Price, cost and exploration sensitivities of prospective activity levels in the UKCS: an application of the Monte Carlo technique

Building on previous work this paper develops a probabilistic economic mode l using the Monte Carlo technique to project activity levels in the UK Cont inental Shelf. The modelling emphasises the importance of oil and gas price s, the investor's hurdle rate of return, changing prospectivity, and the ex ploration effort. Activity in the medium term is found to be highly sensiti ve to oil and gas prices, development costs and exploration effort. Field i nvestment may fall very substantially and the oil production decline rate c ould be fast from 2000. To sustain higher activity levels further technolog ical advances and their widespread adoption are essential. (C) 2000 Elsevie r Science Ltd. All rights reserved.