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Statistics for Petroleum Engineers and Geoscientists

a
Eric R. Ziegel
a
B.P. Amoco p.l.c.
Published online: 12 Mar 2012.

To cite this article: Eric R. Ziegel (1999) Statistics for Petroleum Engineers and Geoscientists, Technometrics, 41:4, 379-380

To link to this article: http://dx.doi.org/10.1080/00401706.1999.10485953

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 BOOK REVIEWS
The book is divided into seven major parts, as follows:
I. “Bayesian Approach,”—including chapters on various approaches to
optimization and introducing the BHA
II. “Global Optimization”—continuous global optimization, time series
models of long-memory processes, and the simple competitive model
III. “Networks Optimization”—global line search, event-driven tech-
niques to solve differential equations, neural networks
IV. “Discrete Optimization”—the Bayesian approach, examples (includ-
ing the knapsack and traveling-salesman problems), mixed integer nonlin-
ear programming
V. “Batch Processing Scheduling”—approaches using material require-
ments planning heuristics, simulated annealing, and genetic algorithms
VI. “Software for Global Optimization”—introduction and discussion
of FORTRAN and UNIX C++ software;
VII. “Visualization”—case studies.
The chapters usually consist of several sections discussing the algo-
rithmic material in a mostly intuitive style, often with some mathematical
theory included and offering several examples of applications. The presen-
tation seems a good reflection of the diverse backgrounds of the authors in
mathematics, statistics, computing, and engineering. The theme of combin-
Downloaded by [George Mason University] at 16:50 23 December 2014
ing the BHA with standard heuristics differs somewhat from that of other
optimization books I have seen, which either provide an in-depth descrip-
tion of a specific methodology or present descriptions and performance
comparisons of several methods. The theoretical portions are mostly brief
(I believe there is only one theorem in the book) and, as stated in the
preface, may be skipped without loss of continuity. The examples span a
wide range of applications and use the BHA in conjunction with a wide
variety of standard optimization techniques, such as genetic algorithms,
penalty-function methods, bilinear programming, simulated annealing, and
so forth. The discussions of these techniques generally assume that the
reader is familiar with them. Part VII of the book is a chapter on dynamic
visualization. This chapter is an intriguing discussion of methods for com-
puter display of complex data that makes essentially no connection to the
optimization ideas in the rest of the book.
As a reader interested in optimization algorithms, I found the book un-
satisfying. For one thing, I found the organization of the material to be too
choppy for my taste. For example, the BHA is discussed in Sections 1.3.5,
1.7, 2.6, and 3.4, all in an introductory manner. I believe that the material
would be easier to digest if the book started with some motivation for the
BHA idea and then proceeded to give a full development of the general
form of the BHA, followed by examples. I also felt that some of the mate-
rial was not smoothly presented. For example, at the beginning of Part II
(“Global Optimization”), the first sentences (p. 63) are as follows: “Con-
sider a family CA of continuous functions f = f (x), x ∈ A ⊂ Rm . As-
sume a possibility to evaluate f at any fixed point xn , n = 1, . . . , N , where
N is the total number of observations. The point of n + 1 observation is
defined by a decision function dn in the following way: xn+1 =
dn (zn ) . . .” I would have expected the chapter to start instead with a brief
description of the setting for the global-optimization problem, a discussion
of how this setting differs from the discrete-optimization idea, and some
introductory and motivational material on why the BHA approach should
be considered for global optimization. Even if one makes allowances for
the fact that some introductory material was presented in Part I, the lack
of a contextual setting makes it hard for the reader to absorb this mate-
rial. For example, one wonders what the family of continuous functions
represents. I think most practitioners would picture a global-optimization
problem as a situation in which one has a single function f , which may
have several local minima, and wishes to find the argument, x, at which
f (x) is a minimum over the entire domain of x. The discussion here does
not make clear whether the functions f are objective functions and, if
so, why there is more than one of them (no standard definition of f was
established in Part I). Despite these concerns, the book has some notable
strengths—namely, that the BHA idea is interesting and appears to be use-
ful in practice—and the authors provide a wealth of examples of appli-
cations.
