Despite recent improvements, major investment decisions are often taken before the technical and business analyses are complete. Even when they are complete, managers are repeatedly left confused by mixed messages from the many disciplines involved. The result is avoidable costs and missed opportunities totaling hundreds of millions of dollars annually.
To solve this problem, we have re-examined all aspects of existing decision-making methods and have created a new way to facilitate crucial decisions much more quickly and clearly. This paper describes this new Hydrocarbon Asset Valuation (HAV) solution, and shows examples of how HAV can reduce cycle times by as much as 50X with improved accuracy and covering a wider range of uncertainties.
HAV consists of five elements: the team, the process, the tools, the room, and the data. The team includes all of the technical and business disciplines that impact the investment decision. The process enables a team to intensively collaborate for two to three weeks in one room to meet a common objective. They work in parallel, and produce several shared earth models, multiple reservoir simulations, numerous surface facility options, and dozens of marketing and business scenarios. This input ultimately converges on a critical few alternative development scenarios. The tools consist of simple yet powerful PC-based products for geoscience interpretation, reservoir simulation, surface facility configuration, economic scenario analysis and electronic documentation. This new software platform is far less expensive than conventional workstation-based products, and is much easier to use. The room is a large well-equipped room where the team meets and works through the process without interruption. Finally, the data includes a carefully extracted subset of the technical and business data to help characterize only those factors that impact profitability.
In one recent HAV example, a 35-person team fully articulated the value of an offshore block containing 51 assets in all phases of the life cycle in just two and a half weeks. This amounted to a 50X reduction in cycle time, with the improved accuracy that comes from synergy in all of the disciplines from seismic interpretation to marketing.