The management of risk in oil and gas exploration

Oil & Gas exploration involves many unknowns, with high risk and uncertainty an inherent part of the oil and gas industry. The elucidation and management of risk in oil and gas exploration has always been difficult.

Today, most petrochemical companies choose expert consultants to analyze risk and make more informed, lucrative decisions.

The use of Monte Carlo simulation tools in the petroleum industry is now common among the more sophisticated hydrocarbon exploration and production organizations. Nexus Energy has been using Crystal Ball for probabilistic assessment of its prospect inventory, resource and reserves volumes since the company started.

-Graham Bunn, Chief Petroleum Engineer, Nexus Energy Ltd.


Key deliverables to the oil and gas industry include sensitivity and tornado analysis, correlation, historical data fitting and optimization.

  • The sensitivity analysis and tornado analysis are two separate methods that help you to understand which of the uncertain inputs (e.g., the recovery factor or the price of oil) drive the uncertainty in your models.
  • Correlation lets you link uncertain inputs and account for their positive or negative dependencies.
  • If historical data does exist, the data fitting feature will compare the data to the distribution algorithms and calculate the best possible fit and parameters for your data.
  • Optimization helps determine optimal decision choices to maximize or minimize your goals (e.g., maximize the return on a portfolio of assets, optimal number of wells to drill), and the efficient frontier runs multiple optimizations to determine the best balance of risk and reward for a particular problem or portfolio.

Specialists in Risk Assessment and Optimization

We are Ivy League educated experts in Risk Assessment and Optimization Techniques. Focused in fields of Oil & Gas and Pharma & Biotech, we have accumulated decades of experience applying our craft diligently to both areas.