To summarize, this book presents new perspectives on a wide variety of
optimization issues and applications, based on a novel idea, the “Bayesian
heuristic approach.” Because of the concerns expressed previously, I would
not recommend the book for use in the classroom or for reference in
379
theoretical research. On the other hand, it would be interesting to try to
develop theory to put the BHA on a more formal footing, and this book
could be a springboard for such an effort. Certainly, practitioners may find
the new ideas and the large collection of examples of diverse applications
useful.
John MARYAK
The Johns Hopkins University
EDITOR REPORTS ON NEW EDITIONS,
PROCEEDINGS, COLLECTIONS,
AND OTHER BOOKS
This section reports on new editions of books previously reviewed
in Technometrics, collections of papers and conference proceedings, and
other statistics books that should have some interest for the readership.
Selections and comments do not represent any perspective of the editor’s
employer or of the sponsoring societies.
Eric R. ZIEGEL
B.P. Amoco p.l.c.
Statistics for Petroleum Engineers and Geoscientists,
by Jerry L. JENSEN, Larry W. LAKE, Patrick W. M.
CORBETT, and David J. GOGGIN, Upper Saddle River,
NJ: Prentice-Hall, 1997, ISBN 0-13-131855-1, xxi +
390 pp., $65.
It has always been hard to recommend an appropriate statistics back-
ground reference to petroleum engineers and geoscientists. Generally there
are just a few statistical methods that these people need to know. For ge-
ologists, the book by Davis (1986) has been a standard textbook, but it
is rather large and certainly dated. The book by Cheeney (1983) is a less
recent but more modest-sized book for geologists. The only book I know
that provides any statistics background for petroleum engineers is that of
Newendorp (1975), and it also is large, not current, and more focused on
decision analysis than on a presentation of statistical methods.
One particular problem with this book is that all four authors are either
petroleum engineers or geoscientists. One actually works in field technol-
ogy for Chevron. Two others are from Heriot-Watt University in Scotland.
Any reader of my reports knows that I do not like statistics books by non-
statisticians. The usual faults are all here. Statistical background, about
two-thirds of this book, is never focused effectively on the needs of the
audience. Instead, the authors have regurgitated a peculiar mix of theory
and methods. The fact that the readers will all want to know how to do
this stuff on their PC’s escapes these authors, who never mention statistical
computing nor show any direct use of statistical computing.
The book begins with a nice discussion of geophysics and the value of
statistical tools for this science. The next four chapters, covering concepts,
univariate distributions, and estimation, have few special moments, other
than the exclusive use of petroleum engineering and geophysical illus-
trations. Chapter 6, “Measures of Heterogeneity,” deals in part with some
explicitly geological issues such as industry measures of permeability. This
information would be unfamiliar to most statisticians. Eighty pages, most
of the next three chapters, are devoted to simple linear regression. Multiple
regression has only five pages. Somehow these authors have not learned
that petroleum geology is a multivariable technology. There is no other
mention of multivariate statistics.
The last three chapters are directly focused on petroleum geology;
Chapter 11, “Analysis of Spatial Relationships,” Chapter 12, “Modeling
Geological Media,” and Chapter 13, “The Use of Statistics in Reservoir
Modeling,” are a 100-page overview of geostatistics. This material is al-
ready available in several excellent geostatistics textbooks, such as that
of Isaaks and Srivastava (1989), reviewed for Technometrics by Bilonick
(1991).
Though the authors have stated that this was not “another book on geo-
statistics” (Preface, p. xix), the authors have essentially written just that
kind of book. Compared to others, it is heavier on statistics background
and lighter on spatial statistics. I am going to have to keep hoping for a
good practical statistics book for petroleum geologists. Maybe I should
write it myself.
