Abstract
The worth of producing an oilfield is governed by future uncertainties that are related both to changes in reservoir behaviour and to on-going production. Costs and selling price of product also influence the decision to produce further reserves. Acquisition of new information, and decisions to produce based on interpretations of the new information, are usually undertaken to maximise the total worth of an oilfield to a corporation, or to minimise total loss. Because acquisition of new information is not cost-free, future further development decisions are influenced by such costs and also the anticipated new worth assuming the acquired data resolve, at least partially, any uncertainty in expected future reserves. This paper is the first in a series designed to illustrate how one can use probabilistic risking methods to handle such uncertainties. A simple deterministic assessment is made of when new information is worthwhile. With the sole exception of the probability of a successful value change resulting from new information, all other parameters describing the oilfield are taken to be precise and it is also taken that new information resolves unequivocally the residual worth of the oilfield. These conditions will be gradually relaxed in future papers to illustrate their importance to the decision-making process. Systematically varying the probability of success, which is the sole unknown, allows one to assess when anticipated new net gains would exceed those by continuing production of the field the way it is. In particular, one can determine how high the success probability needs to be for such an eventuality and compare this value against a corporate-mandated Minimum Acceptable Chance in order to make a decision consistent with the corporate constraints. To assess the uncertainty, measures of bulk volatility and also of upside and downside volatile risk are used as yardsticks. Simple numerical examples are provided to show how these factors can be quantified and used in oilfield development and production situations.