Practical workshop: Excel analysis of oil, gas and power supply chains

This course provides hands-on instruction for building, developing and applying spreadsheet economics, risk, finance and decision evaluation models to a range of projects from the oil, natural gas and power supply chains. It is built around a series of workbook modules compatible with Excel 2010, 2007 and 2003 versions.

Delegates are required to bring their own laptop computers loaded with a functioning version of Excel (i.e. 2003, 2007 or 2010 version) for use during the course. Delegates are provided with a number of spreadsheet workbooks to load and then evaluate with structured exercises. Some basic knowledge of operating Excel software is required, but detailed computer modelling expertise is not essential. The emphasis is on fit-for-purpose gas industry model applications rather than developing spreadsheet skills, but both should be part of the learning outcomes.

The course is broken down into approximately onequarter theoretical instruction and three-quarters practical hands-on facilitated spreadsheet model evaluation. Brief PowerPoint presentations are delivered to review the industry topics covered and these will lead swiftly into the practical sessions. The economic analysis theory sections also aim to provide insight to the key economic issues impacting the supply chains covered.

Many companies make extensive use of proprietary economic modelling software, often requiring macros to be built to evaluate case-specific problems. In such cases, even though spreadsheets may not be used routinely, it is of enormous benefit for analysts and decision-makers to understand how such models can be built, developed and manipulated on a spread-sheet platform. Spreadsheets in conjunction with built-in functions, add-ins and VBA macros provide an extremely powerful platform for such analysis. The course’s practical sessions will demonstrate how such features can be simply and effectively harnessed to build quite sophisticated, but highly functional, analytical models.

Day one:

Oil and gas project analysis

• Overview of cash flow analysis and discounting techniques

• Cash flow model for oil and gas exploration, development and production

• Fiscal models for tax and royalty and production sharing terms

• Excel’s VLOOKUP function aids models with sliding scales

• Rate building models (tariff calculations) for midstream infrastructure

• Levelised and rolled-in tariffs

Day two:

Pricing issues and sensitivity and scenario analysis

• Inflation, money of the day versus real terms

• Selecting alternative multi-year pricing profiles

• Excel’s spinners and choose function

• Netback pricing models

• Establishing break-even prices

• Using Excel’s solver and goal seek functions

• Requirements for sensitivity and scenario analysis

• VBA Macros: powerful dimension to Excel’s sensitivity and scenario analysis

• Cost and revenue components for constructing a Gas Liquefaction plant

• LNG Shipping and netback price model

• Risk analysis, probabilities and expected monetary values

Day three:

Decision trees and simulation

• Building oil and gas production profiles using decline equations

• Building cost escalation using growth equations

• Decision trees and their application

• Dynamic graphics with updating labels driven by spinners

• Monte Carlo simulation method and input distributions

• Demonstrations with Excel Addin Crystal Ball

• Statistical analysis of simulation outputs

• Refinery economics: Gross Product Worth (GPW) and margin analysis

Day four:

Power generation, debt finance and hedging

• Cash flow model for Combined Cycle Gas Turbines (CCGT)

• Cash flow model for coal-fired power plant

• Carbon Capture and Sequestration (CCS) models

• Cash flow Model for full-cycle nuclear power plant

• Cash flow model for offshore wind farm

• Debt financing upstream oil and gas projects

• Evaluating hedging alternatives

• Profit and loss model for futures swaps and options

Commercial, technical and financial analysts, economists, planners and decision makers plus others working in the oil, gas and power industry wishing to develop practical economic analytical skills using spread-sheets to evaluate natural gas projects.