oa Risk and Portfolio Management for Exploration and Development with SAP-PPM

Handling exploration and production portfolios in the upstream oil&gas industry involves assessing risk<br>or chance of success, overall timing, availability of resources or equipment and balancing large<br>investments with possible revenues. This analysis in a multidimensional space is most oftenly a task<br>carried out by entire departments or groups of individuals in oil&gas companies. Corporate standards<br>hereby usually form a framework to ensure assessment and ranking of projects with constant quality<br>and objectiveness. In most cases, the ranking of these exploration and development projects and<br>subsequent decisions drive a company's strategy over years. Hence a portfolio process and toolset that<br>both provide visibility and transparency across all influencing factors and input parameters are required.<br>A portfolio decision-making process was developed following years of best practice research within the<br>largest oil&gas companies. The underlying process is based on a common assessment of the chance of<br>geological, drilling/completion and economical success. The objectivity of the overall process is assured<br>by questionnaires enabled for true company-wide collaboration e.g. in peer-review teams as well as by<br>rigid decision milestones. In portfolio management, this process is being tracked, overall quality<br>assured, results analysed and lateron published to the upper management.<br>However, those - nevertheless important - non-financial and financial KPIs most oftenly blur the sight<br>on the proper risk of projects. And in many cases the correct ranking in which projects should be<br>executed is not determined. A proper risk and portfolio management process takes into consideration<br>the skill level and the availability of appropriate resources and or equipment. This fact is overlooked in<br>many exploration and development projects where timely project execution is essential. In addition to<br>that, many companies handle portfolio management in quite different ways and qualities on a global<br>scale. Risk is not assessed in the same manner and how it should have been in the different<br>subsidiaries of leading E&P companies.<br>In order to avoid such a biased ranking of E&P projects, a centralised corporate risk and portfolio<br>solution is required. This will ultimately result in greater success and increased reserves as well as<br>better project delivery on time.