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Monte Carlo simulation: Its status and future

Journal Article · · JPT, Journal of Petroleum Technology
DOI:https://doi.org/10.2118/37932-JPT· OSTI ID:465163
Monte Carlo simulation is a statistics-based analysis tool that yields probability-vs.-value relationships for key parameters, including oil and gas reserves, capital exposure, and various economic yardsticks, such as net present value (NPV) and return on investment (ROI). Monte Carlo simulation is a part of risk analysis and is sometimes performed in conjunction with or as an alternative to decision [tree] analysis. The objectives are (1) to define Monte Carlo simulation in a more general context of risk and decision analysis; (2) to provide some specific applications, which can be interrelated; (3) to respond to some of the criticisms; (4) to offer some cautions about abuses of the method and recommend how to avoid the pitfalls; and (5) to predict what the future has in store.
Sponsoring Organization:
USDOE
OSTI ID:
465163
Journal Information:
JPT, Journal of Petroleum Technology, Journal Name: JPT, Journal of Petroleum Technology Journal Issue: 4 Vol. 49; ISSN JPTJAM; ISSN 0149-2136
Country of Publication:
United States
Language:
English

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