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

23 Pages Posted: 26 Jul 2014

See all articles by Lucas Fiévet

Lucas Fiévet

ETH Zurich

Zalàn Forrò

Independent

Peter Cauwels

ETH Zurich; Director Quaerens CommV

Didier Sornette

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute

Date Written: July 1, 2014

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.

Keywords: Monte-Carlo, oil peak, logistic equation, Poisson process, power law distribution

JEL Classification: C15, C46, O13, Q40

Suggested Citation

Fiévet, Lucas and Forrò, Zalàn and Cauwels, Peter and Sornette, Didier, Forecasting Future Oil Production in Norway and the UK: A General Improved Methodology (July 1, 2014). Swiss Finance Institute Research Paper No. 14-46. Available at SSRN: https://ssrn.com/abstract=2465087 or http://dx.doi.org/10.2139/ssrn.2465087

Lucas Fiévet

ETH Zurich ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

Zalàn Forrò

Independent ( email )

No Address Available

Peter Cauwels

ETH Zurich

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

Director Quaerens CommV ( email )

Bruges
Belgium

Didier Sornette (Contact Author)

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC) ( email )

Scheuchzerstrasse 7
Zurich, ZURICH CH-8092
Switzerland
41446328917 (Phone)
41446321914 (Fax)

HOME PAGE: http://www.er.ethz.ch/

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

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