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P et r oleum R isk a nd D ecision

Ana lysis - P R D
Dis cip line: Petroleum Business
L evel: Foundation
Durat io n: 5 days
Ins t ruct o r( s ) : T im Nieman, John Schuyler

Good technical and business decisions are based on competent analysis of project
costs, benefits and risks. Participants learn the decision analysis process and
foundation concepts so they can actively participate in multi-discipline evaluation teams.
T he focus is on designing and solving decision models. About half the problems relate
to exploration. T he methods apply to R&D, risk management, and all capital investment
decisions. Probability distributions express professional judgments about risks and
uncertainties and are carried through the calculations. Decision tree and influence
diagrams provide clear communications and the basis for valuing each alternative.
Monte Carlo simulation is experienced in detail in a hand-calculation exercise. Project
modeling fundamentals and basic probability concepts provide the foundation for the
calculations. T he mathematics is straightforward and mostly involves only common
algebra. T he emphasis is on practical techniques for immediate application. T his is a
fast-paced course and recommended for those with strong English listening skills. T his
course is intended as the prerequisite for the Advanced Decision Analysis with Portfolio
and Project Modeling course.

Des ig ned Fo r:
Geologists, engineers, geophysicists, managers, team leaders, economists, and
planners.

Y o u Will L earn:
How T o:

Describe the elements of the decision analysis process and the respective roles of
management and the analysis team
Express and interpret judgments about risks and uncertainties as probability
distributions and popular statistics
Represent discrete risk events in Venn diagrams, probability trees, and joint
probability tables
Solve for expected values with decision trees, payoff tables, and Monte Carlo
simulation (hand calculations)
Craft and solve decision models
Evaluate investment and design alternatives with decision tree analysis
Develop and solve decision trees for value of information (VOI) problems

Co urs e Co nt ent :

Decision T ree Analysis: decision models, value of information (a key problem type
emphasized in the course), flexibility and control, project threats and opportunities
Monte Carlo Simulation: Latin hypercube sampling, portfolio problems, optimization,
advantages and limitations
Decision Criteria and Policy: value measures, multiple objectives, HSE, capital
constraint, risk aversion
Modeling the Decision: influence diagrams, sensitivity analysis, modeling correlations
Basic Probability and Statistics: four fundamental rules including Bayes' rule (the easy
way), calibration and eliciting judgments, choosing distribution types, common
misconceptions about probability
Expected Value Concept: foundation for decision policy, features, pitfalls to avoid
Implementing Decision Analysis: problem framing, guidelines for good analysis
practice, team analyses, computer tools (discussion and demonstrations),
mitigating risks
Evaluating a multi-pay prospect (team exercise)

Ins t ruct o rs :

MR. T IM NIEMAN has 30 years of experience as a risk and decision analyst, economist
and petroleum scientist. His professional experience includes 20 years in leading and
conducting projects of various sizes and scopes involving the application of decision
and risk analysis methodologies in the energy and environmental sectors, and 10 years
as a practicing petroleum geophysicist. His background includes work in decision
analysis, risk analysis, business modeling, financial forecasting, strategic planning, R&D
portfolio management, software development, geology, and geophysics. Mr. Nieman
has also taught numerous training seminars in decision analysis, economics and
quantitative modeling. He has a BS in geology and an MS in geophysics from Michigan
State University, and an MBA from Rice University.

MR. JOHN SCHUYLER, CAM, CCE, CMA, CMC, CPIM, PMP and PE, is a decision analyst,
evaluation engineer, and investor. He founded his consulting practice, Decision
Precision, in 1988. He has over 37 years of experience in analysis, consulting, training
and management, primarily in the energy industry. His focus has been in feasibility
analysis, appraisals, corporate planning, and evaluation software. He has presented
over 290 courses in 34 countries since 1989. He was vice president and petroleum
engineer with Security Pacific National Bank, planning and evaluation analyst at Cities
Service Oil Co., manager of business systems for Cities Service's Petrochemicals
Division, and senior management consultant with a national accounting firm. He is a
member of eight professional organizations and is an author and speaker on modern
analysis practices. He is the revision author of Decision Analysis for Petroleum
Exploration, 2nd Ed., author of Risk and Decision Analysis in Projects, 2nd Ed., and has
written over 40 articles, papers and handbook chapters. He received BS and MS
degrees in mineral-engineering physics from the Colorado School of Mines and an MBA
from the University of Colorado. His website is www.maxvalue.com.

In-Ho us e Co urs e P res ent at io ns


All courses are available for in-house presentation to individual organizations. In-house
courses may be structured the same as the public versions or tailored to meet your
requirements. Special courses on virtually any petroleum-related subject can be
arranged specifically for in-house presentation. For further information, contact our In-
House T raining Coordinator at one of the numbers listed below.
T elephone 1- 832 426 1234
Facsimile 1- 832 426 1244
E-Mail inhouse@petroskills.com

P ub lic Co urs e P res ent at io ns


How to contact PetroSkills:
1-800-821-5933 toll-free in North America or
T elephone 1-918-828-2500
Facsimile 1-918-828-2580
E-Mail registrations@petroskills.com
Internet www.petroskills.com
Address P.O. Box 35448, T ulsa, Oklahoma 74153-0448, U.S.A