We would like to invite you and your colleagues to an uncertain May London Section evening meeting. Distinguished Lecturer Prof Reidar Bratvold and members of the London Decision Quality Group will try to create value in a world of unknown unknowns.
The afternoon will start at 3.30pm with a presentation by the winning team of the MSc Petroleum Geoscience Barrel Award at Imperial College London, an exploration-based project focused on assessment of the petroleum potential of a frontier basin, this year being the Great South Basin, offshore, Southeastern New Zealand.
Then at 4pm we will have a presentation of this year's two best Field Development projects by the MSc in Petroleum Engineering students. The Field Development project is a group integrated study of the evaluation and development of a North Sea oil field (currently, Wytch Farm). Each team will have 20 minutes for their presentation, plus 5 minutes for questions. The audience will then help select the best presentation, which will be awarded the Colin Wall prize, named after one of the founding petroleum engineering professors from Imperial. The prize (£300 in £1 coins) will be given at the dinner.
This event will be held at Imperial College; Royal School of Mines, Prince Consort Road, London, SW7 2BP.
The Royal School of Mines is about 15 minutes’ walk from South Kensington tube station via Exhibition Road and Prince Consort Road.
The Board has decided to reduce the fees to university students to £5, if booked on or before the Friday preceding the meeting.
Please, read more about the agenda, the talk content, and the booking information below.
SPE London Section - Programme Chairman
||Talk and Speaker
|3.30 pm -
Time: 3.30 pm – 4.30 pm
Talk: Colin Wall Presentations
Time: 5.00 pm – 5.10 pm
Talk 1: Introduction to Decision Analysis/Decision Quality
Pete Naylor (Shell)
Time: 5.10 pm – 5.45 pm
Talk 2: Making decisions can be hard and what happens when the stakes are high?
Peter Wood, Shell U.K. Limited; Andrew Tweedie, Nexen Petroleum U.K. Limited
Time: 5.45 pm – 6.10 pm
Talk 3: Event-based risk management: An aid to decision-making in oil and gas developments.
Craig Smalley (Imperial College)
Time: 6.10 pm – 6.30 pm
Talk 4: What would it take to increase the use of Decision Analysis/Decision Quality?
Pete Naylor (Shell)
Read more >
|DRINKS AND NETWORKING BUFFET
|7.15 pm -
Time: 7.15 pm – 8.45 pm
Talk: Creating Value from Uncertainty and Flexibility
Distinguished Lecturer Prof Reidar B. Bratvold, University of Stavanger
Read more >
Venue: The event will be held at the Department of Earth Science and Engineering, Imperial College London
Map : http://www.imperial.ac.uk/media/imperial-college/visit/public/Map-of-South-Kensington-Campus-%5Bpdf%5D.pdf
Directions : Please note the main entrance to the Department is via the Royal School of Mines Building on Prince Consort Road, between 10 and 12 on the campus map
Booking: All booking must be paid in advance and online please
Cost £34 for SPE/PESGB/EI members, £44 non-members, £19 unemployed members.Non-refundable £5 for students booking by Friday 26 May (£19 after). All tickets have an additional event brite fee.
BEFORE DINNER: 5.00 - 6.30pm.
Talk 1: Event-based risk management for subsurface risks: An approach to protect value in oil and gas fields, Craig Smalley (Imperial College)
Event-based risk management (EBRM) is an improved way to describe subsurface uncertainties and their possible business impacts in a manner that facilitates specific actions to improve business performance. In EBRM, uncertainties are viewed as potential causes of risk events that could in turn lead to consequences that affect the attainment of objectives. This “causes–event–consequences” syntax aids the design of prevention measures to inhibit the causes turning into the event and mitigation measures to reduce the potential consequences should the risk event occur, and it also facilitates construction of a risk taxonomy scheme based on risk consequences, events, and causes. We described a large database of risks in this manner, placed the risks in the taxonomy, and analysed the proportion of risks in each taxonomic group.
