Simulating Natural Gas Discoveries

Our modeling framework replicates the commercial assessment of discoveries completed by the oil and gas industry as it explores for and discovers natural gas deposits in frontier basins. We use geologic data to predict expected discovery volumes. We then pass discoveries through an economic filter to determine which are commercially viable. The filter combines taxation, royalty, and pricing assumptions with historical drilling and engineering development cost data to classify discoveries as economic or subeconomic. Designed with the cooperation of the Canada Oil and Gas Lands Administration and the Nova Scotia Department of Mines and Energy, and applied to Canada's Scotian shelf, the model provides a useful exploration and policy-planning tool to industry and government. The model was used to analyze the number of wells required to add a trillion cubic feet of gas to discovery inventories, a question of current concern about the exploration and development potential of Canada's Scotian shelf region.