Why use integrated risking software?

By using tools that serve as integration platforms for all disciplines involved, consistency, comparability and full data capture can be ensured; the pre-requisites for better decision-making on all types of investment projects in the Upstream Value Chain.

DiagramCASHFLOW_ARVID

Decision-making

Integrated decision models should be easy to use, yet flexible, allowing any type of project and decision situation to be evaluated. The modeling approach should involve all team members, improving cooperation and the review process. The time and cost estimation approach must take all risks and uncertainties into account, avoiding the cost surprises that management and partners always dislike. The main challenge in the upstream oil industry is the complexity of the projects regarding types and amount of data and the large uncertainties in the most important parameters. The illustration below shows some of the typical challenges in an offshore development project where only one discovery and a possible undrilled prospect are considered. In most cases it is even more complex with several discoveries, prospects and already producing fields evaluated in an area asset development model with multiple branches in a decision tree.
IPRES_CAPEX_OPEX_illustration

The integrated team approach
All upstream investment planning processes involves integrated consideration of in-place hydrocarbons, reserves, production rates, facility designs, capital investments, operating costs, timing of execution and economic factors. New technology also needs to be considered, but there has to be a balance between the different risks/uncertainties and the costs/returns. All in all decision-making is getting more and more complex and there is a great need for efficient decision-making tools and processes.

IPRES_Exploration risk

Conclusions
It is documented that the financial benefits is increased shareholder value by this consistent approach to uncertainty and risk evaluation of each asset and portfolios by
• Reduction in suboptimal asset/field development decisions
• Reduction in suboptimal well prioritisations
• Efficient integration of the entire, integrated value chain with uncertainty
• Time saved when performing analysis iterations and updates
• Time and costs saved by standardisation • Reduced probability of errors

An integrated stochastic approach also improves the corporate decision support work processes:

• Ensures consistency and comparability across projects and portfolios
• Improves communication and integration between disciplines and team members
• Encourages team members to review and quantify risks systematically
• Gives management early warnings and allows for risk and uncertainty mitigation
• Shows management the range of outcomes, and reasons behind the values
• Fast-tracks decision processes and project planning

IPRES_Decision path
IPRISK Field

• Integrated stochastic field development tool for all disciplines involved
• Exploration prospect, discovery evaluations, concept selection, project comparison, ranking, aggregation and area planning
• Development scenarios, portfolio considerarions
• Economics with fiscal regimes, full risk assessment

IPRES_Field_Projects_Decision

Calculate optimum path – Extract the essentials
Project NPV = 21.5 MUSD Delta(D2 – D1) = 36 MUSD (18%)
80% chance that FPSO is best solution Slightly higher downside risk

IPRES_OPTIMUM_path2

 

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IPRISK Well

• Integrated stochastic well planning tool for all disciplines involved
• Single well evaluations, contingency wells, pilot wells, production wells, injection wells, scenario modelling
• Comparison and ranking of alternatives, aggregation of wells in a campaign to give total project value
•Economics, full risk assessment

IPRES_WELL_IPRISK_model

Benefits of using IPRISK Well:

 

General

• Ensures corporate consistency
o Ranking and mitigating uncertainties and risks
o Standardized input, results and reporting

Fully integrated development well valuation
o Probability of discovery, Drilling, Reservoir, Production profiles,
Economics incl. fiscal regimes
o Full stochastic handling of all uncertainties and risks
o Fast and easy to use
o Transparent work process

Single wells

• Valuation of multiple reservoir and drilling scenarios
• Full overview of all uncertainties and risks (technical and economic)
• Secure economic optimisation of wells

Well campaigns
• Compare and rank wells by using the Comparison module
• Evaluate total value of well campaign by using the Aggregation module