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On the Economics of Improved Oil Recovery: The Optimal Recovery Factor from Oil and Gas Reservoirs

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  • Arild N. Nystad

Abstract

This paper investigates an oil company's optimal depletion of oil and gas reservoirs, taking into account that the depletion policy itself influences the recoverable reserves, i.e. determines the recovery factor. The emphasis is on the role of up-front capital costs. The depletion policy is derived from the amount of investment in production and associated injection projects, represented in a stylized fashion. I make a comparative static study of how various economic factors influence the company's choice of an optimal depletion policy and, thus, implicitly of an optimal recovery factor.

Suggested Citation

  • Arild N. Nystad, 1988. "On the Economics of Improved Oil Recovery: The Optimal Recovery Factor from Oil and Gas Reservoirs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 49-61.
    • Handle: RePEc:aen:journl:1988v09-04-a04
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    Cited by:

    1. Cairns, Robert D., 2014. "The green paradox of the economics of exhaustible resources," Energy Policy, Elsevier, vol. 65(C), pages 78-85.
    2. Reynolds, Douglas B., 2013. "Uncertainty in exhaustible natural resource economics: The irreversible sunk costs of Hotelling," Resources Policy, Elsevier, vol. 38(4), pages 532-541.
    3. Chavez-Rodriguez, Mauro F. & Szklo, Alexandre & de Lucena, Andre Frossard Pereira, 2015. "Analysis of past and future oil production in Peru under a Hubbert approach," Energy Policy, Elsevier, vol. 77(C), pages 140-151.
    4. Al-Kasim, Farouk & Søreide, Tina & Williams, Aled, 2013. "Corruption and reduced oil production: An additional resource curse factor?," Energy Policy, Elsevier, vol. 54(C), pages 137-147.

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    JEL classification:

    • F0 - International Economics - - General

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