 Gustavson Associates has extensive experience in feasibility
studies. These studies are undertaken before significant investment is made, in order to assess and document whether a project is economically attractive.
Examples
Should a company develop a remote coal bed methane field? If so, should the methane be sold as gas or converted into other products such as fertilizer, diesel or electric power?
Should a company enter into a license for a hydrocarbon
block with a production sharing agreement in a particular
country?
Should a company acquire a lease for some undeveloped acreage?
Should an oil or gas pipeline be built?
Feasibility study steps
Market analysis: What products and/or services will be delivered by the project? Who will buy them? How much will they pay?
Technical analysis: Is it technically possible to do the project? What amount of reserves will be developed? What equipment/drilling/mining is required to produce and process the reserves? What is the timing of development and production?
Legal/regulatory analysis: What are the environmental and social implications of the project? Does it conform to local and international laws and regulations?
Economic analysis: What will it cost to develop the project, including capital costs, operating costs and taxes? What is the optimal scale of the project? Perform a cash flow analysis, using an appropriate discount rate. Prepare sensitivity analyses to show ranges of possible outcomes. Consider explicit treatment of uncertainty and real option analysis to calculate the upside potential associated with flexibility.
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