Economics and petroleum resource appraisal: The case of the Permian basin:

Estimates of oil and gas resources typically are presented in terms of proved and undiscovered resources. This paper presents a methodology for incorporating economic considerations into resource appraisals for petroleum basins. A cost algorithm is used to calculate estimates of the costs of finding and developing undiscovered oil and gas fields in the Permian basin. The sensitivity of the resource estimates to variations in values of the variables in the costing model was investigated, and the results of this analysis are presented. The model indicates that at prices up to $40/bbl, the total reserves of oil and gas in barrels-of-oil equivalent (BOE's) from future discoveries will be less than 15% of the estimated ultimate recovery from fields discovered before Jan. 1 1975. Only discoveries to a depth of 20,000 ft were included.