Using a realistic case study around the development of an oil field the process of making decisions against a background of a variety of risks and uncertainties is reviewed across a three-day course. First we look at the framing: define the decisions to be taken, examine the decision hierarchy and explore the uncertainties and the possible trade-offs to be made. For the case study at hand, participants are asked to prepare a strategy table showing the different options for developing and monetising the asset. A spreadsheet based economic model is made available to deterministically and probabilistically evaluate the economic attractiveness.
The basic principles of uncertainty analysis are introduced with a focus on probability distributions. An overview is provided of various techniques to assess the uncertainties (probabilities and ranges) and the possible biases in the process. Various tools are introduced to analyse the implications of the uncertainties associated with the different options: decision trees, tornados, Monte Carlo simulation, the DeltaLogN method. Course participants are asked to apply some of these techniques to the case study and draw conclusions.
We will discuss how an analysis as conducted in the context of the case study can be linked to the risk management activities. Lastly it will be realised that not all uncertainties can be fully captured in numbers. The concept of scenario analysis of the business environment is introduced and a simple example is reviewed.
The case study is a red thread through the course. It concerns the development of an offshore oil field for which different strategies can be followed. Participants will be handed materials to work the case, including texts, videos and spreadsheets.
The course is unique for having a red thread case study, for presenting some innovative techniques for probabilistic analysis and for making the connections to other disciplines.
As a three day face to face course can only cover the ground at a high level, reference will be made to more in depth online materials available for further study and capability development.