The main types of flexibility present in oil field development projects

The main types of flexibility present in oil field development projects.

- Initiation

- Termination

- Start/stop

- Information

- Capacity flexibility

Of particular interest is the capacity flexibility, i.e., the option to change the scale of the project.
This may be achieved by changing the production capacity of the production unit, and/or by
changing the production capacity of the reservoir. Both the degree of decision making freedom and the number of stochastic variables are increased, implying a much more computationally demanding model.

The value of flexibility is closely related to the uncertainty. An analysis of flexibility must therefore be made together with an assessment of the uncertainty surrounding the project. Hence, the selection of stochastic variables should support the flexibility of interest. Based on previous studies and discussions with Norwegian operators three variables are considered stochastic in the model;

- oil price

- reservoir volume

- well rate

These variables are of major importance to the production profile and the cash flow of the field.