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Are Decline Rates Really Exponential? Evidence From the UK Continental Shelf

Abstract:
Understanding of oil and gas production decline rates is important in order to predict future behaviour and give policy guidelines. Most studies propose exponential and/or hyperbolic decline rates. Econometric techniques are extensively used in the present study to establish that logistic decline rates best fit the UKCS data and that the majority of fields have experienced complex logistic decline. Newer fields with relatively smaller reserves were found to have higher annual mean decline and decline decelerating rates � a property that poses both a challenge and an opportunity for the industry.

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Energy Specializations: Petroleum – Exploration and Production; Energy Modeling – Energy Data, Modeling, and Policy Analysis; Energy Modeling – Other

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
C59 - Econometric Modeling: Other

Keywords: Oil and gas production, decline rate, UK, depletion, logistic model

DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No1-2


Published in Volume 26, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.