Forecasting

CHESTER
MEMBER

Ultimate
R,

PELTO

SPE-A/ME

ABSTRACT
The growth in time oi API annual estimates
of
ultimate oil recovery from U. S. fields is governed
by the model,

ij

= Ci {1-exp[-k(j-i)]}
-tEij,

is the API estimate,

published
in year j,
Uiee
o~
the Y
u tlmate recovery from all fields discovered
in year i; Ci is the true ultirna[e recovery from these
fields; k is a constant,
the same for all i and j; and
is a random deviation.
6ii
Rigorous statistical
tests support the model. The
unknown
k and Cis are estimated
by nonlinear
methods,
and exact
confidence
limits
on these
parameters are calculated.
When the estimated
Cis are plotted against time
on a semilogaritbmic
scale, a clear 41 -year downward
linear trend emerges. This trend, stable over political
and economic crises of the first magnitude,
must be
cons idered highly significant,
On the assumption
inde~initely
i?)to the future,
that
it continues
projections
of ultimate
recovery
to be discovered
for any period /rem 1971 onward can be made. These
projections,
applicable
to the lower 48 states and
contiguous
offshore
areas,
are consistent
with
those made on a quite different
basis by the Oil
Supply Task Group of the NPC.
Calculated
con~idence
limits on the projections
emphasize
the great uncertainty
associated
with all
such attempts to look into tbe future.
INTRODUCTION
The API annual estimates
of ultimate oil recovery
from U.S. fields discovered
in a given year tend to
increase with time. In view of the impending energy
it is important
to have a reliable
method
crisis,
for extrapolating
the evolving
estimates
to their
limiting value: true ultimate recovery.
The results of at least two earlier attempts to do
just this are available.
Bradley, 3 Table 16, quoting
the Alberta Oil & Gas Conservation
Board, gives a
series
of ~appreciation
factors
indicating
how
reserve
(recovery?)
estimates
increase
over the
years. Marsh5 developed an ingenious procedure
for
Paper
SPE
Metallurgical,

4261,
and

@Copyright
Petroleum

1973 American
Engineers,
Inc.

Institute

of Mining,

GULF

Oil Recovery
RESEARCH

PITTSBURGH,

& DEVELOPMENT

CO.

PA,

calculating
the factor, F, by which the 1970 API
estimate of ultimate recovery from fields discovered
in any prior year must be multiplied
to estimate
true ultimate recovery.
These factors for rhe years
1960 to 1969 appear in his Table 1.
Neither
Bradley nor Marsh postulated
a definite
mathematical
model for the growth
of ultimate
recovery . estimates.
In the following
section
we
show that the estimation
process
is well described
by the equation,

Rij=

ci{l-exp

[-k(j-i)]}+~ij

. . . . . . . . . . . . . . . . . .(1)
Here, Ri. is the API estimate,
published
in year j,
of the u (tlmate recovery from all fields discovered
in year i; Ci is the true ultimate recovery from these
fields; k is a constant parameter,
the same for all i
and j; and c~j is a random, normal~y distributed
deviation
having mean value of zero. It is easy to
show that the .Marsh and Bradley computed factors
fit the model (Eq. 1).
Advantages
of this
formulation
are that the
unknown parameter
k, and the Cis are easily and
estimated
by standard
nonlinear
simultaneously
methods.
The model can be supported
by rigorous
statistical
tests, and exact confidence
limits for k
and the Cis can be found. These confidence
limits
are the best
way to assess
the reliability
of
forecasts
made by use of Eq. 1.
From these results we estimate
the total ultimate
recovery
from all U. S. fields discovered
between
1920 and 1970 and calculate
approximate
confidence
limits for the estimate.
When the estimated
Cis of
Eq, 1 are plotted against time on a semilogarithmic
a clear
41-yea~,
downward
linear
trend
scale,
emerges.
That is, the Cis from 1930 to 1970 fit
the model,

where ~i is a normally distributed

random deviation
with mean zero. The parameters
of Eq. 2 are easily
least
squares
(l-S). Exact
estimated
by linear
confidence
limits for the expected value and for the
actual value of any future observation
are also not

4.5

difficult
to establish.
By extrapolating
the linear
a derived
trend
into the future and integrating
the expected
value of total ultimate
expression,
recovery
CO be discovered
in the U. S. (excluding
Alaska) for selected
periods from 1971 onward are
calculated.
Approximate
confidence
limits on these
forecasts
are also available.
The prediction
thus generated
for the period 1970
to 1985 is very close to the Oil Supply Task Groupb
forecast
for the same period.
The Task Groups
projections,
of course,
are based on an entirely
Integrating
the derived expresdifferent
approach.
sion from 1970 to infinity yields 52.9 billion bbl of
ultimate
recovery
yet
to be discovered.
The
analogous
Task Group projection
is 104.0 billion
bbl (at 37 percent
recovery
efficiency).
The two
projections
are consistent,
however,
because
the
95 percent
confidence
band for the 52.9 billion
forecast
fully covers and exceeds
the range, 22 to
226 billion bbl.
DERIVATION
AND VALIDATION
OF THE MODEL
Let t z j -- i and let Ri(t) be the API estimate,
published
in year j, of the ultimate
recovery
from
fields discovered
in year i, We postulate
that the
rate of increase
of Ri(t) with time is proportional
to
the ultimate
recovery
yet to be allotted
to fields
with the index i:
q(t)=

7iOn integration,

Ri(t)=

k[Ci-Ri
this expression

Ci[l-exp(-kt

(t)].

. . .(3)

yields

]].

