The degree of uncertainty in developing an oil field

The development of an offshore oil field is a task characterised by its versatility and high degree of uncertainty. The selection of the development strategy is made early in the project’s lifetime, and at the time the decision is made the information concerning the field is often scarce. For instance is neither the future production nor sales prices known with certainty. The problem facing the decision maker is therefore a problem with imperfect information. This makes the decision making process a challenging one, and the methods applied should offer adequate support for evaluation under uncertainty. The criticality of good decision making at this stage is further stressed by the fact that the choice of a development strategy is of great consequence for the profitability of the project.

Several decades may pass between inception and completion of the project, and throughout this time many disciplines are involved. A model that aims to cover the complete development must therefore be based on rather crude approximations in order to get a solvable model. The requirement for a compact representation of the problem is of course not unique to an oil field development project, but the inherent complexity makes this demand a critical one. To facilitate the modelling the project is thus depicted by a simple phasing (figure 1). The four phases cover the complete development project from the time before the PDO (Plan for Development and Operation) is submitted to the government to the abandonment.

The operator bases the PDO on information about the reservoir properties retrieved by seismic
surveys and exploration well drilling. It is however still possible to obtain further information by
additional well drilling, as captured by the exploration phase. Having completed the appraisal of the reservoir the conceptual study is carried out. The choice of concept involves, in addition to the selection of a production unit, a choice of flexibility. As any possibility to alter the configuration of the production unit is restricted by its free space and carrying capacity, the concept design is essential to the development strategy. Following the choice of concept is the engineering and construction of the production unit. This may either be the construction of a new unit, or the modification of an existing unit. Finally the depletion of the field is captured in the production phase.