Log-Normal Creaming and the Likelihood of Discovering Additional Giant Petroleum Fields

19 Pages Posted: 27 Jan 2016

See all articles by Jostein Lillestol

Jostein Lillestol

Norwegian School of Economics (NHH) - Department of Business and Management Science

Richard Sinding-Larsen

Norwegian University of Science and Technology (NTNU)

Date Written: January 27, 2016

Abstract

This paper considers sampling proportional to expected size from a partly unknown distribution. The applied context is the exploration for undiscovered resources, like oil accumulations in different deposits, where the most promising deposits are likely to be drilled first, based on some geologic size indicators (“creaming”). A Log-normal size distribution turns out to have nice analytical features in this context, and fits available data reasonably well. The theoretical and practical consequences for the accumulation of knowledge on the underlying distribution based on this scheme, named Log-normal creaming, are explored in some detail. The theory is applied on the prediction of remaining oil accumulations to be found on the Norwegian Continental Shelf.

Keywords: Log-normal distribution, sampling proportional to size, resource prediction

JEL Classification: C00, C10, C13

Suggested Citation

Lillestol, Jostein and Sinding-Larsen, Richard, Log-Normal Creaming and the Likelihood of Discovering Additional Giant Petroleum Fields (January 27, 2016). NHH Dept. of Business and Management Science Discussion Paper No. 2016/3, Available at SSRN: https://ssrn.com/abstract=2723267 or http://dx.doi.org/10.2139/ssrn.2723267

Jostein Lillestol (Contact Author)

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Richard Sinding-Larsen

Norwegian University of Science and Technology (NTNU) ( email )

Høgskoleringen
Trondheim NO-7491, 7491
Norway

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