Value of Information in the Oil and Gas Industry: Past, Present, and Future

TLDR

Petroleum engineers and geoscientists routinely generate costly decision‑relevant data such as seismic surveys, core analyses, reservoir simulations, and market forecasts, yet the profitability or value of this information is rarely assessed. This study aims to make value‑of‑information analysis more accessible and useful by reviewing its past, present, and future in the oil and gas sector. The authors surveyed SPE publications to map how VOI has been applied, the decision contexts involved, and the methods used, and they analyze barriers to adoption and propose ways to broaden its use. The review shows that VOI has been successfully applied in several decision areas but also reveals key challenges that limit its broader adoption.

Abstract

Summary An important task that petroleum engineers and geoscientists undertake is to produce decision-relevant information. Some of the most important decisions we make concern what type and what quality of information to produce. When decisions are fraught with geologic and market uncertainties, this information gathering may such forms as seismic surveys, core and well test analyses, reservoir simulations, market analyses, and price forecasts—which the industry spends billions of US dollars each year. Yet, considerably less time and resources are expended on assessing the profitability or value of this information. Why is that? This paper addresses how to make value-of-information (VOI) analysis more accessible and useful by discussing its past, present, and future. On the basis of a survey of SPE publications, we provide an overview of the use of VOI in the oil and gas industry, focusing on how the analysis was carried out and for which types of decisions VOI analysis has been performed. We highlight areas in which VOI methods have been used successfully and identify important challenges. We then identify and discuss the possible causes for the limited use of VOI methods and suggest ways to increase the use of this powerful analysis tool.