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    *Previously presented at the IPA Annual Convention, Jakarta 2010

    SPE Paper Number SPE-133518-PP

    UNCERTAINTY MANAGEMENT: A STRUCTURED APPROACH TOWARDS

    RECOGNIZING, QUANTIFYING AND MANAGING SAMPLING BIASES INSUBSURFACE UNKNOWNS*

    Laurent Alessio, Leap Energy Partners Sdn Bhd, Arnout Everts, Leap Energy Partners Sdn Bhd, and FaeezRahmat, Leap Energy Partners Sdn Bhd

    Copyright 2010, Society of Petroleum Engineers

    This paper was prepared for presentation at the SPE Asia Pacific Oil & Gas Conference and Exhibition held in Brisbane, Queensland, Australia, 1820 October 2010.

    This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not beenreviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect any position of the Society of Petroleum Engineers, itsofficers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Society of Petroleum Engineers is prohibited. Permission to

    reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.

    ABSTRACT

    This paper illustrates, through field studies examples, why

    and how a structured approach towards managing

    uncertainties, and especially sampling biases, deliversvaluable insights through the successive early asset life

    stages - exploration, appraisal and field development

    phases. In doing so, we respond to three fundamental

    questions.

    Firstly, What are the key uncertainties those that

    matter? Field studies should begin with a comprehensiveupfront assessment of uncertainties impact on historical

    and future well and field performance. However, often

    major factors are overlooked, leading to under-prediction

    of true outcome ranges and the inability to reconcile

    historical production. Our illustration is a large producing

    carbonate field, where after 15 years of production, large

    scale Karstification was finally evidenced to be the

    explanation for the field performance that couldnt be

    history matched with the measured matrix porosity and

    permeability ranges.

    Secondly What are realistic ranges for these

    uncertainties? Known Industry best practices include

    intensive expert-assist, integration of drilling, mud-loggingand other traditional sources of data from the field,

    resorting to analogue benchmarking. Despite these, we

    often fail to understand and correct for sampling bias,

    which we show often leads to over-optimism. The paper

    will highlight why such biases are present and propose

    simple and practical methods to remove them. The case

    study is the volumetric assessment of a gas discoveries

    portfolio, where geophysical techniques were instrumental

    in exploration and appraisal drilling.

    Finally How these uncertainties will evolve with time?

    This is an important question for assessing value of

    Information: the impact that additional data may have on

    the uncertainty range of uncertainties and the base case.

    Unconventional fractured plays, often characterized by

    data abundance but extreme variability, provide surprising

    insights on how uncertainties ranges evolve. This paper

    presents methods to develop confidence curves for

    important parameters.

    INTRODUCTION

    This paper illustrates, through field studies examples, why

    and how a structured approach towards managing

    sampling biases in reservoir evaluation delivers valuable

    insights through the successive early asset life stages -

    exploration, appraisal and field development phases.

    Whilst the purpose of the paper is not to provide a

    comprehensive review of uncertainty management best

    practices, a workflow and fundamental steps are discussed

    herein, to provide some contextual framework. We then

    focus our illustration around identification of key

    uncertainties, defining realistic ranges for these, andfinally assessing how ranges should evolve with time.

    The first step through the Uncertainty Assessment

    workflow is Identification. Were essentially responding to

    the question What are the key uncertainties those that

    matter. Most subsurface professionals would agree on the

    need for a comprehensive assessment of uncertainties

    conducted upfront, and developing an understanding of

    their impact on historical and future well and field

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    performance. However, often major factors are

    overlooked, leading to under-prediction of true outcome

    ranges and when applicable, the inability to reconcile

    historical production. A field case of a very large

    producing carbonate field, where after over 15 years of

    production history, the main uncertainty impacting field

    performance was found to an intense Karstification; a

    factor that had been essentially overlooked until, as part of

    a major field review, a comprehensive reservoir modellinghistory match-ing exercise highlighted the impossibility to

    obtain a match with the measured carbonate matrix

    porosity and permeability ranges.

