Technical and economic evaluation of hydrocarbon prospects offshore Uruguay and the challenge of maximizing rent from exploration to production phases through local content

Pablo Gristo, Juan Tomasini, Santiago Ferro, Julian Fennema, Priscilla G. McLeroy

    Research output: Chapter in Book/Report/Conference proceedingConference contribution

    Abstract

    From 2009, when the first offshore bidding round took place in Uruguay, and in particular from the second bidding round that constituted a enormous step in the exploratory history of Uruguay, our country faces a new and nontraditional hydrocarbons upstream activity. Government take, including the National Oil Company association in the case of a discovery, is already fixed under the Production Sharing Contracts in force and do not vary much with the field size. Therefore, a possible strategy to maximize the local revenues (income from Uruguayan services, products and human resources), which constitutes a key part for a sound distribution of petroleum revenues within the country, would be to increase the local content in the supply chain. Taking into consideration analogous geological basins, and the geological and technical probability of success for offshore Uruguay as a frontier basin, the field size and hydrocarbon potential was evaluated from a stochastic point of view. The cash flow analysis of a hypothetic oil development was carried out, incorporating the actual economic variables of the contracts in force offshore Uruguay, as well as the current fiscal regime. The standard project parameters, investments yardsticks and the government and contractor takes were calculated with the aim to obtain the Uruguayan rent and the relative impact of the local content. This work constitutes the first approach to the analysis of expenditures and investment during the current stage of exploration, and the eventual phases of appraisal, development and production offshore Uruguay. The technical and economic evaluation applied to a portfolio of offshore prospects models the level of expenditures and investment from exploration to production. The assessment of the potential impact of the activity on macroeconomic variables is carried out considering the local services and products that would be necessary for each stage, in order to identify the areas where increasing local content will provide the larger impact in the country economy.
    Original languageEnglish
    Title of host publicationSPE Hydrocarbon Economics and Evaluation Symposium
    Subtitle of host publication(HEES 2014)
    Place of PublicationRichardson, Texas
    PublisherSociety of Petroleum Engineers
    Pages32-45
    Number of pages14
    ISBN (Electronic)9781613993323
    ISBN (Print)9781632665904
    DOIs
    Publication statusPublished - 2014
    EventSPE Hydrocarbon Economics and Evaluation Symposium - Houston, United States
    Duration: 19 May 201420 May 2014

    Conference

    ConferenceSPE Hydrocarbon Economics and Evaluation Symposium
    CountryUnited States
    CityHouston
    Period19/05/1420/05/14

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    hydrocarbon
    expenditure
    economics
    oil
    human resource
    macroeconomics
    basin
    petroleum
    income
    history
    evaluation
    product
    analysis
    services
    contract
    distribution
    appraisal
    economy
    parameter
    project

    Cite this

    Gristo, P., Tomasini, J., Ferro, S., Fennema, J., & McLeroy, P. G. (2014). Technical and economic evaluation of hydrocarbon prospects offshore Uruguay and the challenge of maximizing rent from exploration to production phases through local content. In SPE Hydrocarbon Economics and Evaluation Symposium: (HEES 2014) (pp. 32-45). Richardson, Texas: Society of Petroleum Engineers . https://doi.org/10.2118/169823-MS
    Gristo, Pablo ; Tomasini, Juan ; Ferro, Santiago ; Fennema, Julian ; McLeroy, Priscilla G. / Technical and economic evaluation of hydrocarbon prospects offshore Uruguay and the challenge of maximizing rent from exploration to production phases through local content. SPE Hydrocarbon Economics and Evaluation Symposium: (HEES 2014). Richardson, Texas : Society of Petroleum Engineers , 2014. pp. 32-45
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    title = "Technical and economic evaluation of hydrocarbon prospects offshore Uruguay and the challenge of maximizing rent from exploration to production phases through local content",
    abstract = "From 2009, when the first offshore bidding round took place in Uruguay, and in particular from the second bidding round that constituted a enormous step in the exploratory history of Uruguay, our country faces a new and nontraditional hydrocarbons upstream activity. Government take, including the National Oil Company association in the case of a discovery, is already fixed under the Production Sharing Contracts in force and do not vary much with the field size. Therefore, a possible strategy to maximize the local revenues (income from Uruguayan services, products and human resources), which constitutes a key part for a sound distribution of petroleum revenues within the country, would be to increase the local content in the supply chain. Taking into consideration analogous geological basins, and the geological and technical probability of success for offshore Uruguay as a frontier basin, the field size and hydrocarbon potential was evaluated from a stochastic point of view. The cash flow analysis of a hypothetic oil development was carried out, incorporating the actual economic variables of the contracts in force offshore Uruguay, as well as the current fiscal regime. The standard project parameters, investments yardsticks and the government and contractor takes were calculated with the aim to obtain the Uruguayan rent and the relative impact of the local content. This work constitutes the first approach to the analysis of expenditures and investment during the current stage of exploration, and the eventual phases of appraisal, development and production offshore Uruguay. The technical and economic evaluation applied to a portfolio of offshore prospects models the level of expenditures and investment from exploration to production. The assessment of the potential impact of the activity on macroeconomic variables is carried out considering the local services and products that would be necessary for each stage, in order to identify the areas where increasing local content will provide the larger impact in the country economy.",
    author = "Pablo Gristo and Juan Tomasini and Santiago Ferro and Julian Fennema and McLeroy, {Priscilla G.}",
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    Gristo, P, Tomasini, J, Ferro, S, Fennema, J & McLeroy, PG 2014, Technical and economic evaluation of hydrocarbon prospects offshore Uruguay and the challenge of maximizing rent from exploration to production phases through local content. in SPE Hydrocarbon Economics and Evaluation Symposium: (HEES 2014). Society of Petroleum Engineers , Richardson, Texas, pp. 32-45, SPE Hydrocarbon Economics and Evaluation Symposium, Houston, United States, 19/05/14. https://doi.org/10.2118/169823-MS

    Technical and economic evaluation of hydrocarbon prospects offshore Uruguay and the challenge of maximizing rent from exploration to production phases through local content. / Gristo, Pablo; Tomasini, Juan; Ferro, Santiago; Fennema, Julian; McLeroy, Priscilla G.

    SPE Hydrocarbon Economics and Evaluation Symposium: (HEES 2014). Richardson, Texas : Society of Petroleum Engineers , 2014. p. 32-45.

    Research output: Chapter in Book/Report/Conference proceedingConference contribution

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    AU - McLeroy, Priscilla G.

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    Gristo P, Tomasini J, Ferro S, Fennema J, McLeroy PG. Technical and economic evaluation of hydrocarbon prospects offshore Uruguay and the challenge of maximizing rent from exploration to production phases through local content. In SPE Hydrocarbon Economics and Evaluation Symposium: (HEES 2014). Richardson, Texas: Society of Petroleum Engineers . 2014. p. 32-45 https://doi.org/10.2118/169823-MS