Decision tree is applicable in many fields. i wish to know its application in the oil and gas industry.
This publication from Schlumberger explains how decision tree is used in the Petroleum industry.
Title: Making Decisions in the Oil and Gas Industry
Page 3, "Decision-Tree Analysis".
Please, believe me most of decisions in the oil and gas has nothing to do with formal typical business management solutions, common sense or commercial reasons. The oilfield is a high capital investment business and with the top management getting sky-high wedges and not owning the company that's why for a CEO the most important thing is to survive next Board of Directors meeting other than making a reasonable solution. There are no practical applications of the decision tree in the oil and gas biz. That is why it is so rocky and swinging up and down as none of the other industries do.
i also found this link very interesting
https://www.youtube.com/watch?v=Pb5fDyG2cBc&t=298s
Sorry I don't have time to read the Schlumberger publication before providing my answer, but thanks to Yakubu for providing it.
I am sure that different types and sizes of companies take decisions in different ways, which could be why Ruslan says "There are no practical applications of the decision tree in the oil and gas biz." whereas in my experience they are used a lot and are very useful.
Based on my experience of over 30 years in BP, the places that I have seen decision trees used in oil and gas include:
- Exploration success / failure outcome planning
- Farm-in / Farm-out evaluations / decisions
- Well sidetrack or re-drill decisions
- Well workover decisions
- Additional storage tank decisions
- Multiple development stage decisions
- Reserves evaluation
- Logistics planning
- Emergency management plans
- Medical treatment plans
[these are the examples that immediately sprang to mind - I am sure there are more]
In my view decision trees are not just helpful in helping you think through and evaluate things, but they are also a very good visual tool for helping to explain decision logic to management, and for providing guidance for people use in an emergency.
Frank,
I worked a bit for BP. I would not say that the decision-making was their strongest point. First bad example anybody can mention is Deepwater Horizon disaster. I worked at a mega project that had tons of bad decisions. At some stage, the guys decided that one of the most senior managers in BP had to control the travel expenditures approving our TAF's. Thus, we had dozens of project people who could not leave Korea or travel to Korea as that top dog was on some serious business trip not being able to approve our TAF's and JMP's through the system.
The other oil majors are not better either.
20 years in the industry, I met only a handful of good managers making sound decisions but none of them used a decision-making tree.
I didn’t work on the project side where there seems to be a severe aversion to risk and uncertainty. I worked in petroleum engineering, production (and drilling) operations, and management decision making side. Managing and acting in the face of risk and uncertainty was our business, and decision trees were definitely used there.
You brought up Deepwater Horizon, that was a terrible incident, and the reports on that include many references to decision trees. Here are some of them:
Transocean, Investigation Report Volume I, MACONDO WELL INCIDENT, June 2011
(Example 1)
104. Testimony of John Guide, Hearing before the Deepwater Horizon Joint Investigation Team, Oct. 7, 2010, 96:3–8; Brian Morel e-mail to Ronald Sepulvado, April 14, 2010, BP-HZN-MBI-00126982; Macondo Production casing and TA Forward Planning Decision Tree; April 14, 2010, BP-HZN-MBI00010575.
National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Report to the President, January 2011
(Example 1)
At the 7:30 a.m. morning meeting with contractors on the rig, the BP team concluded the cement job went well enough to send home a team of technicians from Schlumberger who had been standing by on the rig for at least one day already55 waiting to perform a suite of cement evaluation tests on the primary cement job, including cement bond logs.56 The BP team relied on a “decision tree” that Guide and BP engineers had prepared beforehand. The primary criterion BP appears to have used to determine whether to perform the cement evaluation test was whether there were “[l]osses while cementing [the] long string.”57 Having seen no lost returns during the cement job, BP sent the Schlumberger team home and moved on to prepare the well for temporary abandonment.
(Example 2)
103 Coastal Response Research Center, Research & Development Needs for Making Decisions Regarding Dispersing Oil (April 2006), 1.
Deepwater Horizon Study Group, Final Report on the Investigation of the Macondo Well Blowout, March 1, 2011
(Example 1) April 20, 7:00 a.m. – After a discussion with the Macondo well contractors, as per the well plan decision tree, BP concluded that a cement bond log was not required.77 BP informed the Schlumberger crew that no wireline cased hole services would be requested. At approximately 11:15 a.m., the Schlumberger crew departed the Deepwater Horizon on the regularly scheduled BP helicopter flight.78
BP PLC, Deepwater Horizon Accident Investigation Report, September 8, 2010
(Example 1)
Section 3. Chronology of the Accident
Cement Job
[Date: Time : Description : Source]
April 20 : ~07:30 : BP and service providers discussed running cement bond log (CBL) during morning operations call. Decision made, in accordance with pre-established BP Macondo well team decision tree, not to run CBL : Interviews
(Example 2)
Section 4. Overview of Deepwater Horizon Accident Analyses
Planning for Temporary Abandonment
The cement job was pumped with expected volumes and mud returns. The BP Macondo
well team used final lift pressure and returns to declare a successful cement placement.
After discussion with Macondo well contractors and consistent with a decision tree developed by the team, the team decided that no further evaluation was needed at that time.
(Example 3)
Analysis 5A. Well Integrity Was Not Established or Failed
Planning For Temporary Abandonment
The BP Macondo well team prepared a detailed decision tree for the temporary abandonment of the well. The decision tree outlined steps to confirm the top of cement (TOC); this was consistent with Minerals Management Services (MMS) regulations (Casing and Cementing Requirements, 30 CFR Section 250, 428). This approach was based on the evaluation of lift pressure and full returns during cement placement.
The "Macondo Production casing and TA Forward Planning Decision Tree" mentioned in some of the above can be found in Exhibit 4 of the following link:
https://mitsloan.mit.edu/LearningEdge/operations-management/BP-Deepwater-Horizon-Disaster/Pages/BP-and-the-Deepwater-Horizon-Disaster-of-2010.aspx
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