Strategic decision analysis applied to borehole seismology

Abstract

Strategic Decision Analysis (SDA) is the evolving body of knowledge on how to achieve high quality in the decision that shapes an organization`s future. SDA comprises philosophy, process concepts, methodology, and tools for making good decisions. It specifically incorporates many concepts and tools from economic evaluation and risk analysis. Chevron Petroleum Technology Company (CPTC) has applied SDA to evaluate and prioritize a number of its most important and most uncertain R and D projects, including borehole seismology. Before SDA, there were significant issues and concerns about the value to CPTC of continuing to work on borehole seismology. The SDA process created a cross-functional team of experts to structure and evaluate this project. A credible economic model was developed, discrete risks and continuous uncertainties were assessed, and an extensive sensitivity analysis was performed. The results, even applied to a very restricted drilling program for a few years, were good enough to demonstrate the value of continuing the project. This paper explains the SDA philosophy concepts, and process and demonstrates the methodology and tools using the borehole seismology project example. SDA is useful in the upstream industry not just in the R and D/technology decisions, but also in major exploration and productionmore » decisions. Since a major challenge for upstream companies today is to create and realize value, the SDA approach should have a very broad applicability.« less