Maximizing the Value of Information of a Horizontal Polymer Pilot Under Uncertainty Incorporating the Risk Attitude of the Decision Maker

Abstract

Summary Polymer injection might lead to incremental oil recovery and increase the value of an asset. Several steps must be taken to mature a polymer-injection project. The field needs to be screened for applicability of polymer injection, laboratory experiments have to be performed, and a pilot project might be required before field implementation. The decision to perform a pilot project can be dependent on a value-of-information (VOI) calculation. The VOI can be derived by performing a work flow that captures the effects of the range of geological scenarios, as well as dynamic and polymer parameters, on incremental net present value (NPV). The result of the work flow is a cumulative distribution function (CDF) of NPV linked to prior distributions of model parameters and potential observables from the polymer-injection pilot. The effect of various parameters on the CDF of the fieldwide NPV can be analyzed and in turn used to decide which measurements from the pilot have a strong sensitivity on the NPV CDF, and are thus informative. In the case shown here, the water-cut reduction in the pilot area has a strong effect on the NPV CDF of the polymer-injection field implementation. To extract maximum information, the response of the pilot for water-cut reduction needs to be optimized under uncertainty. To calculate the VOI, the expected-monetary-value (EMV) difference of a decision tree with and without the pilot can be used if the decision maker (DM) is risk neutral. However, if the DM requires hurdle values through a probability of economic success (PES), value functions (VFs) and decision weights according to the prospect theory should be used. Applying risk hurdles requires a consistent use of VFs and decision weights for calculating VOI and the probability of maturation (POM) of projects. The methodology was applied to assess the VOI for a horizontal-well pilot in the ninth Tortonian Horizon (9TH) Reservoir in Austria for a risk-averse DM. The operating parameters (polymer concentration and water injection) were chosen such that the water-cut reduction, which was the most influential parameter of the polymer pilot on the field NPV CDF, was maximized.