A Process for Evaluating Exploration Prospects

In 1989, Chevron Overseas Petroleum, Inc., developed a process to allow management to compare a wide variety of global exploration opportunities on a uniform and consistent basis. Over the next five years, the process evolved into an effective method to plan exploration programs on a basis of value incorporating prospect ranking, budget allocation, and technology management. The final product is a continuous process and includes, within a single organizational unit, the integration of geologic risk assessment, probabilistic distribution of prospect hydrocarbon volumes, engineering development planning, and prospect economics. The process is based on the concepts of the play and hydrocarbon system. Other steps of the process (geologic risk assessment, volumetric estimation, engineering support, economic evaluation, and postdrill feedback) are considered extensions of fundamental knowledge and understanding of the underlying geological, engineering, and fiscal constraints imposed by these concepts. A foundation is set, describing the geologic framework and the prospect in terms of the play concept-source, reservoir, trap (including seal), and dynamics (timing/migration). The information and data from this description become the basis for subsquent steps in the process. Risk assessment assigns a probability of success to each of these four elements of the play concept, and multiplication of ©Copyright 1997. The American Association of Petroleum Geologists. All rights reserved.1Manuscript received February 16, 1996; revised manuscript received September 26, 1996; final acceptance February 4, 1997. 2Chevron Overseas Petroleum, Inc., P.O. Box 5046, San Ramon, California 94583-0946. We acknowledge the champion of this process, M. W. Boyce, without whose continuing, senior-management support this process would not have been possible. We acknowledge the pioneering efforts of C. L. Aguilera, G. A. Demaison, E. J. Durrer, F. R. Johnson, W. E. Perkins, J. L. Reich, and R. A. Seltzer, who established the framework for the process in its early stages. We also acknowledge the efforts to refine, document, and teach the process during the later stages by S. D. Adams, A. O. Akinpelu, G. A. Ankenbauer, G. L. Bliss, T. J. Humphrey, E. McLean, and D. B. Wallem. Finally, we acknowledge all the people who, over the past several decades, have championed such a process, but fell victim to deaf ears because of high oil prices or dumb luck. These people provided the well-founded basis for the theoretical and practical application of evaluation principles. We also wish to extend special thanks to Gerard Demaison and Erwin Durrer for their continuous support, guidance, and friendship.