Scandinavian Working Papers in Economics
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Department of Business and Management Science, Norwegian School of Economics (NHH) Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)

No 2016/3:
Log-normal creaming and the likelihood of discovering additional giant petroleum fields

Jostein Lillestøl () and Richard Sinding-Larsen ()

Abstract: This paper considers sampling proportional to expected size from a partly unknown distribution. The applied context is the exploration for undiscovered resources, like oil accumulations in different deposits, where the most promising deposits are likely to be drilled first, based on some geologic size indicators (“creaming”). A Log-normal size distribution turns out to have nice analytical features in this context, and fits available data reasonably well. The theoretical and practical consequences for the accumulation of knowledge on the underlying distribution based on this scheme, named Log-normal creaming, are explored in some detail. The theory is applied on the prediction of remaining oil accumulations to be found on the Norwegian Continental Shelf.

Keywords: Log-normal distribution; sampling proportional to size; resource prediction; (follow links to similar papers)

JEL-Codes: C00; C10; C13; (follow links to similar papers)

18 pages, January 27, 2016

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