TECHNOMETRICS, NOVEMBER 1999, VOL. 41, NO. 4
 380 BOOK REVIEWS
REFERENCES
Bilonick, R. (1991), Book Review of An Introduction to Applied Geostatis-
tics, by E. Isaacks and R. Srivastava, Technometrics, 33, 483–485.
Cheeney, R. (1983), Statistical Methods in Geology, London: George Allen
and Unwin.
Davis, J. (1986), Statistics and Data Analysis in Geology (2nd ed.), New
York: Wiley.
Isaaks, E., and Srivastava, R. (1989), An Introduction to Applied Geostatis-
tics, Oxford, U.K.: Oxford University Press.
Newendorp, P. (1975), Decision Analysis for Petroleum Exploration, Tulsa:
Pennwell Books.
Nonparametric Statistical Methods (2nd ed.), by
Myles HOLLANDER and Douglas A. WOLFE, New York:
Wiley-Interscience, 1999, ISBN 0-471-19045-4, xiv +
787 pp., $89.95.
The first edition (1E) of this book, which was published in 1973, is cer-
tainly on my list of all-time favorite statistics books. Published as I was
beginning my career, it was my constant companion for all of my nonpara-
metric analyses until SAS and various PC software packages took all the
fun out of nonparametric statistics. I had learned nonparametrics method-
Downloaded by [George Mason University] at 16:50 23 December 2014
ology from the first edition of Gibbons (1971), another of my favorites,
which twice has been updated (see Ziegel 1993). My level of compre-
hension for the methods was immediately enhanced by the 250 pages of
estimators, tests, asymptotics, illustrations, and calculations that Hollan-
der and Wolfe provided. In addition, they added 180 pages of tables and
charts so that you could use any of these procedures without needing some
obscure journal to assess the significance of the results. All this was mine
for $18.95 at Kroch’s (the price sticker was still on my book).
Hollander and Wolfe may have waited 25 years to update their book,
perhaps a record gap between first and second editions, but it would hardly
have been possible for them to have done a new edition that is any more
impressive than this second edition (2E). What was a normal-sized text-
book has now become a huge large-format tome. There now are 560 pages
of text. In addition, all of the tables have been retained. There are two new
chapters (105 pages) at the end of the book, so the content of the original
chapters has approximately doubled in length.
The structure of these chapters is actually relatively unchanged. Each
chapter introduces the type of problem, such as two-sample dispersion, that
is being discussed in the chapter, including assumptions. Then a sequence
of tests is presented as the sections of the chapter. Each section has several
parts—hypothesis, procedure, large-sample approximation, ties, examples,
comments, and properties. Most of the increase has come in additional
and expanded examples and many more comments. Some of the examples
now include Minitab illustrations and outputs from StatXact.
The last chapter (10) in the 1E, “Tests Designed to Test Broad Alterna-
tives,” has been allocated among earlier chapters. The two new chapters
emanate from the largely greater prevalence of health and medical applica-
tions occurring now compared to the time of the 1E’s publication. Chapter
10, “Comparing Two Success Probabilities,” deals with a familiar problem
in drug testing. The first section covers large-sample and chi-squared tests.
The second section has Fisher’s exact test. The last section has Mantel and
Haenszel’s test for multiple 2 × 2 tables in strata.
The last chapter, “Life Distributions and Survival Analysis,” has the
usual dual application in the physical and medical sciences. There are three
sections for tests versus alternatives—increasing failure rates, new better
than used, and various mean residual life patterns. There are a couple of
sections on distribution functions—Kolmogorov confidence bands and the
Kaplan–Meier estimator. The last section has the Mantel two-sample test.
Persons who did not like the structured style of the 1E will not find
the 2E much different. For me, the 1E was as good as any practitioner’s
guidebook that has ever been written in any area of statistics. My high
opinion remains for the 2E. This book should be an essential part of the
personal library of every practicing statistician. Buy a copy before they
are all snapped up. Look for a more complete review in a subsequent issue
of Technometrics.
