Observed oil and gas field size distributions: A consequence of the discovery process and prices of oil and gas

Abstract

If observed oil and gas field size distributions are obtained by random samplings, the fitted distributions should approximate that of the parent population of oil and gas fields. However, empirical evidence strongly suggests that larger fields tend to be discovered earlier in the discovery process than they would be by random sampling. Economic factors also can limit the number of small fields that are developed and reported. This paper examines observed size distributions in state and federal waters of offshore Texas. Results of the analysis demonstrate how the shape of the observable size distributions change with significant hydrocarbon price changes. Comparison of state and federal observed size distributions in the offshore area shows how production cost differences also affect the shape of the observed size distribution. Methods for modifying the discovery rate estimation procedures when economic factors significantly affect the discovery sequence are presented. A primary conclusion of the analysis is that, because hydrocarbon price changes can significantly affect the observed discovery size distribution, one should not be confident about inferring the form and specific parameters of the parent field size distribution from the observed distributions.