Geostatistics is the study of autocorrelated variables. In our applications, this means spatially correlated variables, or variables whose value at one point depends on values at nearby points. Well-understood processes account for the deposition of reservoirs, so we expect a property sampled at a location to be similar in value to the same property sampled some distance away. We further recognize that these similarities provide only averages, and, for a variety of reasons, a specific property at a specific location is still a random variable, despite the existence of the spatial relationships. We distill both of these into a number of specific algorithms.
Inference detects the existence of statistical spatial relationships from data.
These relationships are then used to construct random fields of the desired property. It is strange to use a statistical procedure to generate input to a flow simulator, an essentially deterministic process. But such is appropriate since the multiple fields reflect our uncertainty in how well we can know the reservoir. The flow simulator is merely the tool to translate this uncertainty into uncertainties in things like rates of return or net present value. This procedure is a thumbnail sketch of a much older procedure called the Monte Carlo method.