EXPLORING ABANDONED RESERVES: opportunity in a forgotten jungle

EXPLORING ABANDONED RESERVES: opportunity in a forgotten jungle

In a tropical jungle location, shallow pools of oil occur adjacent to leaky plugged and abandoned oil field production wells. From some wellheads indigenous people collect small quantities of oil for cooking. Most wells are located above oil fields that were abandoned 30 to 40 years ago and plugged wellheads are widespread (>50 km2), although not all leak oil.

You are familiar only with a small area (~2 km2), which is less than 30 minutes’ walk from a village of indigenous people. With a friend you decide to investigate the potential for renewed commercial oil production with almost zero capital. To succeed you need to design simple, low-cost solutions that will provide immediate income. You have no time and no budget to acquire new data or to search for and review public domain documentation.

For this exercise assume: 1) that government and local permission is given and that the indigenous people are supportive, and 2) that you have a local market for your produced oil.

 

  1. Explain how you will develop oil production from the jungle pools and/or wellsites within one week and thereby create an income stream. Your methods must be immediately available and very low cost. Your aim is to generate a steady income stream within two weeks of beginning your operation. An immediate target is to produce at least 1 barrel (~160 litres) of oil per day. Your plan should guarantee income with minimal CAPEX (capital expenditure) and OPEX (operating expenditure). A successful outcome will equate to a proof of concept that should enable you to up-scale your method and have potential for business expansion.
  2. Assuming that successful profitable oil production is achieved in the first two weeks (you are making a profit), devise a plan to expand oil production to at least x10 your initial production target by replicating or improving upon your “proof of concept” keeping CAPEX and OPEX minimal, and increasing production with immediate effect. Please describe exactly what you will do to achieve this goal. The only funds at your disposal are derived from the sale of your crude.
  3. Expand oil production x100 (100’s barrels per day). If steps 1 and 2 were successful you achieved an average daily production of ~35 barrels per day. Assume that to increase productivity you need to drill a borehole (~$1 million). How will you finance it? Assuming that independent investment is required, how will you convince investors that your project is robust and exciting? For example, what locations are attractive for boreholes and why?