Oil & Gas exploration deals with many unknowns, with high risk and uncertainty an inherent part of the oil and gas industry. The management of risk in oil and gas exploration has always been a difficult subject, and it is even more important in these days of high capital investment.

You need a better tool: Crystal Ball.

Today, Crystal Ball is the tool chosen by the top domestic oil and gas companies to analyze risk and make more informed, lucrative decisions. Crystal Ball is a Microsoft® Excel®-based suite of analytical tools that includes Monte Carlo simulation, optimization, and forecasting. With little effort, you can apply these advanced analytical techniques to your upstream or downstream spreadsheets to create more accurate reserve forecasts and financial and operational predictions.

Leading petroleum companies including Chevron, BP, Occidental, Shell, Saudi Aramco, and Halliburton have used Crystal Ball to add insight when performing probabilistic reserves analysis, planning capital projects, preparing drilling AFE's, evaluating exploration opportunities, as well as estimating reserves and predicting petrochemical prices.

Primary Crystal Ball applications include probabilistic reserves analysis, capital projects planning, drilling AFE's preparation, exploration opportunity evaluation, asset evaluation, petrochemical price prediction, NPV analysis, and quality control and reliability analysis.

Key features of interest to your industry include sensitivity and tornado analysis, correlation, historical data fitting and optimization. The sensitivity analysis and tornado analysis are two separate methods that help you to understand which of the uncertain inputs (e.g., the recovery factor or the price of oil) drive the uncertainty in your models. Correlation lets you link uncertain inputs and account for their positive or negative dependencies. If historical data does exist, the data fitting feature will compare the data to the distribution algorithms and calculate the best possible fit and parameters for your data.

Optimization helps determine optimal decision choices to maximize or minimize your goals (e.g., maximize the return on a portfolio of assets, optimal number of well to drill), and efficient frontier runs multiple optimizations to determine the best balance of risk and reward for a particular problem or portfolio.

LEARN MORE ABOUT CRYSTAL BALL FOR OIL & GAS

This page offers links to a growing number of resources, including recorded Web seminars, articles, white papers, case studies, and example models. Additionally, you can view a list of common uses and examples reported directly from customers using Crystal Ball. You can also download a free trial version of Crystal Ball to see how it can help improve your business forecasts and decisions!

TRAINING CLASS: ADVANCED CRYSTAL BALL FOR OIL & GAS

This two-day course will teach you how to model uncertainty and risk, identify key drivers, and then refine them using an advanced suite of professional modeling tools. The course shows how to evaluate individual prospects, and then how to combine them into a working portfolio optimized on your key business indicators.

RECORDED WEB SEMINARS

Could Probabilistic Reserve Estimates Handle Simulation Pessimism? (Oil and Gas Seminar) Accurately estimating recoverable reserves and then determining the best scenario to develop the reserves is a key function of reservoir engineering. Learn how to use Monte Carlo simulation techniques to calculate the volumetrics of the original hydrocarbon in place (OHIP) to yield a more realistic range of probable OHIP. Presented by Dr. Sameh Macary, with the IPR Group of Companies Recorded September 8, 2006	View recording Download files
Efficient Capital Allocation in Oil & Gas: Good, Bad and Ugly Projects, and How to Tell the Difference Learn when is a project an efficient use of corporate capital, what is the Efficient Frontier, what is an appropriate measure of risk in capital project evaluation, what is the role of strategic flexibility (real options) in project evaluation and the capital allocation decision, and what effect does this flexibility have on the Efficient Frontier Presented by Steve Hoye of Decisioneering, Inc. Recorded December 7, 2006	View recording Download files
Forecasting Oil & Gas Production for Short-Term Planning Learn why and how probabilistic analysis is used to forecast oil and gas production in Chevron's GOM Deepwater Producing Operations Group and the key benefits of the methodology. Presented by Michelle LaPoint, Business Planning Engineer for Chevron's GOM Deepwater Producing Operations Group Recorded February 14, 2007	View recording Download files
Improve Business Value from Time and Cost Estimates: How BP uses Monte Carlo Analysis as a Risk Management Tool Learn how a major oil and gas company has made Monte Carlo analysis a core skill of the thousand-strong well engineering staff at the world's largest privately-owned oil and gas operator. Presented by Hugh Williamson, BP's global specialist on well cost estimation and risk management Recorded May 24, 2006	View recording Download files
Medición de Riesgos en Proyectos de E&P (Exploracion y Produccion) Oscar Bravo Mendoza presentará las consideraciones necesarias a tener en cuenta para la construcción de modelos de desarrollo de campos petroleros, tomadas del libro “Gestión Integral de Riesgos para toma de decisiones” que acaba de publicar. Presented by Oscar Bravo Mendoza, funcionario de la Dirección de Planeación y Riesgos de Ecopetrol S.A. Recorded February 15, 2006	View recording Download files
Portfolios Optimisation in Oil & Gas: An Analysis of Risk and Real Options and Their Contribution to Efficient Capital Allocation Review an optimised portfolio of capital projects and examine the sources of systematic and unsystematic risk. We will see how this can help in our funding decisions and the different impacts on the portfolio and its risk/return characteristics. Presented by Dave Hammal of Crystal Ball Recorded June 6, 2007	View recording Download files
Using Crystal Ball to Analyze Waterflood Projects Demonstrates the effectiveness of using Crystal Ball with a simple “quick look” model to simulate hydrocarbon recoveries from a waterflood project. Presented by David F. Yard, project engineer and international consultant Recorded July 25, 2007	View recording Download files

