Economic forecast for assessing reservoir performance is a strong function of geological modeling. Complexity of geological modeling may vary from semivariogram-based models to multiple-point simulation technique. Semivariogram-based stochastic simulation techniques are less complex than multiple-point simulation technique in terms of the amount and type of reservoir information needed to generate the porosity and permeability maps.

This paper assesses economic implication of using geological models of varying levels of complexity. For this we compared the uncertainty in reservoir's long term economic performance obtained by using geological models with varying levels of complexity. Reservoir economic performance is assessed using both the real options valuation (ROV) analysis, a probabilistic approach, and discounted cash flow (DCF) based approach.

The results suggest that it may be appropriate to use simpler geological models for the forecast of volumetric flow rate uncertainty. We see that the economics in terms of ROV obtained from a simple geological model is not significantly different from that of a complex geological model. Similar results also hold true with DCF analysis.

This study could help answer the question of how much detail in reservoir models are necessary if the end objective is to obtain realistic assessment of net economic risk (which would be used to make correct decisions)?

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