Dealing with risk and uncertainty in exploration: how can we improve
Journal Article
·
· Am. Assoc. Pet. Geol., Bull.; (United States)
OSTI ID:6438065
Risk and uncertainty are inherent aspects of investing in petroleum exploration ventures. The tasks in serial exploration decision making are to be consistent in dealing with risk and uncertainty, and to perceive uncertainty realistically, reducing it where possible. Many biases exist in the mental processes by which most people make risk decisions. These biases tend to produce significant inconsistencies. Consideration of such behavioral patterns, use of quantified risk-aversion methods, and periodic review of investment decisions all help to optimize risk decision making. Target-size estimates tend to range widely, and they seem to be accurate only within +/- 1 order of magnitude of the actual size of discovered accumulations. Also, target-size forecasts tend to be significantly over optimistic. Estimates of discovery probability also tend to be over optimistic, because they commonly do not distinguish between noncommercial and commercial new-field wildcats. In addition, analysis of different geologic risk factors (structure, reservoir, trap, and hydrocarbon charge) may help improve perception of discovery probability, but explorationists commonly do not realize which geologic factor actually constitutes the primary exploration hazard for a given prospect. Cost-of-finding estimates seem to show the smallest variation in predictive accuracy. Exploratory performance can be improved through constructive postmortem analysis of geotechnical predictions, review of exploration tactics versus declared strategy, and year-to-year comparison of exploration performance parameters. 15 figures, 4 tables.
- Research Organization:
- Telegraph Exploration Inc., TX
- OSTI ID:
- 6438065
- Journal Information:
- Am. Assoc. Pet. Geol., Bull.; (United States), Journal Name: Am. Assoc. Pet. Geol., Bull.; (United States) Vol. 71:1; ISSN AAPGB
- Country of Publication:
- United States
- Language:
- English
Similar Records
Estimation of geologic risks and economic ranking of exploratory prospects
Risk management in international petroleum ventures: Ideas from a Hedberg Conference
Understanding common risk analysis problems leads to better E and P decisions
Conference
·
Sun Jan 31 23:00:00 EST 1993
· AAPG Bulletin (American Association of Petroleum Geologists); (United States)
·
OSTI ID:6087231
Risk management in international petroleum ventures: Ideas from a Hedberg Conference
Journal Article
·
Sat Nov 30 23:00:00 EST 1996
· AAPG Bulletin
·
OSTI ID:426167
Understanding common risk analysis problems leads to better E and P decisions
Journal Article
·
Sat Oct 01 00:00:00 EDT 1994
· World Oil; (United States)
·
OSTI ID:6782710