Abstract
North Dakota’s oil production has been rapidly increasing during the past several years. The state’s oil production in March 2013 even increased to more than twice the quantity produced in March 2011, and the estimated Bakken Formation reserves were reported very large compared with those of the United Arab Emirates. It eventually makes a question to us of how much oil will be able to be actually extracted with currently available technologies. To answer this question, this paper forecasts future oil development trend in North Dakota using the Seasonal Autoregressive Integrated Moving Average (S-ARIMA) model. Nonstationarity derived from a stochastic trend and the abrupt structural change of oil industry was a big potential problem, but through the Quandt Likelihood Ratio test, we found break points, which allowed us to select a model fitting period suitable for the S-ARIMA method to provide accurate statistical inference for the historical period. The seven major oil producing counties were investigated to determine whether the current oil boom was consistent across all oil fields in North Dakota. Empirical estimates show that North Dakota’s oil production will be more than double in the next five years. What we can predict with great certainty is that North Dakota’s influence over domestic and global oil supply systems will increase in the near future, especially over the next five to six years. This is good news for those who are concerned about domestic energy security in the USA.
Highlights
North Dakota is one of the lower 48 states of the USA
The regression results in the three tables show model type, estimated model parameters, mean absolute error (MAE), R2, Ljung-Box Chi-Square test for error autocorrelation, Augmented Dickey-Fuller (ADF) test for trend, and Seasonal Dickey-Fuller (SDF) test for trend
The purpose of this paper was to forecast how much oil can be produced in North Dakota for the five years using the Seasonal Autoregressive Integrated Moving Average (S-Autoregressive Integrated Moving Average (ARIMA))
Summary
North Dakota is one of the lower 48 states of the USA. Historically, its economy had been highly dependent on agriculture, which accounted for over 87% of land cover in the state in 2007—more than 16 million hectares [1]. Oil production from the North Dakota portion of the Bakken Formation has increased by more than 197% since 2005, to approximately 400,000 bbl. LeFever and Helms [3] of the North Dakota Geological Survey (NDGS) reported several estimates of total oil reserves in the Bakken Formation. Estimates made based on NDGS data place the total reserves between 200 and 300 billion bbl. The estimated Bakken Formation reserves are very large compared with those of the United Arab Emirates (UAE), which is one of the most powerful oil producing countries in the Organization of the Petroleum Exporting Countries (OPEC), and has the seventh largest oil reserves with 97.8 billion bbl. [5], these estimated recovery rates will allow total production of between 9 and 150 billion bbl. Mason (2012) predicts that the Bakken can produce as much as 1.5 million bbl. per day by 2023, and sustain this level of production for 25 years more
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