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  | pdf    = http://archives.datapages.com/data/specpubs/methodo1/images/a095/a0950001/0000/00300.pdf

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Economic analysis of contemplated oil and gas ventures must be carried out on the assumption that the project is successful, with "success" often being expressed as one of several levels of profitability based on the various ranges in geotechnical and economic parameters that impact project commerciality. However, many exploration ventures do not succeed, and not all [[development wells]] and projects succeed either, so the consequences of such failure must be considered in appraising the economic merit of a proposed development venture.

Economic analysis of contemplated oil and gas ventures must be carried out on the assumption that the project is successful, with "success" often being expressed as one of several levels of profitability based on the various ranges in geotechnical and economic parameters that impact project commerciality. However, many exploration ventures do not succeed, and not all [[development well]]s and projects succeed either, so the consequences of such failure must be considered in appraising the economic merit of a proposed development venture.

Accordingly, the ''expected value'' (EV) of any venture can be expressed as follows:

Accordingly, the ''expected value'' (EV) of any venture can be expressed as follows:

#: One approach is to estimate the minimum required flow rate and relate this flow rate to thickness and [[permeability]]. In any case, what we seek is the geologist's confidence in the existence of at least a minimal reservoir—thickness, extent, [[porosity]], and effective [[permeability]]. Under this approach, encountering a wet, commercial-quality sandstone would not be a failure in the reservoir category, but rather in one of the other categories, such as an unexpected structural low, an absence of [[Calculating charge volume|hydrocarbon charge]], or a leaky trap. However, the presence of a 1-ft-thick tight siltstone where a 10-ft-thick porous sandstone objective had been predicted would be a reservoir failure!

#: One approach is to estimate the minimum required flow rate and relate this flow rate to thickness and [[permeability]]. In any case, what we seek is the geologist's confidence in the existence of at least a minimal reservoir—thickness, extent, [[porosity]], and effective [[permeability]]. Under this approach, encountering a wet, commercial-quality sandstone would not be a failure in the reservoir category, but rather in one of the other categories, such as an unexpected structural low, an absence of [[Calculating charge volume|hydrocarbon charge]], or a leaky trap. However, the presence of a 1-ft-thick tight siltstone where a 10-ft-thick porous sandstone objective had been predicted would be a reservoir failure!

# ''What is the probability (or confidence) that the '''geological structure''' of the reservoir objective is, in reality, essentially as represented on maps and [[cross section]]s?''

# ''What is the probability (or confidence) that the '''geological structure''' of the reservoir objective is, in reality, essentially as represented on maps and [[cross section]]s?''

#: It is important to note here that we do not require an actual "structure," such as a domal anticline or a fault closure, only that prospect maps and sections accurately depict the structural configuration. For example, if only regular monoclinal south dip is required in the case of a stratigraphic trap prospect, then the geologist should express confidence—as a probabilistic estimate—that the structure in the vicinity of the prospect actually is indeed regular monoclinal south dip.  

#: It is important to note here that we do not require an actual "structure," such as a domal anticline or a fault closure, only that prospect maps and sections accurately depict the structural configuration. For example, if only regular monoclinal south [[dip]] is required in the case of a stratigraphic trap prospect, then the geologist should express confidence—as a probabilistic estimate—that the structure in the vicinity of the prospect actually is indeed regular monoclinal south dip.  

#: If the map shows an antithetic fault closure, then what is the probability that such a structural configuration will actually turn out to be present?

#: If the map shows an antithetic fault closure, then what is the probability that such a structural configuration will actually turn out to be present?

#: This geological chance factor is formulated to apply to stratigraphic as well as structural traps, and in tacit acknowledgment that the structural map is ordinarily the single most important map involved in most prospects and many development projects. Also, structural "busts" are a common reason for [[dry hole]]s.<ref name=Rose_1987>Rose, P. R., 1987, [http://archives.datapages.com/data/bulletns/1986-87/data/pg/0071/0001/0000/0001.htm Dealing with risk and uncertainty in exploration--how can we improve?]: AAPG Bulletin, v. 71, n. 1, p. 1-16.</ref>

#: This geological chance factor is formulated to apply to stratigraphic as well as structural traps, and in tacit acknowledgment that the structural map is ordinarily the single most important map involved in most prospects and many development projects. Also, structural "busts" are a common reason for [[dry hole]]s.<ref name=Rose_1987>Rose, P. R., 1987, [http://archives.datapages.com/data/bulletns/1986-87/data/pg/0071/0001/0000/0001.htm Dealing with risk and uncertainty in exploration--how can we improve?]: AAPG Bulletin, v. 71, n. 1, p. 1-16.</ref>