Are We Flying Blind?

The energy industry is feeling the pressure. Operators and reservoir engineers are being asked to do more with less—less manpower, smaller budgets, and tighter timelines. In the rush to cut costs, are we overlooking the long-term impact?

Are we sacrificing accuracy and future success for short-term savings and speed? And what’s the risk of cutting corners in simulation?

In this month’s Accelerate edition, we ask: Are we flying blind?

The Airplane Analogy: Off Course?

Imagine a pilot flying a plane. The aviation “1 in 60 rule” states that if the plane is off-course by just one degree, after a 60-mile flight, it will be one mile away from the intended destination. One degree may seem trivial, but over time and distance, this small error compounds, taking the aircraft further off course.

Now, let’s apply this analogy to the energy sector. A seemingly minor error in a simulation model—such as an incorrect assumption or a miscalculation—can appear insignificant at first. But as time goes on, and decisions based on that model accumulate, the small error can snowball. The result? Suboptimal field development plans, reduced recovery factors, and operational inefficiencies—such as over- or under-investment in well placements, misallocated resources, and inaccurate production forecasts—that lead to significant financial losses, far exceeding the short-term savings achieved by compromising simulation accuracy.

Carlos Granado and Victor Lara recently discussed the mentality of “good enough" on the Upstream and CCS panels at the 2025 ADI Forum in Houston. Settling for less-than-ideal accuracy to make a faster decision has become widespread across our industry.?

The question is: are we, like that pilot who fails to correct course, slowly drifting away from our destination? Are we sacrificing long-term success for immediate cost reductions?

The Cost of Cutting Corners in Simulation

The energy industry’s success hinges on accurate data and simulations. Reservoir engineering models depend on vast amounts of real-time, historical, and geological data. If the accuracy of these models is compromised—due to cost-saving measures or rushing through critical steps—the results can be devastating.

Inaccurate simulations lead to poor decision-making across the entire lifecycle of a reservoir, from exploration to production. Just like the slight heading deviation in an aircraft that leads to a significant misplacement, small errors in simulation can send us off-course, affecting the bottom line and the overall success of projects.

Accuracy is everything.

Achieving this level of precision requires:

• Rigorous Data Validation: Ensuring high-quality, validated models.
• Advanced Physics: Accurately capturing the processes driving energy production.
• Sensitivity Analysis: Understanding the impact of uncertainties on results.
• History Matching: Calibrating models with historical data for more reliable predictions.

By adhering to these principles, we help operators stay on course.

But, what's the impact of cutting corners?

Let’s examine the risks in key areas of the energy industry:

• Carbon Capture & Storage (CCS): Accurate modeling of subsurface CO2 behavior is critical for the success of CCS projects. Recent advancements in simulation technology have improved storage estimates. As the global focus on reducing carbon emissions intensifies, the role of accurate modeling in unlocking additional storage capacity and improving project economics will become increasingly vital for the success of CCS initiatives worldwide.
• Enhanced Oil Recovery (EOR): Small simulation errors can lead to wasted resources and project failures. Advanced EOR modeling techniques, such as integrating tracer analysis, help refine reservoir models and boost recovery rates. These methods reduce uncertainties and enhance predictive accuracy, ultimately minimizing inefficiencies. Just like miscalculating wind speed at takeoff, minor errors in EOR simulations can have disastrous results.
• Unconventionals: Without reliable simulation, navigating unconventional reservoirs is akin to flying blind. Modeling and simulation of unconventional reservoirs are much more complicated than the conventional reservoir modeling, because of their complex flow characteristics. Reliable simulations are essential for optimizing development strategies, reducing costs, and maximizing recovery. As the industry continues to innovate, the integration of advanced modeling techniques, high-quality data, and computational power will be key to unlocking the full potential of unconventional resources.
• Conventional Oil & Gas: Cutting corners in simulations leads to missed production targets and lower efficiency. Integrating advanced simulation tools with economic analysis ensures informed decision-making and investment planning, optimizing even mature fields for maximum efficiency and profitability.

