28 lines
1.3 KiB
TeX
28 lines
1.3 KiB
TeX
\begin{frame}{Oil and Gas Production: Assumptions }
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\textbf{Assumptions}
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\begin{enumerate}
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\item{Engineer probabilistically knows the production path of each well }
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\item{Marginal production choice is to drill a new well in a particular location}
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\item{Future production is modeled by a best fit Arps model}
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\item{Constant discount rate of 4.5\%}
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\end{enumerate}
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\end{frame}
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\begin{frame}{Oil and Gas Production: Econometric Model }
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\begin{block}{Long Run Effect on Oil Produced}
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\begin{equation}
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Q_{O,b,t}=\beta_{1} Q_{O,b,t-1}+\beta_{2} P_{WTI,t-1}+\beta_{3} P_{HH,t-1}+\beta_{4}\theta_{t}+\gamma_{t,b}+\epsilon_{b,t}
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\end{equation}
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\end{block}
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Where \(Q_{O,b,t}\) is the net present oil produced in a basin state pair b, at time t, \(P_{WTI}\) is the West Texas Intermediate futures price, \(P_{HH}\) is the futures price of the Henry Hub spot market, \(\theta_{t}\) is a month dummy, and \(\gamma_{b,t}\) is a variable that represents the amount of monetary damage from natural disasters.\newline
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\textbf{2SLS is used, with instruments of:}
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\begin{enumerate}
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\item{VAR model residuals of oil refinery volumes, and gas storage}
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\item{Regional population weighted cooling and heating degree days}
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\item{Sum of the standard of each instrument over the last 12 months}
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\end{enumerate}
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\end{frame}
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