Abstract
Industry needs to move away from standard, volume based, assessment of the success case that only involves the establishment of sufficient recoverable product, within a container of sufficient size, to enable a critical volume of product to be commercialized. Volume based techniques at best, whether deterministic or parametric, serve only to calculate the mean case and as such are insufficient to provide adequate information regarding the true economic potential of an asset or any decision management capability. Frequently, an assumption is made that the recovery factor (bbls per acre foot), or the individual components that lead to the calculation of a recovery factor equivalent, provides a valid assessment of production rate. Economic analyses of prospects tend to be based on and constrained by detailed earth-models, assessments of risk and uncertainty coupled with cursory, deterministic, and biased assessments of rate and production profile. The result is a fairly good record of Chance; finding recoverable hydrocarbons, and an over-estimation of the Uncertainty; finding sufficient hydrocarbons that will produce at economic rates through time providing at least a minimally acceptable volume. This results in economic over-estimation.
We require a more rigorous, uncertainty ranged approach to rate and profile in order to provide a better assessment of the true potential and downside possibilities of exploratory and producing assets. Elements such as Initial Production Rate, Plateau Life, and Total Cumulative Production should be ranged as correlated elements to base reservoir properties such as porosity, saturation, and composition. For appraisal and development planning, the significance and extent of element correlation is assisted by links to an experimental design or other reservoir simulation process.
It is our view that this can only be accomplished via the stochastic approach. Economic outcome is sensitive to initial rate and profile, sometimes to a greater degree than volume. A stochastic approach enables assessment of viability as profile pathways, facility constrained yearly ranges, or "discounted production". This enables identification of valid minimum completion criteria, or at least illuminates risk potential, and establishes a fairer representation of the distribution of expected outcomes.
