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Comparison of two probability distributions used to model sizes of undiscovered oil and gas accumulations: Does the tail wag the assessment?

Mathematical Geology
By:  and 
https://doi.org/10.1023/A:1019809410934

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Abstract

Undiscovered oil and gas assessments are commonly reported as aggregate estimates of hydrocarbon volumes. Potential commercial value and discovery costs are, however, determined by accumulation size, so engineers, economists, decision makers, and sometimes policy analysts are most interested in projected discovery sizes. The lognormal and Pareto distributions have been used to model exploration target sizes. This note contrasts the outcomes of applying these alternative distributions to the play level assessments of the U.S. Geological Survey's 1995 National Oil and Gas Assessment. Using the same numbers of undiscovered accumulations and the same minimum, medium, and maximum size estimates, substitution of the shifted truncated lognormal distribution for the shifted truncated Pareto distribution reduced assessed undiscovered oil by 16% and gas by 15%. Nearly all of the volume differences resulted because the lognormal had fewer larger fields relative to the Pareto. The lognormal also resulted in a smaller number of small fields relative to the Pareto. For the Permian Basin case study presented here, reserve addition costs were 20% higher with the lognormal size assumption. ?? 2002 International Association for Mathematical Geology.
Publication type Article
Publication Subtype Journal Article
Title Comparison of two probability distributions used to model sizes of undiscovered oil and gas accumulations: Does the tail wag the assessment?
Series title Mathematical Geology
DOI 10.1023/A:1019809410934
Volume 34
Issue 6
Year Published 2002
Language English
Publisher Springer
Contributing office(s) Eastern Energy Resources Science Center
Description 11 p.
First page 767
Last page 777
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