Volume 4 – Natural Gas: Economics and Environment. A Handbook for Students

The first chapter (17) of Natural Gas: Economics and Environment focuses on calculating the economics of various economic models referring to the (1) E&P-model, (2) CCGT-model and (3) LNG Model. The aim was to calculate the gas price in MMBTU, which was required to enable a profitable gas field development, based on the assumptions of the E&P-model. This gas price can be used subsequently as an input value to determine the costs of the fuel gas either for the CGGT-model to produce electricity (sold in cents per kwh) or in the LNG-model to determine the costs of LNG, when re-gasified in the receiving terminal of the buyer. The following image shows a spider diagram referring to the sensitivity of a change of variables of the Base Case (reserves, price etc.) with respect to result figures in terms of NPV, net present values.

Economic performance – output, profit, growth – represents the backbone of a company when it comes to creating commercial values. During the last decades, an increasing number of market participants have developed the view that this was not entirely sufficient. According to their perspective, corporations should not just invest to add (1) economic value but (2) social and (3) environmental value as well. This idea is associated with what is called the Triple Bottom Line, TBL. Social and environmental values are going to be described in the following chapter (18) with reference to HSEQ (health, safety, environment, and quality control). The image below (Source: NASA) shows the ozone hole over the Antarctic caused – amongst others – by chlorofluorocarbons (CFCs) having ascended into the stratosphere.

The last chapter (19) of volume 4 deals with historic and more recent technical developments in the upstream oil & gas industry. The image below left shows Captain Drake’s first oil well drilled in 1859 in Titusville /Pennsylvania (Source: Drake Well Museum) and the Troll A drilling platform (Source: OD – NPD) being towed to its location in the Norwegian sector of the North Sea.

The following table of contents provides a more detailed overview of the topics addressed in Natural Gas: Economics and Environment. Please note that the numbering continues with the 17th chapter in continuation of the seven chapters presented in the 1st volume (Natural Gas: Exploration and Properties), chapter 8-12 of volume 2 (Natural Gas: Operations and Transport) as well as chapter 13-16 dealt with in volume 3 (Natural Gas: Costumers and Consuming Industries).

17. Natural Gas: Economics
17.1. E&P Model and Information
17.1.1. Method of Calculation and Sensitivity of Results
17.1.2. Economics and Accounting
17.1.3. Reservoir: Natural Gas Reserves and Production
17.1.3.1. Natural Gas: Definition
17.1.3.2. Reserves
17.1.3.3. Production
17.1.4. Natural Gas Projects: Types of Contracts
17.1.5. Financial Engineering of E&P- and Natural Gas Projects
17.1.5.1. Financing Alternatives
17.1.5.1.1. Reserve-Based Loan
17.1.5.1.2. Project Financing
17.1.5.1.3. Project Economics and Financial Cover Ratios
17.1.5.2. Project Risks and Risk Mitigation Instruments: Insurances, Guarantees, Others
17.1.5.2.1. Project Risks: Oil and Gas Projects
17.1.5.2.2. Insurance: Oil and Gas Projects
17.1.5.2.3. Market and Political Risks: Oil and Gas Projects – Risk Mitigation Instruments
17.1.6. Natural Gas Project Costs: Specific Aspects
17.1.6.1. Exploration and Appraisal Costs
17.1.6.2. Drilling Costs
17.1.6.3. Development Costs
17.1.6.4. Production Costs
17.1.6.5. Pipeline Construction Costs
17.1.7. E&P-Model: Upstream Exploration and Production Project
17.1.7.1. Gas Production
17.1.7.2. E&P-Project Costs: CAPEX and OPEX
17.1.7.3. Cost Recovery
17.1.7.4. Profit Sharing
17.1.7.5. Cash Flow and Results
17.1.7.6. Economies of Scale
17.1.8. Natural Gas E&P-Project: Industry Examples
17.1.8.1. In Salah – Onshore – Algeria
17.1.8.2. Malampaya – Offshore – Philippines
17.1.8.3. Gas Field Development – Offshore – Lead-Time
17.1.8.3.1. Yacheng Gas Field
17.1.8.3.2. Lan Tay and Lan Do Gas Fields
17.1.8.4. Wet- and Dry Gas – Cost Estimate
17.2. CCGT-Model
17.2.1. CCGT-Model: Gas-to-Electricity Project
17.2.1.1. CCGT-Model: Introduction and Overview
17.2.1.2. CCGT-Model: Economics
17.2.1.2.1. Base Case
17.2.1.2.2. CAPEX and OPEX-Maintenance Costs
17.2.1.2.3. Availability
17.2.1.2.4. OPEX – Natural Gas Load
17.2.1.2.5. Total Costs
17.2.1.2.6. Electricity Output and Revenues
17.2.1.2.7. Economics: Results
17.2.1.2.8. Sensitivities
17.3. LNG-Model: Liquefied Natural Gas Project
17.3.1. LNG Plant
17.3.2. LNG Carriers
17.3.3. LNG Receiving Terminal – Regasification
17.3.4. LNG Unit Costs and Prices
References (17)

