The planning fallacy in oil and gas decision-making

2010 ◽  
Vol 50 (1) ◽  
pp. 389
Author(s):  
Matthew B. Welsh ◽  
Nigel Rees ◽  
Hugh Ringwood ◽  
Stephen (Steve) H. Begg
Keyword(s):  
Decision Making ◽  
Oil And Gas ◽  
Psychological Research ◽  
Personal Traits ◽  
Time Estimates ◽  
Complex Projects ◽  
Potential Problems ◽  
Planning Fallacy ◽  
Time Required ◽  
The Impact

The ‘planning fallacy’ describes the tendency of people to underestimate costs and times required for the completion of complex projects. Psychological research has demonstrated that a key component of this results from the packing/unpacking bias—where options or problems that are not specifically stated tend to be ignored by people when making estimates or assigning probabilities to events. We have investigated this effect as it relates to oil and gas decision making, highlighted by experimental results comparing estimates of drilling times made by both student and industry participants. Specifically, participants were provided with a drilling scenario and asked to estimate the time required to drill the well—including drilling, tripping, rigging and all potential problems. In the packed condition the options were given as just stated while, in the unpacked condition the ‘all potential problems’ category was divided into a list of specific problems. The packing effect was shown to markedly alter the time estimates made by all groups of participants—altering estimates of problem times by more than 100 hours on average. Additional analyses assessed the interactions between the packing/unpacking effect and personal traits such as optimism, tendency to procrastinate and industry experience. These findings are discussed in terms of their import for oil and gas decision makers desiring to improve prediction accuracy and, thus, economic outcomes by avoiding, or limiting, the impact of the planning fallacy.

scholarly journals On tomography velocity uncertainty in relation with structural imaging

Geophysics ◽  
2021 ◽  
pp. 1-71
Author(s):  
Jérémie Messud ◽  
Patrice Guillaume ◽  
Gilles Lambaré
Keyword(s):  
Decision Making ◽  
Oil And Gas ◽  
Model Building ◽  
Model Space ◽  
Velocity Model ◽  
Industrial Applications ◽  
Theoretical Concepts ◽  
The North ◽  
Structural Uncertainties ◽  
The Impact

Evaluating structural uncertainties associated with seismic imaging and target horizonscan be of critical importance for decision-making related to oil and gas exploration andproduction. An important breakthrough for industrial applications has been madewith the development of industrial approaches to velocity model building. We proposean extension of these approaches, sampling an equi-probable contour of the tomographyposterior probability density function (pdf) rather than the full pdf, and usingnon-linear slope tomography. Our approach allows to assess the quality of uncertainty relatedassumptions (linearity and Gaussian hypothesis within the Bayesian theory)and estimate volumetric migration positioning uncertainties (a generalization of horizonuncertainties), in addition to the advantages in terms of computational efficiency.We derive the theoretical concepts underlying this approach and unify our derivationswith those of previous publications. As the method works in the full model space ratherthan in a preconditioned one, we split the analysis into the resolved and unresolvedtomography spaces. We argue that the resolved space uncertainties are to be used infurther steps leading to decision-making and can be related to the output of methodsthat work in a preconditioned model space. The unresolved space uncertainties representa qualitative byproduct specific to our method, strongly highlighting the mostuncertain gross areas, thus useful for QCs. These concepts are demonstrated on asynthetic dataset. In addition, the industrial viability of the method is illustrated ontwo different 3D field datasets. The first one consists of a merge of different seismic surveys in the North Sea and shows corresponding structural uncertainties. The second one consists of a marine dataset and shows the impact of structural uncertainties on gross-rock volume computation.

scholarly journals DECISION QUALITY IN COMPLEX PRODUCT DEVELOPMENT: REFLECTIONS ON A CASE STUDY

2021 ◽  
Vol 1 ◽  
pp. 861-870
Author(s):  
Ghadir Siyam ◽  
Mariely Salgueiro ◽  
John Kennedy
Keyword(s):  
Decision Making ◽  
Oil And Gas ◽  
Dynamic Environment ◽  
Decision Quality ◽  
Future Research ◽  
Decision Making Process ◽  
Dependency Structure ◽  
Complex Projects ◽  
Wide Range ◽  
Dependency Structure Matrix

AbstractConceptual design projects are increasingly known as an intense decision-making process. Much of the decision-making is comparing the degree of preference between choices. In the complex projects of the upstream business of oil and gas, good decisions are crucial for success. Decisions are typically made within a dynamic environment, wide range of uncertainty, and have to account for the asset life cycle. This paper reflects on the application of the decision quality framework with a focus on decision modelling. Using an industrial example, a systematic approach to visualise and improve decision making process is proposed. The approach applies a Dependency Structure Matrix (DSM) and Decision Quality frameworks and identified opportunities for future research.

scholarly journals Why are decisions for oil and gas projects not always made the way they ‘should' be?

