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Application of Value of Information approach to seismic data for decreasing well drilling risks

UDK: 550.834.017
Key words: seismic exploration, value of information (VOI), drilling risks, decision tree
Authors: A.N. Sitnikov, A.V. Butorin, G.M. Timoshenko, A.M. Vashevnik (Gazpromneft NTC LLC, RF, Saint-Petersburg)

Nowadays oil industry is often faced with the following question: which development strategy is preferable? The matter is that the best development scenario is important both in the initial and the development final stages of the hydrocarbons field. The most important criteria while choosing the development scenario is the process of maximizing the profit by raising the NPV value. This estimation parameter can be determined in terms of Value of Information approach (VOI).

The authors carry out the usage of VOI approach in various seismic scenarios included all steps which are field survey, processing and interpretation in order to reduce risks and uncertainties. The new seismic data leads to changes in uncertainty distribution, key parameters and thus in NPV distribution. Consequently the new data can change the investment decision. Generally the project risks are closely connected with the lack of precise information about the geologic genesis, which creates the range of uncertainty and consequently leads to increasing the “dry hole” drilling risks and its expenditures. Conducting the seismic survey helps to decrease the standard deviation in forecasting parameter (to narrow of the forecast deviation). As a result knowingly non-commercial wells can be expelled from the project and thus can lead to the profit maximization and the development program correction. Economic rationalization due to cutting the non-commercial wells drilling allows to obtain the benefit and to form the VOI of the event. The operations called successful in case of VOI values are higher than its expenditures. Otherwise, the benefit is implicit and the operation has no practical usage.

The article shows the main approaches of VOI calculation using reserves deviation and optimization of the development scenarios based on the real data.

References

1. Kim J., How could you possibly predict the value of 3D seismic before you

shoot it, SPE 56446-MS, 1999.

2. Levyant V.B., Ampilov Yu.P., Glogovskiy V.M. et al., Metodicheskie

rekomendatsii po ispol'zovaniyu dannykh seysmorazvedki (2D, 3D) dlya

podscheta zapasov nefti i gaza (Guidelines for using seismic data (2D,

3D) for calculating oil and gas reserves), Moscow: Publ. of Central Geophysical

Expedition, 2006, 40 p.

Nowadays oil industry is often faced with the following question: which development strategy is preferable? The matter is that the best development scenario is important both in the initial and the development final stages of the hydrocarbons field. The most important criteria while choosing the development scenario is the process of maximizing the profit by raising the NPV value. This estimation parameter can be determined in terms of Value of Information approach (VOI).

The authors carry out the usage of VOI approach in various seismic scenarios included all steps which are field survey, processing and interpretation in order to reduce risks and uncertainties. The new seismic data leads to changes in uncertainty distribution, key parameters and thus in NPV distribution. Consequently the new data can change the investment decision. Generally the project risks are closely connected with the lack of precise information about the geologic genesis, which creates the range of uncertainty and consequently leads to increasing the “dry hole” drilling risks and its expenditures. Conducting the seismic survey helps to decrease the standard deviation in forecasting parameter (to narrow of the forecast deviation). As a result knowingly non-commercial wells can be expelled from the project and thus can lead to the profit maximization and the development program correction. Economic rationalization due to cutting the non-commercial wells drilling allows to obtain the benefit and to form the VOI of the event. The operations called successful in case of VOI values are higher than its expenditures. Otherwise, the benefit is implicit and the operation has no practical usage.

The article shows the main approaches of VOI calculation using reserves deviation and optimization of the development scenarios based on the real data.

References

1. Kim J., How could you possibly predict the value of 3D seismic before you

shoot it, SPE 56446-MS, 1999.

2. Levyant V.B., Ampilov Yu.P., Glogovskiy V.M. et al., Metodicheskie

rekomendatsii po ispol'zovaniyu dannykh seysmorazvedki (2D, 3D) dlya

podscheta zapasov nefti i gaza (Guidelines for using seismic data (2D,

3D) for calculating oil and gas reserves), Moscow: Publ. of Central Geophysical

Expedition, 2006, 40 p.



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