Oil and gas: decision analysis

In a high cost, low commodity price environment, the depth and quality of decision analysis is ever more important. Bringing an actuarial approach to complex decision problems, we can ensure that risk and uncertainty are modelled in full depth in an influence diagram or decision tree so that a decision can be evaluated according to multiple criteria.

It is often said that the value of information derives entirely from its ability to affect a decision choice. We disagree!

We have specific expertise in:

Modelling value criteria

Ensuring that the 'payoff' in a decision model can reflect the impact of a decision on your asset or aggregated risk profile, as well as simpler (but perhaps incomplete) criteria such as NPV or IRR. This improves estimation of the true Value of Information, hence for example the optimum effort to apply to Appraisal. How much appraisal is enough? A recent study by IPA has shown that lack of sufficient appraisal is one of the key indicators for unnecessary loss of value, or poor project performance in the Development and Production stages of the asset lifecycle.

Estimating the Value of Flexibility

How does the ability to change track in future, when circumstances change, affect the optimum decision now?

Estimating the resilience and robustness of a decision

As the probabilities in a decision model are uncertain, how likely is it that a particular decision is not in fact optimal? If the probability estimates are wrong, which ones are most likely to bite, leading to the wrong choice and loss of value?

Documenting the rationale behind decisions

Including an assessment of the underlying data quality, models and reportable outputs. We believe good documentation, especially regarding expert judgment, can help to demonstrate the quality of a decision, which improves its value.

Assessing data quality and governance

Answering questions such as 'How good are accuracy and completeness, and how can this be preserved across stage gates cost-effectively?' and 'How material are the gaps, and how proportionate to results is the cost to remedy these?'.