HYDROCARBON PROSPECTS, PLAYS, AND PRODUCTION FORECASTS: INDUSTRY AND GOVERNMENT PRACTICE

Oil and gas prospects are characterized in industry assessments by several parameters using probability distributions. These may include reservoir porosity, net pay thickness, hydrocarbon charge, hydrocarbon saturation, area of closure, depth to reservoir and recovery factor. The resulting assessment is typically a log-normal probability distribution of recoverable reserves. A chance factor is also assigned to each prospect, reflecting the imperfect knowledge of the petroleum system. Typically this is the risk of exceeding a minimum commercial hydrocarbon volume.

Development scenarios utilize points on the assessment probability distribution to forecast costs and revenues under several price assumptions. Best industry practice thus attempts to utilize the full range of geological data to anticipate drilling outcomes.

Resource assessment of plays, basins, national, and global hydrocarbon endowments also attempt to capture the full range of possible exploration outcomes. Probability distributions are used to describe these resources, usually under a range of price assumptions.

Industry is motivated to perform these predictions in order to prioritize prospects within a play, plays within a basin, and basins within a country. Companies have limited capital and personnel resources, and thus must attempt to allocate these for the highest economic return.

Host governments are motivated to perform these predictions in order to organize lease sales and to forecast future tax revenues and industry activity.

Both industry and government scientists use the most recently acquired data to perform assessments. In frontier basins, new data may dramatically change forecasts.

In political discussions of oil and gas activities, it is commonplace for participants to choose points of the forecast probability distribution that suit their agendas. In doing so, they misrepresent the work they cite and encourage political decisions that are not based on the full range of geological knowledge. Geologists who participate in political discussions of oil and gas activities serve the process best by emphasizing the full range of possible outcomes, including the dry-hole risk.