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An Econometric Model of Oil and Gas Exploration Development and Production in the UK Continental Shelf: A Systems Approach

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  • Alexander Kemp
  • Sola Kasim

Abstract

The petroleum supply process takes place in stages. Decisions at any stage are based on information obtained at the preceding stage. The present paper develops an econometric model incorporating the feedback structure of the process. The model framework consists of a system of simultaneous equations. Using UKCS data the model was estimated, tested for stability and predictive power, and used to conduct a structural analysis, investigating the effects of market conditions on activity levels in a mature hydrocarbon province. The results provide useful insights into the feedback nature of the petroleum supply process and the importance of market conditions to continued activity levels in a mature province.

Suggested Citation

  • Alexander Kemp & Sola Kasim, 2003. "An Econometric Model of Oil and Gas Exploration Development and Production in the UK Continental Shelf: A Systems Approach," The Energy Journal, , vol. 24(2), pages 113-141, April.
    • Handle: RePEc:sae:enejou:v:24:y:2003:i:2:p:113-141
    DOI: 10.5547/ISSN0195-6574-EJ-Vol24-No2-5
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    References listed on IDEAS

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    2. Adelman, M A, 1990. "Mineral Depletion, with Special Reference to Petroleum," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 1-10, February.
    3. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
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