business side of petroleum system (downey, 1997)

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INDONESIAN PETROLEUM ASSOCIATION

Proceedings of the Petroleum Systems of SE Asia and Australasia Conference, M

THE BUSINESS SIDE OF PETROLEUM SY STE M S

MadanW. Downey"

ABSTRACT

The Petroleum System concept has great utility in

providing a unifying concept for understanding the

distribution of hydrocarbon accumulations. In

addition, recognition of a petroleum system has a

powerful influence on the assessment of risk in'an

exploration play. Plays that lack evidence of a

petroleum system are very high risk, and exploration

efforts in such risky plays should be re-focused to

provide early information as to tile presence or

absence of a petroleum system.

For plays that have evidence of a petroleum system,

exploration data will be available to judge geologic

chance factor and the economic chance factor.Analysis of the factors affecting the likelihood of an

economic discovery illustrate that contract terms,

development costs, and oillgas price are likely to be

as important as exploration technology for exploration

success.

Making sure your new exploration play is within a

petroleum system is more than good science ... t'snecessary for successful business.

SCIENTIFI C IM PORTANCE OF PETROLEUM

SYSTEMS CONCEPT

Petroleum System have been of suc

geologists and geochemists all over

concepts have great merit and

inspiration for numerous techni

demonstrate the concept's utility

hydrocarbon distributions. The

recognizing and mapping the potent

hydrocarbons derived from a parti

has implications exceeding techn

scientific understanding.

BUSINESS IMPL ICATI ONSOFTH

SYSTEMS CONCEPT

Recognizing the presence or absenc

system has a powerful influence on the "business merit" of an explo

knowledge of the petroleum system

into an assessment of the economic

in the exploration play.

Economic evaluations require that w

of failure, the likelihood of success

success. Typically, the most diffdetermine is the likelihood of succe

of the petroleum system bears very

estimateof likelihood of success.

LIK ELIHOOD OF SUCCESS IN A

© IPA, 2006 - Proceedings of an International Conference on Petroleum SSE Asia and Australasia, 1997

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16

recognition that we are in a very high risk play, withno clear evidence of a petroleum system, should cause

a specific direction and focus to ongoing explorationactivity.

Any exploration expenditures should re-focus towardsgetting some clear encouragement that a petroleumsystem is present. Such high-risk plays need to haveactions taken to better assess and lower risk, ratherthan continue efforts to drill likely barren structures.

To elaborate on the proper exploration acbon in thiscase: if you have no direct dataon the presence of apetroleum system, you are embarking on a very highrisk play. Your first exploration task is to obtain datathat establishes whether you really do have a

petroleum system. You should restram the earlyinclination to drill the largest and most obvious

structures. Any drilling should be directed to the areawhere yon have the best chance of proving a

petroleum system. You need to establish that you areexploring in a petroleum system.

For a basin where source rock maturity is uncertain,where valid oil shows are questionable or absent,initial drilling should be concentrated on structures inthe deepest part of the basin, rather than superficiallymore attractive larger stnlctures on basin flanks.

DETEFUWNING L IK EL IHOOD OF ECONOMIC

SUCCESS I NAREAS WHERE A PETROLEUM

SYSTEM IS DEMONSTRATED

In an exploration play where we have recognized apetroleum system, we can move directly to an

assessment of the probable risks and rewards of theeffort.

We have a very clear and simple proof for thepresence of a petroleum system....has a well in thearea flowed hydrocarbons to the borehole? When a

all the elements of petroleum apresent, your task is to assess the fr

and the economic worth of these acto design an efficient exploration pr

USE OF A CAPEN RISK DIAGRA

One of the most powerful ways likelihood of an accumulation, andvarious sizes of accumulation, is b

risk diagram. (Figure 1)

The Capen risk diagram mimics a ppossible outcomes being properly dchance diagram. Let's pretend we ha

parlour game, that we have an opponeedle, and see what the outcome o

chance, will be. In the illustration,

we have -data ndicating that hydrocaborehole in one wildcat out of four.the chance arrow is flicked, one average) the chance pointer will landaccumulation". Three out of four pointer will land on areas marked "nWe could stop our experience-baseprocess here, if all we cared abohydrocarbon accumulation. But, wein just finding hydrocarbon accumvitally interested in finding econom

of hydrocarbons! We are fortunatestatistical tools that assist us inlikelihood that we might findaccumulation. We know that accumulations occur in log-normal we will have many, many very sm

some medium-sized accumulationsvery large accumulations.

Notice the help that the Capen diaassessing the likelihood of any sonce we know the likelihood of



altered by our efforts, abilities, and circumstances.

The:Capen risk diagram reminds us that the likelihood

of fiiding a commercial field may beas dependent on

negotiation of good terns, or development technology

that lowers costs, or a favorable price for oil and gas,

as in exploration technology that finds accumulations

Making sure your new exploration

petroleum system is more than g

necessary for successful business.

REFERENCE

Capen, E.C.,1992, Business of Petro

efficiently! AAPG pp.29-61.



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business side of petroleum system (downey, 1997)

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