Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
The objective is still the same: try to put some confidence intervals around the URR and K but this time I look at the world production.
Methodology
I assume a particular logistic model which gives a production maximum in 2009 and an URR of 2,450 Gb (all liquids).
I model the residuals using a 4th-order AR random process:
Code:
Residuals(k)= 0.0013 + 1.2487 x Residuals(k-1) - 0.2272 x Residuals(k-2) + 0.2036 x Residuals(k-3) - 0.2756 x Residuals(k-4) + 0.1992 x n(k)
the AR model replicates the observed first- order (variance) and second order (correlation) residual statistics:
Then, for each production maturity levels (20% to 80%) , I generate 1,000 random realizations of the residuals which I add to the "true logistic model" before using the Hubbert linearization to estimate the URR and K.
Results
The distribution of the sample estimates for the URR and K at 50% of maturity are the following:
Distribution of the 1,000 samples' estimates at 50% of maturity. The full red line is the median value and the two dotted red lines are the limits of the 80% confidence interval.
Discussion
1- K estimation is more reliable than the URR
2- if we are near 50% of maturity (peak production) the uncertainty on the URR estimation is quite large and the 90% confidence interval is [1.551, 3.854] Tb with a median estimate around 2.335 Tb which covers the ASPO and USGS lower estimates.
3- Assuming a given URR we have about 30% chance to be wrong by more than 10% (higher or lower) if we are near peak production.
4- The Hubbert linearization seems to be fairly reliable even if residuals are strongly correlated
Posted: Fri Jan 20, 2006 8:52 pm Post subject: Re: How Reliable is the Hubbert Lin. Method? the world case
I suppose we should be thankful that the probability of a surprise on the upside in the direction of a greater-than-expected URR is greater than the probability of a surprise on the downside (in other words, the probability distribution is asymmetrical and probably gaussian or something.)
The function becomes more symmetrical the more mature the production gets, which is logical. The farther to the right you go, the more certain you are that you did not get lucky and find more oil than you expected.
Posted: Sat Jan 21, 2006 2:32 pm Post subject: Re: How Reliable is the Hubbert Lin. Method? the world case
thanks for your comment pu55!
pup55 wrote:
I suppose we should be thankful that the probability of a surprise on the upside in the direction of a greater-than-expected URR is greater than the probability of a surprise on the downside (in other words, the probability distribution is asymmetrical and probably gaussian or something.)
The distribution shape looks like more like a gamma or a chi2 function. Note that the maximum is around 2,000 Gb which means that the URR is probably lower than we think.
pup55 wrote:
The function becomes more symmetrical the more mature the production gets, which is logical. The farther to the right you go, the more certain you are that you did not get lucky and find more oil than you expected.
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