How can you evaluate the feasibility of a new field development project?

2 Development concept

The second factor to consider is the development concept, which is the overall design and strategy of the project. It includes the number, type, and location of wells, the surface facilities, the transportation and processing systems, the injection and enhanced recovery methods, and the decommissioning plans. The development concept should be optimized to maximize the net present value (NPV) of the project, while minimizing the capital expenditure (CAPEX), the operating expenditure (OPEX), and the environmental impact.

3 Economic analysis

The third factor to consider is the economic analysis, which is the evaluation of the profitability and viability of the project. It involves estimating the revenues, costs, taxes, royalties, and cash flows of the project over its life cycle, and applying appropriate discount rates and criteria to calculate the NPV, the internal rate of return (IRR), the payback period, and the break-even price. The economic analysis should also account for the risks and uncertainties associated with the project, such as the oil and gas prices, the production performance, the technical issues, and the regulatory changes.

4 Environmental and social impact

The fourth factor to consider is the environmental and social impact, which is the assessment of the potential effects of the project on the natural and human environment. It includes identifying and quantifying the emissions, wastes, spills, noise, land use, water use, biodiversity, and cultural heritage impacts of the project, and proposing mitigation measures and compensation plans. The environmental and social impact should also comply with the relevant laws, regulations, standards, and best practices of the host country and the industry.

5 Stakeholder engagement

The fifth factor to consider is the stakeholder engagement, which is the process of communicating and collaborating with the parties that have an interest or influence on the project. It includes identifying and analyzing the stakeholders, such as the government, the regulators, the investors, the partners, the contractors, the suppliers, the customers, the employees, the communities, and the NGOs, and developing and implementing a stakeholder engagement plan that addresses their needs, expectations, concerns, and feedback. The stakeholder engagement should also foster trust, transparency, and mutual benefit among the stakeholders.

6 Decision making

The sixth factor to consider is the decision making, which is the final step of evaluating the feasibility of a new field development project. It involves reviewing and integrating the results of the previous factors, and comparing the project with the alternative options and the strategic objectives of the company. The decision making should also consider the sensitivity, uncertainty, and scenario analysis of the project, and the trade-offs and synergies among the technical, economic, environmental, and social aspects. The decision making should ultimately lead to a clear and justified recommendation on whether to proceed, modify, or cancel the project.