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Forecasting Future Oil Production in Norway and the UK: A General Improved Methodology

Author

Listed:
  • Lucas FIEVET

    (ETH Zurich)

  • Zalàn FORRO

    (Independent)

  • Peter CAUWELS

    (ETH Zurich)

  • Didier SORNETTE

    (ETH Zurich and Swiss Finance Institute)

Abstract

We present a new Monte-Carlo methodology to forecast the crude oil production of Norway and the U.K. based on a two-step process, (i) the nonlinear extrapolation of the current/past performances of individual oil fields and (ii) a stochastic model of the frequency of future oil field discoveries. Compared with the standard methodology that tends to underestimate remaining oil reserves, our method gives a better description of future oil production, as validated by our back-tests starting in 2008. Specifically, we predict remaining reserves extractable until 2030 to be 188 ± 10 million barrels for Norway and 98 ± 10 million barrels for the UK, which are respectively 45% and 66% above the predictions using the standard methodology.

Suggested Citation

  • Lucas FIEVET & Zalàn FORRO & Peter CAUWELS & Didier SORNETTE, 2014. "Forecasting Future Oil Production in Norway and the UK: A General Improved Methodology," Swiss Finance Institute Research Paper Series 14-46, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1446
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    File URL: http://ssrn.com/abstract=2465087
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    More about this item

    Keywords

    Monte-Carlo; oil peak; logistic equation; Poisson process; power law distribution;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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