
Unconventional resource developments: Shale gas/oil
Isolated gas monetisation: Gas to Liquid (GtL), Floating Liquefied Natural Gas (FLNG)
Heavy oil developments: In-situ combustion, Steam Assisted Gravity Drainage (SAGD), Cold Heavy Oil Production with Sand(CHOPS)
Examples will be given to demonstrate the successes and failures of game changing technologies, where the failures are generally less advertised. It is important to discuss the ‘lessons learnt’ from these important events in our recent history: How can we apply techno-economic evaluation in an integrated fashion (and at an earlier stage) to better evaluate risks and uncertainties associated with implementing game-changing technologies? How can we influence the outcome of these projects?
This discussion is particularly relevant to the North Africa region as governments, National Oil Companies (NOCs) and International Oil Companies (IOCs) try to harness unconventional resources and seek alternative ways to monetise their gas resources.