Abstract
The oil industry loses an estimated US$30 billion or about 25% of its annual upstream expenditure due to poor decision outcomes1 . This provides a strong incentive to study decision improvement initiatives. While there has been a significant improvement in decision-making, it has been slow and in small steps. Perhaps a paradigm shift maybe necessary to cope with an environment that is likely to become even harsher in future. We believe industry decision experts have overworked the technical and economic factors while largely ignoring individual expertise, which is the third key factor in improving decision-outcomes under conditions of uncertainty in the real world environment. Most failure stories can be largely ascribed to the lack of application of appropriate expertise in judgements. This paper questions the common industry practice of placing decision-making responsibility according to organizational hierarchy rather than expertise. In this first part of a continuing study, relying on two experiments, the paper illustrates two points. First, that decision-makers invariably superimpose their experience and expertise onto the results of normative tools and adjust them. This makes it imperative that they possess the requisite expertise. Secondly, we argue it is possible to develop a methodology to distinguish experts from intermediates and novices in the oil and gas industry. We assert that while years of experience help build expertise, by itself it is an unreliable indicator of the level of expertise.
