Abstract

In any petroleum industry application, it is important that sound decision making techniques are applied to maximize value of investments and generate optimal returns from execution of these decisions. This is especially critical for lower margin unconventional resource plays, where cost reduction is of upmost concern. Whilst significant attention is placed on minimizing costs to improve economics for unconventional projects, there are often opportunities with potential to yield substantial incremental value creation, despite some outlay of additional capital. This paper will discuss the application of fit-for-purpose decision analysis (DA) and value of information (VOI) techniques to evaluate various opportunities to enable data driven decisions to be made, and maximize value from unconventionals.

The Wolfcamp Play in Permian Basin is one of the most active unconventional oil plays in North America, and is widely considered a statistical play requiring a manufacturing approach, whereby many wells are drilled and completed in the same fashion to develop the field with optimal operational efficiency. However, this paper will discuss several case studies where more detailed study and analysis have led to opportunities to optimize the development and increase economic viability, by adopting a more scientific and DA based approach. Final results suggest that these opportunities have generated significant value creation and highly favorable economic returns, and should serve as examples for other tight rock plays.

This paper provides a robust workflow of fit-for-purpose DA techniques for application to various decision points for unconventional projects. The paper also presents case studies that convey the complexities and challenges faced in unconventional resource plays, and how making data driven decisions that provide value creation can enhance the value of the assets. Case studies discussed include 1) Open hole logging decisions, 2) Proppant selection for hydraulic fracturing, and 3) The use of mud logs as a completion selection tool. To evaluate these opportunities, a series of VOI and DA techniques were employed, including decision trees, investment efficiency charts, sensitivity to probability calculations, and other net present value (NPV) and profitability analyses.

The subject matter discussed in this paper has relevance and application to other unconventional plays in the industry that seek to maximize value of the resource base and capital investment employed.

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