An oil and natural gas producer should continuously analyze industry fundamentals such as supply, demand, storage, transportation, and pricing to make informed operational and business decisions. An oil and gas producer should be able to adapt to frequently changing industry environment by adjusting its operation: increasing or curtailing production, drilling and connecting new wells, obtaining new financing, locking in future natural gas prices, etc. In order to provide an input to the decision-making process, the adaptive management methodology needs to be applied.

Forecasts of hydrocarbon resources, production, infrastructure, and pricing are very sensitive to technological improvements, pricing changes, new discoveries, and other major events, the impacts of which are difficult to predict. One method to improve the quality of a forecast is to apply adaptive management process. The adaptive management methodology implies assuming supply and demand strategy, creating multiple scenarios for allocating oil or gas demand to different areas or regions, evaluating these scenarios, and performing detailed forecast for selected scenarios. One important step of adaptive management is monitoring of actual drilling and production activities. Based on this information original assumptions can be updated.

The result of the analysis is production, prices, and infrastructure forecast. The paper presents an example of a production forecast that is generated using adaptive management process.

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