PET 412E - Petroleum and Natural Gas Economics

Course Objectives

To acquaint students with the techniques commonly used in the application of engineering economics and decision analysis concepts with special emphasis on petroleum assets.

Course Description

Overview of petroleum and natural gas economics and basic concepts. Methods of profitability measures. Definition of risk and uncertainty. Decision analysis, decision tree analysis, evaluation of expected monetary value. Basic principles of probability: probability distributions, binomial, multinomial and hypergeometric distributions. Risk analysis methods in oil and gas exploration: risking petroleum exploration, judging probability of discovery, resource distribution, multiwell drilling programs. Valuation in discovered fields. Appraisal of risky investments under uncertainty.