Course title: CE198: Petroleum Industry Fundamentals

Student Facilitator: Greg Croft (CEE, Ph.D. student)

Faculty Advisors: Tad W. Patzek, Professor, CEE, patzek@ce.berkeley.edu

Sponsoring Department: Civil and Environmental Engineering

Course Level: 100, 3 credits,

When: To be offered in Fall 2007

Prerequisites: Basic knowledge of linear algebra, basic computer science, basic economics, and undergraduate physics

Course Grading: C/NC, 60% of total points are required to pass. Points are allocated as follows: Homework 50%, Final Project 50%

This is a lecture and discussion course for students intending to learn about the petroleum industry. The emphasis will be on the technical and operational aspects of the upstream part of the industry. The course begins with definitions and an overview of the history of the petroleum industry. After that, we follow the entire process of discovering and evaluating an oilfield. Topics will include acreage acquisition, seismic surveys, design and drilling of a discovery well, formation evaluation, well completion and testing, delineation of the reservoir, estimation of reserves, production planning, and economic evaluation in the presence of risk. Both theory and actual case histories will be presented.

Students will run computer simulations, and perform a variety of technical and economic analyses. Each student will prepare and present a class project. Depending on their backgrounds and inclinations, students may either do a technical project or a business case history.

This course will have three hours of lecture per week. After the introduction and history, each week will cover one professional specialty within the upstream petroleum industry (see job titles in parenthesis). The student facilitator is a former oil company executive, the faculty advisor is a professor of petroleum engineering and there will be outside speakers as well.

The course is an overview and is not meant to be a substitute for specialized courses. Upon completion of the course, students should:

• have a basic familiarity with ten different oil industry professions
• be able to combine public production data with published financial reports to evaluate an oil company
• be able to critically evaluate announcements of oil discoveries or new, oil-related technologies

Week 1 Introduction and definitions

• Upstream versus downstream
• Oil versus natural gas liquids
• API gravity

Week 2 History of the oil industry

• Before 1945: the early days
• 1946 to 1970: the oil peace
• 1971 to 1985: oil nationalism
• 1986 to present: a new order

Week 3 Geology and geography of petroleum

• The petroleum system
• Great source rocks of the world
• The geography of oil production

Week 4 Acreage acquisition and deal structures – domestic

(landman)

• Private leases and farmouts
• State leases
• Federal Leases

Week 5 Acreage acquisition and contract terms – international

(contract negotiator)

• Tax and royalty regimes
• Production-sharing agreements
• Work commitments
• The role of governments

Week 6 Seismic exploration

(geophysicist)

• Moveout and stacking
• Field layouts
• Deconvolution and migration

Week 7 Well design

(drilling engineer)

• Casing program
• Bit selection
• Safety and environmental considerations

Week 8 Formation evaluation

(log analyst)

• Lithology and correlation tools
• Saturation tools
• Porosity tools

Week 9 Well completion and testing

(well test engineer)

• Test procedures
• Pressure transient analysis

Week 10 Reservoir delineation

(development geologist)

• Mapping from well data
• Mapping from seismic data
• Reservoir characterization

Week 11 Reserve estimation

(reservoir engineer)

• Methodology
• Proven versus 3P reserves
• Reserve calculation exercise

Week 12 Production planning

(facilities engineer)

• Facilities required
• Onshore versus offshore
• Enhanced recovery

Week 13 Economic evaluation with risk and uncertainty

(economic evaluation specialist)

• The nature of exploratory risk
• Discounted cash flow models
• Probabilistic models

Week 14 Student presentations

Week 15 Student presentations

Textbook: There will not be a required course textbook. We will have class notes and recommended reading. The students will be organized into teams with complementary skills. Each team will be assigned a class project, which will be presented and defended at the end as the final examination. There will be homework problem assignments every week and a final project.

Monitoring of Student Facilitator: The faculty advisor will meet once per week with the student facilitator and will attend many of the class sessions.

Related Courses: None