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WHITE PAPERS & ARTICLES

"Advanced Project Portfolio Selection Methods" By Jay April, Fred Glover, James P. Kelly, and Manuel Laguna, OptTek Systems, Inc (on the Financial Engineering News Web site)	Download
An Application of Portfolio Optimization with Risk Assessment To E&P Projects By Juan Marcelo Antelo Rodriguez, Petrobras Bolivia, Economic Engineer	Download
Boosting Our Confidence With Crystal Ball By Patrick Leach, Senior Consultant with Decision Strategies Inc (Written for Pipeline Magazine)	Download
Estimating Time for Obtaining Environmental Permits in Brazil Jackson Carvalho Guedes, Manager of Planning and Control, Petrobras S.A.	Download
Guidelines for Successful Risk Facilitating and Analysis By Dr. Iqbal Noor and Thomas J. Rye	Download
Monte Carlo Analysis for Earthquake Mitigation at Refinery Complex Ari Pramono, Business Analyst, Pertamina Ariadi Soebandrijo, Geologist, Pertamina Heru Setiawan, Mechanical Engineer, Pertamina	Download
Portfolio Optimization Applied to Acquisition Evaluation Chris Hill, Development Manager, Marathon Oil	Download
Sensitivity Study of the Economics of Photoelectrochemical Hydrogen Production By Margaret Mann, NREL	Download
A "Top Down" Approach for Modern Portfolio Theory to Oil and Gas Property Investment By Dr. Frank Moseley, North Dakota University - Minot	Download
The Use of Monte Carlo Analysis in Organizational Design Process By Ari Pramono, Organizational Development Analyst, PERTAMINA	Download
The following papers by James Murtha were presented in Risk Analysis for the Oil Industry supplement to the August 2000 issue of Hart's E & P. The PDF files have been published here by permission of the author and Hart's E & P. A Guide to Risk Analysis Central Limit Theorem - Poles and Holes Estimating Pay Thickness From Seismic Data Bayes' Theorem - Pitfalls Decision Trees vs. Monte Carlo Simulation When Does Correlation Matter? Beware of Risked Reserves

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CASE STUDIES

Earth Science Associates With Crystal Ball, Earth Science Associates Predicts Success of Russian Oil Production	Download
Schlumberger on Real Options in Oil and Gas	Download
Texaco Texaco Uses Crystal Ball Pro to Evaluate Inventory and Optimize Production Levels	Download

