Uncertainty Management and Risk Mitigation Over Asset Lifecycles

Uncertainty Management and Risk Mitigation
Over Asset Lifecycles
Attendees Will
• Discuss common interests informally with colleagues from around the world
• Share knowledge and experience in off-the-record format
• Gain new insight and perspective through conversations with others from international companies, service companies, contractors, research
institutes and universities
• Enjoy the relaxed atmosphere of learning through one-on-one interaction
Come prepared to be a participant, not a spectator.
The Forum Series Format
28 November–1 December 2011
Dubai, UAE
The Forum Series provides morning, afternoon and evening sessions of short scheduled and unscheduled presentations with maximum time available
for informal discussions and exchange of experience.
To encourage maximum discussion, lengthy formal presentations are discouraged. Presentations are usually limited to three or four slides or
transparencies. Breakout sessions for discussions in smaller groups are common. Participants are encouraged to come prepared to contribute their
experience and knowledge, NOT to be spectators or students.
The reporting of new, unpublished work and incomplete results is encouraged. Written papers are prohibited, and extensive note taking is not allowed.
Information disclosed at a forum may not be used publicly without the originator’s permission. Participants are specifically requested to omit reference
to forum proceedings in any subsequent published work or oral presentation.
A short written summary of major issues and consensus arising from the forum may be prepared and distributed to attendees after the forum at the
discretion of the steering committee and with appropriate SPE approval.
11FSM2_BRO_8413_2011

Committee Chairs
Ian Bryant, Co-chairperson
Schlumberger
Marko Maucec, Co-chairperson
Halliburton
Committee
Ahmed Al Neaimi
ADMA-OPCO
Ellen Cooper-Smith
Decision Frameworks
Ernesto Della Rossa
Eni
François-Michel Colomar
IFP Middle East Consultancy-
Beicip-Franlab
Iain Percival
Shell (Retired)
Jonathan Carter
Imperial College
Mark Sykes
ExxonMobil
Michael Scanlon
Schlumberger
Moncef Attia
ADMA-OPCO
Paul van den Hoek
Shell
Ralf Schulze-Riegert
SPT Group
Reidar Bratvold
University of Stavanger
Rik Sneep
South Rub Al-Khali Company
Roger Ekseth
Gyrodata
Segun Jebutu
Baker Hughes
W. Scott Meddaugh
Chevron
Thirty Years of Innovative Thought and Accelerated Results
28 November–1 December 2011
Dubai, UAE
Uncertainty Management and Risk
Mitigation Over Asset Lifecycles
Forum Description
Effective management of lifecycle risk and uncertainty is critical to the success of oil and gas projects: many feel it is in
fact the central challenge of the E&P business. In spite of the focus on uncertainty assessment and risk management in
the last generation of reservoir development projects, surprises continue to occur.
The field development and management process covers a broad range of decisions (technical as well as commercial),
involving all E&P disciplines (sub-surface, wells, surface engineering and operations) and functional domains, over a time
period that can span 25-35 years in which the asset will go through several development phases (primary, secondary and
tertiary recovery). The “objective or target function” for the asset in terms of production, recovery or business value may
change over its lifecycle.
There are accepted E&P practices for describing, evaluating and handling risks and uncertainties in the course of a
development (probabilistic, deterministic, stochastic, scenario based or a combination of these). A distinction is made
between the treatment of risks, as potential future events that can influence the achievement of project objectives, and
uncertainties which can have different sources, being model or data dependent.
There is a growing sense in the industry that a more integrated, lifecycle approach to the above challenges is required,
specifically to understand how risks and uncertainties can be factored into technical or commercial decisions and
“evaluated” dynamically (using e.g. real options theory). Last but not least the propagation of risks and uncertainties
through the project lifecycle is only understood for very obvious–low dimensional–decisions involving a limited number of
parameters.
New capabilities are beginning to emerge that should allow the industry to reduce development surprises and improve
management of assets and reservoirs. These include advanced modelling of uncertainty, integrated workflows, robust
uncertainty frameworks, improved surveillance and increased computing capacity.
