Unconventional shale gas field development under price uncertainty
Abstract/Contents
- Abstract
- We present an optimization framework for unconventional shale gas resource development under price uncertainty. Shale gas developers must balance the ability to implement price-reactive actions with the operational and financial constraints of long-term service agreements. Both can improve project NPV, but they typically act in opposition to one another. We represent gas price uncertainty with a Ornstein-Uhlenbeck stochastic natural gas price model. We develop a mixed-integer linear program (MILP) framework to define optimal month-to-month field development decisions based on current gas prices and future expectations. Our workflow then provides the optimal set of long-term upstream and midstream agreements based on NPV and NPV-risk preferences. Using two case studies, we illustrate both how a field developer can leverage flexible on-demand services, as well as the restrictive effect of long-term agreements on price-reactive actions. For the financial parameters and natural gas price uncertainty used in one of our case studies, a stochastic solution that utilizes on-demand services is, on an NPV basis, equivalent to a 3.1% reduction in the field development costs associated with long-term agreements. Larger cost savings would be achieved in cases with greater price volatility, weaker reversion speeds, and increased availability of on-demand services
Description
| Type of resource | text |
|---|---|
| Form | electronic resource; remote; computer; online resource |
| Extent | 1 online resource |
| Place | California |
| Place | [Stanford, California] |
| Publisher | [Stanford University] |
| Copyright date | 2020; ©2020 |
| Publication date | 2020; 2020 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Author | Bean, Malcolm |
|---|---|
| Degree committee member | Brandt, Adam (Adam R.) |
| Degree committee member | Durlofsky, Louis |
| Thesis advisor | Brandt, Adam (Adam R.) |
| Thesis advisor | Durlofsky, Louis |
| Associated with | Stanford University, Department of Energy Resources Engineering. |
Subjects
| Genre | Theses |
|---|---|
| Genre | Text |
Bibliographic information
| Statement of responsibility | Malcolm Bean |
|---|---|
| Note | Submitted to the Department of Energy Resources Engineering |
| Thesis | Thesis Engineering Stanford University 2020 |
| Location | electronic resource |
Access conditions
- Copyright
- © 2020 by Malcolm Bean
Also listed in
Loading usage metrics...