Abstract

This paper is a case study on improving the quality of project approval decisions within an operating oil and gas company, by improving the existing deterministic economic evaluation workflow to answer questions such as:

  • Did our project outcomes meet our expectations, or were we miles off?

  • What, no production? A write-off! How could this be?

  • Do we give the project team a bonus this year?

The methodology employed was to:

  • Determine the insights needed by decision-makers to improve the quality of project approval decisions, and post-project, to appraise the project team's performance.

  • Update the existing evaluation workflow to deliver these insights.

  • Measure the impact of the updated workflow in terms of project proposal quality, and actual verses proposed project outcomes.

The improvements from this simple and inexpensive workflow include:

  • Fewer and better project proposals.

  • Better project sanction decisions.

  • Fast and focused project look-backs.

  • More objective evaluation of project team performance.

Conclusions from this project are:

  • Improved project sanction decisions result from using a probabilistic economic valuation.

  • This method is straight-forward to implement, requiring management support but minimal expense, and is equally applicable for small and large companies.

  • Visualising the entire range of project outcomes benefits all stakeholders:

  • Project team members quickly identify key project drivers, allowing more time to investigate ways to reduce their uncertainty.

This workflow is extended to quantify the uncertainty in production and cost forecasts for annual and long-range budgets.

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