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Technology and petroleum exhaustion: Evidence from two mega-oilfields

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  • Gowdy, John
  • Juliá, Roxana

Abstract

In this paper, we use results from the Hotelling model of non-renewable resources to examine the mainstream view among economists that improvements in recovery technology can offset declines in petroleum reserves. We present empirical evidence from two well-documented mega-oilfields: the Forties in the North Sea and the Yates in West Texas. Patterns of depletion in these two fields suggest that technology temporarily increases the rates of production at the expense of more pronounced rates of depletion in later years—in line with Hotelling's predictions. Insofar as our results are generalizable, they call into question the view of most economists that technology can mitigate absolute resource scarcity. This raises concerns about the capacity of current mega-fields to meet future oil demand.

Suggested Citation

  • Gowdy, John & Juliá, Roxana, 2007. "Technology and petroleum exhaustion: Evidence from two mega-oilfields," Energy, Elsevier, vol. 32(8), pages 1448-1454.
    • Handle: RePEc:eee:energy:v:32:y:2007:i:8:p:1448-1454
    DOI: 10.1016/j.energy.2006.10.019
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    Cited by:

    1. Höök, Mikael & Hirsch, Robert & Aleklett, Kjell, 2009. "Giant oil field decline rates and their influence on world oil production," Energy Policy, Elsevier, vol. 37(6), pages 2262-2272, June.
    2. Sorrell, Steve & Speirs, Jamie & Bentley, Roger & Miller, Richard & Thompson, Erica, 2012. "Shaping the global oil peak: A review of the evidence on field sizes, reserve growth, decline rates and depletion rates," Energy, Elsevier, vol. 37(1), pages 709-724.
    3. Tang, Xu & Zhang, Baosheng & Höök, Mikael & Feng, Lianyong, 2010. "Forecast of oil reserves and production in Daqing oilfield of China," Energy, Elsevier, vol. 35(7), pages 3097-3102.
    4. Kretzschmar, Gavin L. & Sharifzyanova, Liliya, 2010. "Limits to international diversification in oil & gas – Domestic vs foreign asset control," Energy, Elsevier, vol. 35(1), pages 468-477.
    5. Hughes, Larry, 2010. "Eastern Canadian crude oil supply and its implications for regional energy security," Energy Policy, Elsevier, vol. 38(6), pages 2692-2699, June.
    6. Sena, Marcelo Fonseca Monteiro de & Rosa, Luiz Pinguelli & Szklo, Alexandre, 2013. "Will Venezuelan extra-heavy oil be a significant source of petroleum in the next decades?," Energy Policy, Elsevier, vol. 61(C), pages 51-59.
    7. Hu, Yan & Hall, Charles A.S. & Wang, Jianliang & Feng, Lianyong & Poisson, Alexandre, 2013. "Energy Return on Investment (EROI) of China's conventional fossil fuels: Historical and future trends," Energy, Elsevier, vol. 54(C), pages 352-364.

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