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Economic and Risk Analysis Applied to Petroleum Engineering Recent Developments and Application Examples
J. C. Cunha
Outline
Introduction Definitions Risk Analysis and the Oil & Gas Industry Application Examples Final Remarks
Introduction
Decision Analysis
1964 by Ronald Howard, Stanford University.
Decision analysis
Procedures, methods and tools
Identify, clearly represent, and formally assess important aspects of a decision situation.
Risk Analysis
Systematic use of information to determine how often specified events may occur and the magnitude of their likely consequences.* Quantitative Risk Analysis
It is a numerical approach to assess project risks.
Uncertainty:
The state of being unsure of something.
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Risk and Uncertainty - Definitions Risk is uncertainty based on a well grounded (quantitative) probability. Example
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Application Examples
Well Drilling Planning and Budget Heavy Oil Field Development
Reservoir Production Economics
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Summary of Operations
Summary by well section
Problems, possible solutions, lessons learned; Monte Carlo simulation to estimate for each well section:
Time; Total cost; Cost excluding NPT; Cost per foot x Feet per day.
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Simulation
Monte Carlo Simulation was performed:
For each well section, a value for cost per foot and feet per day was obtained; Using these values and the planned depth of the well section, it was determined the cost and period of time expected for the section; 1000 runs;
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Simulation (cont.)
Results of each run in one well section were added to correspondent results for the other sections; Table containing 1000 results for cost and time; Histograms for cost and time; Cumulative Probability Function (CDF).
1.0 0.9 0.8 0.7 0.6 % 0.5 0.4 0.3 0.2 0.1 0.0 60 62 64
65.8
66
68
70
72
71.9
74
76
78
78.0
80
82
84
86 Days
88
90
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Deliverables
Estimates of costs and time to perform operations; Sensitivity analysis to types of NPT; Easy adaptation to new realities; Partners relationship.
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Methodology
Experimental Design
Factors
Response
NPV
Grid 50x45x4
3,150 3,132 3,115 3,097 3,079 3,062 3,044 3,026 3,009 2,991 2,974
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K layer: 1
AreaOpt_HorW File: AreaExp_VertW AreaPes_HorW User: jwalter Date: 2005-04-05 1:84938 Scale: 1:84916 Y/X: 1.00:1 Axis Units: m
1.501.50 1.50
3.003.00 km km 3.00 km
10,000 1 0,000
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 0.000.00 1.001.00 2.002.00 miles miles 0.00 1.00 2.00 miles
8,000 8,00 0
6,000 6 ,000
4,000 4,0 00
2,000 2,00 0
9,000 9,0 00 9,000 7,000 7,00 0 7,000 5,0 00 5,000 5,000 3,000 3,00 0 3,000 1,00 0 1,000 1,000
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000
3,102 3,115 3,087 3,086 3,097 3,073 3,070 3,079 3,059 3,054 3,062 3,045 3,038 3,044 3,030 3,022 3,026 3,016 3,006 3,009 3,002
2,991 2,990 2,988
2,974
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Uncertainty Analysis
.. Area 1 P=0.2 .. Area 2 P=0.65 .. Prod. Scheme 1 P=0.25
.. Area 3 P=0.15 Prod. Scheme 2 P=0.25 Kr 1 16 P=0.0625 each Prod. Scheme 3 P=0.25 Prod. Scheme 4 P=0.25 Total of possible outcomes = 1728
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Por3 P=0.2
US$
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Deliverables
Expected Monetary Value (EMV) for project; Easy sensitivity analysis; Consideration of:
Reservoir characteristics; Production scheme; Economic conditions.
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Completion Program
-----------------------------
Probabilistic Model
Detailed completion time study; NPT assumptions built in the model; Probability analysis approach.
Decision tree (commercial software). Sensitivity Analysis.
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Probabilistic Model
Decision Tree
116,734 events
DISTRIBUTION STATISTICS (days)
Mean Mode Std. Dev Min 2.5% 10% 50% 90% 97.5% Max
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126.84 109.72 12.45 108.08 108.08 111.50 124.75 145.50 154.48 243.15
Deliverables
Sensitivity analysis:
Very important due to rig uncertainty;
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Final Remarks
Just the tip of the iceberg;
Useful tool for cost/budgeting; Allow better timing prediction; Gives information about chances of success and failures; Various applications; Recommended reading.
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SPE/PS-CIM/CHOA SPE-97917-PP Uncertainty Assessment Using Experimental Design and Risk Analysis Techniques, Applied to Offshore Heavy Oil Recovery J.W. Vanegas Prada, J.C. Cunha and L.B. Cunha
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University of Alberta QUANTIFICATION OF RESERVOIR UNCERTAINTY FOR OPTIMAL DECISION MAKING by Alshehri, Naeem Salem
http://repository.library.ualberta.ca/dspace/bitstream/10048/833/1/Alshehri_Naeem_Spring+2010.pdf 33
PETROLEUM SOCIETY
CANADIAN INSTITUTE OF MINING, METALLURGY & PETROLEUM
Economic Analysis for Enhanced CO2 Injection and Sequestration Using Horizontal Wells P. Gui, X. Jia, J.C. Cunha, L.B. Cunha
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J. C. Cunha jcunha@petrobras-usa.com
Society of Petroleum Engineers Distinguished Lecturer Program
www.spe.org/dl
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