As you surely are aware of, petroleum exploration is a risky business. On a worldwide basis, four of five wildcats are dry. Similarly, there is often a great deal of uncertainty in terms of estimates of the size of accumulations. As upside potential is often the key to prospect economics, accurate estimation of both downside and upside are equally important.

For consistent, accurate and realistic assessment of exploration risks, we decompose overall risk into distinct and independent risk factors. For uncertainty in resource estimates, we attempt to state explicitly uncertainties in the estimates used to calculate hydrocarbon potential.

In very simple terms, uncertainty is stated by defining not only your best estimate of prospect attributes such as area of closure, thickness, porosity and trap fill, but by also defining a range of values with their likelihood of occurrence. The resulting range of values with their likelihood represents the probability distribution of the parameter estimate.

Consider reservoir rock porosity. Let us assume that the estimate of the most likely value for the porosity of the Alpha reservoir is 12%.

Pressing the explorationist involved in the Alpha case for a lower bound on the porosity, you ask for an estimate of the porosity value that he is sure that the Alpha reservoir is above. He replies 8%. You then press for an upper bound on the porosity. He replies that he is confident that the porosity cannot under any circumstances be 18% or above.

The 8 to 18 % range for the porosity with a most likely value of 12% can be said to define a triangular frequency distribution. You enter this value in the parameter input panel (PIP) for the porosity by selecting a triangular distribution and entering a minimum value of 8%, a maximum value of 18% and a most likely (mode) value of 12%.

The graph of the distribution that is displayed when you click the Graph button shows not only the frequency distribution (dotted line), but also the cumulative probability distribution (continuous line) for your estimate of the Alpha reservoir porosity. The cumulative probability distribution shows the probability of the reservoir porosity being equal to or greater than a porosity value. Here the cumulative distribution shows that there is a probability of 1 (certainty) that the porosity is 8% or greater while there is a zero (0) probability that the porosity is equal or greater than 18%.