Implementation of an Exploration Portfolio Management PlatformYousef Al-SalaliSenior Petroleum Engineer - Exploration GroupKuwait Oil Company (KOC)

Authors: Yousef Al-Salali and Talal Al-AdwaniCo Authors: Muhammad Al-Ajmi, Haifa Al-Bader, Abdulaziz Sajer, Sunil Singh, Waleed Morsy, Abdullah Al-Hamad, Hanan Al-Kandari and Mohammad Al-Bahar All from Kuwait Oil Company, Kuwait

• Currently, KOC have High Standards Exploration Portfolio Management Platform to Achieve Primary Strategic objectives of Production & Reserve Growth Targets.

Exploration developed an international system customized for Kuwait needs.

This System Optimize the way to Achieve Strategic Targets based on demand and needs.

Add full value of EG production potential to drive production growth for Kuwait.

Source: 2011-2016 Several Projects and & Workshops - PE & DP Teams Geoknowledge/SBC experts

EXPLORATION PORTFOLIO MANAGEMENT

PORTFOLIO MANAGEMENT WORKFLOW

REVIEW PLANSELECT PRIORITISE

INVENTORY PRIORITISED LIST PROJECT BASED PORTFOLIO*

2019

2020

2017

2018

Leads &prospects

Drillableprospects

Sequenceddrillable prospects

Sequencedprojects

REVIEWED INVENTORY

2015 2020 2025 2030

IMPLEMENTATION

ACTION PLAN

KOC has developed a strategic Portfolio Management approach laying the foundation for driving a step change in Kuwait’s future oil & gas production

REVIEWED INVENTORY

• Prospects Has been Reviewed and Reassessed based on International Standards

• Certified the Prospects Inventory by Reserve certifier.

Integrated Prospect Risk, Resource and Value Assessment Solution

G&G Data

Reservoir Data

Resources Results

Activities Schedule

Exploration Activities

Facilities

Appraisal

Production Activities

Net Cash Flows

Production

PRIORITIZATION

analytical prioritization framework that takes into consideration the strategic directions of the Exploration Group

PRODUCTIONCONTRIBUTION

ECONOMICRETURNS

Mapping strategic criteria to customized GeoX prospect properties

SELECTION CRITERIA

SELECTION CRITERIA

Source: EG’s Portfolio Management Dashboard

The prospect inventory chart displays the inventory through all strategic dimensions

Prospect inventory chart

• Shows 4 dimensions in one chart Chance of success (vertical axis) Unrisked Recoverable resources

(horizontal axis) Net present value (bubble size) Property score (bubble colour)

• Shows risked resource isoline (orange) for the risked resource value set in the dedicated parameter.

Risked resourceisoline

Bubble size reflects NPV

Negative NPV Positive NPV

Source: EG’s Portfolio Management Dashboard

The profitability chart displays maximum capital requirement versus economic return

Profitability chart

• Scatters the prospects using the success case net present value (NPV) on the x-axis vs. success case profitability index (PI) on the y-axis.

• Shows the two reference lines for average success case PI and success case NPV.

• The prospects are represented by different icons depending on their land accessibility and H2S content.

High H2S content

Land accessYes

No

PROJECT BASED PORTFOLIO

PROJECT BASED PORTFOLIO

Link between Exploration Strategy, Portfolio Management and Technical Processes

Exploration Portfolio Management Structure

EG EXECUTIVEMANAGEMENT

SYSTEM

TRAININGCOMMITTEE

ACTION PLANSTEERING

COMMITTEE

PMC1

PROGRESS REVIEW

PEOPLE DEVELOPMENT PORTFOLIO SUSTAINING

PORTFOLIOEXECUTION

ES FP2

PE FP2 EO FP2

GS FP2

PLANNING WORKGROUP

DP FP2

UH3 2

UH3 1UH3 3

PROJECT WORKGROUP (EXAMPLE)

UP-TO-DATE INFORMATION TIMELY DECISION-MAKING

* CARACAL : KOC/Exploration Portfolio Management System

Consistency is the key in exploration portfolio management

“Exploration is best managed by managing the exploration portfolio”

G. McMaster (1997) quoted by A. Milkov (2015)

“For the portfolio management to succeed, each prospect must be assessed consistently”

P. Rose & G. Citron (2000)

“Sound portfolio management reflects the choices that are made after understanding project interactions relative to goals”

J. Howell & J. DuBois (2003)

Objective: Consistent and universally adopted work process in KOC that yields objective and documented play and prospect evaluations which can be used confidently to prioritize future exploration plans

Acknowledgment

The authors wish to acknowledge gratitude to Kuwait Oil Company (KOC) and Ministry of Oil for granting permission to publish a paper. The authors also like to extend appreciation to all associated teams.

Conclusions

1Consistency

Ensuring all prospects are assessed consistently before entering the prospect inventory

2Strategic Fit

Ensuring prospects are ranked to reflect KOC strategic priorities and industry environment

3Exploration Management

Giving the Exploration Management Team easy and flexible access to all the information they required to make the best decisions on where to allocate resources to across the exploration portfolio

Key achieved benefits