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The Discovery Decline Phenomenon: Microeconometric Evidence from the UK Continental Shelf

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  • Andrew Pickering

Abstract

The Discovery Decline Phenomenon (DDP) requires that firm-level discoveries of a non-renewable resource depend, non-linearly, upon cumulative industry wide exploration. In this paper, an optimal rule for the exploration effort that adheres to the DDP is derived. Data from the United Kingdom Continental Shelf (UKCS) are applied to the model where it is found that cumulative exploration is a highly significant determinant of firm-level exploration, and that prices and taxes also determine exploration effort. The 'Hubbert peak’ in discoveries in the UKCS is estimated to be 1989 thereby improving upon previous estimates but also implying that the DDP in this region is already quite advanced.

Suggested Citation

  • Andrew Pickering, 2002. "The Discovery Decline Phenomenon: Microeconometric Evidence from the UK Continental Shelf," The Energy Journal, , vol. 23(1), pages 57-71, January.
    • Handle: RePEc:sae:enejou:v:23:y:2002:i:1:p:57-71
    DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No1-3
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    Cited by:

    1. Jakobsson, Kristofer & Söderbergh, Bengt & Snowden, Simon & Li, Chuan-Zhong & Aleklett, Kjell, 2012. "Oil exploration and perceptions of scarcity: The fallacy of early success," Energy Economics, Elsevier, vol. 34(4), pages 1226-1233.
    2. Stephen P. Holland, 2008. "Modeling Peak Oil," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 61-80.
    3. Reynolds, Douglas B. & Kolodziej, Marek, 2008. "Former Soviet Union oil production and GDP decline: Granger causality and the multi-cycle Hubbert curve," Energy Economics, Elsevier, vol. 30(2), pages 271-289, March.

    More about this item

    Keywords

    Depletable resources; Hubbert; oil; UK ; Resource scarcity; oil production;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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