Justifying Appraisal in a Low Oil Price Environment: A Probabilistic Workflow for Development Planning and Value of Information

Abstract

Abstract Appraisal adds value to potential developments by changing key development decisions (well count, subsea infrastructure requirements, development sequence, etc.), and this value can be quantified using value of information (VOI). The value of perfect information is readily evaluated but, unfortunately, all real world data is imperfect. Quantifying the value of this imperfect information requires assessment of either (i) the likelihood of the appraisal activity correctly resolving the value of an uncertainty, or (ii) the impact of the activity on the post-appraisal uncertainty range, both of which can be problematic. Traditional value of imperfect information analyses tend to focus on resolving only a single uncertainty and becomes difficult to apply as the number of uncertainties addressed by a single appraisal activity increases. This paper describes a fit-for-purpose probabilistic approach to enable the rapid evaluation of perfect and imperfect value of information for a range of appraisal alternatives. The workflow is demonstrated through its application to a recent deepwater appraisal well which included an extended well test selected as the preferred activity from amongst a range of alternatives (including conducting no further appraisal). The workflow uses a Monte Carlo spreadsheet tool to generate gas in place (GIIP) and estimated ultimate recovery (EUR) estimates for individual reservoir elements, which are then aggregated to field level estimates. A large number of individual trial values are captured and interrogated in conjunction with a set of heuristics to allow the rapid generation of probabilistic development plans (without needing to rely on a small set of deterministic realisations). Distributions and dependencies defined in the spreadsheet can be readily altered, enabling robust evaluation of the impact on EUR and preferred development plan for each appraisal alternative and outcome (low/mid/high). The EUR and development plan are then used in an economic model to quantify the value added by each appraisal activity. The highest value appraisal activity, in this case the appraisal well with an extended well test, was executed and a post-appraisal lookback was completed to review the value of information analysis once the appraisal results were available.