Abstract: Risk Analysis in Development and Exploration Projects: Why Analyze the Uncertainty in Your Projects

Ned R. Timbel

The availability of statistical programs for personal computers has made it possible for many investigators in the petroleum industry to perform stochastic analysis. When a single number is selected for a calculation such as porosity, pay thickness, or efficiency of trap timing, certainty is implied. Commonly these types of data are not certain and would be better defined by a range of numbers. Analysis of opportunities using a probabilistic approach yields more realistic interpretations and therefore guides appropriate decision making. Analysis of development projects is accomplished through spreadsheet manipulation and interpretation of graphic results of the computer simulation. Original and recoverable oil calculations can be simulated to prioritize drilling locations. Evaluation f cost estimates may be further refined by analyzing uncertainty. Accurate calculation of electric logs to determine hydrocarbon saturation may be enhanced with the application of risk analysis tools.

Risk analysis is of great value in exploration plays where results may be used to direct investments in exploration technology. A portfolio of prospects may be prioritized based on technical merit and political risk. Another use of risk analysis is the prediction of resource size based on historical success rates.

Software to assist the investigator in risk evaluation is now widely available. Risk based decision making should be considered as means for improved project performance.

AAPG Search and Discovery Article #90986©1994 AAPG Annual Convention, Denver, Colorado, June 12-15, 1994