A CONTRIBUTION TO RISK AND DECISION ANALYSIS OF PETROLEUM EXPLORATION

Abstract

Abstract In this study the problem specifications are as follows: 1) Assessment of the factors of risk in petroleum exploration. 2) Evaluation of the geological risk. 3) Estimating prospect reserves. 4) Utilization of the probability of geological risk and the results of estimating prospect reserves in the decision making for drilling. ln petroleum exploration the basic concept in assigning risk for the geologic factors is contraverse; therefore, the subjective probability is used to assess the factors which are independent thus; the multiplication rule of probability is used to evaluate the geological risk. The prospect reserves distribution being a lognormal distribution, is estimated by finding out first the mean and variance of all the reserve parameters in the prospect reserves. In our study two methods were explained for finding the mean and variance of the reserve parameters: 1) Swanson's 30-40-30 rule.

2) Three-point method Since the prospect drilling is too expensive, and to avoid the loss if a dry hole is resulted, one can use the decision tree initially to decide whether to drill or not. The calculation of prospect reserve will be illustrated by the use of worksheet from one of the Sudanese Petroleum Companies.