Abstract The use of a probabilistic estimation analysis system that applies Monte Carlo simulation techniques to generate a deeper understanding of the risks inherent in well operations. The software and the process associated with its application represent a step forward in providing operators with a tool for identifying, quantifying and managing risk.
A process flow map is generated that shows all the risks that have been addressed along the probabilities and options. This ensures that the team understands what they are addressing and all contingency materials services etc. are addressed. With a flexible process new information leads to a need for the steps to be easily added or adjusted. By producing reports to an industry standard spreadsheet that show all inputs and output information, there is no confusion as to what assumptions have been made, and they are all captured.
Whilst probabilistic estimation techniques are used routinely to characterise risks associated with geological and reservoir uncertainty, these techniques have not been routinely applied to well activities.
For many decision-makers, the traditional deterministic cost estimate has produced satisfactory results. However, in an increasingly competitive business environment, project decisions need to be made in a more informed manner for organisations to become "Best in Class". The application of a risk-weighted probabilistic cost and schedule estimation tool that can provide a comprehensive understanding of the time-cost risk spread in well abandonment projects represents a significant progression and can help provide detailed answers to the three basic questions in managing project costs:
What is the likelihood of overrunning the project budget?
What is the level of exposure associated with any overrun that may occur?
Where do the individual risks lie that need to be mitigated against in order to avoid overrun?
If the risks can be mitigated, then the level of exposure can be reduced and projects can be delivered with greater budgetary certainty, conversely if the risk cannot be mitigated, how can it affect the total budget, and is it wise to carry through the operation?