REFERENCES
Gibbons, J. (1971), Nonparametric Statistical Inference, New York: Marcel
Dekker.
TECHNOMETRICS, NOVEMBER 1999, VOL. 41, NO. 4
Gibbons, J., and Chakraborti, S. (1992), Nonparametric Statistical Infer-
ence (3rd ed.), New York: Marcel Dekker.
Ziegel, E. (1993), Editor’s Report on Nonparametric Statistical Inference
(3rd ed.), by J. Gibbons and S. Chakraborti, Technometrics, 35, 239–240.
Data Analysis With Microsoftr Excel, by Kenneth N.
BERK and Patrick CAREY, Pacific Grove, CA: Duxbury,
1998, ISBN 0-534-52929-1, xxiv + 504 pp. + disk,
$29.95 (softcover).
Though not explicitly stated, this book is actually a “New Edition” (NE).
The book was originally published (1E) as Berk and Carey (1995). The
NE is a Windows 95 version, whereas the 1E was a Windows 3.1 version.
The authors do comment that, as a result of feedback from the 1E users,
they have also made “minor as well as significant changes throughout this
Windows 95 edition.”
See Ziegel (1997) for a report on the 1E. The technical content is un-
changed in the NE. There is a much-improved layout for the lists of Excel
commands that are needed for the statistical analyses. There also are more
pictures of Windows from Excel. The book is nearly 50% bigger than
the 1E.
Because the authors and publisher have not chosen to make the NE
a second edition, it would not seem necessary for owners of the 1E to
purchase the NE. The conversion from Windows 3.1 to Windows 95 is
practically transparent to Excel users. This remains a book that all statis-
ticians should own. Their customers will be using Excel to do statistics.
The book comes with a disk of add-ins that are easily worth the cost of the
book, which is cheap in the first place. The add-ins considerably expand
the capabilities of Excel.
REFERENCES
Berk, K., and Carey, P. (1995), Data Analysis With Microsoftr Excel 5.0
for Windows, Cambridge, MA: Course Technology.
Ziegel, E. (1997), Editor’s Report on Data Analysis with Microsoftr Excel
5.0 for Windows, by K. Berk and P. Carey, Technometrics, 39, 237.
Practical Risk Assessment for Project Management,
by Stephen GREY, New York: Wiley, 1995, ISBN 0-471-
93979-X, xviii + 140 pp., $69.99.
Showing up here as a 1998 reprint, this book, not previously reviewed
by Technometrics, must be having some success. It is a good little book.
Previous reports on books on risk assessment, such as that of McBean and
Rovers (1998), reported by Ziegel (in press) have noted that comprehensive
guidance on risk assessment with consideration of quantitative uncertainty
has never been available. This book actually focuses mostly on the sim-
ulation of risk, but it does integrate this activity with the planning and
decision making that surround it.
This volume is part of a series in software engineering practice, but
software engineering is not the focus of the book. The author has an
excellent Introduction as a preface that sets the context for the book. The
first chapter of the book provides a background in project risk assessment,
and the second chapter give the tutorial on risk modeling with Monte Carlo
simulation. Three applications chapters follow—cost risk, schedule risk,
and business forecast risk. The simulation is built around the use of the
@Risk add-on for Excel. The statistical component for this book has been
minimized by the limiting of the use of continuous statistical distributions
to the triangular distribution, a very limited perspective on distribution
modeling. The book ends with a brief chapter that looks at alternatives to
using @Risk.
Risk assessment is a prominent activity at BP Amoco. Recently a book
by the head of that effort at BP Amoco (Koller 1999) was written because
the author’s students wanted a resource and the author did not feel that a
good resource was available. That book shares with Grey’s a simplification
of the use of statistics, but it offers a much more comprehensive perspective
on risk assessment.
REFERENCES
Koller, G. (1999), Risk Assessment and Decision Making in Business and
Industry, Boca Raton, FL: CRC Press.