ABSTRACT: Integrating deterministic scenarios with stochastic analysis -- a new approach to exploration and production project evaluation

Etherington, John R.¹, Leroy Bradley¹, and Charles Stabell²
(1) Mobil Technology Co, Dallas, TX 
(2) GeoKnowledge, Sandvika, Norway

Oil companies are forced to make major investment decisions on projects that have significant uncertainty in the ultimate volumes that may be economically recovered. While volumetric uncertainty is expected in the exploration phase, it persists into the post discovery appraisal phase, and this is the period of maximum investment exposure. Our challenge is to describe the range of possible volumetric scenarios and their associated probability of occurrence.

Ideally, we would make many deterministic interpretations covering the full range of possible outcomes. We could then directly show the volumetric and economic consequence of multiple development scenarios. However, the time involved is prohibitive and it is also difficult to weight the relative probabilities of each outcome. Alternatively we could perform classic stochastic analysis using monte carlo simulation to generate a range of volumes and associated probabilities. However, this approach does not allow us to extract and evaluate a unique scenario and its probability.

Since neither method is fully satisfactory, our solution is to combine the two approaches. We create a limited suite of geologic models, assess in-place volumes, and apply a range of development scenarios. The relative probability of occurrence of each scenario is extracted from integration with the full stochastic volume distribution and carried into risked volumetric and economic evaluations. We can then better understand the underlying causes of uncertainty and evaluate the expected benefit of applying alternative technologies.

In this paper, we describe the method and show its application to specific exploration and development projects.

AAPG Search and Discovery Article #90913©2000 AAPG International Conference and Exhibition, Bali, Indonesia