Value of Information from Multiple Sources

Abstract

Major investment decisions in the oil & gas industry are made with respect to uncertainty. For these decisions, acquiring information will not eliminate the decision maker's uncertainties. Thus, priorities have to be made according to what uncertainties to focus on and what information gathering sources one should use. The value of information framework is a powerful approach to making these prioritization decisions.

In this thesis the framework was used to evaluate the value of information for decision contexts with multiple uncertainties, both concerning market and technical uncertainties. Decision models in the form of influence diagrams were created to structure the decision context. They include both dependent and independent information sources, and analyses were conducted on the strength of dependence between the information sources. Other analyses include the accuracy of the information sources, the sequence they were to be conducted in, and the value of gathering information from the same source more than once.

The key contribution of this work is showing that information gathering from multiple sources can be beneficial. Also, a formulation of dependence between variables with three outcomes was derived and used for analysis. In addition, a model was made where different sequences of information gathering gave different information value.