The forum aims to bring together a multi-disciplinary group of E&P specialists and generalists, as well as external experts
to provide input and perspectives of non-E&P fields. It will address emerging developments and holistic approaches to the
treatment and management of E&P risk and uncertainty. Challenges that the forum will address include:
• Estimation and prioritisation of uncertainties
• The limitations of the current risk/uncertainty models, decision models and management practices
• Determination of the simplest models to appropriately model and predict the impact of uncertainties and development
options
• The impact of discipline specific models and work-processes on the overall quality of decisions across the asset lifecycle
• The state-of-the-art in risk/uncertainty modelling and complex integrated technical and commercial decision making
• Application of a Bayesian framework for uncertainty assessment
• Whether an integrated risk/uncertainty management framework can be defined that allows consistent handling and
propagation across disciplines and field phases
• Whether a hierarchy of risks/uncertainties can be identified, to allow for cost-effective evaluation and management
• How non-technical risks/uncertainties and objectives can be incorporated into the management process and effectively
communicated to decision makers at all levels
• How increased computing power can be effectively deployed to handle complex E&P risk and uncertainty problems
Output of the forum will be a summary on the status of the field and recommended directions and priorities for improving
the robustness of field development planning and lifecycle asset management.
Who should attend?
The target audience includes staff working in academia, service companies and oil companies. Exploration staff,
geoscientists, petroleum engineers, drilling and facility engineers and project and asset management staff will benefit
from attending this forum. Academics and specialists from non-E&P industries will be actively encouraged to attend and
contribute their insights.
The forum is aimed at people whose principal job falls into any one of the following categories:
Exploration and appraisal, geophysics and geology, petroleum engineering, drilling and completion, engineering,
production, field development, reservoir management, economics and portfolio management, health, safety and
environment.
www.spe.org/events/11fsm2
Application
Deadline:
15 September
2011
Society of Petroleum Engineers

28 November–1 December 2011
Dubai, UAE
Uncertainty Management and Risk Mitigation Over Asset Lifecycles
These exciting topics will be discussed in an open setting designed for optimal input from all participants.
Session 1: Characterisation of Static Uncertainty
Session Managers: Mark Sykes, ExxonMobil
W. Scott Meddaugh, Chevron
Uncertainty is ubiquitous in the oil and gas industry. A careful consideration of
uncertainty must be embraced throughout the lifecycle of a petroleum asset
in order to fully characterise the range of possible geologic, production and
economic-performance outcomes. Static uncertainty, the range in possible oil or
gas volumes in-place in the reservoir and their connectivity prior to production
start-up, is the first uncertainty that petroleum companies must address. Failure
to recognise, understand and quantify static uncertainties renders attempts to
control or harness uncertainties in subsequent elements of an asset’s lifecycle
futile. Recent scientific literature and industry practices have refined the
geological, conceptual and computational methodologies available for use in
uncertainty assessment and mitigation. This session of the forum looks to critically
examine these established approaches, and to discuss alternatives, which may be
more effective at identifying and mitigating static uncertainty.
Session 2: Characterisation of Dynamic Uncertainty
Session Managers: Ian Bryant, Schlumberger
Paul van den Hoek, Shell
Following evaluation of static uncertainty, it is necessary to evaluate uncertainty in
the anticipated dynamic performance of an oil or gas asset. Early characterisation
of a range of potential production profiles, often based on well tests, will
control investment decisions in infrastructure and evaluation of alternative field
development plans. Subsequently, surface measurements, downhole pressure
and temperature measurements and repeat seismic surveys may be used to
revise production forecasts. This session of the forum looks to evaluate how these
measurements can be incorporated into contingency planning and optimisation
over the lifecycle of assets.
Session 3: Forecasting Risks
Session Managers: Marko Maucec, Halliburton
Francois-Michel Colomar, IFP Middle
East-Beicip-Franlab
The presence of a large number of geological uncertainties and limited well
data typically increase the challenges associated with forecasting hydrocarbon
recovery. Traditionally, reservoir development decisions are based on a production
forecast from a single history-matched reservoir model. Challenges mainly emerge
in the characterisation of the main features of the reservoir uncertainty space to
understand uncertainties impact on production forecast, identify and mitigate risk.
This in practice requires considering only a few (but which?) of the many probable
realisations and scenarios.
How can we quantify the uncertainty parameters range including structural
framework, stratigraphic, facies and petrophysical model, properly rank their
impact in order to define the critical factors and reduce their range for more
accurate production forecast? Can we clearly identify state-of-the-art technologies
for pre-screening geological models and sensitivity analyses in terms of usability
Application Information
Participants at SPE forums are selected by the Forum Steering Committee on the basis of ability to contribute to the
discussion of the topic. Attendance is limited to maximise each person’s opportunity to contribute.