2018 ◽  
Vol 58 (1) ◽  
pp. 130 ◽  
Author(s):  
David Newman ◽  
Steve Begg ◽  
Matthew Welsh
Keyword(s):  
Decision Making ◽  
Decision Analysis ◽  
Oil And Gas ◽  
Decision Makers ◽  
Decision Quality ◽  
Good Decision ◽  
Business Decisions ◽  
Business Outcomes ◽  
Underlying Causes ◽  
The Impact

The outcomes of many business decisions do not live up to expectations or possibilities. A literature review of neuroscience and psychological factors that affect decision making has been undertaken, highlighting many reasons why it is hard for people to be good decision makers, particularly in complex and uncertain situations such as oil and gas projects. One way to diminish the impact of these human factors is to use the structured methodology and tools of Decision Analysis, which have been developed and used over 50 years, for making good decisions. Interviews with senior personnel from oil and gas operating companies, followed up by a larger-scale survey, were conducted to determine whether or how Decision Analysis and Decision Quality are used and why they are used in particular ways. The results showed that Decision Analysis and Decision Quality are not used as often as the participants think they should be; some 90% of respondents believed that they should be used for key project decisions, but only ~50% said that they are used. Six propositions were tested for why Decision Analysis and Decision Quality are not used more, and the following three were deemed to be supported: • Decision Analysis and Decision Quality are not well understood. • There is reliance on experience and judgment for decision-making. • Projects are schedule-driven. Further research is proposed to determine the underlying causes, and tackle those, with the aim being to improve business outcomes by determining how to influence decision makers to use Decision Analysis and Decision Quality more effectively.

scholarly journals Assessment of the impact of the northern territories of oil and gas facilities on the environment

2020 ◽  
Vol 164 ◽  
pp. 07020
Author(s):  
Larisa Gilyova ◽  
Marina Podkovyrova
Keyword(s):  
Decision Making ◽  
Land Use ◽  
Environmental Impact ◽  
Impact Assessment ◽  
Environmental Impact Assessment ◽  
Anthropogenic Impact ◽  
Oil And Gas ◽  
Negative Impact ◽  
Northern Territories ◽  
The Impact

The article highlights the problems of the negative impact of oil and gas facilities on the environment Northern territories this necessitates the development of measures for the greening of land use based on the results of an environmental impact assessment and decision-making to minimize or eliminate them. The article presents the results of the environmental impact assessment of oil and gas facilities, zoning is conducted by the degree of impact and criteria for the degree of impact are defined. The results of the environmental impact assessment made it possible to assess the degree of anthropogenic impact of the study object and to develop recommendations for reducing adverse industrial effects in order to protect the environment.

scholarly journals Review of Innumeracy in the Wild: Misunderstanding and Misusing Numbers by Ellen Peters

Numeracy ◽  
2021 ◽  
Vol 14 (1) ◽  
Author(s):  
Gizem Karaali
Keyword(s):  
Decision Making ◽  
Literature Review ◽  
Psychological Research ◽  
Supporting Evidence ◽  
Life Outcomes ◽  
Oxford University ◽  
Comprehensive Literature Review ◽  
In The Wild ◽  
The Impact ◽  
Oriented Research

Ellen Peters’s new book Innumeracy in the Wild: Misunderstanding and Misusing Numbers (Oxford University Press, 2020) is a whirlwind tour of psychological research on numeracy and its interactions with decision-making. The book is packed full of convincing arguments about the impact of numeracy and innumeracy on people's decisions and life outcomes, piles of supporting evidence and relevant references, and detailed expositions of multitudes of research results. Thus, it can serve the motivated reader well as a comprehensive literature review of psychologically oriented research on numeracy and decision-making.

scholarly journals Relationships Among CEO Narcissism, Debt Financing and Firm Innovation Performance: Emotion Recognition Using Advanced Artificial Intelligence

2021 ◽  
Vol 12 ◽  
Author(s):  
Lan Zhang ◽  
Biming Liang ◽  
Datian Bi ◽  
Yuan Zhou ◽  
Xiaohan Yu
Keyword(s):  
Artificial Intelligence ◽  
Decision Making ◽  
Positive Impact ◽  
Psychological Research ◽  
Debt Financing ◽  
Innovation Performance ◽  
Firm Innovation ◽  
Main Component ◽  
Ceo Narcissism ◽  
The Impact

