Low Mid High cases is more suitable for MEFS estimation due to its linearity

  • In resource estimates, P10-P50-P90 probability distribution are likely to be lognormal – as such, the characteristic is also expected for NPV vs Volume

    • resource estimation is derived from probability multiplication of several probability distribution representing the charge, storage and entrapment (see Classification of Prospective Resources Private or Broken Links
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      and Resources Estimation Techniques Private or Broken Links
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      )

  • If P10-P50-P90 data points for NPV vs volume are closer together, it is safe to use linear regression but best fit model should still be tested

    • Due diligence must be done to ensure the assumption that data points that are closer together are somewhat linear is true.
    • Choose the best fit model by testing the points with both linear (value closer to the mean) and log-based (P10-P50-P90) regression line. This calculation is critical in determining the MEFS which will determine the Probability of Commercial Success Private or Broken Links
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    • !MEFS three point estimate line.excalidraw.png Private or Broken Links
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  • Alternatively, a single technical input (typically the P50 estimates) can be used as a base while the other two points are derived using proper correlation

    • Reserves/production can estimated by simple variation (e.g. +/- 20%) combined with proper correlation for costs.
    • Capex estimates can utilise sixth-tenth power rule while for Opex can utilise the percentages of Capex approach (see Opex Forecast Methodology Private or Broken Links
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      ).

Metadata

  • topic:: 00 Engineering Economics00 Engineering Economics
    #MOC / for economics notes with focus on petroleum fiscal and engineering
  • updated:: 2022-10-07 Private or Broken Links
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  • reviewed:: 2022-10-07 Private or Broken Links
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  • #PermanentNote