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Sunday, January 27, 2019

Risk Mgmt Unit 1: Identifying and Quantifying Risks in the Energy Industry Using Heat Maps

Upon successful completion of this unit, learners will be able to identify and define risks in the energy industry (petroleum, natural gas, alternative), and construct risk heat maps for analysis, strategic planning and decision-making.

Unit Presentation: 
Pdf:  (contains links to readings):


Scenario 1:  The Real Risks:  Identifying and Quantifying Using Heat Maps

Mark, Tamara, and Talib have put together a small company, Invictus Energy, with the goal of buying two or three small mature fields that also has a pipeline and gas gathering system. 

 Their goal is to revitalize the fields, renegotiate contracts, and then sell the fields and the gas gathering system and pipelines. They have obtained private equity financing, but are a bit alarmed at how much personal "skin in the game" they have to put up.

They are required to put in their own savings and assets, which makes them very nervous. But, they believe they can boost the production and recoverable reserves by 50%.  They are worried because the pumps are old, and the pipeline and gas gathering systems have not had any corrosion control or maintenance in many years.

Your Task:  Help Mark, Tamara, and Talib identify and rank the risks. Then, help them create a heat map so they can make sound financial decisions.

 --What are the kinds of risks that Invictus Energy will face?
 --What is the probability and potential impact of each?
 --What does a risk heat map look like for Invictus?
 --What are 3 or 4 decisions that the heat map can help with?


Unit Presentation:

Heat Maps – where how to build them 

Example: Upstream oil and gas exploration and development
 Geological Risk (model, quality of information, imaging)
 Legal risk (title, etc.)
 Analytics risk (model, organization of information)
 Data Acquisition Risk
 Safety risk
 Drilling Risk (out of zone)
 Hydraulic fracturing risk
 Completion Risk 

Other examples:  Solar and wind energy generation and distribution.

Texas A&M Texarkana MBA in Energy Leadership: Click link to apply - more information

For more information about the courses (and this full course), please contact me. 

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