Online: www.spe.org/events/11fsm2
Mail: SPE Middle East FZ, North Africa and India, DMCC, PO Box 215959, Dubai, UAE
Fax: +971.4.457.3164
and industrial economic impact? When does such methodology become too
sophisticated and advanced for routine use and how to stimulate a faster
knowledge transfer from academia to industrial implementations?
Session 4: Simplicity Versus Complexity
Session Managers: Rik Sneep, South Rub Al Khali Company
Segun Jebutu, Baker Hughes
‘Simplicity is the ultimate sophistication’ according to Leonardo da Vinci. In the
petroleum industry, the truth is that the level of complexity required to establish
an economically acceptable value proposition can be quite a challenge to define.
It will require a delicate balance between dynamic universal factors such as time,
technology and integration potential.
To harness the full benefit of the system, we must challenge all the fundamental
assumptions for our simplistic model, and have a pre-determined process to guide
us from the simplistic model to that optimal level of technical detail required to
establish a maximum value proposition at an acceptable risk level.
We will explore the fine balance between simple and complex and the associated
merits and pitfalls covering amongst other topics:
• How to define the required level of complexity to fully understand the petroleum
system?
• Change of complexity requirements through the project lifecycle
• Uncertainty as a function of data availability—the risk of creating ‘false
certainties’
‘Everything should be made as simple as possible, but not simpler…’ Einstein
knew it all along.
Session 5: Heuristic Approaches in Complex E&P
Uncertainty and Risk Management: Advancing the
Industry by Synergising Intelligent Data Mining and
High-Performance Computing
Session Managers: Ralf Schulze-Riegert, SPT Group
Moncef Attia, ADMA-OPCO
Advances in high-performance computing allow reservoir engineers to run highly
complex simulation models. Multiple reservoir simulation or process models
representing predefined uncertainty distributions are processed concurrently on
multiple computing units. Workflows for estimation of prediction uncertainties are
supported by generating large amount of information, which are mostly condensed
to expected means, variances etc.
Result presentation and the quality of data analysis are always critical. Data mining
and smart data analysis techniques become even more important as the amount
of information increases. At the same time heuristic approaches and expert
knowledge remain a key success factor for any reservoir study supporting field
development projects.
Application Deadline: 15 September 2011
An electronic version of the printed application form is available for downloading and printing at www.spe.org/events/11fsm2.
You may also contact SPE at +971.4.457.5800 or sjubran@spe.org to receive a printed application form via mail, fax or email.

The question remains how to balance heuristics and high-performance computing
workflows and how to combine key areas efficiently. Which degree of heuristics is
essential and which contribution of workflow standards is acceptable? How can
we combine expert knowledge and result analysis from intelligent data processing
workflows? Which criteria exist for choosing the most suitable workflows and
which expert knowledge is required for choosing efficient and result oriented
workflow components? When prior uncertainty definitions remain vague; how
much do we gain from high-performance computing and what are the limitations?
Which workflows based on high-performance computing become an industry
standard and what type of synergies supported by heuristics is likely to become a
competitive advantage in managing complex projects?
Session 6: Risk Auditing and Standards
Session Managers: Roger Ekseth, Gyrodata
Michael Scanlon, Schlumberger
While oil and gas operations are by nature high risk ventures, no worldwide
standards exist for lifecycle risk management or auditing. Much of the risk
standards are set by individual corporations, local legislative authorities or by
insurance requirements. By comparison, the aviation industry sets standards for
operations and maintenance via IATA in order to consistently manage and audit
risks on a global level. Given the potential hazards inherent in commercial aviation,
the establishment of global standards of best practice, and risk auditing processes
has ensured that aviation safety has consistently improved.
The number and nature of relief wells drilled in the past year, the responsibility
of environmental awareness and the inconsistency of project performance tend
to indicate that the industry may benefit from a global standard that can be
effectively administered while acknowledging the inherently competitive nature
of the upstream industry. This should address not just the operational risk impact,
which are visible and potentially catastrophic, but also the longer term lifecycle
project risks in a consistent and auditable process.
This session will seek to discuss the requirements for global standards and audit
procedures for risk based evaluations and decisions, how comprehensive they
need to be, and how they could be implemented and administered for the industry
at large.
Session 7: Optionality and Pricing for Contingency
Session Managers: Micheal Scanlon, Schlumberger
Reidar Bratvold, University of Stavanger
In the past three years, the oil and gas sector has materially underperformed the
Dow index, highlighting the relative inflexibility of projects to changes and the fact
that our industry is not very well positioned to capitalise on market and technical
uncertainties. While contracting strategies and investment sanction criteria can,
to some extent, mitigate the impact of oil price fluctuations, the requirement to
commit to detailed equipment design specifications and significant associated
capital commitment very early in the project lifecycle when relatively little is
known of the reservoir makes it difficult to turn the underlying uncertainties into
competitive advantages and thus contributes to the underperformance.
