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Practice Guide to Auditing Oil and Gas Revenues


The Life Cycle of Oil and Gas Projects

The oil and gas industry is a major sector of the economy in Canada and in many other countries around the world. Oil and gas extraction projects are usually capital-intensive, long-term, and potentially very lucrative. The revenues they generate are significant for both private companies and governments. However, not all oil and gas extraction projects come to fruition and, when they do, it is only after many years of planning, exploration, and development activities.

The typical life cycle of an oil and gas project includes five phases:

  1.  exploration,
  2.  appraisal,
  3.  development,
  4.  production, and
  5.  decommissioning.

An overview of this life cycle is presented in Figure 3.

Figure 3

Typical Life Cycle of an Oil and Gas Extraction Project

(from an industry perspective)

Typical Life Cycle of an Oil and Gas Extraction Project