This revealed clear trends in risk types depending on field/project characteristics: for example, risks related to hydrocarbon-in-place volumes are more frequently identified in deep-water oil fields in which resource volumes are critical to support the large project capital costs. Trends were also evident with field maturity: for example, risks related to hydrocarbon-in-place volumes are more frequently identified before the field sanction decision than afterward. The EBRM approach encourages the creation of meaningful risk-management actions, assists in the identification of relevant risks, helps to anticipate future risks, and helps to focus resources (data acquisition, technical studies) onto those aspects of the subsurface that are likely to impact business outcomes.
Talk 2 : Making decisions can be hard and what happens when the stakes are high? Peter Wood, Shell U.K. Limited; Andrew Tweedie, Nexen Petroleum U.K. Limited
You make about 35,000 decisions every day. These decisions can be as trivial as deciding between porridge or toast for breakfast but they can also be as impactful as deciding on the direction for a project or programme, acquisition, or where to explore next. Being responsible for making 35,000 decisions each day can be overwhelming! How can you possibly hammer through these and be assured that you are making the best possible decisions?
Shell and Nexen are using Decision Analysis to tackle difficult problems and find the best solutions. Decision Analysis is a structured approach that frames and analyses decisions while engaging the teams and decision makers in a dialogue to ensure the right decision is made at the right time. It is about creating clarity, building commitment and feeling confident in our choices.
Decision Quality is a simple way to help analyse and measure the quality of a decision. Nexen’s Decision Analysis team has put together a short video to explain the concepts behind making high quality decisions.
Moving from concepts to application, Shell will share what happened when a project team had to make an urgent, high stake decision with their reputation on the line. How did the team create an informed dialogue and then take decisive action when the ‘chips were down’?
Talk 3 : What would it take to increase the use of Decision Analysis/Decision Quality?Pete Naylor (Shell)
What is available regarding DA/DQ? Who knows about DA/DQ? What are some of the barriers? What needs to be done to increase take up? Please come prepared to discuss/debate these questions.
AFTER DINNER: 7.15 pm - 8.45pm:
Talk 4: Creating Value from Uncertainty and Flexibility, Reidar B. Bratvold, University of Stavanger
An increasing number of oil & gas companies use decision analytic methods to deal with complex and uncertain decisions, but still they get consistent under-performance in typical business metrics (cost, production rates, time to start,…) leading to less value than expected, or, more perniciously, than possible. Uncertainty per se is not the culprit, rather a failure to make the best decisions under uncertainty – which are often non-intuitive. The real value-destroyers are bias and failing to plan for, and exploit, the different ways reality might evolve - if you under-estimate the real uncertainty, you are likely to under-invest in managing its consequences. Making the best decisions requires an accurate assessment of uncertainty (unbiased, neither optimistic nor pessimistic) – and an unbiased approach to managing its consequences – putting as much effort on capturing upside opportunities as mitigating risks.
We often make decisions to live up to expectations rather than to live up to possibilities. Despite the ubiquity of options in the oil & gas industry, in practice these embedded options are often overlooked in the formulation and evaluation of investment opportunities, even when uncertainties are explicitly modeled.
This talk will illustrate and discuss how to create value from uncertainty and flexibility by applying an option pricing methodology that explicitly focuses on upside possibilities. To properly value flexibility, we must model not only the possible future decisions, but also the information available at the time these decisions are made.
Reidar B. Bratvold is Professor of Petroleum Investment and Decision Analysis at the University of Stavanger.
His research interests include decision analysis, project valuation, portfolio analysis, real-option valuation, and behavioral challenges in decision-making. Prior to academia, he spent 15 years in the industry in various technical and management roles. He is a co-author of the SPE book Making Good Decisions. Professor Bratvold has previously twice served as an SPE Distinguished Lecturer. He is the 2015 recipient of the North Sea Region SPE Management & Information Award and currently serves as the executive editor for the SPE Economics & Management journal. He is a Fellow of the Society of Decision Professionals and a member of the Norwegian Academy of Technological Sciences. He holds a PhD in petroleum engineering and an MSc in mathematics, both from Stanford University and has studied business and management science at INSEAD and Stanford University.