Psychological research shows that as the main component of enterprise decision-making, CEOs are not completely rational, cognitive and psychological biases often influence their decision-making process. CEO narcissism has gradually attracted academic attention. Based on upper echelon theory and subconscious theory, this paper uses advanced artificial intelligence technology to quantify CEO narcissism as a kind of emotional intelligence. Taking A-share listed companies in China from 2010 to 2019 as research objects, this paper empirically tests the impact of CEO narcissism on debt financing and innovation performance. The results show that CEO narcissism has a significant positive impact on firm innovation performance. Debt financing plays a mediating role in the relationship between CEO narcissism and firm innovation performance. CEO narcissism can have a positive impact on firm innovation performance through debt financing. Compared with non-SOEs, SOEs' CEO narcissism has a more significant positive effect on debt financing and enterprise innovation performance. The research in this paper enriches psychology and organizational management and provides a reference for an enterprise's management decisions and for investors' investment decisions.

Do personality traits affect decision-making ability: can MBTI type predict biases?

2011 ◽  
Vol 51 (1) ◽  
pp. 359
Author(s):  
Matthew B. Welsh ◽  
Abdulaziz Alhakim ◽  
Finlay Ball ◽  
Joseph Dunstan ◽  
Steve Begg
Keyword(s):  
Decision Making ◽  
Personality Traits ◽  
Engineering Students ◽  
Oil And Gas ◽  
Petroleum Industry ◽  
Risk Attitude ◽  
Oil And Gas Industry ◽  
Personality Test ◽  
Myers Briggs ◽  
The Impact

From decades of psychological research, the observation that people’s decisions are often biased by particular decision-making flaws has led to discussions of what can be done to de-bias decisions. A key area of research is the study of individual differences in decision-making ability–that is, whether certain people are less susceptible to particular biases. Much of this research, however, has focused on the impact of intelligence on decision-making ability. This, however, is of limited use in industries such as oil and gas where, due to hiring criteria that commonly include at least a bachelor’s degree, a restricted range of intelligence is observed. Given this, it may be more fruitful to consider other sources of potential differences in decision-making ability such as personality traits. The Myers-Briggs Type Indicator (MBTI) (Myers et al, 1998) is a personality test based on Jung’s 1921 theory of psychological types (see, e.g., Jung, 1971). People are sorted into one of 16 categories based on their responses to the personality test. Although the test is widely used to identify leadership styles and preferences and therefore influence recruitment decisions (including within the petroleum industry), the impact of Myers-Briggs personality type on decision making itself and, in particular, on decisionmaking biases, has not been thoroughly investigated. A large number of specific, cognitive biases have been identified by psychologists and in this study we have chosen to investigate two of particular interest in the oil and gas industry: overconfidence and risk attitude/framing. It has been shown (Welsh and Begg, 2008; Welsh et al, 2007) that these biases can have disastrous consequences on the value of projects in the petroleum industry. If it is possible, therefore, to use an easily administered and well-known test (MBTI) to quantify and predict an individual’s susceptibility to bias, we can improve decisions in the industry by ensuring that the right people are employed to make decisions where bias may prove to be a problem. To test this, we distributed a survey–which included the complete Myers-Briggs test and questions to identify biases in the respondent’s responses–to engineering students at the University of Adelaide, petroleum industry employees and a small number of employees from other industries. Individual MBTI distinctions (e.g., extroverts versus introverts) were studied for bias tendencies. We discuss the observed relationships between Myers-Briggs type and decision biases and their relevance to decision making in the petroleum industry. We conclude that while there do seem to be some effects of personality on susceptibility to decision-making biases, these are not necessarily what one might expect given the descriptions attached to specific MBTI types. They are also relatively weak effects and, as such, the use of the Myers-Briggs as a tool for assessing decision-making ability is not supported by our results.

Post-Investment Reviews of Oil and Gas Projects: Methodology, Lessons Learnt, and Limitations

2021 ◽  
Author(s):  
Arthur Melet
Keyword(s):  
Decision Making ◽  
Capital Investment ◽  
Oil And Gas ◽  
Stakeholder Management ◽  
Data Availability ◽  
Capital Projects ◽  
Lessons Learnt ◽  
Operation Stage ◽  
Underlying Causes ◽  
The Impact

