De-risking of geothermal prospect portfolios based on Value of Information and a play-based exploration approach: a case study for Slochteren reservoir development in the Netherlands

For the portfolio approach presented in this study, a Value of Information (VOI) methodology originally developed for oil and gas exploration has been adapted for geothermal exploration. A former VOI analysis for geothermal exploration uses a simple positive correlation associated with a fixed increase or decrease between follow up prospects, which does not take into account the spatial geological correlation between prospects. We introduce a methodological more advanced and robust VOI method, allowing the strength of geological correlation to vary with distance between prospects. The updated VOI analysis uses a decision tree approach, where the Net Present Value (NPV) of the first project takes the VOI for potential follow-up projects into account. The updated portfolio approach was applied to a case study in the Netherlands to determine the benefits and added value of such approach for geothermal exploration. The results show that acquired information in the first prospects used for decisions in follow-up projects within the same geologic play contributes significantly to the business case and indicates that the development of the remaining prospects after the success of the first prospect is positive even with high initial risk. The expected uncertainty and anticipated spatial correlation in flow properties allows to effectively harness the VOI for a portfolio of prospects in such way that it increases the average profitability of the projects and lowers the risk. Geothermal areas that would mostly benefit from the improved VOI analysis are associated with large geological uncertainty and sufficient spatial geological correlation between prospects. • Reservoir characterization and property mapping for value of information analysis. • Benefits of play based portfolio approach compared to stand alone approach. • Derisking geothermal exploration and accelerating geothermal development.