Decisions made every day at the asset level affect corporate-level profitability, and oftentimes, this big-picture impact is not obvious to those on the front lines. How can exploration and production (E&P) organizations enable frontline managers to make decisions for a particular field within the larger context of the larger corporate portfolio?
A view of the corporate portfolio shows how oil and gas (O&G) assets come together to drive or diminish value. The E&P industry was originally structured in siloed multidisciplinary teams, and this has resulted in inherently suboptimal overall performance for O&G assets. Projects run behind schedule and over budget, reserves are frequently downgraded after final investment decisions, and value winds up destroyed. Juxtaposed with the huge capital expenditure (CAPEX) required to meet long-term global hydrocarbon demand, an increasing need exists to leverage technology and integrate people, processes, and platforms to produce better results.
This paper discusses the decision dynamics of E&P organizations within the context of the lifecycle of a hydrocarbon asset, identifies the weak links in this decision-making process, and suggests ways of achieving a more collaborative process for making value-added decisions. It demonstrates, using a case study of an exploration project and an acquisition target, how organizations can build resilient portfolios by continuously calibrating to rapidly changing technical and market conditions, thus, unlocking "option value" and achieving balance between risks and rewards.
This paper seeks to trigger a new way of thinking in how organizations could leverage an integrated platform to solve the disconnect between underlying technical risks resident in engineering and execution models and the economic risks inherent to the market and its models.
Much like how the integration of point engineering models significantly advanced the utility of the digital oilfield in the early 2000s, the coupling of petrotechnical, operational, and economic models will unlock a new, greater level of upstream optimization. This paper uniquely shows how possible this integration is today and helps progress the adoption of expected value thinking in the industry. Additionally, the paper introduces the effective use of a cloud-enabled integrated solution to evaluate prospects in a timely manner with minimal information and less resources, thereby, delivering results in mere minutes that would have previously taken a team of professionals several months to achieve.