Such a test is carried out below for each reservoir

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Unformatted text preview: d for economic factors such as oil price. Section 6.2 of Chapter 6 will discuss how companies cope with this lack of prescription in the literature. It is possible here, to perform a crude test to investigate whether the shape of the probability distribution used for each input variable, affects the estimate generated by a Monte Carlo simulation. Such a test is carried out below. For each reservoir parameter, base values are entered and probability distributions are assigned to each of these variables from the seventeen available in Crystal Ball™ . Then a Monte Carlo simulation is run and the estimate of recoverable reserves 102 generated expressed in percentiles, is noted. This process is repeated twelve times altering only the probability distribution assigned to each variable each time. The base value data and the probability distributions used for each trial are shown in table 5.5. The output produced is summarised in table 5.6 and provides evidence that altering the probability distribution assigned to each reservoir parameter, significantly affects the forecast of the recoverable reserves. (Note, that although some of the distributions used here are more unusual (for example, the Weibull), the lack of prescription in the literature over the shape of probability distribution that analysts should adopt for reservoir parameters (and economic variables) means that, if these results are accurate, analysts could, unwittingly or otherwise, use these types of distribution to distort the results.) Further studies are needed to confirm these results. This would then prompt researchers to explore the shape of the probability distributions to be used for the reservoir parameters of reservoir rocks of similar lithology and burial history and the nature of the probability distributions to be used to model the economic variables. Future research should also investigate the nature of correlation between the reservoir (and economic) variables. The author of this thesis tried repeatedly throughout the course of the study to access “real” reserves and economic data to conduct such research but was unable to collect enough data to make any results achieved meaningful. Whilst much of the economic data is regarded by companies as commercially sensitive and this makes such research unlikely in the near future, a book due for publication next year should contain the relevant reserves data (Gluyas et al., 2001). It is hoped that the interest provoked by this thesis will motivate researchers and practitioners to conduct the necessary studies. Despite these limitations, risk analysis using simulation is perceived by the majority of decision analysts to enable a more informed choice to be made between investment options (for example, Newendorp, 1996; Goodwin and Wright, 1991 p151). Certainly, by restricting analysts to single-value estimates the conventional NPV approach yields no information on the level of uncertainty that is associated with different options....
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