Lognormality in the observed size distribution of oil and gas pools as a consequence of sampling bias |
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| Authors: | M Power |
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| Institution: | (1) Department of Management Sciences, University of Waterloo, N2L 3G1 Waterloo, Ontario, Canada |
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| Abstract: | Economic filtration has been offered as an explanation of the observed lognormality in the size distribution of discovered oil and gas deposits. The result leads to the conclusion that one cannot impute the shape of the underlying parent distribution from the observed discoveries size distribution. The fact that the largest pools tend to be discovered early in the exploration history of an area of interest suggests the existence of an inherent sampling bias in the discovery process. The bias is influenced by the levels of geologic knowledge and technological sophistication. Furthermore, the existence of the bias leads to lognormality in the observed discoveries size distribution of oil and gas pools. A discovery process model explicitly incorporating the notion of sampling bias was applied to a series of Weibull parent frequency size distributions. The selected parent distributions are of a class suggested in the literature as more reflective of nature's size distribution and have empirical support. The distribution of discoveries resulting from the application of the model to the chosen parent size distributions were tested for lognormality using a chi-squared test. Lognormality was found to be an acceptable model of the discoveries size distribution over a wide range of resource exhaustion measures. When combined with the notion of economic filtration, sampling bias leads to the conclusion that one should not expect the lognormal distribution to accurately represent the underlying parent size distribution of oil and gas deposits. |
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| Keywords: | economic filtration oil and gas pool-size distributions resource appraisal |
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