Clustered-Development Approach Leads to Better Evaluation of Multiprospect Plays

Abstract

This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper OTC 28499, “Making Better Business Decisions Evaluating Multiprospect Plays Using a Clustered-Development Basis,” by Mark Schneider and James Gouveia, SPE, Rose and Associates, prepared for the 2018 Offshore Technology Conference Asia, Kuala Lumpur, 20–23 March. The paper has not been peer reviewed. Copyright 2018 Offshore Technology Conference. Reproduced by permission. In plays with multiple prospects, decision-makers put themselves at a significant disadvantage by using economics on a standalone basis to justify development for each prospect. In the clustered-development approach, the geologic dependence between prospects is combined with the aggregation of prospects to determine the economic viability of a grassroots development offshore. Although easily visualized, economic evaluations of clustered developments typically do not consider the geological dependencies and development synergies that exist. Modeling these synergies has a significant effect on the economic evaluation of developments. Geologic Dependency In assessing the economic effect of the dependencies between prospects, breaking the chance of geologic success into a shared element and a local element is mandatory. The geologic-chance elements shared between all related prospects will be referred to as either the shared or play chance. Those geologic-chance elements that are independent between each related prospect are referred to as the prospect/success ratio (PSR). The probability of geologic success for any individual prospect will be defined as the play chance multiplied by the PSR. When evaluating a new region, having a high degree of dependence within the geologic chance-of-success components will effectively derisk the play relative to total independence. A key learning from the authors’ play analysis is that an optimal drill order always exists. The well that will have the largest effect on the play chance is typically the optimal well to drill first. Industry practice often is focused on a well decision rather than a play decision. Consequently, the well with the highest chance of geologic success (Pg) or the largest risked mean re-coverable resources typically is drilled first. Ideally, prospects should be drilled in a location that best addresses the play-chance elements. Effect of Aggregation on Size Dependency Geological successes are not all commercial or economic successes. A two-step process is used to determine the chance of commercial success leading to a development. The first step is assessing the total chance of Pg. The second step is to run the cash-flow model to determine the minimum commercial field size (MCFS) for each prospect, assuming a standalone development and a clustered tie-in to an existing development. The product of the two is the chance of commercial success. Viewing a play as an individual prospect vs. as an aggregate of prospects will affect decision making materially in the determination of the size threshold for commercialization. An assumption has been made that each prospect can be represented by the same cash-flow model (i.e., the same distance from prospect to central processing facilities).