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Unformatted text preview: ter 6). As an asset proceeds through its life
from exploration, through development to production and, ultimately, to
abandonment, the relative risk and uncertainty associated with it decrease, though the
relative risk and uncertainty may increase. (For example, at a recent Society of
Petroleum Engineers seminar in Aberdeen, Mike Cooper and Steve Burford
demonstrated how the relative risk and uncertainty associated with the Murchison
field actually increased with time). Unfortunately, most of the decisions have to be
made near the beginning of the asset’s life when the risk and uncertainty are
particularly high. This makes it paramount that organisations use probabilistic methods for the generation of both reserves and economic estimates.
Some companies use a combination of deterministic and probabilistic techniques. For
example, Nangea and Hunt (1997) describe how Mobil used such an approach for
reserve and resource evaluation prior to their merger with Exxon. The authors, and
presumably the company, believed that both methods have valid justification for
utilisation and that when they are used jointly, they can provide greater insights into
the recoverable hydrocarbon volumes and the probability of recovering those
volumes, than when they are used in isolation. During exploration, proved and
probable reserves (as defined by the World Petroleum Congress, see Section 7.4 of
Chapter 7) were calculated deterministically. A Monte Carlo simulation was then run
to establish the cumulative probability distribution for recoverable hydrocarbons.
This curve and the deterministic results were then utilised to determine the possible
volumes (“geological uncertainty”) and associated confidence factors (“geological
risk”) for each of these categories. The mean value of this probabilistic curve (the
expected value) was the case used for the economic analysis. No indication is given
in the Nangea and Hunt’s (1997) paper as to how Mobil conducted their economic
analysis. However, clearly by using only one reserves case to run the economic
analysis, the economic impact of the high and low reserve cases was ignored. As
fields went into production and new information became available, Mobil’s analysts
generated new deterministic and probabilistic estimates of the proven and possible
reserves of each field. Near the end of fields’ lives, Mobil believed that there is a
little uncertainty associated with the reservoir parameters or the size of the field.
122 Consequently, the company discontinued using probabilistic analysis at this stage, and
the production volumes (and associated confidence factors) were calculated
Whilst it is certainly true that during production risks and uncertainties are
significantly reduced, they are by no means eliminated. For example, the oil price
prediction used in the economic models may prove inaccurate, as was the case with
the Brent field. The physical structures could fail. This occurred with the facilities
for Foinaven, Balder and Sleipner (Wood...
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This document was uploaded on 03/30/2014.
- Summer '14
- The Land