(1) Noble Energy, Inc, Houston, TX
ABSTRACT: The View from the Middle: E&P from the Perspective of a Corporate Risk and Portfolio Manager
Recent years have witnessed a revolution in the methods of E&P project evaluation and selection (most notably, Risk Analysis and Portfolio Management). Despite the resulting improvement in performance, results delivered to stakeholders are still failing to match those promised. This paper explores areas for possible further improvement from the view of a Corporate department charged with predicting and delivering results from a diversified Exploration and Development portfolio:
• Capital-constrained must not translate into prospect-constrained. But capital constraint is our best friend when it enforces selectivity.
• Capital constraint becomes our enemy when invoked to deny either 1) a robust-enough portfolio to choose from amongst the best, or 2) front-end technology to mature projects, reduce uncertainty, and identify the best projects.
• The role each project plays in the portfolio must be understood, and the types of projects needed to meet corporate goals must be defined. Otherwise, good projects may enter that are not the types of projects that are needed.
• Support of the project evaluation process is critical. The nature of this support varies, with both “carrot” and “stick” tactics observed, the former far more effective.
• Honor the classic axiom: “Risk analysis doesn’t replace good geology and geophysics – it pre-supposes it”. Risk Analysis does not find prospects or close contours; good technical works does.
• Four forces play a role in Corporate Risk Analysis and Portfolio Management: People, Process, Data, and Technology. The relationship and priorities amongst these forces are unique for each vantage point in the organization.
AAPG Search and Discovery Article #90026©2004 AAPG Annual Meeting, Dallas, Texas, April 18-21, 2004.