--> ABSTRACT: Using Information to Close the Gap Between Risk Assessment and Risk Tolerance; A Case Study Using a Gravimetric Survey in the North Sea, by Laura Kay Ethetton and Wm. D. Brumbaugh; #91019 (1996)

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Using Information to Close the Gap Between Risk Assessment and Risk Tolerance; A Case Study Using a Gravimetric Survey in the North Sea

Laura Kay Ethetton and Wm. D. Brumbaugh

The commitment to pursue a petroleum venture - requires confidence in finding commercial quantities of hydrocarbons. This confidence should be based on both the probability of having a working hydrocarbon system (geotechnical success) and generating a profit (economic success). A balance is needed between risk assessment and risk tolerance, the assessment reflecting what is known, and tolerance reflecting what is hoped for. If the gap between risk assessment and risk tolerance is unacceptable, information is acquired to hopefully increase the probabilities of geotechnical and economic success to more acceptable levels. An information strategy is derived that will reduce the critical uncertainties and result in an acceptable confidence level.

The value of information is driven by the change in Expected Monetary Value (EMV) after the information is acquired. A decision tree is employed to predict the outcomes of the new information and select the most value adding option. The difficulty that arises is predicting to what extent the information will affect the geotechnical and economic assessments. The effect of information also changes as the venture matures through reconnaissance, evaluation, development, and production stages.

A case is built in the North Sea w here a Gravimetric Survey was used to assess concerns about location, source, reservoir, trap, seal, and migration. A method for consistently predicting the change in risk with increased information will be presented. An incremental increase in EMV is shown at each stage of the venture resulting in a convergence between risk assessment and risk tolerance.

AAPG Search and Discover Article #91019©1996 AAPG Convention and Exhibition 19-22 May 1996, San Diego, California