Cost Efficient Decrease Of Risks Due To Additional Geological Information

Abstract

The paper presents methods for the economic evaluation of additional geological information obtained through a variety of field-geological studies in the presence of geological risks. This is particularly important in the Arctic where the risks associated with the development of hydrocarbons are extremely high. The evaluation is based on the ability to make the right decision that is reduced to the choice of two options: to continue the project or abandon it. We consider Monte Carlo method for economic evaluation of the information. The paper also suggests to express the economic effect of information in equivalent amounts of hydrocarbons instead of monetary units. This in some cases will greatly simplify the calculations using practical formulas to estimate the economic impact of additional information based on fairly standard data available to the companies.