Qualitative appraisal methods


A decision to drill may be entirely based on a "quality statement". To answer the question "Is this a good or bad prospect" one could answer in terms of quality, such as "fair". Then the final result of prospect appraisal is in words.

Various methods have been proposed to describe prospects qualitatively. In Shell we tried to assign qualities to certain geological variables, called "sine qua non". For a "final" quality the sub-qualities have to be combined. The choice is then an average, or a product. If the "sum" of qualities is used, a final quality might be good, because of excellent qualities of most variables, but one of the variables would have a totally condemning quality. So, if one or more of the sub-qualities is bad, the final quality should also be bad, because of the sine-qua-non condition. Such result can be obtained if qualities are numbers and the final quality is the product of these numbers. Only one zero kills the final quality.
There remains a problem of assigning numbers to the quality terms in words, and to make decisions on the basis of final quality. Note that the idea of a product is very similar to the scheme of chances of fulfillment that are employed in most of the quantitative methods of appraisal.

A type of quality can also be applied in ranking prospects. Then the rank within a portfolio is the quality. To arrive at such a ranking, a scheme of pairwise comparison may be used. This method allows the individual making the comparison to focus only on two objects, eliminating the influence of extraneous factors, and improving response consistency.

In two or three dimensions, fairway maps (Grant,et al.,1996) are possibly an example of a qualitative system, indicating a ranking of possible targets or plays. By first making a regional assessment of reservoir, seal and hydrocarbon charge and then overlaying the three maps to show where the best areas are. But such fairway maps are more a tool for communication and summarizing multivariate and spatial data, obtained by mostly quantitative methods, rather than somewhat vague, and possibly non-standardized qualities.

It seems that the qualitative statements about prospects or opportunities have gradually made way for more quantitative expressions over the last half century. Obviously, the requirements of fairly sophisticated economic evaluation techniques and risk analysis do not well connect to quality statements.

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