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AAPG Bulletin

Abstract


Volume: 51 (1967)

Issue: 7. (July)

First Page: 1225

Last Page: 1239

Title: Geologic Quantification: Description ^rarr Numbers ^rarr Success Ratio

Author(s): Irving T. Schwade (2)

Abstract:

Continually increasing emphasis on the economic aspects of risk/return ratio is essential in a successful oil-exploration program. Such an economic analysis attempts to predict (based on [1] various estimated, largely dimensional, parameters, and [2] the assumption that the wildcat test will be a discovery) the ultimate financial return from the original investment. In the past, probability of success, the fundamental element in any drilling decision, commonly has been determined subjectively by the geologist. His means of making such a determination has been based largely on his "feel" for the area, his experience, and perhaps a desire to take advantage of an element of luck where positive supporting evidence is lacking. The geologist rarely recommends a prospect with a isk factor less than 1 to 4, or 1 to 5, yet statistical results of domestic wildcat drilling, considering only those tests in which technical advice has been used, are about 1 to 8. This poor record in prediction, based on subjective factors, must be supplanted by some system of estimation in which descriptive geology is translatable into numbers that may be converted into a measurable probability of success.

An accompanying exploration prospect check list (Table I) is organized into three primary classes of fundamental geologic data essential to any prospect. These are the major trapping factors of environment of deposition, stratigraphy, and structure. The absence of favorable development of any one of these ordinarily results in a wildcat failure. Each primary class is subdivided into categories, some of which are separated further into sub-categories. The ultimate division in the classification is a check list of 198 geologic elements. Up to 38 elements are considered in the evaluation of a prospect. Translation of geologic description to numbers is accomplished by relating the geologic details with each of the above elements that is pertinent to the objective. From careful considerati n of the check list, the expected condition of development of each element that is essential to the prospect is compared with what might be considered optimum development of that element for the area. The sum of the percentages of optimum development of all pertinent elements under each of the primary classes of data is a measure of the probability of optimum development of any major trapping factor. According to the probability theory, the percentage chance of geologic success is the product of the percentage chance of development of the three trapping factors. Examples taken from actual case histories, considering the state of knowledge prior to drilling, demonstrate how percentage probability of success and risk are determined.

If the geologists' largely descriptively oriented profession is to survive as a provider of significant technical advice to the highly competitive and cost-conscious domestic oil industry, the geologist must seek to translate his determinations into tangible terms more suited to comprehension by a non-geologically oriented management. Quantification, as presented here, is one approach toward the end. It is hoped that this approach will stimulate continued improvement of the system, or provide the impetus for the spawning of other systems, which may result in substantial improvement in the selection of prospects which result in economic successes. If the present domestic 1 to 8 discovery-to-dry-hole ratio is reduced to the desired 1 to 5, exploration costs would almost be cut in half; his might result in a complete rejuvenation of our domestic oil industry!

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