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Project Risk Analysis (ProjectRA)

Software for the Integrated Probabilistic Economic Modeling of Unconventional Projects to address the challenge of:

Multiple play segment characterization

Forecasting from limited data sets

Pilot-sizing and confidence of achieving the mean

Modeling type well decline variability

Full-cycle economic portrayal

Modeling in either scoping mode or detailed development mode

ProjectRA fully encompasses the concepts and best practices taught in the R&A courses, especially the Unconventional Resource Assessment and Valuation (URAV) Course.

ProjectRA incorporates the learnings from the licensees (Independents to Super-Majors) of the UCRA software and is rewritten and extended to support the challenge of effectively modeling diverse unconventional opportunities and their potential development.

ProjectRA includes an internal Monte Carlo Simulation  engine that supports rapid simulations to facilitate exploring a wide range of scenarios. The user is provided an intuitive guided workflow where, even with a very small amount of data in hand, a model can be built that utilizes the power of aggregation. If in development mode, dedailed well, pad and infrastructure details can be easily and quickly incorporated.

ProjectRA models a series of staged investments in one or more play segments. The different play segments may have different geology, type curves, development and production characteristics. Results are output for both the individual play segments and the project aggregate. This rapidly helps identify those play segments that should be high-graded or divested.

ProjectRA

Conceptually, here’s the ProjectRA process:

The model develops the defined acreage position based upon an input well timing and drilling rig schedule. The number of drillable well locations is based on the acreage description, well spacing and probability of land capture. A project may consist of multiple user-identified revenue and / or expense-only products.

ProjectRADiscovery, the first stage gate, applies in an unproven play segment, where Shared Chance is modeled via a customizable checklist that is programed according to the play type including provision for internal company guidelines.  Local Geologic Chance is modeled together with Local Mechanical Chance that are applied to all potential wells.

The Deliverability, or Pilot phase, tests the project against a minimum average IP required to continue to the Economic Demonstration Phase. Should the IP average be less than the hurdle rate for a defined number of wells, the trial will report as a failure. ProjectRA will stop capital expenditures on that play segment and calculate the failure case costs including provision for revenue from residual production.

ProjectRABased on work by R&A Partner, Jim Gouveia, P.Eng, in SPEE Monograph 3 and his 2016 SPE Distinguished Lecturer paper ”Fooled by Randomness – Improving Decision Making with Limited Data”, special provision for project evaluations with limited data is included in   ProjectRA. In Figure 3 Trumpet plot, the 80% confidence range of the forecasted average IP reduces as the well count increases. From inputs, the user can effectively communicate to management the number of wells required to be 90% confident that  the future average well IP will be in excess of a defined target hurdle rate. Trumpet plots, as shown in Figure 3, assist communicating to management program success expected confidence levels given pilot size. Additionally, Uncertainty around the Mean IP is modelled to represent the real-world situation that the play’s Mean IP and EUR are truly unknown, and may have a wide range impacting the project’s resources and value.

ProjectRAEmpirical based type curve modeling methods for both primary and secondary phases are provided including the capability to model uncertainty via appropriate distribution shapes. The Multi-Segment Type Curve option supports modeling several sequential decline curve methods for a single type curve such as Modified Arps, or re-completions in multiple stratigraphic intervals as shown in Figure 4.

When the Deliverability Stage is successful, the Economic Demonstration stage tests a defined number of wells to determine if the average well has a positive NPV. If it is negative, the production, revenue, and costs are recorded for valuation to this point. A positive NPV proceeds to full Development. The development NPV success and failure cases are based on the accrued capital and operating costs, including capital investments timing and production revenue.

Learning curve improvements for costs and durations, repeated capital investments and variable OPEX expenses can be included.

ProjectRAEarly wells are often anticipated to have the greatest uncertainty. Previously, attempts to reflect the range of potential outcomes sampled a very large number of trials. ProjectRA provides the ability to fully sample new type curve parameters for the user-identified consecutive wells on a given trial. This may be applied to any specified number of wells after which the program will revert to using input distribution mean parameters. Figure 5 shows a range of type curves sampled from the   input distributions.

Volumetrics for the in-place resources and recoverable hydrocarbon volumes can be calculated and used to reality check the type curve estimated EURs. An implied recovery efficiency provides the opportunity to reality check the inputs and range of uncertainties as shown in Figure 6.

ProjectRA

Monte-Carlo Simulation results are presented in both deterministic and probabilistic form. The decision tree shown earlier in Figure 1 provides rapid insight to both the overall project and play segment stages chance of success.

Trial Summary Table provides a tabular output of all the trial outcomes. This can be used for additional analyses and, using the included Sorting Tools, individual trials can be selected to observe production, capital, investment streams and economic metrics. These can be viewed in the context of Well Schedule and Project Streams Reports. Multiple realizations can be used to communicate potential development scenarios and cash-flows. A graphical summary is provided in dashboard format in Figure 7 below.

ProjectRA

Whether scoping or field developing planning, ProjectRA provides a framework to help support the key decisions in integrated evaluation of unconventional projects. Answer the impact of adding an additional rig in a full field development plan in minutes rather than days with ProjectRA.

For further details, a live demonstration, or a trial copy, please contact Phil Conway at Rose & Associates, philconway@roseassoc.com or at 713 528 8422.