There is no deterministic reservoir. Many unpredictable properties of the reservoir have still remained. Geometry and geological parameters are changed as new data collected.
Many companies put their goal in their development proposal to maximized Net Present Value (NPV), hydrocarbon production, and reservoir drainage. The reservoir model is build and exploitation strategy is determined. In the proposal, the reservoir is assumed deterministic and the production forecast is predicted accordingly.
During 20 years of exploitation, some reservoirs have a low recovery, short drainage radius at most of the wells, and rapid rate decline. Consequently, the production target proposed is not achieved.
At this point, oil and gas companies must consider many projects to keep the oil and gas production above economic rate. Every project such as drilling additional wells, upgrading surface facilities, performing workover, water flooding, chemical flooding (EOR), and implementing control technology have their own NPV and require risk mitigation for each entity. Furthermore, each project has its individual risk. Projects that have a connection to reservoirs such as EOR and water flooding will require reservoir risk management to control the risk related to the reservoirs. Oil companies that have strong financial basis will acquire more data such as 3D seismic and CO logging to strengthen the reservoir information. An example of a risk management flowchart is depicted in Figure 1.
Contrary to a big company, a small company has financial risk besides the reservoir and project risk. Some oil companies must rely on common activities without big projects such as drilling and fracking since the company must wait for new investment.
In Figure 1, every scenario is valued by its NPV. Risks are weighted and influencing the hydrocarbon gain from the individual scenarios. The hydrocarbon gain distributions are evaluated statistically (stochastic). All scenarios are compared to the deterministic reservoir model without implementing anything. The best NPV and risk that could be anticipated are chosen.
Some risks can be eliminated by acquiring new data or collecting more data. The value of the data can be concluded by comparing the production gain with the new data available to the production without doing anything due to risks associated with the lack of the data.