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Proceedings of the Second International Energy 2030 Conference,
November 4-5, 2008, Abu Dhabi, U.A.E.

Quantifying the Value of Data Before the Measurements are Done; as Applied to Oil Exploration and Production

Karl A. Berteussen

The Petroleum Institute, UAE

Abstract
The standard approach in the industry, when deciding between different projects, is to evaluate and rank them according to monetary criteria such as net present value (NPV), profitability index (PI) or internal rate of return (IRR). Only projects with a return on investment above a certain threshold might be accepted and among these one selects from the top of the list.

In hydrocarbon exploration this approach is difficult because conclusive information about the reservoir is usually not available at decision time. Almost every reserve-related decision is therefore made under uncertainty. Acquiring more data should reduce uncertainty. Information does have a cost and it might or might not have a value (Wills, 2004). Costs are generally known beforehand, from contract prices, price lists or direct negotiations. Acquiring additional information is one alternative choice among several.

Seismic data is possible the most important tool for gathering reservoir information in the exploration and production phase. In this presentation we focus on two aspects of seismic, its ability to detect hydrocarbons directly (DHI) and its ability to help in producing a field (4D). Using specific examples we shall generate estimates of the value of surveys (Expected Monetary Value = EMV) before acquiring the data. For other examples the relevant parameters will of course have to be changed accordingly. Doing this, seismic surveys can be compared on equal footing to any other projects in the Oil Companies portfolio that are competing for available funds. Also different seismic parameter settings can be compared according to their monetary value. This has not been standard practice hitherto because it has been considered too difficult to put a value on the seismic information.




 

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