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The fuzzy analytic hierarchy process in the investment appraisal of drilling methods

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posted on 2018-01-01, 00:00 authored by Olubukola TokedeOlubukola Tokede, Adam Ayinla, Sam Wamuziri
The robust appraisal of exploration drilling concepts is essential for establishing the economic viability of a prospective recovery field. This study evaluates the different concept selection methods that were considered for drilling operations at the Trym field in Norway. The construction of drilling rigs is a capital-intensive process, and it involves high levels of economic risk. These risks can be broadly categorised as aleatoric (i.e. those related to chance) and epistemic (i.e. those related to knowledge). Evaluating risks in the investment appraisal process tends to be a complicated process. Project risks are evaluated using Monte Carlo simulation (MCS) and are based on the fuzzy analytic hierarchy process (AHP). MCS provides a useful means of evaluating variabilities (i.e. aleatoric risks) in oil drilling operations. However, many of the economic risks in oil drilling processes are unanticipated, and, in some cases, are not readily expressible in quantitative values. The fuzzy AHP is therefore used to appraise the qualitatively defined indirect revenues comprising risks that affect future flexibilities, schedule certainty and health and safety performance. Both the Monte Carlo technique and the fuzzy AHP technique found that a cumulative revenue variation of up to 30% is possible in any of the considered drilling options. The fuzzy AHP technique estimates that the chances of profitability being less than NOK 1 billion over a five-year period is 0.5%, while the Monte Carlo technique estimates suggest a more conservative proportion of 10%. Overall, the fuzzy AHP technique is easy to use and flexible, and it demonstrates increased robustness and improved predictability

History

Chapter number

8

Pagination

303-336

ISBN-13

9781787438699

ISBN-10

1787438694

Language

eng

Publication classification

B1 Book chapter

Copyright notice

2018, Emerald Publishing Limited

Extent

13

Editor/Contributor(s)

Fayek A

Publisher

Emerald Publishing Limited

Place of publication

Bingley, Eng.

Title of book

Fuzzy hybrid computing in construction engineering and management: theory and applications

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