Handling Risk and Uncertainty in Portfolio Production Forecasting

Abstract

Summary Stochastic modeling provides a mechanism for incorporating risk and uncertainty considerations into portfolio production forecasts. Through this process, insight is gained into the likelihood of production targets being missed, met, or exceeded. This insight enables organizations to better manage operational, positioning, and strategic planning activities around stakeholders’ production expectations. Inherent in all capital programs are numerous uncontrollable, but definable, factors that affect overall corporate production performance. These factors can be categorized into four groups: (1) timing uncertainties, (2) performance uncertainties, (3) sequencing uncertainties, and (4) risk. Timing uncertainty considers spud scheduling, spud-to-first-production cycle timing, and production-ramp-up cycle timing. Performance uncertainty considers the historical or modeled distribution of period-specific production rates within the constituent plays (e.g., What is the unavoidable range of variability within a play as depicted in a peak-normalized composite-production plot of wells within the analog population?). Sequencing uncertainty considers performance-percentile clustering or sequencing within the program (e.g., the number of top-quartile wells that are, by chance, drilled early in the year vs. later in the year). Finally, risk addresses commercial failure within a program attributed to either geology or execution, or both. By integrating historical operational data with a standardized set of play-assessment deliverables, the building blocks of a stochastic capital-program forecast and analysis are readily available. Ultimately, the use of stochastic modeling in portfolio production forecasting provides an organization's decision makers with the information necessary to examine investment and strategic decisions in the context of corporate-risk tolerance.

Artificial Intelligence-Centric Low-Enthalpy Geothermal Field Development Planning

“…A structured decision dialogue, as proposed by SPE [58] and Spetzler et al [50], ensures alignment between project objectives and corporate goals. Additionally, portfolio considerations, such as evaluating the impact of the project on overall company risk [59][60][61], play a crucial role. The FDP process is dissected into three phases: frame, evaluate, and commit.…”

“…Energies 2024, 17, x FOR PEER REVIEW risk [59][60][61], play a crucial role. The FDP process is dissected into three phases: evaluate, and commit.…”