Decision Analysis for Petroleum Exploration, 3.0 Edition
The 3.0 Edition is now available and
is a major upgrade.
Now designed as handbook for quick topic access.
List price US$79.95. ISBN
by Paul Newendorp and John
3.0(.5) Edition, Dec. 2014, ~570 pages, softcover, US$79.95 List
Planning Press, Aurora, Colorado USA
ISBN 0-9664401-4-5 EIN 978-0-9664401-4-0
is a major rework of Paul Newendorp's 1975 best-seller, which became the
standard reference in the field. This book is now structured as a handbook
of important concepts useful in risk and economic decision analysis. As the
title suggests, well over half the examples apply to petroleum exploration
Topics in the book represent a composite of evaluation practices and
problem-solving approaches now commonly used in oil & gas and other
capital-intensive industries. Several important and practical techniques
were first published in the first edition.
Decision analysis methods apply to any type of
decision. The emphasis here is on quantitative methods useful in capital
investment decisions and decisions to acquire additional information. This
will be of special interest to anyone involved in the evaluation of property
acquisitions, geophysical surveys, prospect drilling, and field development
decisions. This book is intended for petroleum geologists, engineers,
geophysicists, evaluation and planning analysts, and managers. No special
background in mathematics or statistics is required. We do presume a general
familiarity with management, economics, and knowledge of the industry.
As a handbook we are
focusing on what is most important and practical. Major topic area include
the decision analysis process, key concepts in probability and statistics
(including Bayes' rule and easy equivalents), decision policy (including
risk policy expressed as a utility function), popular economic metrics and
concepts, project and enterprise modeling, decision tree analysis, Monte
Carlo simulation, and various special topics. Value of information problems
receive special attention.
The expected value (EV) concept is central throughout.
Most often we assume a decision policy that maximizes EV. Most of the
discussion presumes the business context and measuring outcome as net
present value (NPV). We also describe approaches for multi-criteria decision
making including HSE.
Expected monetary value (EMV = EV NPV) is the principal decision criterion
used in most examples. The EV calculation incorporates judgments about risks
and uncertainties expressed as probabilities and probability distributions.
EV is the cornerstone of formal, quantitative analysis for decisions under
uncertainty. The key calculation methods are decision trees and Monte Carlo
simulation. Small decision trees can be solved with a hand calculator, while
larger trees and Monte Carlo simulation usually require a computer. Software
supporting these methods is now widely available as Microsoft® Excel
spreadsheet add-ins and for other platforms.
The material is organized into seven sections:
Decision Analysis Process, Probability and Statistics, Decision Policy,
Economic Matters, Modeling, Decision Tree Analysis, and Monte Carlo
Simulation. Throughout, real-world exploration examples are presented to
illustrate the risk and decision analysis methods.
This revised 3.0 edition features
a larger page format, an updated and expanded bibliography, and an extensive
glossary. We also offer additional material online, including extended
discussions, software resources, and example Excel spreadsheets. This
version has a larger, 8.5x11" soft-cover format.
Available from Amazon.com (link to the book)
Books for Resale
- Decision Analysis Process (pp.
- Probability and Statistics (53-240)
- Decision Policy (241-284)
- Economic Matters (285-324)
- Modeling (325-368)
- Decision Tree Analysis (369-420)
- Monte Carlo Simulation (421-448)
- Authors, Software Appendix,
Bibliography, Glossary and Index (449-525)
Paul Newendorp (first author)
Dr. Paul Newendorp began his career in 1959 as a
petroleum engineer for Pan American Petroleum Corporation (now Amoco
Production Company). During two later educational leaves of absence he
completed his MS and Doctorate degrees in Petroleum Engineering from the
University of Oklahoma. In 1968 he developed a two-week short course on
petroleum exploration economics and risk analysis. The course was based, in
part, on his Doctoral research on decision theory and earlier industry work
For the next 21 years Paul traveled throughout the
world teaching his short course. Entitled "Decision Analysis for Petroleum
Exploration," the course introduced many new concepts into the lexicon and
accepted practice for analyzing drilling prospects. Included was his
pioneering work on the use of Monte Carlo simulation for the quantification
of exploration risks and uncertainties. His course, research, and numerous
publications also brought into focus how established decision theory methods
such as the expected value concept, decision tree analysis, and utility
theory can be used to advantage in evaluating drilling prospects. This book
was written in 1975 for use as a text for his 2-week course with the same
During his career Paul was an active
member of the Society of Petroleum Engineers. He served in various
leadership roles and received numerous awards, including the SPE Section
Service Award. In 1987-1988 he was appointed an SPE Distinguished Lecturer.
He was also an associate member of the American Association of Petroleum
Dr. Newendorp retired in 1989 and now lives in
Colorado. His retirement activities include work as a volunteer for the U.S.
Has also contributed to our course materials and, thus,
portions of this book. Tim will be listed as co-author on the next edition.
John Schuyler (revisions author)
Upon nearing retirement in 1988, Paul Newendorp
encouraged John Schuyler, one of his former students
and a longtime colleague, to design a successor course. John developed what
has become his primary course, "Petroleum Risks and Decision Analysis," and
variants which have been presented more than 200 times in 34 countries
since 1990. This one-week course includes and extends the concepts in Dr. Newendorp's book.
John holds BS and MS degrees in
Mineral-Engineering Physics from Colorado School of Mines and an MBA from
University of Colorado at Boulder. He was formerly VP and Petroleum
Evaluation Engineer with Security Pacific Bank, Planning and Evaluation
Analyst and Manager-Business Systems for Cities Service Company, and a
Senior Management Consultant with a national accounting firm. He is a CAM,
CCP, CMA, CMC, DRMP, PE (CO) and PMP. He is a member of AACE, IMA, IMC, INFORMS,
PMI, RMAG, SPE and SPEE. Project Management Institute published,
Risk and Decision Analysis in Projects
(1997 and 2001 editions).
John's petroleum industry training is sponsored
by PetroSkills, LLC., the world leader in
petroleum training. He is the course director. He and Tim Nieman teach the
- Petroleum Risks and Decision
Analysis he now regularly presents two additional courses
- Advanced Decision Analysis with
Portfolio and Project Modeling
(a sequel workshop with hands-on use of personal computer software
Course schedules and descriptions see
Decision Precision and
PetroSkills (bio + course links)
15492 East Chenango Avenue
Aurora, Colorado 80015-1703 USA
Phone: (303) 693-0067
(UTC/GMT -6 or -7, depending upon time of year)
Risk and Decision Analysis in Projects 3.0 Edition by John Schuyler
A 3.1 edition is in the
works. Anticipated availability early 2018.
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