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.
