FWGS January Luncheon
Time & Location
Time: 11:30 am Buffet, Noon Speaker Presentation
RSVP online by Friday, January 11th at noon on the FWGS website www.fwgs.org.
Cost: $27 with RSVP, $30 with no RSVP, student members eat free with RSVP (Student Members please directly email the FWGS Secretary to RSVP).
Reminder: FWGS is charged for all RSVP's, so if you RSVP and do not attend you will be contacted concerning payment.
The Role of Serendipity, Randomness and Luck in Petroleum Exploration
Alexei V. Milkov1 and William C. Navidi2
1Colorado School of Mines, Department of Geology and Geological Engineering
2Colorado School of Mines, Department of Applied Mathematics and Statistics
Petroleum explorers often acknowledge the contribution of luck in exploration outcomes. Our survey of 237 industry practitioners revealed that 90% of them believe that luck plays some role in the outcomes of exploration projects. However, the luck factor has never been quantified before, and therefore it remains an esoteric concept of little use to geoscientist and exploration managers. Luck clearly exists in petroleum exploration, as it contributed to many serendipitously discovered plays and pools. We studied luck as a factor in the variation of exploration success of different companies. Looking at the performance of companies exploring on the Norwegian Continental Shelf in 1966-2005, we concluded that the difference in success rate of a particular company from the overall industry success rate over time is consistent with what would be expected from luck alone. The variation in success rates for all companies within a given 5-year period is also not distinguishable from randomness. Using a global dataset of 8,906 conventional exploration wells in which 733 companies participated (had equity position) from 2008-2017, we calculated that the proportion of variance in geological success among the companies is 39% due to luck (25% for commercial success), the rest being related to skill. In frontier plays, luck contribution to the variation in geological and commercial success rates between different companies is 100%. However, the role of luck is relatively less in emerging plays (67% for geological success, 49% for commercial success), maturing plays (38% and 28%), and mature plays (29% and 28%, respectively). The role of explorers is to reduce the dependence of exploration results on luck by improving exploration processes. Managers should increase the exposure of their companies to opportunities, enable geoscientists with data, technology and knowledge, champion a consistent and unbiased process of opportunity evaluation, have (and communicate to investors) realistic (probabilistic) expectations of outcomes, keep track of forecasts versus results, and incorporate learnings into new evaluations. Individual explorers should focus on honing and demonstrating their prediction skills. Companies should recognize and reward those who correctly and consistently predict various outcomes of exploration wells rather than those who associate themselves with discoveries.
Dr. Alexei V. Milkov is Full Professor and Director of Potential Gas Agency at Colorado School of Mines and a consultant to oil and gas industry. After receiving PhD from Texas A&M University, Dr. Milkov worked for BP, Sasol and Murphy Oil as geoscientist and senior manager. He explored for conventional and unconventional oil and gas in >30 basins on six continents and participated in the discovery of >4 Billion BOE of petroleum resources. He also worked on several appraisal and production projects. Dr. Milkov has deep expertise in oil and gas geochemistry, petroleum systems modeling, exploration risk analysis, resource assessments and portfolio management. He published 50 peer-reviewed articles. Dr. Milkov received several industry awards including J.C. “Cam” Sproule Memorial Award from the American Association of Petroleum Geologists (AAPG) for the best contribution to petroleum geology and Pieter Schenck Award from the European Association of Organic Geochemists (EAOG) for a major contribution to organic geochemistry.
- Member RSVP - Pay Before Event$27$270$0
- Member RSVP - Pay at Event$0$00$0
- Student RSVP$0$00$0