A study on the future of unconventional oil development under different oil price scenarios: A system dynamics approach |
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Affiliation: | 1. School of Industrial and Systems Engineering, College of Engineering, University of Tehran, 14395-515 Tehran, Iran;2. Institute for Resources, Environment and Sustainability (IRES), University of British Colombia (UBC), Vancouver, Canada;1. Petroleum Systems Engineering, University of Regina, Regina, SK S4S 0A2, Canada;2. Environmental Systems Engineering, University of Regina, Regina, SK S4S 0A2, Canada;1. Eurotechnica GmbH, D-22941, Bargteheide, Germany;2. Clausthal University of Technology, 38678, Clausthal-Zellerfeld, Germany |
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Abstract: | Fluctuations in the oil global market has been a critical topic for the world economy so that analyzing and forecasting the conventional oil production rate has been examined by many researchers thoroughly. However, the dynamics of the market has not been studied systematically with regard to the new emerging competitors, namely unconventional oil. In this paper, the future trend of conventional and unconventional oil production and capacity expansion rates are analyzed using system dynamics approach. To do so, a supply-side modeling approach is utilized while main effective loops are modeled mathematically as follows: technological learning and progress, long and short-term profitability of oil capacity expansion and production, and oil proved reserve limitations. The proposed model is used to analyze conventional and unconventional oil production shares, up to 2025, under different oil price scenarios. The results show that conventional oil production rate ranges from 79.995 to 87.044 MB/day, which is 75–80 percent of total oil production rate, while unconventional oil production rate ranges from 19.615 to 28.584 MB/day. Simulation results reveal that unconventional oil can gain a considerable market share in the short run, although conventional oil will remain as the major source for the market in the long run. |
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Keywords: | Conventional oil production Unconventional oil production Oil price Scenario analysis System dynamics |
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