When oil prices were low, management energy focused on cutting costs and im
proving return on capital employed (ROCE). Because the ROCE was poor, the m
ajor fiscal problem was that the energy business is not competitive as an i
nvestment vehicle compared with other growth industries (such as computing,
the Internet, and biomedicine). When the economics of time-lapse (4D) rese
rvoir management are considered in a stochastic portfolio model of future c
ash now, various price scenarios can be considered quantitatively in terms
of the relative contributions of each large field to the company's overall
success. High recovery rates are required to balance risk and reward suffic
iently. However, if cost-cutting models are used that exclude 4D reservoir
management from future development scenarios for these fields, cash-now sho
rtfalls result in all but the most optimistic future-price scenarios.