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The problems of exploration evaluation are occupying an ever-increasing importance in the petroleum industry. Recent developments in exploration trends and in the field of data handling stress the need and desire to minimize risk in business decisions.
Geologic-geographic preference has long been an excellent criterion to determine where to concentrate exploration efforts. This becomes very obvious when the exploration efforts and results in areas such as the Gulf Coast and West Texas are carefully analyzed and compared with other areas. Exploring for oil in certain foreign countries, too, has paid off munificently, particularly when the oil finding costs are compared in dollars per barrel with similar costs in the United States.
All exploration programs have one common goal: To find and exploit oil and gas reserves at a profit. However, economic factors are playing an ever-increasingly important role. The problem of arriving at what appears to be the optimum route to follow in petroleum exploration can be facilitated by a statistical approach, particularly with the recent advent and utilization of data processing techniques. This approach is not a substitute for intelligence or judgment but it is a new advance in the solution of problems of all kinds. The theories of probability provide a method of measuring uncertainty that may lead to better exploration decisions.
Innumerable factors affect exploration decisions but these can be placed in four broad categories--geophysical, geological, economic and engineering aspects. Since the primary goal of any exploration problem is to find and exploit reserves efficiently, a realistic approach for exploration decisions is needed. The various factors must be considered and an attempt made to translate them into a desired return on investment. The resultant solution can be accepted or rejected, depending on good judgment and the particular company's criteria and policies.
Analytical evaluations bring oil exploration from the realm of educated guessing to a quantitative approach that fits into modern businesses' techniques. Management and explorationists can thus appraise the merits of a prospect or exploration program and expect to derive optimum results with minimum risk.
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