CPG Risk Assessment & Mitigation 3

Question 1

In petroleum exploration portfolio management, what does 'portfolio diversification' primarily aim to reduce?

Accepted Answer

The variance in exploration outcomes caused by correlated geological risk

Answer

Portfolio diversification reduces outcome variance by including prospects with uncorrelated risk factors, so failures in one risk segment do not doom the entire portfolio.

Question 2

A well encounters a structural trap but finds the reservoir water-saturated. Which risk factor was not adequately mitigated?

Accepted Answer

Charge risk and hydrocarbon migration

Answer

A water-saturated reservoir in an otherwise valid trap indicates that hydrocarbons never migrated into the structure, pointing to a charge risk failure.

Question 3

What is the main advantage of using 'P10-P50-P90' probabilistic ranges in resource estimation?

Accepted Answer

They communicate uncertainty by expressing the full range of possible outcomes

Answer

P10-P50-P90 ranges convey geological uncertainty by showing low-case, mid-case, and high-case resource estimates rather than a false single number.

Question 4

Which factor would most increase the seal risk for an exploration prospect?

Accepted Answer

Presence of natural fractures cutting through the caprock

Answer

Natural fractures cutting through the caprock create pathways for hydrocarbon leakage, significantly increasing seal breach risk.

Question 5

What does 'expected monetary value' (EMV) represent in exploration risk assessment?

Accepted Answer

The probability-weighted average of all possible financial outcomes

Answer

EMV is calculated by weighting each possible outcome (success or failure) by its probability, giving a risk-adjusted expected financial return.

(CPG) Certified Petroleum Geologist Practice Test

(CPG) Certified Petroleum Geologist Practice Test

CPG Risk Assessment & Mitigation 3