Forecasting future oil production in Norway and the UK: a general improved methodology

TL;DR

This paper introduces an improved Monte-Carlo methodology for forecasting future oil production in Norway and the UK, combining nonlinear extrapolation of existing fields with a stochastic discovery model, resulting in more accurate reserve estimates.

Contribution

The paper develops a novel two-step Monte-Carlo approach that enhances the accuracy of oil production forecasts over standard methods.

Findings

Predicted remaining reserves until 2030: 188 +/- 10 million barrels for Norway.

Predicted remaining reserves until 2030: 98 +/- 10 million barrels for the UK.

Method outperforms standard approaches in back-tests since 2008.

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.