• Class and Course

    Risk, Uncertainty and Decisions in E&P Projects RILS

    Risks and uncertainties are everywhere in E&P projects. They impact decision making by the projects chosen, how they are developed, and their economic performance. Improving the quality of decisions is the main goal, not just understanding risk and uncertainty for their own sake.

    Although probabilistic concepts and tools are commonly used to describe projects under risk and uncertainty, the principles underlying these concepts and tools are not always well understood.  Upon completion of this course, participants will become more comfortable with probabilistic thinking and how it can be used to improve decision making.

    Day 1 - Risk

    Basic probability refresher

    Probability calculation rules 

    Expected value, risk dependence

    Simple exploration economics exercise

    Day 2 - Decision Analysis

    Decision trees

    Influence diagrams, SWOT analysis

    Bayes formula 

    Value of Information and case study

    The case study will illustrate the concept of value of information by combining decision trees and Bayesian inversion to show how the probability of geologic success should be revised to incorporate new seismic information and how the quality of this information impacts its value.  

    Day 3 - Psychological Aspects of Decision Making

    Utility curves and risk attitudes 

    Behavioral economics

    How good are we at estimating?

    Cognitive biases

    Day 4 - Uncertainty

    Deterministic versus probabilistic: what is the difference?

    Histogram, pdf, cdf, percentiles, mean, mode, median, variance, standard deviation

    Risked mean

    Standard error of the mean, confidence intervals

    Random errors and bias

    Correlation and its interpretation

    The flaw of averages, the winner’s curse

    Day 5 - Monte Carlo Simulation and case studies

    A review of the most common distributions used in geosciences

    The Monte Carlo approach

    Presentation of @RISK™, a Monte Carlo add-in for Excel™

    Computing uncertainty on STOIIP

    What to expect from a workover program?

    Estimation of the production increase expected from a workover program will demonstrate the importance of scale in assessing uncertainty. 

    Anyone interested in learning more about the approach and techniques of risk, uncertainty and decisions in E&P projects.

    Some basic statistics knowledge would be useful but not mandatory. 

    Currently there are no scheduled classes for this course.

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