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40 comments on Empirical Relationships Between Reserves and Production Rates

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sjn on November 9, 2007 - 11:03pm Permalink | Subthread | Parent | Comments top

I think you're spot on Memmel. It's certainly going to be interesting.

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memmel on November 10, 2007 - 12:21am Permalink | Subthread | Parent | Comments top

Thanks I wish someone would come up with a good way to get a better handle on how technical advances have effected extraction capabilities. Extrapolating from price induced surges is a weak approach. Its sufficient to show the effect probably on the order of a few percent and that enough to conclude we are in bad shape. But maybe their is a more refined way.

One approach could be to set a baseline back say in the fifties between discovery and production this would be the the non-technically shifted discovery->production curve what we should see is that the gap closes rapidly going negative in the 1980-1990's at this point production increases where effectively purely because of technical advances.

The shock model uses a constant for this but technical advances indicates its critical variable.

Effectively I'm simply saying you have to normalize the numbers to a standard vertical well/water driven field extraction model to get a good baseline. I think its correct to assume pressure remains a constant although how you water drive is important in and of itself and cannot be dismissed.

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WebHubbleTelescope on November 10, 2007 - 2:10am Permalink | Subthread | Parent | Comments top

Yes, the Shock Model incorporates a Markov rate term which maps directly to Khebab's a term.

P= aR + b

However, it is not entirely correct that we need to keep it constant. The shocks, or perturbations in the model are due to varying this term to match either technical advances or instantaneous economic disturbances. This is doable mathematically because the effect essentially happens at the end of the pipeline, which has little impact on the stochastic approximations that we make prior to this.

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memmel on November 10, 2007 - 3:19am Permalink | Subthread | Parent | Comments top

Yes it can handle it I'm suggesting a shark fin curve as a good model for technical innovation.

Think about it. Take airplanes or even oil discovery the changes where slow at the beginning then exploded exponentially then hit physical limits then effectively when to zero. Cars today for example are effectively at the end of their technical advancement as far as being transportation devices. The difference between a cheap Ford and a Mercedes are pretty small. Compare this to a luxury car in the 1920 vs a pedestrian model.

Plus I thin the shark fin curve for respiration bears a lot of similarity to oil extraction and also the financial one for patent drugs. Investment in the texas oil fields for example followed a shark fin model and in general this holds for commodities. The increase exponentially till the returns become unattractive vs other investment choices then drop to zero when they are unprofitable. So both the technology and the financial model could be plausibly modeled as shark fins.

And to top it off shark fin curve has a nice ominous ring to it :)

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memmel on November 10, 2007 - 3:38am Permalink | Subthread | Parent | Comments top

Export land is also a shark fin in profile if you assume that no other real economic value is created. Internal consumption increases exponentially until exports no longer cause increasing revenue then the economy collapses. So I think a lot of these perturbations are better modeled as a shark fin curves first order. A eventual return to Gaussian/exponential on the back side of the curve makes them fairly physical but this is just the inherent Gaussian in effect reasserting itself. The geologic situation is inherently a gaussian so like Russian production it tends to get back on curve.

But dolphin fin curve does not have the same ring :)

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40 comments on Empirical Relationships Between Reserves and Production Rates

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