PETROENG 4027 - Decision Making and Risk Analysis

This course teaches the skills required for a key component of a Petroleum Engineer's job - creating value by making decisions that yield optimal returns on the allocation of human and financial resources. The many uncertainties inherent to the oil and gas business (estimating current 'states-of-the world/nature' and predicting future events) create considerable uncertainty in the value that can be realised from resource-allocation decisions. Consequently, there will be a strong emphasis on evaluating the impacts of uncertainty, managing its resultant risks and planning to exploit its up-side potential. Topics to be addressed are the decision-making process, multi-objective decision making, decision-tree analysis, decision criteria, Monte Carlo Simulation and Value of Information & Flexibility. In addition, Utility Theory will be introduced as a means of rationally accounting for risk attitudes. Some of the psychological and judgemental aspects of how people respond to uncertainty will be discussed. The techniques learned in this course will also be useful in making personal decisions.