    The second step in the workflow is Assess Ranges: thisequates to asking the following question what are realistic

    ranges for these uncertainties? This is a very typical issue

    for green field developments. Known and well

    documented Industry best practices include intensive

    expert-assist, integration of drilling, mud-logging, and

    other traditional sources of data from the field, resorting to

    analogue benchmarking. What remains generally an issue

    is our ability to understand and correct for sampling bias

    unfortunately at the early stage of the asset life, bias oftenleads to over-optimism. The paper will highlight why such

    biases are present and propose simple and practical

    methods to remove them. The illustrating case is a

    portfolio of clastics gas discoveries. Geophysical

    techniques are often instrumental in exploration and

    appraisal drilling, and as a consequence, assessing

    sampling bias and correlations are a very important step in

    the volumetric assessment.

    The third and final question is how some of these

    uncertainties will evolve with time. This is an important

    question to answer for an adequate assessment of Value of

    Information (VoI) but also to understand how much

    impact should additional data have onto the range ofuncertainties, and of course, the base case. Fractured

    resource plays, with their abundance of data but extreme

    variability, provide surprising insights on how

    uncertainties ranges evolve. This paper will present a

    practical method to develop confidence curves for

    important parameters.

    UNCERTAINTY MANAGEMENT BEST

    PRACTICES AND CONTEXT

    Because of the inherent difficulty in understanding what

    cannot be clearly seen and measured the subsurface, it is

    recognized widely that managing uncertainties is critical to

    E&P ventures, and therefore a very importantresponsibility of the Subsurface and Front End teams. It is

    by nature an inter-disciplinary capability that operators

    must develop and apply across their assets.

    As a consequence, fairly well established practices do

    exist, and have been published in the past (Alessio et. al.,

    2005); (Charles et. al., 2001); (Corre et. al., 2000), so it is

    not the objective of this paper to provide a thorough

    account of the best practices of uncertainty management,

    but rather to focus on the particular aspect of sampling

    bias and its impact on the uncertainty management

    workflows.

    Uncertainty management can be broken up into two main

    phases: Assessment and Mitigation. Each of these can be

    articulated around a number of steps: an account of those

    is proposed in Figure 1. Sampling bias problems do occur

    mostly in the Assessment phase, and so this is the part thatwe will be focusing in this paper.

    IDENTIFICATION OF UNCERTAINTIES

    Ensuring all critical information and data is consideredLets introduce the first problem: why despite elaborate

    and rigorous workflows, using probabilistic and

    geostatistical techniques (Charles et. al., 2001); (Corre et.

    al., 2000), it still sometimes happens that field

    performance expectations fall outside the P90/P10 range.

    The first example provides an interesting case whereby a

    producing field (which we will call Field X through this

    paper) consistently out-performed expectations, and

    couldnt initially be history matched conventionally,despite the availability of a fairly extensive core dataset,

    and post-drilling transient testing data on the early

    production wells. Field X is a large, multi-Tscf, carbonate

    gas field, located in a prolific carbonate province, in Asia.

    Field Xs production started in 1987 from a total of 11

    deviated wells placed in the central part of the field, drilled

    on a dataset of multi-vintage, good quality 2D seismic.

    Little was known about the detailed reservoir architecture

    away from well penetrations. Following 15 years of

    production and half of the expected reserves produced, a

    3D survey was acquired in mid 2002 to support an infill

    drilling campaign and a potential field re-development. At

    the same time, the field review initiative started and whilstseismic processing and inversion was carried out and

    iterated, a first pass material balance and static-dynamic

    modelling exercise was initiated.

    These early static-dynamic modelling iterations rapidly led

    to the conclusions that a combination of enhanced

    permeabilities in the lower producing intervals and

    possibly higher volumes were required to match (and slow

    down) the combination of rise of contact and pressure data

    in the field. This was in part consistent with the fact that

    horizontal permeabilities derived from core data were

    consistently lower than the well-test derived ones. In

    addition, it was found that lower gas residual saturations in

    these zones also improved the quality of the history match,and so could greater gas volumes in that zone. This

    indicated the possible role of a non-matrix element to

    flow, either fractures or Karsts. In the earlier dynamic

    models (pre-2002), permeability multipliers were applied

    to layers to match the well test results, but neither the

    mechanism nor the spatial distribution of the property

    enhancements were properly understood.

