Price, cost and exploration sensitivities of prospective activity levels in the UKCS: an application of the Monte Carlo technique

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Abstract

Building on previous work this paper develops a probabilistic economic model using the Monte Carlo technique to project activity levels in the UK Continental Shelf. The modelling emphasises the importance of oil and gas prices, the investor's hurdle rate of return, changing prospectivity, and the exploration effort. Activity in the medium term is found to be highly sensitive to oil and gas prices, development costs and exploration effort. Field investment may fall very substantially and the oil production decline rate could be fast from 2000. To sustain higher activity levels further technological advances and their widespread adoption are essential. (C) 2000 Elsevier Science Ltd. All rights reserved.

Original languageEnglish
Pages (from-to)801-810
Number of pages10
JournalEnergy Policy
Volume27
Publication statusPublished - 1999

Keywords

  • North Sea prospects
  • Monte Carlo analysis
  • economic framework
  • declining prospectivity
  • price and cost sensitivity

Cite this

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title = "Price, cost and exploration sensitivities of prospective activity levels in the UKCS: an application of the Monte Carlo technique",
abstract = "Building on previous work this paper develops a probabilistic economic model using the Monte Carlo technique to project activity levels in the UK Continental Shelf. The modelling emphasises the importance of oil and gas prices, the investor's hurdle rate of return, changing prospectivity, and the exploration effort. Activity in the medium term is found to be highly sensitive to oil and gas prices, development costs and exploration effort. Field investment may fall very substantially and the oil production decline rate could be fast from 2000. To sustain higher activity levels further technological advances and their widespread adoption are essential. (C) 2000 Elsevier Science Ltd. All rights reserved.",
keywords = "North Sea prospects, Monte Carlo analysis, economic framework, declining prospectivity, price and cost sensitivity",
author = "Kemp, {A G} and L Stephen",
year = "1999",
language = "English",
volume = "27",
pages = "801--810",
journal = "Energy Policy",
issn = "0301-4215",
publisher = "Elsevier BV",

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T1 - Price, cost and exploration sensitivities of prospective activity levels in the UKCS: an application of the Monte Carlo technique

AU - Kemp, A G

AU - Stephen, L

PY - 1999

Y1 - 1999

N2 - Building on previous work this paper develops a probabilistic economic model using the Monte Carlo technique to project activity levels in the UK Continental Shelf. The modelling emphasises the importance of oil and gas prices, the investor's hurdle rate of return, changing prospectivity, and the exploration effort. Activity in the medium term is found to be highly sensitive to oil and gas prices, development costs and exploration effort. Field investment may fall very substantially and the oil production decline rate could be fast from 2000. To sustain higher activity levels further technological advances and their widespread adoption are essential. (C) 2000 Elsevier Science Ltd. All rights reserved.

AB - Building on previous work this paper develops a probabilistic economic model using the Monte Carlo technique to project activity levels in the UK Continental Shelf. The modelling emphasises the importance of oil and gas prices, the investor's hurdle rate of return, changing prospectivity, and the exploration effort. Activity in the medium term is found to be highly sensitive to oil and gas prices, development costs and exploration effort. Field investment may fall very substantially and the oil production decline rate could be fast from 2000. To sustain higher activity levels further technological advances and their widespread adoption are essential. (C) 2000 Elsevier Science Ltd. All rights reserved.

KW - North Sea prospects

KW - Monte Carlo analysis

KW - economic framework

KW - declining prospectivity

KW - price and cost sensitivity

M3 - Article

VL - 27

SP - 801

EP - 810

JO - Energy Policy

JF - Energy Policy

SN - 0301-4215

ER -