Modeling response to proposed OCS leasing schedules
A model of the response of the oil industry to proposed offshore leasing schedules has been developed for the Minerals Management Service (MMS). In order to analyze the economic and environmental consequences of a proposed 5-year schedule, the MMS must first estimate the number of tracts that will be acquired at each future sale and the amount of exploration and production that will occur on these tracts. Forecasts of total bonus are also of interest. The industry model, called IMODEL, makes these predictions based on user-provided oil price forecasts and a data base of characteristics of each OCS planning area. Part of the data base is an inventory (by size class) of the attractive unleased prospects for each OCS planning area. Initial inventories can be inferred from the results of past sales. The model simulates the growth of these inventories between sales as a result of exploration and assigns economic values to the inventories based on oil price assumptions and area-specific cost data. Industry cash-flow considerations enter via the rate of return used in evaluation. Industry cash-flow considerations enter via the rate of return used in evaluation. Industry response to each sale is then forecast using a game-theoretic bidding model. Initial results with the model (which is written in FORTRAN and runs on an IBM PC-XT) are encouraging but emphasize its sensitivity to oil price forecasts.
- Research Organization:
- Daniel H. Wagner, Associates, Paoli, PA
- OSTI ID:
- 5785199
- Report Number(s):
- CONF-870606-
- Journal Information:
- AAPG (Am. Assoc. Pet. Geol.) Bull.; (United States), Journal Name: AAPG (Am. Assoc. Pet. Geol.) Bull.; (United States) Vol. 71:5; ISSN AABUD
- Country of Publication:
- United States
- Language:
- English
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