We understand the pressures of optimizing resources, but cutting headcount in simulation roles or using sub-optimal simulation tools is like removing the co-pilot and expecting the pilot to handle everything. It only increases risk. A small miss now means a big miss later. Instead, empower your team with the best tools and software to enhance efficiency and precision. We need to shift our thinking to long-term solutions.

The Power of Compounding:

Modern energy needs to think about the power of compounding. Small improvements add up over time and create significant long-term results. In reservoir engineering, a 5% improvement in production for a field generating 10,000 barrels per day can result in an additional $5.5 million USD annually. With IPSM (Integration Production System Modelling) deployments achieving up to 15% improvement, the compounded revenue impact over time becomes immense.?

This principle isn’t unique to energy—it mirrors the concept of compounding in investment growth, modest annual returns can lead to substantial wealth over time. For example, investing $1,000 at a 5% annual return demonstrates how compounding accelerates growth. In the first year, the investment earns $50 in interest, bringing the total to $1,050. By the second year, interest is calculated on this new principal, generating $52.50, and so on. Over ten years, this initial $1,000 grows to $1,628.89—significantly more than the $1,500 it would have earned with simple interest alone.

However, the flip side of compounding is equally critical. Just as small gains amplify over time, so do small errors. In reservoir simulation, a minor miscalculation—such as an incorrect assumption about reservoir pressure or fluid properties—can seem insignificant initially. But as decisions based on that model accumulate, the error compounds, leading to missed production targets, inefficient well placements, and ultimately, significant financial losses.

For example, consider a reservoir simulation that underestimates water breakthrough timing by just 5%. Initially, this might seem like a minor discrepancy. However, over the life of the field, this error could lead to:

• Over-injection of water in certain wells, causing premature water breakthrough and reducing oil recovery.
• Under-investment in well interventions, such as shut-offs or recompletions, resulting in lost production opportunities.
• Misdirected capital allocation, such as drilling new wells in less productive areas, further reducing overall field efficiency.

Over time, these compounding errors could result in a 10-15% reduction in recovery factors, translating to tens of millions of dollars in lost revenue for a mid-sized field. This is the hidden cost of negative compounding—a small error today can snowball into a major financial setback tomorrow.

In the rush to cut costs, the energy industry risks overlooking the long-term impact of sacrificing accuracy and future success for short-term savings. The aviation analogy illustrates this risk: a small deviation in flight can lead to significant misplacement over time. Likewise, minor errors in energy simulations can compound into missed opportunities and financial losses. Advancements in multiscale modeling and simulation within reservoir engineering, emphasizing the need for precise and integrated approaches to optimize production..

As an industry, we need to invest in long-term strategies, rather than looking for immediate short-term gains. We need to invest in quality. More advanced simulation technologies ensure more precise decisions and greater profitability over time. 1% improvements today lead to long-term success over time.

Why "Accelerate"? Commitment to Knowledge Sharing

As the energy industry evolves, knowledge-sharing is more critical than ever. That's why we created Accelerate—a platform for sharing insights, best practices, and collaboration in energy simulation and the energy transition.

Through Accelerate, you’ll find:

• In-depth articles on the latest trends and innovations.
• Expert interviews from thought leaders in the industry.
• Case studies showcasing real-world simulation applications.
• Industry insights offering expert analysis on key developments.

Looking ahead: what’s next for Accelerate?

We’re continuing to push the boundaries of energy simulation. From AI and machine learning to new solutions for carbon capture, geothermal energy, and hydrogen production.

As CMG CEO Pramod often says, “Our goal is to maximize production, and that doesn’t happen when plans are built in silos. The key is technology that connects surface and subsurface teams, breaking down those barriers.”? CMG is leading the energy industry with the Gold Standard in Simulation.

In our next edition, we’ll dive into the challenges facing simulation in unconventional reservoirs. Stay tuned! Subscribe to our LinkedIn Accelerate newsletter to stay up to date with the latest news and trends in simulation.

CMG – The Gold Standard in Simulation for 47 Years.