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

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