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Technological Advancement and the Recovery of Natural Gas: The Value of Information

Accurate information on geology, petroleum engineering, and economics is essential for firms to make efficient decisions concerning if and, if so, how to produce natural gas wells. Improved information may not only help insure that wells are economic, but may also lead to reduced costs of production and an increased physically recoverable stock of the resource. This paper empirically applies the economic theory of exhaustible resources (extended to include necessary reservoir engineering) to evaluate the benefits obtainable from using an enhanced information technology developed by the Gas Research Institute. The wells analyzed indicate significant benefits are obtainable with appropriate use of the new technology. The magnitudes of these benefits vary across reservoir characteristics.

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Energy Specializations: Natural Gas – Exploration and Production

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

Keywords: Natural gas production, US, Natural gas wells, technology change, reservoir properties

DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No1-7

Published in Volume16, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.