Risk, Resources, Economics and Commercial SIG Meeting – April (Virtual Event)

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Speaker: Tom Levy, Senior Geoscience Consultant

Topic: Geologists are the biggest gamblers in the world: Odds, Chance of Success, and Uncertainty

Abstract

Geologists are the biggest gamblers in the world…with other peoples’ money.” by personal communication from L.C. Solieau, President CALCO, New Orleans, 1975.

This is probably true. Yet, geologists struggle with the difference between odds, chance of success, and uncertainty. They are not the same thing. The terms are not interchangeable or in some way synonymous with each other.

Odds can be calculated to determine the percentage of the time that any single outcome will occur out of numerous trials. They give the probability that any single outcome might occur on any single trial.

We calculate chance of success and think we are calculating odds. But we are not calculating odds.

Chance of Success characterizes the chance that a Play, Lead or Prospect will contain at least the minimum success case hydrocarbon volumes i.e., the smallest volume where all of the input factors have minimum adequacy.

If the Chance of Success estimates are done geologically, consistently, and objectively, they characterize which Play, Lead, or Prospect has the relatively better chance of finding its minimum success case volume.

Differences in a few COS percent do not distinguish one opportunity from another. 22.5% is not greater than 21.2%. 28% is probably (hopefully) greater than 22%.

When we estimate the chance factor for any Petroleum System Element or sub-element, we are predicting the chance that the factor will be adequate at that point on the map. Adequate means that it will exceed our minimum expectation for a successful result e.g. Porosity > 8%; N/G > 40%. Ultimately, volume estimates are adequate when they exceed a certain expectation.

Where the true state of nature cannot be precisely known, but limits can be placed on the bounds in which it must lie.

Where there is uncertainty about the true state of nature, uncertainty analysis determines the range in which the true state of nature must lie and describes the probability that the true state of nature will actually be within different parts of the range. It often describes the most-likely part of the range where true state of nature might lie.

Using methods that extract values for chance and volumetric factors directly from regional geological and chance maps, can make these estimates of chance of success and uncertainty geologically-based, consistent and objective.

Historically, 75% or more of wildcats fail. Using map-derived inputs in our characterization of Chance of Success and Uncertainty can tip the “odds” in our favor.

Tom Levy is a senior geoscience consultant with 43 years of major oil company experience with Chevron, Mobil, ExxonMobil, and Schlumberger.  He is recently retired. His career has been balanced between Exploration, Development, and Production where he has served in management, advisory, and technical roles. His expertise includes geophysical and geological interpretation, basin and play analysis, petroleum systems modeling, geoscience project definition and planning, play and prospect-level volumetrics & risking, and unitization.

His present work centers around his industry-recognized expertise in Integrated Petroleum System-based Play-to-Prospect Exploration (IPPE) and play and prospect resource assessment and risking using this IPPE approach.

Recent work with major national oil companies has included establishing work processes for the evaluation of their plays and for assessing their plays’ resource potential.

He has developed the processes for other national oil companies to evaluate the total play potential for new offshore areas and establish the areas of best prospectivity for designating future concession round areas.

He is actively engaged in projects, workflow development, and teaching. Tom teaches numerous courses each year ranging from short web-based courses to longer classroom courses in play and prospect identification, evaluation, and resource assessment.