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    As these observations were consistently reported from the

    reservoir engineer back into the subsurface team, a new

    hypothesis emerged: presence of an extensive Karsts

    network in the lower part of the reservoir could explain the

    required enhancement of properties of this zone

    (permeability, storability and residual gas). A close

    examination of the drilling history, back in the late 80s,

    confirmed that nearly 80% of the wells suffered some

    losses in this interval, and about 50% experienced verysevere losses. Following this lead, seismic multi-attribute

    extractions revealed an extensive dendritic Karsts network

    (Bourdon et. al., 2004); (L. Bourdon, 2004) covering the

    vast majority of the Lower reservoir. Because of their

    shear size and density, this imaged Karsts system couldfinally explain the matrix property enhancement, in terms

    of volumes, effective permeability, and petrophysical

    property alterations.

    The process of introducing a new facies (Karsts) provided

    the team with a defendable, plausible, explanation for the

    performance of the field, without reverting to arbitrary

    transforms of the reservoir properties.

    It is here interesting to acknowledge the sampling bias

    issue with this case study: despite very early significant

    observations that non-matrix properties had to be

    responsible for the massive and consistent drilling induced

    losses, this fact was not eventually carried through, as

    knowledge, into the later phases of reservoir management.

    Up until it was recognised that the field performance

    couldnt be reconciled using the sampled ranges of

    petrophysical parameters (porosity, permeability, residual

    gas saturation), the uncertainty assessment work

    essentially ignored a fundamental parameter. This is an

    extreme case of sampling bias: the omiting of a critical

    parameter!The lessons learned from this case study are:

    Ensure all possible sources of information are

    considered in the first step of the Uncertainty

    Assessment stage (Figure 1).

    Field reviews must be a fully multi-disciplinary

    exercise

    Ensure a learning system is in place within the

    organisation to ensure critical information is retained

    DEFINING REALISTIC RANGES FOR

    UNCERTAINTIES

    What are realistic ranges for uncertainties?In this part, the technical contribution of this paper is to

    provide some practical insights, through another case

    study, towards sampling bias presence in volumetric

    assessment.

    This case study depicts a fairly common situation where

    exploration is conducted using seismic attribute high-

    grading techniques, such as AVO, inversion etc. Direct

    hydrocarbon indicators (DHI) have become a very popular

    de-risking exploration application that has helped increase

    dramatically the (Pg) probability of geological success

    (Roden et. al.).

    An indirect consequence of this improvement ofgeological success is the introduction of a sampling bias,

    within the fields that are being discovered. Not

    dissimilarly to the basin creaming curve effect well known

    to explorationists, guided exploration and appraisal

    drilling has a tendency to produce a skew in thepetrophysical and geological sums and averages, for a

    combination of the following reasons:

    Early exploration wells are drilled on amplitude

    highs which are hoped to and often do hold higher net

    hydrocarbon volumes

    Early exploration wells are drilled on structural highs,

    to maximise the chance of encountering a charged

    hydrocarbon column, hence encountering non-representative elevated saturations

    Delineation wells may be drilled down-dip to test

    minimum economic columns, and therefore may find

    low saturations

    None of these remarks should come at a surprise to the

    seasoned subsurface professionals. Accounting for such

    biases is however not always straight-forward, will

    involve elaborate data analysis and integration and may

    actually emphasise remaining uncertainty in the field.

    Case study: portfolio of gas discoveries, drilled through

    DHI (Direct Hydrocarbon Indicators)

    At an early appraisal stage, we are often confronted to a

    dataset of wells that were predominantly targeted at

    amplitude sweet spots. Removal of sampling bias will

    typically start with obtaining statistics of the area covered

    by sweet spots versus the total field area. This would

    then be combined with either geologically and/or

    geophysically driven estimates of the expected reduction

    in net pay and/or reservoir properties in the seismically

    dimmer areas compared to the sweet spots.

