Keywords: risk analysis, oil production, decisions under uncertainty, performance forecasting, risk assessment, decision making, production forecasting
How does risk analysis add value in the forecasting of oil production?
One of the challenges faced by oil companies is the ability to predict oil production from its fields when faced with uncertainties. The objective of this article is to show how risk analysis can add value to production forecasting. A real case study shows variations in the worst and best production of the company were between 40,000 to 50,000 barrels per day, and the variance between P10 and P90 was approximately 8,000 barrels per day. The results showed that there was only a 53% chance of meeting the company's target of 270,000 barrels per day in the first year. The major uncertainty factors were dynamically captured, and the chances of production meeting certain targets were quantified in probabilities. These results can only be achieved by applying risk analysis to production forecasting. [Received: April 25, 2011; Accepted: June 27, 2011]