For example well intervention and side track

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Unformatted text preview: Mackenzie, 1999). As indicated earlier, there is also the possibility of phenomena occurring that are out with management control so-called “acts of god”. Spencer and Morgan (1998) refer to such acts as “train wrecks”. They define a “train wreck” to be an exceptional event that is not accounted for in the analysis. In a mature field, an example of a train wreck is the reaction of Greenpeace to the decommissioning of the Brent Spar. There are also still significant investment decisions to be made. For example, well intervention and side track decisions. For these and other production decisions, it is evident from the examples above that companies ought to use decision analysis techniques with probabilistic input acknowledging the risks and uncertainties that remain. By selecting a single value, Mobil were ignoring other probable outcomes for each project variable (data which are often vital to the investment decision as they pertain to the risk and uncertainty of the project) implying a certainty which does not exist. Spencer and Morgan (1998) describe the application probabilistic techniques to production forecasting using the choke model (figure 5.13) in BP. This model considers the reservoir, wells, facilities and export decisions as a system analogous to a pipeline with various chokes restricting flow. Each “choke” is a probability distribution of either production or efficiency. These individual distributions are then combined by Monte Carlo simulation. It is usually assumed that all the distributions are independent. The authors recognise that, in practice, this is often not the case and they highlight the need for this issue to be addressed. Using probabilistic techniques for production decisions explicitly recognises the inherent uncertainty in the input parameters. The authors claim that using these methods has reduced the gap between actual and predicted outcomes. 123 Reservoir potential Well capacity Facilities limits Export system Figure 5.13: Choke model (source: Spencer and Morgan, 1998) This section has provided an indication of the way the tools identified in this chapter can be used together. Since their use together is resource-intensive, the approach that is suggested in figure 5.12 would only be appropriate for investment decisions that require “significant” capital expenditure. This is a relative measure, for example, a small petroleum company might regard the investment needed to acquire seismic data as “significant” (figure 5.1), whereas for a large company, the sums involved only become “significant” when it is considering whether to develop the field (figure 5.1) (Section 6.3 of Chapter 6). Variations of the approach summarised in figure 5.12 could also be used in other industries with a similar business environment to the oil and gas industry, for example, the pharmaceutical or aerospace industries. In these businesses, the investment decisions are similar in scale to the oil industry, also cha...
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This document was uploaded on 03/30/2014.

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