18. Natural Gas: HSEQ and Sustainability
18.1. H – Health and S – Safety during Operations
18.1.1. Natural Gas: Safety Aspects
18.1.2. Specific Health and Safety Aspects
18.1.2.1. Blow-out
18.1.2.2. Hydrogen Sulfide – H2S
18.1.2.3. Naturally Occurring Radioactive Materials – NORM
18.1.2.4. Fracking
18.1.2.5. Gas Leakage
18.1.2.6. Petrochemicals
18.1.2.7. Toxicity
18.1.3. Production and Processing: Hazards, Safety, Automation and Q- Quality Control
18.2. E – Environment
18.2.1. Natural Gas Combustion: Emissions
18.2.1.1. Emission – Substances
18.2.1.2. Oxycombustion
18.2.2. Greenhouse Gases, Global Warming and Anoxic Events
18.2.3. Acid Rain – SOx and NOx
18.2.3.1. Sulfurous Oxides – SOx
18.2.3.2. Nitric Oxides – NOx
18.2.4. Ozone – Ozone Hole and Smog
18.2.4.1. Ozone Hole
18.2.4.2. Ozone and Smog
18.2.5. Heavy Metals – Lead and Mercury
References (18)

19. Industry Environment: Historical Overview and Current Developments in the Upstream Oil & Gas Industry
19.1. Historical Overview: From the Beginnings to the Ocean Floor
19.1.1. Oil & Gas Industry Development: Onshore – Origins
19.1.1.1. Onshore Drilling
19.1.1.2. Seismic
19.1.1.3. Well Stimulation: First Frack
19.1.2. Oil & Gas Industry Development: Offshore – Origins
19.1.2.1. Offshore Drilling
19.1.2.2. Offshore Pipeline Construction
19.1.2.3. Offshore Platforms and Production Technology
19.2. More Recent Developments: Selected Topics – From the Ocean Floor to Down-hole
19.2.1. Subsea Template, Completion, Riser, Drilling and Intervention
19.2.1.1. Subsea Completion
19.2.1.2. Subsea Template
19.2.1.3. Subsea Riser
19.2.1.4. Riser and Riserless Drilling
19.2.1.5. Subsea Well Intervention
19.2.1.5.1. Subsea Well Intervention: Riser and Riserless
19.2.1.5.2. Subsea Well Intervention: Lower Marine Riser Package
19.2.2. Subsea Separation and Processing
19.2.2.1. Type 1 System – Multiphase Pumps
19.2.2.2. Type 2, 3 and 4 Systems – Separation and Pressure Boosting
19.2.2.3. Subsea Separation and Processing: Further Industry Examples
19.2.3. Drilling, Completion and Subsea Drilling Units – Additional Aspects
19.2.4. Downhole Production Technology
19.3. Future Exploration Frontiers
References (19)

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