How to Perform Project Risk Management for Oil and Gas Projects Intaver Institute 2011 How to Perform Project Risk Management for Oil and Gas Projects  Intaver Institute Inc. 303, 6707, Elbow Drive S.W, Calgary, AB, Canada Tel: +1(403)692-2252 Fax: +1(403)459-4533 www.intaver.com

Introduction + Intaver Institute Timeline RiskyProject Clients 2002: Established 2004: V.1 RiskyProject 2009: v 3 Integrated Risk Register 2012: v 5 RiskyProject Full Project Risk Management Lifecycle Integrated Risk Register Risk Matrix, Risk Planning + Quantitative Monte Carlo Cost and Schedule Risk Analysis Clients 4/24/2017 2013 Intaver Institute

Gorgon Natural Gas Project A three-train liquefied natural gas (LNG) facility on Barrow Island (Australia) that will produce 15.6 million metric tons of LNG per year. Project Cost Estimate in Billions A$ Date of cost estimate 4/24/2017 2013 Intaver Institute

Corporate Portfolio Management Process Project Cost and Schedule risks and uncertainties Quantitative cost and schedule risk analysis is an important component of portfolio management Geological and other Uncertainties affecting production Economic Analysis of the Projects Corporate Portfolio Management Strategic Decision Price Uncertainties Other Risks and Uncertainties: Political risks Uncertainties in Royalties regimes …. 4/24/2017 2013 Intaver Institute

Risk Management Affects Project Profitability Full circle cost of gas $/Mcf Quantitative risk analysis provides realistic risk adjusted and risk mitigated cost estimates 4/24/2017 2013 Intaver Institute

Identifying and Managing Critical Risks is Key Quantitative risk analysis identifies and prioritizes critical risks Opportunity? Risk Threat? 4/24/2017 2013 Intaver Institute

Which risks are critical? Schedule risk Cost Risk Safety Risk Legal Risk Quality Risk Enviromental Risk …………….. Risk 4/24/2017 2013 Intaver Institute

Time is Money: Cost and Schedule Risks Schedule risk drives Costs due to time dependent resource costs 40% -70% cost risk is schedule driven Schedule risk Cost Risk Time Dependent Costs 4/24/2017 2013 Intaver Institute

Assign Risks to Project Tasks and Resources Intaver Institute 2011 Risk Events Approach Input 1: Project Schedule Perform Analysis Assign Risks to Project Tasks and Resources Input 2: List of Risks (Risk Register)

Intaver Institute 2011 Schedule Import project schedule from project management tool (Primavera, MS Project, etc.. 4/24/2017 2013 Intaver Institute

Intaver Institute 2011 Costs Schedules can include cost data for quantitative risk analysis of fixed costs 4/24/2017 2013 Intaver Institute

Intaver Institute 2011 Resources To model schedule driven cost, we have included high level resources that have been assigned to specific tasks. Resources with rates are loaded with the project schedule to allow for risk analysis of time dependent costs 4/24/2017 2013 Intaver Institute

Project risk register is integrated to the project schedule and cost Intaver Institute 2011 Risk Register Project risk register is integrated to the project schedule and cost 4/24/2017 2013 Intaver Institute

Risks are assigned to project activities Intaver Institute 2011 Risk Assignment Task R1 R2 R3 R4 R5 R6 Installing Microsoft Seismic monitoring x Deliver frac fleet and install equipment Deliver rig and equipment Well 1,2,3 (share common risks) Rig Mobilization Drilling Installing Service Rig Completion (8 stages fracing) Risks are assigned to project activities 4/24/2017 2013 Intaver Institute

Risk Assignment Interface Intaver Institute 2011 Risk Assignment Interface 30 % chance that risk causes a delay and increase in cost of drilling Risk Assigned to task ‘Drilling’ Risk probability and cost and schedule impact are assigned to activities 4/24/2017 2013 Intaver Institute

Run Monte Carlo Simulation Intaver Institute 2011 Run Monte Carlo Simulation Monte Carlo simulation prioritizes risk based on impact on cost, schedule or other parameters 4/24/2017 2013 Intaver Institute

Intaver Institute 2011 Results of Analysis Monte Carlo simulation results for cost and schedule can be viewed as histograms or cumulative probability 4/24/2017 2013 Intaver Institute

Risk Adjusted Project Schedule Intaver Institute 2011 Risk Adjusted Project Schedule Schedule with risks Schedule without risks Arrows show risk assignments 4/24/2017 2013 Intaver Institute

Project Cost Schedule without risks Schedule with risks Intaver Institute 2011 Project Cost Schedule without risks Schedule with risks Results of quantitative cost risk analysis are shown on the Cost view 4/24/2017 2013 Intaver Institute

Risk Planning – Mitigation Plan Intaver Institute 2011 Risk Planning – Mitigation Plan Risk response plans can be plotted on a Risk Mitigation Waterfall chart 4/24/2017 2013 Intaver Institute

Pre and Post Mitigation Risk Scores Intaver Institute 2011 Pre and Post Mitigation Risk Scores Pre-mitigation Post-mitigation 4/24/2017 2013 Intaver Institute

Risk Planning Risk: Mechanical Problem with instrument Intaver Institute 2011 Risk Planning Risk: Mechanical Problem with instrument Pre-Mitigation Cost 17, 178, 397 Post Mitigation $16, 734, 906 Risk response plans can reduce the expected cost of the project 4/24/2017 2013 Intaver Institute

RiskyProject Enterprise Intaver Institute 2011 RiskyProject Enterprise Enterprise Risk Database: Schedules, Risks, Mitigation Plans RiskyProject Professional RiskyProject Lite RiskyProject Web 4/24/2017 2013 Intaver Institute

Contact Future Reading Intaver Institute 2011 Future Reading Virine, L. and M. Trumper. 2007 Project Decisions: The Art and Science. VA: Management Concepts Virine, L. and M. Trumper. 2013. Project Think: Why Good Managers Make Poor Project Choices. England: Gower Publishing P. Leach. 2005. Late and Over Budget: Why Projects Always Seem to Take Longer and Cost More Than Planned. Projects & Profits, Vol. V Issue - XI, November 2005 http://www.project decisions.org http://www.intaver.com/index-whitepapers.html http://www.risk-doctor.com/ http://www.projectrisk.com Contact Michael Trumper mtrumper@intaver.com 403.692.2252 Intaver Institute Inc. www.intaver.com 4/24/2017 2013 Intaver Institute