    To illustrate the issue of dealing with a biased well datasetconsider the case study of Field Z, consisting of fluvial

    and marginal marine sandstones in a three-way dip closure

    with a bounding fault and possibly a stratigraphic trappingcomponent. An amplitude map of the main reservoir level

    in Field Z is shown in Figure 3. Two wells were drilled to

    appraise the structure and from the amplitude map, it is

    obvious that both wells were specifically targeted at

    reservoir sweet spots. The problem presented to the

    asset team was to arrive at a realistic range in net pay for

    the field despite the obvious bias in the well data. The

    workflow followed by the team on this particular example

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    is one of the many possible methodologies. First,

    geophysical analysis and seismic modelling studies

    established that for the main reservoir in Field Z, the

    thickness cut-off for seismically visible pay is around

    3.5 to 5.5 m (about 1/8th

    of the seismic wavelength) whilst

    the maximum constructive interference (i.e., brightest

    amplitudes) are expected for a pay thickness of around 7

    to 11 meter (around of the seismic wavelength). This

    information was then used to consistency check andcomplement the well data in establishing the relationship

    between pay and seismic amplitude (Figure 4). Histograms

    of amplitude distribution in the field were then used to

    determine area weighed average amplitude for the

    amplitude and non-amplitude supported domains in thefield, as well as ranges of pay expected in these two

    domains. As expected, the range in pay for the amplitude

    supported area of the field as estimated with this method

    (Figure 4) is substantially less than the average of the two

    wells.

    Sampling bias and 3D geostatistical modelling

    workflow

    The issue of sampling bias is again at play when it comes

    to more sophisticated resource assessment techniques

    involving 3D reservoir modelling. Reason being,

    commonly used techniques to stochastically simulate

    reservoir and/or property distribution in 2D or 3D domain

    such as Gaussian simulation, are designed to replicate the

    statistics of the input data. If the input data consists of a

    biased set of wells like in the example of Field Z, the risk

    is this bias will be extrapolated to field scale. Whilst it is

    true that modern mapping and 3D modelling tools do

    provide ample mitigation options against this risk such as

    use of areal trends, such sophistication is not always

    applied especially not in fast track assessments (which,

    not surprisingly, tend to lead to over optimism).

    Moreover, without considering the possibility of the actual

    statistics of pay and/or property distribution in the field

    being different from what is seen in the wells, repeated

    stochastic simulation in nested workflows - a popular

    technique in modern field assessment - will simply

    reproduce the well data - albeit with different areal

    distribution - resulting in unrealistically narrow

    uncertainty ranges for the field. In other words, to cover

    the full range of outcomes for a field, it is important to

    consider the possibility of a bias in the well data especially

    if the data is scarce.

    EVOLUTION OF UNCERTAINTY RANGES AS AFUNCTION OF AVAILABLE DATA

    A quantitative approach using Confidence Curves

    Objective and problemIn this part, we are focusing specifically on highly

    heterogeneous systems, such as highly fractured

    carbonates, chalks, or unconventional reservoirs such as

    tight sands, shales and coalbed methane. Were trying to

    establish a systematic method to quantify, as a function of

    the amount of data available, the uncertainty in a field

    average metric, such as an average permeability, or peak

    rate per well.

    Variability and uncertainties

    With highly heterogeneous systems, where large

    differences are found from one observation (ex: agiven well) to another observation (a neighbouring well),

    it is important to recognise the distinction between

    variability and uncertainty, as these are two often confused

    for one another, and thereby leading to significant

    misrepresentations of field uncertainty ranges.

    Variability is defined as a short to medium scale (up

    to inter-well scale) variations of a given parameter,

    such as permeability, porosity, gas content (for CBM

    reservoirs), hydrocarbon saturation etc. These

    variations can be often extreme, with several orders of

    magnitude differences in permeability commonly

    observed in fractured reservoirs. Variability is

    intrinsic and non-temporal, which means it that doesneither change with time nor with the number of data

    points, and it is a characteristic of the reservoir (for a

    given sampling scale*). Ultimate understanding of

    variability often remains spatially poorly predictive,

    so the authors recommend a statistical approach is

    always conducted in parallel.