Abstract Objectives/scope Discuss the analytical framework created by ADNOC for the implementation of post-investment reviews (PIR) of previous capital projects, and present an overview of both the results, the lessons learnt and the limitations of such exercises, based on ADNOC's return of experience on PIRs. Without sharing confidential project information, the article will focus on providing actionable insights on ADNOC's chosen approach for PIRs, including best practices in terms of data and stakeholder management. Methods, procedures, process The overall approach can be summarized as follows: Project choice: what are the tangible criteria to be used to focus PIRs on the capital projects with the highest potential in terms of learning opportunity? Data collection: what are the minimum data requirements to conduct a PIR for an O&G project? Variance analysis: what rules need to be followed to be able to generate two economics models (initial vs updated) that can be compared? Root cause analysis: how to organize the analysis process to explain the identified variances? Results, observations, conclusions PIRs can play an important role in the continuous improvement of O&G companies’ operations at the pre-investment stage, capital investment stage, and operation stage: At the investment stage, a PIR can provide insights into the effectiveness of the decision-making and, specifically, help to identify improvement areas in the valuation (project economics), assumptions, risk management, and decision-making processes. At the execution stage, PIRs can be useful to quantify the impact of project delays and cost overruns on the overall project economics, and associate such variances with the relevant underlying causes. At the operation stage, PIRs be useful to quantify the impact of OPEX, production, and price variances (actual – forecast) on overall project economics, and associate such variances with the relevant underlying causes. Limitations of PIRs Uncertainty on what projects are likely to yield the best learning opportunities. Subjectivity: PIRs are partly subjective, as the results are largely dependent on data availability and methodological choices. Applicability of recommendations and acceptance from key stakeholders

Dispersant Use in Ice-Affected Waters: Regulatory Status and Opportunities to Advance Decision Making

2014 ◽  
Vol 2014 (1) ◽  
pp. 476-490 ◽  
Author(s):  
Ann Hayward Walker ◽  
John Joeckel ◽  
Per Daling
Keyword(s):  
Decision Making ◽  
Oil Spill ◽  
Oil And Gas ◽  
Environmental Damage ◽  
Mechanical Equipment ◽  
Regulatory Review ◽  
Oil And Gas Exploration ◽  
Regulatory Status ◽  
Exploration And Production ◽  
The Impact

ABSTRACT There is increasing interest in, and evolving technological capability to, conduct offshore oil and gas exploration and production operations in sensitive arctic regions. This has focused attention on oil spill preparedness and response for waters which have an ice cover for some part of the year. Given the logistical challenges associated with transporting and deploying mechanical equipment in these remote, ice-prone areas, the application of dispersants below and on the water surface is being considered as one of the ways to mitigate the impact of accidental oil spills from offshore exploration, production and transportation operations. In 2013, the International Oil & Gas Producers (OGP) commissioned a study about using dispersants in ice-affected waters. Part of the study scope was a regulatory review concerning the dispersant use in twenty-one Northern Hemisphere nations having Arctic/ice-prone waters. An important issue for government policy and decision makers is considering where and when dispersant use might reduce the net economic and environmental damage from an oil spill. Industry is aware that their resources and knowledge can help inform nations as they examine dispersants as a response option. This paper presents an overview of the regulatory status regarding the use and/or limitations of dispersants in countries that have oil and gas exploration and production operations ice-affected waters; potential obstacles in decision making which may limit industry's ability to stand up the logistical infrastructure necessary to implement an effective dispersant operation; and potential strategies, e.g., industry technical support and stakeholder engagement, to address identified obstacles in countries with ice-affected waters.

Quota Women Are Threatening to Men

2017 ◽  
Vol 76 (3) ◽  
pp. 107-116 ◽  
Author(s):  
Klea Faniko ◽  
Till Burckhardt ◽  
Oriane Sarrasin ◽  
Fabio Lorenzi-Cioldi ◽  
Siri Øyslebø Sørensen ◽  
...  
Keyword(s):  
Decision Making ◽  
Organizational Performance ◽  
Gender Stereotypes ◽  
Perceived Threat ◽  
Preferential Treatment ◽  
Public Sector Employees ◽  
Different Types ◽  
Low Levels ◽  
Women In Decision Making ◽  
The Impact

Abstract. Two studies carried out among Albanian public-sector employees examined the impact of different types of affirmative action policies (AAPs) on (counter)stereotypical perceptions of women in decision-making positions. Study 1 (N = 178) revealed that participants – especially women – perceived women in decision-making positions as more masculine (i.e., agentic) than feminine (i.e., communal). Study 2 (N = 239) showed that different types of AA had different effects on the attribution of gender stereotypes to AAP beneficiaries: Women benefiting from a quota policy were perceived as being more communal than agentic, while those benefiting from weak preferential treatment were perceived as being more agentic than communal. Furthermore, we examined how the belief that AAPs threaten men’s access to decision-making positions influenced the attribution of these traits to AAP beneficiaries. The results showed that men who reported high levels of perceived threat, as compared to men who reported low levels of perceived threat, attributed more communal than agentic traits to the beneficiaries of quotas. These findings suggest that AAPs may have created a backlash against its beneficiaries by emphasizing gender-stereotypical or counterstereotypical traits. Thus, the framing of AAPs, for instance, as a matter of enhancing organizational performance, in the process of policy making and implementation, may be a crucial tool to countering potential backlash.

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