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AAPG Bulletin


AAPG Bulletin, V. 92, No. 10 (October 2008), P. 1393-1402.

Copyright copy2008. The American Association of Petroleum Geologists. All rights reserved.


Using the value of information to determine optimal well order in a sequential drilling program

Peter Cunningham,1 Steve Begg2

1Decisions Unlimited, Balmuir, Aberdeen Road, Tarland, Aberdeen AB34 4UA, United Kingdom; [email protected]
2Australian School of Petroleum, University of Adelaide, SA 5005, Australia


Offshore drilling programs on complex reservoirs carry inherent risks. Subsurface uncertainty can lead to costly mistakes being made, and, therefore, being able to gain information during the course of a sequential drilling program, and use it effectively, can have sizeable capital importance. Based only on predicted drilling costs and production rates, wells closest to the platform would commonly be drilled before longer offset wells by virtue of their cheaper drilling costs. However, there is potential during the drilling program for learning to occur between the drilling of two wells that would either provide encouragement to go ahead and drill the second well, change it in some way, or, indeed, remove it from the program altogether. Analyzing the predicted value of this learning, before drilling commences, can reveal the conditions under which the longer offset well could be drilled first because of its potential to impact decisions regarding the second well. The various scenarios and their sensitivities are analyzed using a value of information (VoI) approach, providing an example of how VoI can be used proactively in the construction of learning drilling strategies. The same approach can be extended to most other data acquisition situations.

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