Estimating the future supply of shale oil: A Bakken case study

We propose a new way to estimate the supply curve of remaining shale oil reserves in the U.S. Our method applies the principle of “successive sampling without replacement” to derive from historical drilling data maximum likelihood estimates of the number and productivity of remaining drilling sites. Unlike existing techniques, this approach identifies the portion of “technically recoverable” resources that can be developed economically at alternative price levels. For example, we estimate that 50% of remaining technically recoverable resources located in the Bakken play-roughly 8 billion barrels-could be developed economically if the oil price remains near $50/barrel. (L71, Q35, Q41).