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ID: 126817

Bottom-up modeling of oil production: a review of approaches / Jakobsson, Kristofer; Soderbergh, Bengt; Snowden, Simon; Aleklett, Kjell

Aleklett, Kjell	Journal Article
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2014.

Summary/Abstract

Bottom-up models of oil production are continuously being used to guide investments and policymaking. Compared to simpler top-down models, bottom-up models have a number of advantages due to their modularity, flexibility and concreteness. The purposes of this paper is to identify the crucial modeling challenges, compare the different ways in which nine existing models handle them, assess the appropriateness of these models, and point to possibilities of further development. The conclusions are that the high level of detail in bottom-up models is of questionable value for predictive accuracy, but of great value for identifying areas of uncertainty and new research questions. There is a potential for improved qualitative insights through systematic sensitivity analysis. This potential is at present largely unrealized.

Key Words

Methodology ; Oil Production ; Bottom - Up Modeling

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ID: 111392

End of cheap oil: bottom-up economic and geologic modeling of aggregate oil production curves / Jakobsson, Kristofer; Bentley, Roger; Soderbergh, Bengt; Aleklett, Kjell

Aleklett, Kjell	Journal Article
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Publication

2012.

Summary/Abstract

There is a lively debate between 'concerned' and 'unconcerned' analysts regarding the future availability and affordability of oil. We critically examine two interrelated and seemingly plausible arguments for an unconcerned view: (1) there is a growing amount of remaining reserves; (2) there is a large amount of oil with a relatively low average production cost. These statements are unconvincing on both theoretical and empirical grounds. Oil availability is about flows rather than stocks, and average cost is not relevant in the determination of price and output. We subsequently implement a bottom-up model of regional oil production with micro-foundations in both natural science and economics. An oil producer optimizes net present value under the constraints of reservoir dynamics, technological capacity and economic circumstances. Optimal production profiles for different reservoir drives and economic scenarios are derived. The field model is then combined with a discovery model of random sampling from a lognormal field size-frequency distribution. Regional discovery and production scenarios are generated. Our approach does not rely on the simple assumptions of top-down models such as the Hubbert curve - however it leads to the same qualitative result that production peaks when a substantial fraction of the recoverable resource remains in-ground.

Key Words

Peak Oil ; Bottom - Up Modeling ; Micro - Foundations

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