Welcome to Eikos Project Systems Limited older stories return to menu newer stories 1st November 2010  JPT article - The Future Ain’t What It Used to Be, Or Is It? This article describes the method used in Korax reports to characterise risk in well projects using the ratio P90/P50 (time). The ratio can be used to substantiate estimates in areas where data is scarce and to compare risk from one area with another. Characterising and quantifying risk is a big issue for new well projects, the Korax tool is highly effective, robust and credible. In “The Difficulty of Assessing Uncertainty” (SPE 5579, 1976) E.C. Capen described how oilfield engineers struggled to quantify variables. Capen asked groups of SPE members to estimate ten quantities (dates, distances, times) using ranges with a prescribed confidence level. What he found (and others before and afterwards confirm) is that very few people are good at this exercise. Probabilistic methods and in particular Monte Carlo Simulation (MCS) are often thought to solve the problems presented by Capen. However MCS can make matters worse if a misleading estimate appears to be backed up by a detailed process, voluminous research and specialised software. All estimates need to be calibrated, that is, substantiated by reference to reality. For clarity it is worth defining the terms Uncertainty and Risk. Uncertainty is used here to describe the fact that for any future project a range of outcomes exist. Risk is used to describe less desirable outcomes; typically risk relates to a project running late and over-budget. The purpose of this article is to suggest that a calibrated estimate of well project duration and cost should be a standard part of the investment decision making process. A calibrated estimate will substantiate a wide range of possible outcomes and improve the quality of information available prior to allocating capital. Communicating information related to risk is also an area where the Exploration & Production (E&P) industry can learn from others. Click here for full article older stories return to menu newer stories			For further information about Eikos Project Systems Limited please contact... Contact: John McIntosh Email: JBM@eikossystem.com Tel: +44 (0)7790 067 598 Skype: john.b.mcintosh Linked-in: > view profile
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