How can you evaluate the feasibility of a deepwater drilling project?

1 Technical feasibility

The first step in evaluating the feasibility of a deepwater drilling project is to determine if you have the technical capabilities and resources to execute it successfully. You need to consider the geological and reservoir characteristics of the target area, such as depth, pressure, temperature, porosity, permeability, and fluid properties. You also need to evaluate the availability and suitability of the drilling equipment, such as the rig, the drill string, the drill bit, the blowout preventer, and the subsea systems. Additionally, you need to estimate the drilling time, the drilling risks, and the contingency plans for potential problems, such as wellbore instability, kick, loss circulation, hydrates, or stuck pipe.

3 Environmental feasibility

The third step in evaluating the feasibility of a deepwater drilling project is to assess its environmental impact and sustainability. You need to identify and quantify the potential environmental risks and hazards of the project, such as oil spills, gas leaks, greenhouse gas emissions, noise, waste, and biodiversity loss. You also need to comply with the environmental regulations and standards of the host country and the international community, such as the Environmental Impact Assessment (EIA), the Environmental Management Plan (EMP), and the Environmental Protection and Biodiversity Conservation Act (EPBCA). Furthermore, you need to implement best practices and technologies to minimize the environmental footprint of the project and enhance its social license to operate.

4 Regulatory feasibility

The fourth step in evaluating the feasibility of a deepwater drilling project is to understand and follow the regulatory framework and requirements of the host country and the relevant authorities. You need to obtain the necessary permits and approvals for the project, such as the exploration license, the development plan, the drilling permit, and the environmental permit. You also need to adhere to the legal and contractual obligations and conditions of the project, such as the production sharing agreement (PSA), the joint operating agreement (JOA), and the health, safety, and security (HSS) regulations. Additionally, you need to monitor and report the progress and performance of the project to the regulators and stakeholders, such as the government, the partners, the investors, and the public.

5 Decision analysis

The fifth step in evaluating the feasibility of a deepwater drilling project is to use decision analysis tools and methods to integrate the information and data from the previous steps and support your decision-making process. You need to define the objectives and criteria of the project, such as maximizing the value, minimizing the risk, and satisfying the constraints. You also need to identify and evaluate the alternatives and options of the project, such as different drilling locations, methods, and scenarios. Moreover, you need to apply different decision analysis techniques, such as decision trees, sensitivity analysis, Monte Carlo simulation, and multi-criteria analysis, to quantify the uncertainty and variability of the project and select the optimal or preferred solution.

6 Sensitivity analysis

The sixth step in evaluating the feasibility of a deepwater drilling project is to perform sensitivity analysis to test the robustness and reliability of your decision and to identify the key drivers and parameters that affect the feasibility of the project. You need to vary the values of the input variables and parameters of the project, such as the reservoir properties, the drilling costs, the oil and gas prices, and the economic indicators, and observe the changes in the output variables and results of the project, such as the production rate, the cash flow, the NPV, and the IRR. You also need to use different sensitivity analysis methods, such as tornado charts, spider charts, and scenario analysis, to rank the importance and influence of the input variables and parameters and to assess the best-case, worst-case, and most-likely outcomes of the project.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?