Forecasting oil and gas reserves and production in the UK North Sea : a Monte Carlo approach
This thesis examines the results of the future exploration drilling activities expected to be committed between 1995-2014 in the mature areas of the UK North Sea. The study employs Monte Carlo simulation techniques to quantify the risk of exploration ventures by estimating the expected value of the exploration decisions in a mature hydrocarbon province where both the exploration success and the size of the discovered fields are shown to be diminishing with advancing exploration. The study explicitly takes into account the risks which are associated with both geological and economic uncertainties. The prime objective is to model and forecast the significant quantities of oil, condensate, and gas to be discovered given the specified levels of committed exploratory effort. Due to the presence of different geological and prospectivity characteristics, the whole North Sea province is divided into three basins namely the Southern, Central and Northern basins each of which has been treated and studied separately. The commercial merits of the future discoveries for potential development purposes have been determined through the application of different parameters for future oil and gas prices, various costs of field exploration and development, etc. The impact of the fiscal regime on the commercial viability of the future discoveries has also been explicitly examined. After identifying the future discoveries with commercial significance in the North Sea, their resulting production, costs, revenues, tax bill, and the net present values are presented in detail. To create a wider picture for the new field discoveries and their eventual contribution to the overall production in the North Sea, the future exploration and production activities have been examined under three different scenarios each reflecting varying geological and economic circumstances.