Creaming - And the Depletion of Resources: A Bayesian Data Analysis

27 Pages Posted: 17 Nov 2017 Last revised: 7 Mar 2018

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: February 13, 2018

Abstract

This paper considers sampling in proportion to 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 model with exponentially decaying creaming factor turns out to have nice analytical features in this context, and fits well available data, as demonstrated in Lillestøl and Sinding-Larsen (2017). This paper is a Bayesian follow-up, which provides posterior parameter densities and predictive densities of future discoveries, in the case of uninformative prior distributions. The theory is applied to the prediction of remaining petroleum accumulations to be found on the mature part of the Norwegian Continental Shelf.

Keywords: Log-Normal Distribution, Sampling Proportional to Size, Resource Prediction

JEL Classification: C00, C10, C11, C13

Suggested Citation

Lillestol, Jostein and Sinding-Larsen, Richard, Creaming - And the Depletion of Resources: A Bayesian Data Analysis (February 13, 2018). NHH Dept. of Business and Management Science Discussion Paper No. 2017/16, Available at SSRN: https://ssrn.com/abstract=3072338 or http://dx.doi.org/10.2139/ssrn.3072338

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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