State the ProblemA critical question for any exploration company wishing to economically exploit an oil or natural gas formation is determining the appropriate number of horizontal wells to place in the formation to effectively drain hydrocarbons. in place. The number of wells per section or prorated unit is called well density. In the state of New Mexico, a standard apportionment unit is 320 acres, or half of a congressional section. The number of wells that may be drilled in a section of a formation in the State of New Mexico is determined by the New Mexico State Petroleum Conservation District (NMOCD). Recently, the NMOCD proposed changes to the existing horizontal rules and the proposed changes, Case 14744, were heard before the Oil Conservation Commission (OCC) on October 20, 2011. The OCC has the authority to approve the proposed changes, and If approved, the new rules will ultimately allow each oil and gas operator to determine for themselves the number of horizontal wells to drill within any formation. Likewise, once this rule is approved, it will be up to WPX Energy to determine the appropriate number of horizontal wells to drill within the Mancos Shale formation, in order to effectively drain the gas in place without drilling too many wells and wasting time. resources or time. How could a risk-based system help mitigate the problem? Risk assessment helps define a project's sensitivity to all threats and opportunities. When all parties fully understand the complexity and nature of threats, better objectives and contingencies can be defined for the project, and mitigation strategies can be created in advance. When using risk assessment in the project planning process...... middle of document...... series fa). PM World today. (Vol. XI, Issue V), 1-3.Koller, Glenn. (2009). A summary of the risk assessment/management journey (part 10 in a series). PM World today. (Vol. XI, Number IX), 1-4.Koller, Glenn. (2011) Risk monetization: converting threats and opportunities into impact on project value. Boca Raton, FL: CRC Press. New Mexico Energy, Mineral and Natural Resources Department (EMNRD), Title 19 (Section 15: Oil and Gas Rules) http://www.emnrd.state.nm.us/ocd/documents/20098 - 5currentrules-new17and39.pdfNew Mexico Oil Conservation District, Case 14774, court date October 20, 2011. (Proposed Changes to Horizontal Drilling Rules) http://www.emnrd.state.nm.us/ocd/documents/10 -20OCCHEARING.pdfOracle (2009). The benefits of risk assessment for projects, portfolios and businesses. Online at http://www.oracle.com/us/products/applications/042743.pdf