--> --> Abstract: The Use of Expected Monetary Values in the Reappraisal of Mature Petroleum Provinces, by D. M. Fuller; #91008 (1991)

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The Use of Expected Monetary Values in the Reappraisal of Mature Petroleum Provinces

FULLER, DAVID M., University of Denver, Denver, CO

Mature petroleum provinces offer a wealth of statistical data which can be used by geologists, managers, and investors to guide their exploration efforts. The Expected Monetary Value (EMV) concept,

familiar to statisticians and economists, can be applied to these data to determine which areas offer the most attractive exploration economics. Traditionally the EMV concept has been used to evaluate individual prospects. This paper illustrates, through example, how the concept can be extended to evaluate and compare entire producing areas.

The EMV concept, based on probability theory, allows geologists to make decisions supported by statistical evidence rather than subjective judgment. The concept integrates a variety of parameters including success ratios, drilling costs, and field size to derive an index of expected profitability. This index estimates the returns one should expect from repeated drilling efforts in a given area (township, county, basin, etc.).

To illustrate how this technique can be used, the State of Kansas was divided into seven areas based on petroleum geological characteristics. Required statistical attributes were determined for each area based on the last 20 years of exploration. Then the areas were analyzed using an EMV approach to determine which offered the best exploration economics. Results indicate that the Hugoton embayment province should yield the highest monetary gains after repeated drilling efforts.

This technique, used over time, will guide geologists to the most profitable portions of mature producing areas.

 

AAPG Search and Discovery Article #91008©1991 AAPG Mid-Continent Section Meeting, Kansas Geological Society, Wichita Kansas, September 22-24, 1991 (2009)