The Re-development Potential of Offshore Structures Destroyed by Hurricanes
Table 3: Estimated Remaining Reserves and Discounted Revenue for Active Structures Complex/Structure
Remaining Reservesa (MBOE) US$60–140/bbl
305 806 927
1055 1286 1340
20068 20739 20947 21009 21471 21579 21764 22343 22444 23098 23308 23925 26044 80003 90004 1038
20670/1 20670/3 21031 21583 21781 21795 23009 23370 27008
Subtotal – Ad Subtotal – Be Subtotal – Cf Total
US$60/bbl
2,093 0
US$80/bbl
0–0c 00 63–81 0–0
6,910–6,927 0–0
697–708
3,763–3,924 243–386 91–135 0–23
39–46
1,050–1,139 745–844 170–270 15–43
1,347–1,463
18,797–18,884 146,956–147,042 0–54
1,946–2,107 64–79
881–881 825–896
1,201–1,293
16,094–16,152 11,936–11,995 1,135–1,362 6,043–6,100 0–0
317–375
11,723–11,776 185–366
31,536–32,901 201,330–201,716 233,051–234,983
187,857 0
21,021 70,759 6,904 2,659 0
1,627
29,759 15,427 4,458 508
31,957 391,749
2,553,676 0
38,361 2,716
36,287 25,203 31,211
427,729 315,107 17,481
143,825 0
11,785
301,059 4,966
677,032
3,989,219 4,671,216
2,790 0
250,594 0
28,271 94,561 10,601 4,124 0
2,169
40,254 20,912 6,845 1,132
42,998 522,346
3,404,902 1,090
51,530 4,040
48,383 33,910 41,875
570,317 420,158 23,356
191,786 0
16,199
401,427 9,067
907,539
5,319,962 6,236,569
Discounted Revenue at 10%b (US$1,000) US$100/bbl 0
US$120/bbl 0
4,329 0
313,242 0
35,339
118,352 13,960 5,405 517
2,711
50,745 26,313 9,014 1,813
53,944 652,939
4,256,129 2,234
64,677 5,049
60,478 42,543 52,477
712,902 525,206 29,208
239,755 0
20,643
501,791 13,061
1,138,408 6,650,248 7,801,717
5,195 0
375,891 0
42,407
142,062 17,327 6,722 1,088 3,724
61,067 31,717 11,189 2,520
64,892 783,533
5,107,355 2,680
77,684 6,442
72,574 51,178 63,080
855,488 630,254 35,056
287,717 0
24,944
602,155 16,389
1,368,988 7,980,563 9,365,940
US$140/bbl 0
6,060 0
438,539 0
49,475
165,809 20,668 8,058 1,684 4,345
71,401 37,114 13,347 2,941
75,777 914,124
5,958,581 3,907
90,755 7,515
84,670 59,763 73,678
998,073 735,301 40,901
335,675 0
29,398
702,517 20,195
1,598,993 9,310,890
10,930,077
a. Remaining reserves correspond to oil prices that range from US$60–140 per barrel (bbl); b. Computed based on the assumption that first revenue occurred one year after initial investment; c. Structures with no remaining reserves are uneconomical at the time of the assessment; d. Computed from all structures with pre-hurricane production <100 barrels of oil equivalent per day (BOEPD) and designated as unlikely to be re-developed. Re-development rates from this class are estimated at 10–20%; e. Computed from all structures with pre-hurricane production >100 and <1,000BOEPD designated as a possible re-development opportunity. Only a percentage of these reserves are likely to be recaptured in the future, estimated at 40 –60%; f. Computed from structures with pre-hurricane production >1,000BOEPD and are considered highly likely to be re-developed. Most of these reserves are likely to be recaptured, estimated at ≥90%. MBOE = million barrels of oil equivalent.
are very important for investment decisions as they are the equivalent, for a given price level, of expected annual gross revenue and property value. Log scales are used because of the wide variation of the data.
re-development rates. Our working assumption is that structures with greater pre-hurricane production and remaining reserves are more likely to be re-developed.
Regions are classified as unlikely, possible or probable re-development based on the probability of re-development computed based on historic3
Idle structures fall on the vertical axis and are unlikely to be re-developed because in most cases they have extracted all the commercial reserves at site and are waiting for lease production to terminate before being decommissioned. Structures on the horizontal axis with positive pre-hurricane production rates and zero expected remaining reserves arise due to the nature of modelling across a structure’s entire life-cycle. Structures that fall on the horizontal axis may be uneconomic or a re-development candidate. Structures within the scatterplot in the bottom left-most quadrant are unlikely to re-start production because they will suffer from both low cash flows and low valuations. In this quadrant, the probability of re-development is estimated to range between 10 and 20%. Structures that fall within the possible and probable re-development categories have a greater likelihood of
EXPLORATION & PRODUCTION – VOLUME 9 ISSUE 1
returning the capital expenditures required by the investment. In the middle quadrant, where pre-hurricane production rates range from 100 to 1,000BOEPD and expected remaining reserves generally range from
The decision to repair, replace or decommission damaged and destroyed infrastructure is often difficult because of the
uncertainty involved in estimation.
10,000 to 20 million BOE (MBOE), structures have a 50:50 chance of re-development. The right-most quadrant has the highest probability of re-development ranging between 85 and 95%.
Expected Reserves Reserves expected to be recovered are calculated by multiplying the
reserve estimates by the anticipated re-development rates pi, i = 1, 2, 3 per category. If we assume p1 = 15%, p2 = 50% and p3 = 90% corresponding to the re-development rates in the unlikely, possible and
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