    Uncertainty is defined at the field scale, or at least, a

    sector or segment of the field (field unit), where

    multiple wells will be ultimately drilled. It represents,

    at a given time, how well a field unit is understood.

    Generally, uncertainty reduces with time and

    information becoming available, provided the right

    framing and uncertainty assessment was conducted(ref previous section). Arguably, the uncertainty in

    subsurface givens, such as field porosity average, or

    in place volumes is strictly a consequence of our lack

    of knowledge. Development related metrics, such as

    field recoverable volumes or production performance,

    at a given time, are a consequence of our level (or

    lack of) of understanding of the subsurface and the

    concept development choices we have made and will

    be making.

    *Note: variability is indeed intimately linked to sampling

    scale; for the purpose of this paper, we are assuming that

    all measures are taken at the same scale (ex: vertical wells

    through a reservoir section), and we will not discuss thispoint further.

    A statistical representation of variability

    Variability of a particular parameter can always be

    represented by a PDF (Probability Density Function). In

    our approach, we are using lognormal curves as those

    describe well a number of naturally occurring phenomena

    and parameters in the subsurface, such as permeability of a

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    The uncertainty decline rapidly with a few early

    wells, since the process of drilling these wells

    reduces swiftly the chances of sampling

    consistently outliers in the same part of the curve

    (either Hi or Lo). For the curves presented in this

    example, this occurs in the first 5% of the drilling.

    It may be possible to more rigorously generalise

    this result, for various parameter variability input

    PDFs.

    The important findings at this stage are that, for highly

    variable resource plays, where intensive drilling does

    occur:

    1. Assuming known the variability of an important

    parameter (ex: well permeability), it is possible to

    predict conceptually the uncertainty bands of a field

    average vs. the amount of data and knowledge

    available.

    2. With highly variable plays, early information from

    a few wells (

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    CONCLUSIONS

    We have presented, through examples, how critical are the

    Uncertainty Identification and Range Assessment phases

    in the Uncertainty Management Workflow (UMW), and

    provided a number of tools and approaches to improve the

    recognition, assessment and management of subsurface

    unknowns.

    Firstly, we have shown how key subsurface features may

    be omitted if not all data and information sources are

    considered; the necessity of a multi-disciplinary approach

    is highly recommended, in order to reduce this risk.

    Secondly, we are providing clear examples of howsampling bias creeps into the subsurface assessment work,

    and provided practical illustration on how this

    phenomenon can be accounted for and removed. Thirdly

    and finally, we have proposed a method to quantify

    uncertainty based on an understanding of variability vs.

    available date, using Confidence Curves.

    The methodologies and practical solutions to the problem

    of sampling bias in quantifying uncertainty ranges forsubsurface assets have been illustrated through case

    studies inspired from actual field reviews, field

    development planning projects and other subsurface

    assessments; note that for the purpose of this paper, all

    confidential information has been duly removed by the

    authors, data, maps, well results have all been suitably

    altered so that no sensitive information is made public.

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    ACKNOWLEDGMENTS

    Special thanks to Peter Friedinger and Artur Ryba for

    providing valuable insights and support for the production

    of this paper.

    Special thanks to Indonesian Petroleum Association (IPA)

    for granting permission to publish this paper.

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    Figure 1: Uncertainty Management Worflow (UMW) : Uncertainty Assessment and Mitigation workflows

    Figure 2 : Addition of Karstification as a significant parameter allows a match to be obtained

    Identify

    Uncertainties

    Quantify

    ranges

    Assess

    impact Rank

    Select

    representative

    uncertainties

    Construct

    models

    Test

    concept

    scenarios

    Develop

    mitigation

    plans

    Uncertainty assessment workflow

    Uncertainty mitigation workflow

    UncertaintyManage

    ment

    Workflow(UMW

    )

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    Figure 3 : Amplitude map of field Z. The two appraisal wells drilled to date both used the seismic to target reservoir sweet spots.The result is a clear example of a biased well dataset. Map and well locations have been altered from actual case study to ensur

