As exploration professionals,
half our job involves estimating various geotechnical parameters that
characterize our prospects and plays. Most of us, however, have had little
or no training in effective estimating methods.
In
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we reviewed six ways to improve our estimates of the variable
factors - uncertain parameters such as productive area, average net pay,
HC-recovery factor, recoverable reserves, flow rates and project costs.
This month we’ll discuss effective
methods for estimating existence factors - our confidence (= probability)
that key geologic requirements such as HC-charge, reservoir and closure
have been satisfied in the subsurface by Mother Nature.
The general
industry convention is to estimate the variable factors as probabilistic
ranges, whereas the existence factors are estimated as unique decimal
fractions, whose product represents the chance that a reservoired, detectable
(i.e. flowable) accumulation is indeed present at depth.
Most experienced evaluators agree that
better results are obtained by assessing the different geologic attributes
separately, rather than estimating only the prospect chance of geologic
success. Naturally, this assumes that the individual geologic attributes
are statistically independent - that the presence of reservoir rock is
not influenced by the existence (or absence) of HC-source rock or closure.
For single-objective prospects, this
usually isn’t a problem - but for multizone prospects, it does have to
be considered. For now, let’s keep it simple.
The reason why we need to estimate
the geological chance of success and failure (= Pg and Pf), of course,
is that they are key items in calculation of Expected Present Value (EPV)
of the venture, i.e., its chance-weighted present monetary value. (Often
we recognize that geological success may not be commercial success, so
to arrive at the chance that the well will be completed, reduce Pg proportional
to how much of the prospect reserves distribution is greater than the
commercial threshold.)
Here are eight tested tips to help you
make better estimates of your prospect’s chance of geological success:
- Be sure you have a geological model for the prospect
in mind before you start, well supported by maps and cross-sections.
- Having a proposed drilling location on the map
will help you focus on the problem.
- Review the prospect with the most knowledgeable
professionals - the prospect team.
- Consider all evidence objectively and rigorously,
taking into account quality and quantity of data. Maintain a courteous,
professional tone throughout your deliberations - you don’t want to
suppress any pertinent data or ideas. Remember, the objective is not
to sell the prospect, it is to evaluate it honestly.
- Use a probability scale (Figure 1) to help geoscientists
and engineers sense and express their individual subjective confidence
in the existence of the various geologic attributes.
- For each chance-factor, ask, “What can hurt us
here?” As a reality check, try to estimate the chance of failure (i.e.,
non-existence), rather than existence.
- Remember that geologic chance of success has
nothing to do with economics - it’s only an estimate of the chance that
Mother Nature has caused a flowable reservoir accumulation of oil and/or
gas to be present.
- Before the group finalizes its consensus probability
for each chance factor, ask each member to independently write down
his/her estimate - then record them for the group.
- Discuss “outlier” estimates - many of these reflect
either important unique knowledge, or incorrect or incomplete knowledge
that may be modified. If anyone then wishes to revise his/her estimate,
enter it, and then average the estimates.
- Remember that changing a chance-factor from 0.3
to 0.4 has a much bigger impact on Pg than a change from 0.8 to 0.9,
so spend more time on the lower chance factors (= critical risks).
- Remember that estimating is not exact - beware
of false precision.
- For each geologic chance-factor, compare other
prospect chance-factors - i.e., “Are you as confident of Reservoir as
you were of Closure?”
- Compare estimated probabilities against previous
estimates for counterpart prospects. Are estimates consistent, considering
data quality and quantity, and known geological characteristics of the
trend?
- Faithfully keep track of your estimates and compare
them against actual outcomes.
Are you usually anticipating critical
risk correctly? What were the actual success-rates of different risk-classes
of your prospects?
Learn from your experiences!