CHAPTER 6

Indicator kriging

Examples in the previous chapters used data that vary along a con-
tinuous scale. However, in many situations one is presented with nom-
inal data or with data that are more easily treated if converted to a
nominal scale. As a simple example of such an indicator variable, the
presence or absence of a show of gas may be represented by the two
values 0 and 1. Statistics such as success ratio assume a value for
economic threshold that may not be stated. A more explicit use of a
threshold appears in Kumar (1985), where fields had to exceed 1 million
barrels (159 000 m 3) in recoverable reserves to be economical at 1979
prices. A continuous variable can be converted to an indicator variable
for a number of thresholds, yielding a new variable for each threshold
chosen; this procedure forms the basis for an important estimation
method described in the second part of this chapter.

6.1 ANALYSIS OF AN INDICATOR VARIABLE

To introduce the idea of an indicator variable, consider a map of

successful and dry wells (Fig. 6.1) adapted from an illustration in Kumar
(1985; Fig. 3). Kumar studied the northwest shelf of the Delaware basin
in New Mexico, a region that is generally densely drilled but has some
sparsely drilled areas. The Permian Age San Andres Formation, one of
three major oil-producing intervals in Kumar's study area, contains oil
accumulations in updip pinchouts zones with above-average porosity. In
addition, some structural anomalies are present in the study area. Areas
deemed prospective had low drilling density, were updip from estab-
lished fields, and contained a structural anomaly.
In Kumar's Fig. 3, each section with at least one test of the San Andres
Formation was shaded one color if all tests were dry and a second color
if at least one producer was drilled. To create a small set of data, I simply
laid a sheet of graph paper over Kumar's figure and read off coordinates
of successful and dry sections in a central area of about 65 km 2 • The
resulting sample distribution (Fig. 6.1) provides a close approximation to
Kumar's map. The intent was not to repeat Kumar's study, which stands
on its own, nor to provide a new interpretation.

M. E. Hohn, Geostatistics and Petroleum Geology

© Kluwer Academic Publishers 1999
152 Indicator kriging

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the Delaware basin of New Mexico; data adapted from Kumar (1985).

Geostatistical analysis of the data set follows the same procedures

described in Chapters 2 and 3. Based on 333 values, the experimental
semivariogram conforms to an exponential model with a range of 1.33,
sill of 0.21, and nugget effect of zero (Fig. 6.2). The first three points of the
experimental semivariogram are calculated from 596, 873, and 1070
pairs, respectively. Each field in the study area is represented by numer-
ous samples. The number and spacing of the samples account in part for
the smoothness of the semivariogram. In addition, the data cannot
include any outliers because all values must equal 0 or 1.
The sill in Fig. 6.2 equals the sample variances, 0.21. The following
simple relationship holds true between the mean m and variance (12 of an
indicator variable:

Kriging an indicator variable does not result in values of 0 and 1, but

rather estimates along a continuous scale that generally lie between 0
and 1. In the present situation, linear estimates represent success rates for
blocks or predicted probabilities of success at points. Thus, linear estima-
tion from an indicator variable yields probabilities. A map of point
estimates (Fig. 6.3) clearly shows fields conforming to densely drilled
areas with at least one successful well per section. Surrounding these