(26c) Gas Monetization and Risk Monetization
AIChE Spring Meeting and Global Congress on Process Safety
2015
2015 AIChE Spring Meeting and 11th Global Congress on Process Safety
15th Topical Conference on Gas Utilization
Development of Gas Monetization Projects I
Monday, April 27, 2015 - 2:30pm to 3:00pm
Gas Monetization and Risk Monetization
Dennis Butts, Partner, Environmental Resources Management
Stephen Shaw, Managing Partner, Environmental Resources Management
Katie Shackelford, Principal Consultant, Environmental Resources Management
Overview:
Major gas monetization projects involve a significant investment of both time and money. With this investment comes the potential for cost and schedule overruns, alterations in market conditions, counterparty issues in long term contracts, and regulatory uncertainty, all of which can lead to net present value (NPV) erosion resulting in negative investor and stakeholder reaction. Budget overruns and schedule delays are generally accounted for in the contingency portion of capital expenditure budgets (capex), while ongoing operational cost uncertainty is covered in the operational expenditure budget (opex). However, neither of those covers the risks inherent in major gas monetization projects, leading to an underestimation of the total costs over the life cycle of the project. A recent study on oil and gas megaprojects reported that 64% of projects are facing cost overruns and 74% are facing schedule overruns.[1] And this is before the projects have been put into operation. The quantification of risk expenditure (RiskEx) helps capture this uncertainty and provides a means of measuring the project risk exposure relative to capex and opex, allowing additional value to be added to projects by preempting potentially high risk components that may otherwise have not been considered. In other words, a major gas monetization project should include a risk monetization exercise.
Specific topics will include:
- A method to identify, assess, and financially quantify risks and associated mitigations that could affect major gas monetization project development, such as regulatory, geopolitical, contractor-related factors, human capital, technical, etc.
- How to establish RiskEx into life cycle economics to better understand how, when, and why plans may be affected
- How to use existing techniques to visualize risks that could result in loss of investment return
- The benefits of using RiskEx at various stages of projects
- An example using RiskEx to demonstrate the impact on project economics, which resulted in a drastic change on project decisions
Topics
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Individuals
2015 AIChE Spring Meeting and 11th Global Congress on Process Safety
AIChE Pro Members | $150.00 |
AIChE Graduate Student Members | Free |
AIChE Undergraduate Student Members | Free |
AIChE Explorer Members | $225.00 |
Non-Members | $225.00 |
15th Topical Conference on Gas Utilization only
AIChE Pro Members | $100.00 |
Fuels and Petrochemicals Division Members | Free |
AIChE Graduate Student Members | Free |
AIChE Undergraduate Student Members | Free |
AIChE Explorer Members | $150.00 |
Non-Members | $150.00 |