    Well 2

    Well 1

    Amplitude map Field ZMap has been altered from actual case

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    Figure 4 : Histogram of amplitude values in field Z derived from the map shown in Figure 3 Indicated are the pay seen in the wells,

    the estimated pay cutoff for seismically visible pay and the optimum tuning thickness range. All of these were used by the asset

    Figure 5 : Parameter Uncertainty Curves: plotted below is the relative parameter value vs. the sample size (ranging from 1 to 100)

    Relatively bright

    = Amplitude supported

    Relatively dim

    = Non-Amplitude supported

    Well-2(12.8 m pay)

    Amp Range

    Well-1 (6 m pay)

    Amp Range

    Area weighed average ofamplitude supported domain

    Amplitude value = 2.1

    4.9 7.7 m pay (P90-P10)

    Limit of visible pay= 1/8 seismicwavelength= 3.5 5.5 m pay

    Lower amplitude areaLower pay 1-5 m range (P90-P10)

    Maximumconstructiveinterference= 1/4 seismicwavelength= 7 11 m pay

    Bright Very Bright(Bright est 5%)

    Cumulative%

    100

    0

    0.0

    0.1

    1.0

    10.0

    0 10 20 30 40 50 60 70 80 90 100

    CALCULATION OF AVERAGES

    No Samples 50

    No Samples 1

    No Samples 2

    No Samples 4

    No Samples 6

    No Samples 8

    No Samples 10

    No Samples 15

    No Samples 20

    No Samples 25

    No Samples 30

    No Samples 35

    No Samples 40

    No Samples 45

    No samples 100

    Parameter Uncertainty CurvesRelative parameter value vs. Sample size (1 to 100)

    Envelop of maximum deviation to the

    final mean (for 100 wells)

    Mean for the total population

    (100wells), Normalisedto 1

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    Figure 6 : Possible trajectory of averages vs. Parameter Uncertainty Curves: showing in red a possible, although not very likely,trajectory of population well averages

    Figure 7 : Variability PDF curve for well parameter (permeability, mD): this is a possible illustration only of a well variability,

    which was used for the computation of the Uncertainty and Confidence curves

    0.0

    0.1

    1.0

    10.0

    0 10 20 30 40 50 60 70 80 90 100

    CALCULATION OF AVERAGES

    No Samples 50

    No Samples 1

    No Samples 2

    No Samples 4

    No Samples 6

    No Samples 8

    No Samples 10

    No Samples 15

    No Samples 20

    No Samples 25

    No Samples 30

    No Samples 35

    No Samples 40

    No Samples 45

    No samples 100

    Parameter Uncertainty CurvesRelative parameter value vs. Sample size (1 to 100)

    A possible trajectory of computed

    averages from drilled wellsThis example assumes that (Hi) outliers are drilledearly, and later wel ls are sampled in the low end of

    the variability curve

    (Final) Mean for the total population

    (100wells), Normalised to 1

    0%

    10%

    20%

    30%

    40%

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    60%

    70%

    80%

    90%

    100%

    1.00 10.00 100.00 1000.00

    CumProbability

    Well parameter - permeability (mD)

    illustrative well parameter PDF

    well permeability distribution curve (generic and non-specific

    case)

    Example PDF well K (mD)This example assumes a P10/P90range of 10 fold, which is not

    uncommon in fractured resource playsThis is theVARIABILITY curve

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    13/13

    SPE-133518-PP 13

    Figure 8 : Confidence Curves: charting confidence folds (as a % certainty) vs. % data available

    0%

    10%

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    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    0% 10% 20% 30% 40% 50% 60%

    %

    ConfidenceinFieldM

    ean

    % Data available

    Plot 1: Evolution of Confidence Curves (varying folds) vs. % data available

    1.10

    1.25

    2.00

    3.00

    5.00

    7.00

    9.00

    10.00

    88% confidence in a f old of 2.00

    At 10% data available (% well drilled)

    40% confidence in a f old of 1,25

    At 10% data available (% well drilled)