The principles of statistical analysis are well-established, but the development and practical application of scalable stochastic shale gas prospect analysis has remained elusive. Development of this integrated software package stemmed from a desire to quantify risk and uncertainty and create a universal program to easily do so for future prospects. An Excel model with Crystal Ball overlay was used for this design. This analysis is both easily implemented, and operates with the seamless addition of scalable Monte Carlo modeling.
Commercial production is a primary uncertainty in unconventional plays. Deterministic solutions do not reflect the uncertainty associated with input assumptions. This discussion presents a stochastic assessment program to evaluate the full range of commercial realization potential. The distinctive aspect is the use of stochastic simulation to calculate the risks of failure and the uncertainty of success for any or all project stages on the basis of subsurface and surface activity performance, cost and duration uncertainties. Land divestitures or acquisitions, monetization, seismic, etc may be modeled.
The results present economic, production, reserves and other performance indicators consistent with commercial software applications, with the additional insight of quantified statistical success uncertainty and failure risk, yielding probabilistic results with associated degrees of confidence. Further work is required to adapt this method for oil reservoirs, and to model tax structures outside of the US. Project-level application is illustrated using a case study from a US shale gas resource play.
This original analysis enables real-world, universal, repeatable application of well-established but theoretical stochastic prospect analysis. Practical application is now possible in-house, and is therefore user-friendly and customizable. Both inputs and outputs will be familiar to any engineer who uses commercial economic analysis software. Most of all, the ability to test the uncertainty of any input or output for any or all project stages grants unparalleled flexibility.