This paper describes the `Bottom Up Economic and Geological Oil field production model’ (`BUEGO’). BUEGO has a detailed field level, bottom-up representation of the supply side of the oil market, and is designed to allow a precise analysis of the characteristics of oil supply.
BUEGO generates an oil price in each year to ensure that sufficient new capacity is brought on-line from projects with positive net present value to satisfy oil demand levels provided by the integrated assessment model `TIAM-UCL’. Given the paucity of other ‘geology plus economics’ oil forecast models, particularly in the academic literature, BUEGO contributes to the debate on future prospects for oil production.
BUEGO is an extension of the bottom-up field model produced by Richard Miller (The Oil Age 1(2) 39-55). The latter contains detailed historic field-level production data from 1992 – 2010, and provides forecast estimates of the maximum theoretical production from the most significant oil fields in 133 countries globally for 2010 – 2035. The model covers (as of 2010) 2855 fields in production, 565 fields discovered but undeveloped, and 3580 undiscovered fields.
Three key changes have been made to Miller’s model to produce more realistic scenarios of global oil production. These are:
(a) incorporation of a projection of demand;
(b) supply is only be brought on-line to satisfy this demand; and
(c) only those fields that are economic at a given oil price continue to produce, or are developed.
Fields are judged economic based on NPV calculations, taking into account capital and operating costs (including detailed tax regimes by country) and assumed discount rates. Other aspects of the model discussed include estimates of undiscovered oil, differentiation by water depth for offshore oil, volumes of oil anticipated from ‘reserves growth’, assumptions on OPEC production, and linkage with TIAM-UCL and demand-side modelling, including CO2 price and intensity of non-conventional oil production.
Examples of oil production forecasts generated by the model, under the model’s ‘new policies demand’ scenario, are given; split by field type, geographical region, discovery date and water depth. These indicate that global ‘all-oils’ production (including conventional, extra-heavy, bitumen, light-tight and NGLs) is likely to peak around 2030, at just below 100 Mb/d. Results are also shown for the model’s ‘low carbon’ scenario, split by field type; and other scenarios are also discussed. The paper concludes with a list of possible extensions to the model.
McGlade, C. (2015) An introduction to the bottom-up Economic and geological oil field production model `BUEGO’. The Oil Age 1 (3) 9-40.
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