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In September 2019, the SPE Board approved important changes to the Management and Information technical discipline. Management is now a separate discipline. Information has been refocused and renamed Data Science and Engineering Analytics. The board agrees this change is necessary to remain relevant and recognize the importance of digital transformation among our members' responsibilities and the industry as a whole. Please take a moment to update your discipline.
When I joined Statoil as a reservoir engineer in the mid-1980s, I was assigned to a team of experienced reservoir engineers with the task of predicting future production from the not-yet-decided development of the Gullfaks B field. Statoil had the latest and greatest in reservoir simulators, and we predicted 30 years of future oil production in double precision--a single production prediction for each year. We spent a lot of energy and time refining the model and used as many grid-blocks as we could, with the constraint that each simulation had to be completed overnight. Our production forecast was used as an input for the development decision, and the field was successfully developed. I have never checked, but I'm pretty sure the field never produced anything close to what we predicted.
Decision analysis is not a cookbook or series of boxes that must be checked before a project is approved, argue professors Reidar Bratvold and Steve Begg, who share some pointers on how to map out the likely consequences of decisions, assess the importance of individual factors, and choose the best.
I am not the product of my circumstances. I am a product of my decisions. Statoil had the latest and greatest in reservoir simulators, and we predicted 30 years of future oil production in double precision—a single production prediction for each year. We spent a lot of energy and time refining the model and used as many grid-blocks as we could, with the constraint that each simulation had to be completed overnight. Our production forecast was used as an input for the development decision, and the field was successfully developed.
What is more integral to the exploration and production (E&P) business than making decisions? In many ways it is the essence of business. Every day we have to choose between “rocks and hard places.” If you get it right, you are a genius. If you get it wrong, there is usually a good reason why, like a “perfect storm” suddenly conspiring to invalidate the assumptions underpinning your decision or perhaps an “unknown unknown.” Nassim Taleb’s book Fooled By Randomness: The Hidden Role of Chance in Life and in the Markets suggests there may not always be a brilliant strategy and excellent decisions behind business success.
Most companies today have formal devil’s advocates (risk councils, peer reviews, controllers) trying to pick apart decisions and recommendations, trying to make sure only good decisions are allowed to be made. In addition, most companies have introduced formal “decision gate processes” for material (investment) decisions. According to Independent Project Analysis (IPA) these decision improvement measures really have not improved things appreciably. The expected case never happens and the decision maker is usually handed actual outcomes that are inferior to what was presented as expected in the decision support package.
More and more, it is not just about making the most money. Every company has corporate values against which all decisions must be tested and the “triple bottom line” (at least) makes it necessary to factor in many other elements. I sat down with an expert in the field of making decisions Patrick Leach, chief executive officer of Decision Strategies, to get his perspective on the 2.0 of making good decisions in 2015—something every SPE member would like to do well—at work and at home.
Success is one of the key drivers of an industry, and success is aided by good decision making. In the oil and gas industry, success is remaining competitive and profitable. This takes good decision making regarding company-wide programs. However, these key decisions are often based on Excel graphs that compare several variables over time. While this method can give a good overview, it fails to captureboth the dependency of the variables on each other, and the probability that the results were derived by chance. There are several statistical analysis tools, including Multivariate Linear Regression, Spearman R, and the Analysis of Variance, which can be used to increase the chance of making the most profitable decision, by numerically measuring if the results were derived by chance, and if the variables are statistically dependant on each other. These statistical analysis tools need to be better incorporated in daily decision making to ensure that variable relations are not due to chance, and that all the possible variables are considered. By including this additional analysis, companies can help drive their own success by making the decisions that help them keep their competitive edge.
This article, written by Assistant Technology Editor Karen Bybee, contains highlights of paper SPE 127063, "The Risk of Introduction of Alien Species at the Goliat Field in the Barents Sea and Risk Reducing Measures," by Amund Ulfsnes, DNV; Egil Dragsund, OLF; and Torild Nissen-Lie, DNV, originally prepared for the 2010 SPE International Conference on Health, Safety, and Environment in Oil and Gas Exploration and Production, Rio de Janeiro, 12-14 April. The paper has not been peer reviewed.
The International Convention for the Control and Management of Ships’ Ballast Water and Sediments was adopted by the International Maritime Organization (IMO) in 2004, with the main objective being to reduce the probability of dispersion of hazardous nonindigenous species. Implementation of ballast-water-treatment systems is mandatory for all international vessels by 2016. The Norwegian government ratified the ballast water convention in 2006.
On 13 February 2004, the Environmental Committee of IMO adopted the Ballast Water Convention. IMO previously had adopted several voluntary guidelines for the treatment of ballast water that provided guidance and recommendations for the handling of ballast water to reduce the likelihood of the spread of harmful alien organisms that can lead to negative consequences for the environment. Previous guidelines had emphasized the replacement of ballast water in open waters, while this measure was phased out in the Convention in favor of the requirements for the quality of ballast water discharged from ships. The Convention states that during a transitional period, the requirement shall be to replace the ballast water in open waters that meet the specified requirements for depth and distance from shore. Requirements for the purification of ballast water so that the ballast water meets the specified quality requirements will be introduced for ships in international trade over a period from 2009 to 2016, depending on the size and year of construction of the ship.
The Convention will enter into force 12 months after at least 30 countries representing at least 35% of world tonnage have ratified the Convention. According to IMO, 14 countries that together represent 3.55% of world tonnage have ratified the convention (August 2008). The parliament in Norway ratified the Convention in 2006, and together with Spain are currently (2008) the only European countries that have made the ratification. However, the dates for the phasing in of clean technologies and phasing out of exchange of ballast water are fixed and will be retroactive regardless of when the Convention enters into force. That is why several shipyards and ship owners who already have installed, or are planning the installation of, equipment onboard ships with the purpose of treating ballast water do this according to the requirements of the Convention. However, there is a discussion in the Marine Environment Protection Committee about whether the deadlines of the Convention are realistic in terms of access to authorized management systems and shipyard capacity for installation of treatment systems. The argument runs primarily on the first date (1 January 2009) for the smaller ships with ballast-water capacity of 5000 m3 or less. On the basis of a likely ratification date for the Convention, however, there remains a challenge for international shipping in the period up to 2016. Regional agreements between countries and national regulations about change or treatment of ballast water along with generally increasing awareness of issues related to ballast water, are expected to reduce the risk of transmission of organisms.
For example, drilling a"choosing the course of action that process is called decision analysis. Likewise, poor decisionsa number of questions such as: What, to help you execute that process. Uncertainty is the main underlyingDECISION ANALYSISmissed good alternatives? How do you define "best"? It enables us toto buy at the supermarket.
Informally, decision making can be thought of as the process of “choosing the course of action that best fits the goals.” This apparently simple statement raises a number of questions such as: What, and whose, are the “goals”? Have you missed good alternatives? How do you measure “fit”? How do you define “best”?