Summary
An important task that petroleum engineers and geoscientists undertake is to
produce decision-relevant information. Some of the most important decisions we
make concern what type and what quality of information to produce. When
decisions are fraught with geologic and market uncertainties, this information
gathering may such forms as seismic surveys, core and well test analyses,
reservoir simulations, market analyses, and price forecasts--which the industry
spends billions of US dollars each year. Yet, considerably less time and
resources are expended on assessing the profitability or value of this
information. Why is that?
This paper addresses how to make value-of-information (VOI) analysis more
accessible and useful by discussing its past, present, and future. On the basis
of a survey of SPE publications, we provide an overview of the use of VOI in
the oil and gas industry, focusing on how the analysis was carried out and for
which types of decisions VOI analysis has been performed. We highlight areas in
which VOI methods have been used successfully and identify important
challenges.
We then identify and discuss the possible causes for the limited use of VOI
methods and suggest ways to increase the use of this powerful analysis
tool.
Introduction
One of the most useful features of decision analysis is its ability to
distinguish between constructive and wasteful information gathering. VOI
analysis evaluates the benefits of collecting additional information before
making a decision. Such information gathering may be worthwhile if it holds the
possibility of changing the decision that would be made without further
information. VOI attributes no value to "uncertainty reduction" or
"increased confidence" per se. Rather, value is added by enabling the
decision maker (DM) to better "tune" his/her choice to the underlying
uncertainty. Thus, information value is forever an entanglement of uncertainty
and decision making; one cannot value information outside of a particular
decision context.
© 2009. Society of Petroleum Engineers
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History
- Original manuscript received:
10 August 2007
- Meeting paper published:
11 November 2007
- Revised manuscript received:
10 March 2009
- Manuscript approved:
30 March 2009
- Published online:
27 July 2009
- Version of record:
9 September 2009
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