Abstract
Hydrocarbon field (re-)development projects are challenging to perform as a number of decisions need to be taken under uncertainty. In addition, data gathering activities need to be performed to decrease the risk of negative outcomes related to project objectives and to select the development option with the highest value.
Many oil and gas E&P companies are using as stage-gate process to mature hydrocarbon field (re-)development projects. Such a process allows for systematic project development including value assurance measures such as peer reviews prior to decision gates. However, the stage-gate leads to challenges if it is not performed in a Bayesian framework. If for example simplified models are used in the early phase of the stage-gate process, no Bayesian updating of believes can be done. Similarly, if the company is not seamlessly integrating project value in project development, the value of development option and of data acquisition cannot be quantitatively determined.
We are showing how to mature projects in a Bayesian framework. We show how data gathering is used to update believes and how generalized sensitivity analysis can be applied to identify which decisions have an impact of project value and which parameters are sensitive to the decision which development option to perform. The key performance indicators such as Expected Monetary Value, Probability of Maturation, Probability of Economic Success are updated. The changes of the sensitivities of the various uncertain parameters with project maturation is monitored and the decision maker is supplied with key performance indicators and residual risks, risk mitigation and management plans at Final Investment Decision.