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EXAMPLE MODELS

Basic Oil Model From: James A. Murtha and Susan Peterson (for more information on these authors, see the Consultants' Corner listings for James Murtha and Dr. Susan Peterson). Detail: This a simple Cash Flow Model for a single oil well. The spreadsheet uses an exponential decline model to calculate the cash flow of the well over a ten-year period.	Download For: Crystal Ball & OptQuest Level: Simple
Drill Bit Replacement Detail: When drilling wells in certain types of terrain, the performance of a drill bit erodes with time because of wear. The problem is to determine the optimum replacement policy; that is, the drilling cycle between replacements. Includes optimizations setting file and defines time as a decision variable.	Download For: Crystal Ball Level: Moderate- advanced
Economic Analysis Taking Into Account Uncertainties Ranging From Reserves to Production, Operating Expenses and Scheduling Risk From: Oscar Bravo, Petroleum Engineer with ECOPETROL S.A. and Bravo and Sanchez For: Crystal Ball Level: Moderate-advanced Detail: This very detailed model intends to capture the most important uncertainties that are part of the Oil & Gas industry. The logic behind the model intends to illustrate rather than be exhaustive. This model shows the effect of schedule risk, but it also does a pretty comprehensive reserves simulation and a complete economic analysis with discounted cash flow analysis and an NPV.  It simulates many uncertainties from oil price through operating expenses, production, and schedule risk.	Download For: Crystal Ball Level: Moderate- advanced
Gasoline Supply Chain Detail: In this example, we determine the optimum amount of gasoline to transport between different levels of a gasoline supply chain. Our objective is to minimize the total cost, which includes transportation costs and inventory holding costs at various points in the supply chain. We also want to minimize stockouts at various retail outlets. The complexity of the problem arises from the fact that we have stochastic production at the refinery level and stochastic demand at the retail outlet level.	Download For: Crystal Ball & OptQuest Level: Beginner-moderate
Multi-Objective Prospect Risk Analysis From: Jeff Brown (for more information on this author, see the Consultants' Corner listings for Decision Strategies, Inc. ). Detail: This template is used to roll up two objective zones in a single undrilled oil and gas prospect. The model addresses both chance dependence / independence (what is the chance of an uplift for the deeper objective if the upper zone "hits"?) and decision behavior (can the upper zone carry the prospect on a stand-alone basis? What about the lower zone? Do both zones have to hit for the prospect to be viable?). The template assumes that the user has already assessed chance and volumes for each zone using appropriate risk analysis software. Click here for more information on the entire suite of E&P software tools from Decision Strategies, Inc. Note: This model uses macros, so select Enable Macros when requested by Excel.	Download For: Crystal Ball Level: Simple
Multi-Zone Reserve Estimation Detail: When estimating reserves for wells or prospects with multiple producing zones, it is important to account for the dependencies that often occur not only between reservoir rock properties on a zone-by-zone basis, but also to quantify dependencies from one zone to another that may be the result of the geologic structural or stratigraphic framework associated with the pay zones. This model shows an approach that can be used to estimate multi-zone reserves accounting for uncertainty in each zone's reservoir parameters, and also incorporating in-zone and across-zone dependencies as a result of plausible observed or known reservoir and geologic information about the prospect.	Download For: Crystal Ball Level: Simple
Oil Field Development Detail: Oil companies need to assess new fields or prospects where very little hard data exists. With little actual data available, the discovery team wants to quantify and optimize the Net Present Value (NPV) of this asset. Includes optimizations setting file and uses a percentile objective and a lookup table based on a decision variable.	Download For: Crystal Ball Level: Simple

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COMMON USES & EXAMPLES

The following examples were provided by our customers and represent only some of the potential oil & gas and energy applications for Crystal Ball.

• Analysis of productive properties for acquisition
• Analysis of trading issues and of wide variations in project to project costs
• Analyze new ventures
• Assess the probability of drilling a successful well
• Cash flow forecasting and interest rate analysis
• Cost estimation for chemical consumption with associated risks
• Determine lifecycle of current capital investments
• Determining optimum replacement rates for offshore equipment
• Developing pricing views for marketing gas at all major trading hubs across North America
• Economic evaluation of oil and gas exploration prospects and exploration portfolios
• Economical optimization for investment and replacement questions in Electricity and Gas distribution networks
• Error analysis of petrophysical evaluations
• Estimate the possible reserve sizes of unproved oil and gas prospects prior to drilling
• Evaluating the inherent risk in achieving financial targets for acquisitions
• Figuring commercial terms for service offerings
• Forecast liquidity availability
• Generating stochastic oil and gas volumetric reserves estimates
• Geologic estimations of oil in place and risk analysis
• Give my clients cost and schedule risk profiles
• Improve the accuracy of cost estimates of single well exploration
• Model utilization trends
• Predict petrochemical prices, supply/demand volumes, imports, exports, operating rates for plants
• Optimizing employee incentive programs
• Portfolio optimization
• Preparation of project budgets
• Reserves determination
• Risk Analysis on Petroleum exploration and Development Projects
• Risk and sensitivity on proposed capital projects
• Risk-based analysis of major project capital expenditures in the oil sands industry
• Risk-based analysis of oil and gas exploration and development opportunities
• Sales and market clearing price forecasting
• Tech portfolio management and asset allocation
• Use CB Predictor to analyze historical trends in production costs
  

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TEXTBOOKS

Decision Analysis for Petroleum Exploration, 2/e

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