Nick Curum on Upstream Project Failures: When ‘FID’ Becomes a Ratification, Not a Decision

In a recent LinkedIn post, Nick Curum discusses a critical, often overlooked, reason for failure in upstream energy projects: value destruction being locked in long before the Final Investment Decision (FID). Curum argues that by the time a project reaches FID, the crucial decisions determining its success or failure have already been made, often under conditions of high uncertainty and low scrutiny.

Curum highlights a common pattern where optimism, rather than rigorous assessment, shapes initial project development. This leads to inflated reserve confidence, trimmed contingencies, and compressed schedules, all aimed at securing approval. He contends that the real choices that dictate an asset’s value creation or destruction occur much earlier, during concept select and FEED (Front-End Engineering Design) phases.

“By the time you reach FID, you’re not really making a decision. You’re ratifying one.”

The Illusion of Decision-Making at FID

The post deconstructs the typical project lifecycle, illustrating how momentum-building tactics can obscure underlying risks. Curum points out that once a project gains public commitment, reputational lock-in often makes it difficult to alter course, even when red flags appear.

He elaborates on the subtle yet significant pressures that can compromise objective decision-making:

• Reserves confidence is overstated to build momentum.
• Contingency is trimmed to meet hurdle rates.
• Schedules are compressed to secure approval.

Curum emphasizes that the subsequent financial and operational challenges, such as capex overruns, delays, or price swings, are not mere edge cases but are frequently the norm, compounding each other.

“The real choices — the ones that determine whether this asset creates or destroys value — happened at concept select and FEED. When uncertainty was at its highest and scrutiny was at its lowest.”

Disciplined Operators vs. Growth-Led Narratives

In contrast to this pattern, Curum describes the practices of disciplined operators. These entities, he notes, prioritize modeling downside risks first, recognizing that optimism is not a substitute for robust contingency planning. Their approach includes using conservative type curves, staging capital releases, and conducting independent reserves audits. Furthermore, they align incentives with capital efficiency rather than just production targets.

Curum contrasts this with a failure pattern characterized by a growth-led narrative, thin contingencies, a single-shot FID process, and governance structures that only flag issues too late to effect change.

“Disciplined operators know this. So they model downside first — because optimism is not a contingency.”

Shifting the Focus from Confidence to Assumptions

As a concluding thought for project leaders, Curum urges a shift in perspective before any FID. Instead of asking about confidence levels, he proposes a more critical question:

“So before your next FID, stop asking ‘Are we confident?’ Start asking ‘What have we already assumed away?'”

This approach, according to Curum, is crucial for genuine capital discipline in the upstream sector. The insights are presented as Brief No. 04 in his series on upstream capital discipline, inviting readers to reflect on past project experiences where potential issues were overlooked.