The process of formalising the assessment and categorisation of upstream project
risks has continued to evolve. However, the communication of these risks in a
standardised way between disciplines, and a structured and consistent process of
establishing the value of contingency in the project plan and facility design, where
the contingency may come at significant capital cost, is not well established or
understood.
This session will seek to explore the principles and processes that will allow a
definition of the project risks and ways to value the mitigation of their downside
impacts and capture their upside potentials based on facility design specifications,
operating procedures and field management plans.
Forum Registration Fee: Early Bird: USD 3,400 (Payment Deadline: 28 October 2011)
Late Fee: USD 3,700
Upon acceptance by the Forum Series Steering Committee, applicants will receive a registration and hotel accommodation form with
detailed information on accommodation, transportation and fees. All participants must register and pay the full fixed fee in advance.
Includes the following for the forum participant:
• Registration to attend all nine forum sessions
• Five nights of hotel accommodation including breakfast
based on single occupancy
• Welcoming reception and dinner
• Scheduled meals
• Return ground airport transfer by shuttle bus
www.spe.org/events/11fsm2
Session 8: Communication and Propagation through
Lifecycle
Session Managers: Ahmed Al Neaimi, ADMA-OPCO
Iain Percival, Shell (Retired)
Effective monitoring and managing of uncertainty and risk throughout the lifespan
of the asset is critical to delivering the promises made at project sanction.
The operating philosophy of the field has been premised on any number of
assumptions regarding the behaviour of the reservoir(s), wells and the array
of equipment required to lift, process and export the produced fluids. Any
misunderstandings or misinterpretations of the assumptions and associated
uncertainties as the project is matured and passes from one owner to another will
inevitably put the full lifecycle value at risk. The situation is exacerbated when an
asset undergoes improved or enhanced recovery where the behaviour of injected
fluids in addition to those produced brings additional uncertainties and their
understanding/interpretation.
The 21st century has led to a new era of transformation in the automation of fields,
i.e. the advent of the “Smart Field”. However, one important question remains
unanswered. Will smart fields help reduce the uncertainties effectively and
efficiently during the lifecycle and thereby mitigate the risk of operational mishaps
and value erosion?
The session will focus on examining and discussing ways to improve:
• Communication between the functions involved with delivering value from a
hydrocarbon asset
• Ensuring knowledge is preserved with the passage of time with respect to the
rationale supporting the taking of certain decisions
• The understanding of the impact of living with uncertainty in one function on the
work and decision making with the various stakeholders
• The application of smart field technology and associated data delivery to address
effectively the issues of managing post execution/commissioning residual
uncertainty and risk
Session 9: The Human Impact and Mitigation of Bias
in Lifecycle Risk and Uncertainty Management
Session Managers: Ellen Cooper-Smith, Decision
Frameworks
Jonathan Carter, Imperial College
Studies across industries confirm that it is more common for actual uncertainties
used in project economics for asset management to fall outside of their predicted
ranges, than inside, and risks are continually underestimated. Many suggest this to
be due to both motivational and cognitive biases repeatedly resulting in commonly
stated ranges, which are too narrow. Hence, the human element in risk and
uncertainty management remains a gap which needs to be addressed to achieve
top tier performance.
But how? How can the industry tap into the “wisdom of crowds”–those who
know their assets and the technological risks associated with their projects and
help them counteract inherent biases to improve their uncertainty management?
What means are available and or need to be developed to ensure not only better
risk and uncertainty forecasting, but also better uncertainty reduction forecasting
when optimising appraisal and development plans? This session will review known
and cutting-edge techniques to do just that, enhance uncertainty management
through the human element, rather than in spite of the human element.
Please note: Attendees are expected to attend the full forum and
the fee is a fixed full registration fee. The base registration fee does
not include accompanying persons. Details of accommodation and rates
for spouses and family members will be sent with the registration packet
that will be emailed to each delegate upon acceptance.
IMPORTANT: All fees paid to SPE are net of taxes. The registration fees in this form do not include any local or withholding taxes.
All such taxes will be added to the above-mentioned registration fees in the invoice.
Forum sessions and housing will be at Al Bustan Rotana Hotel, Dubai, UAE.