Assessing economic implications of complexity in geological modeling and simulation

Harpreet Singh, Sanjay Srinivasan

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Economic forecast for assessing reservoir performance is a strong function of geological modeling. Complexity of geological modeling may vary from semivariogram-based models to multiple-point simulation technique. Semivariogram-based stochastic simulation techniques are less complex than multiple-point simulation technique in terms of the amount and type of reservoir information needed to generate the porosity and permeability maps. This paper assesses economic implication of using geological models of varying levels of complexity. For this we compared the uncertainty in reservoir's long term economic performance obtained by using geological models with varying levels of complexity. Reservoir economic performance is assessed using both the real options valuation (ROV) analysis, a probabilistic approach, and discounted cash flow (DCF) based approach. The results suggest that it may be appropriate to use simpler geological models for the forecast of volumetric flow rate uncertainty. We see that the economics in terms of ROV obtained from a simple geological model is not significantly different from that of a complex geological model. Similar results also hold true with DCF analysis. This study could help answer the question of how much detail in reservoir models are necessary if the end objective is to obtain realistic assessment of net economic risk (which would be used to make correct decisions)?

Original languageEnglish (US)
Title of host publicationSociety of Petroleum Engineers - SPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014
PublisherSociety of Petroleum Engineers (SPE)
Pages46-63
Number of pages18
ISBN (Print)9781632665904
StatePublished - 2014
EventSPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014 - Houston, TX, United States
Duration: May 19 2014May 20 2014

Other

OtherSPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014
CountryUnited States
CityHouston, TX
Period5/19/145/20/14

Fingerprint

Economics
economics
modeling
simulation
valuation
Porosity
porosity
Flow rate
permeability
forecast
analysis
Uncertainty

All Science Journal Classification (ASJC) codes

  • Energy Engineering and Power Technology
  • Geotechnical Engineering and Engineering Geology

Cite this

Singh, H., & Srinivasan, S. (2014). Assessing economic implications of complexity in geological modeling and simulation. In Society of Petroleum Engineers - SPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014 (pp. 46-63). Society of Petroleum Engineers (SPE).
Singh, Harpreet ; Srinivasan, Sanjay. / Assessing economic implications of complexity in geological modeling and simulation. Society of Petroleum Engineers - SPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014. Society of Petroleum Engineers (SPE), 2014. pp. 46-63
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Singh, H & Srinivasan, S 2014, Assessing economic implications of complexity in geological modeling and simulation. in Society of Petroleum Engineers - SPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014. Society of Petroleum Engineers (SPE), pp. 46-63, SPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014, Houston, TX, United States, 5/19/14.

Assessing economic implications of complexity in geological modeling and simulation. / Singh, Harpreet; Srinivasan, Sanjay.

Society of Petroleum Engineers - SPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014. Society of Petroleum Engineers (SPE), 2014. p. 46-63.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

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Singh H, Srinivasan S. Assessing economic implications of complexity in geological modeling and simulation. In Society of Petroleum Engineers - SPE Hydrocarbon Economics and Evaluation Symposium, HEES 2014. Society of Petroleum Engineers (SPE). 2014. p. 46-63