The time between discovery and development of a petroleum asset is wrought with many decisions, all with an aim to reach first oil with minimum expenditure, and maximum value. Not surprisingly, sorting through all the decisions and uncertainties is a daunting task for asset teams worldwide and lends itself to the use of a systematic approach. The focus on this phase is obvious. The majority of investment in a petroleum asset is in the appraisal and development phases, where the potential for value degradation due to lengthy, unfocused evaluation or sub-optimization of the project is great.

Key to accomplishing the goal of maximizing discovered asset value is the development of an appropriate appraisal and delineation strategy – ideally, geared toward gathering information, which adds value by optimizing development strategy selection. This requires a clear understanding of the development decisions ahead, and the existing uncertainties in the field, making the selection of development strategy difficult. Only with a clear understanding of the direct linkages between appraisal and development strategy, can teams set up their evaluations correctly. This requires a practical process and tools to identify and understand those interrelationships.

This paper proposes a practical methodology to frame (set up) appraisal and development strategy evaluations, and provides an illustrative example utilizing the approach. The methodology combines classic decision analysis with a new team-based, efficiency tool, referred to as "Decision Mapping". Decision Mapping is a simple framing tool, which helps multi-discipline teams identify the development decisions facing them, the key choices "in play" for each of those decisions, the interrelationship between those choices and the key uncertainties driving their value.

The Decision Map focuses teams on "why they cannot make each development decision today". This in turn helps them identify the inter-related decisions and key uncertainties, around which appraisal needs to focus. As appraisal and flexibility decisions are both "Valuing Information" decisions, the proposed approach also incorporates previously described methodologies to frame and value information-gathering decisions 1 and expands them to address related project sanction decisions. One of which, valuing appraisal well placement, will be addressed specifically.

You can access this article if you purchase or spend a download.