. (4)

Here,
Ci is the true ultimate
recovery
from all
fields
discovered
in the specified
year.
The
transformation
of Eq. 4 to the form of Eq. 1 is
immediate.
The API estimates
cited here began in 1967 and
are presented
in Table 3, Vols. 21 to 25 of Ref. I.
At the time of writing, Vol. 25 was the most recent
issue available.
Although Eq. 1 is nonlinear,
simultaneous
leastsquares estimates
of k, and of as many of the Cis
as desired,
are easy to get. The procedure
is to
determine a reasonable
range for k. For each fixed
value of k in thisA range, a linear LS computation
yields the set of Cis associated
with this value of
k, (A carat or hat
over a symbol denotes
an
estimated
parameter. ) A Fibonacci
or other
systematic
search over the range of k then rapidly
identifies
the estimates,
k and Ci (i = 1920, 1921,
. . . . 1970), yielding the minimum sum of squares.
This approach was applied to the 47 time series,
each with five data points,
representing
the API
estimates
(1967 to 1971) of u] Limate recovery from
fields discovered
in all years between
1920 and

1966, inclusive.
Analysis
of the residuals,
i.e., of
the deviations
betyeen
the observations
Rii and
the LS estimates
Rij, showed that the first data
point in each series was highly erratic. This is not
surprising.
The first time any new procedure
is
tried, errors and unexpected
gaps in the data are
year (1968),
bound to crop up. By the following
most of these defects would have been corrected.
Accordingly,
ir was decided to eliminate
the first
data point from each series.
The parameters
were
then re-estimated
using the reduced data set. Study
of the resulting deviations
showed that the residual
variances
of series representing
fields discovered
in 1946 and earlier
were about six times greater
than for the post-1946
years. The standard way of
handling this situation is to assign the observations
weights
inversely
proportional
to their variances.
Accordingly,
all Rij (t < 1946) were given the weight
0.16.
All other weights,
with a few exceptions
listed below, were set equal to 1. Recalculation
of
all estimates
then produced a homogeneous
weighted
residual plot.
To verify Model 1, the rank correlation
coefficient
T test
was applied
twice to the residuals,
once
within each time series and once across all series.
The details of the test are given in the Appendix.
The test demonstrated
(1) no average tendency for
the set of time series to depart from the model and
(2) no tendency for earlier time series to depart in
one direction
from the model and for later series to
deviate
in the opposite
direction,
thereby yielding
a nearly zero average deviation.
Thus the model (Eq. 1) cannot be rejected on this
test and the available
data.
Let

Fj-~ =E(c~/Rij),

... . . ..

(5)

i.e. , F.-. is the average factor by which the estimate

Rij fo~ f{elds discovered
(j - i) years before j must
be multiplied
to get true average ultimate recovery.
final factor of Marshs
Then Fj_i is the probable
Table 1. Bradleys
Table 16 yields another set of
such factors. If

Fj-i

= 1/{1--

exp[-k

(j-i)]

. . . . . . . . . . . . . . . .

(6)

as postulated
here, a plot of (Fi-i - l)/Fj_i
against
time in years on a semilogarlthmic
scale should
show up as a straight line (Fig. 1). The dashed line
in this figure was fitted by eye to the data of
Marshs Table 1. The solid line corresponds
to the
value of k (0.125) estimated
in this study. Bradleys
but they
factors
are more erratic
than Marshs,
conform approximately
to Eq. 6, with a value of k
intermediate
between
those
implied
by the two
lines of the figure.
Although Marsh expresses
some doubts about its
reality,
he cites a possible
discontinuity
in the

data set. This break appears at about the year 1941.

Its effect, if it exists; is to prescribe
one constant
value of k for fields discovered
after 1941 and a
different
constant
value of k for fields discovered
earlier.
In view of the r test discussed
above,
the
possible
discontinuity
is not supported
by the
evidence.
But another test was made. The pre-1941
discoveries
were passed
separately
through
the
estimation
program to yield a value of k (0.08)
substantially
less than the value (O. 125) found for
the data taken altogether.
The upper exact 95
percent confidence
Iimit for k based on the pre-1941
data is 0.161. The analogous
lower confidence
limit
for k using all the data is 0.104. This large overlap
of confidence
bands (e *en greater
when the data
are broken into two exclusive
sets) casts further
doubr on the hypothesis
that there may be two
different
ks governing
the estimation
process.
Merhods of calculating
exact confidence
limits for
the parameter k are described
in the Appendix.
Although the data at this stage do not support
the concept that k may be a function of the number
of years between discovery
and publication
of the
API estimate,
or that ir may be a function of time
in some other sense, these possibilities
should be
kept cpen and tested as additional
data accumulate.
After the foregoing analyses
and tests had been
made on fields discovered
in 1966 and earlier,
the
API estimates
for fields discovered
in the years
1967 to 1970 were added
to the data and all
The computational
were
repeated.
calculations
problem raised by the fact that no 1968 estimate
F?}i
exists
for fields
discovered
in 1969, say,
is
handled by arbitrarily
setting impossible
values of
Rij equal to 1 and assigning
them zero weight.
Five observations
so far out of line as to be
zero weight.
highly
suspect
were also assigned

%8
7

w
=6

b,

F
5

MARSHS

BRADLEYS

DATA
DATA

0.1

0.5
(Fj.l_l)/FJ_i

FIG. 1 (Fj_i l)/Fji

Vs TIME,

1.0

=
.

CI

Confidence

Limits

Discovwv
Yeor (i)

e
c,

1,98, 2,16

1946

1921

3.10
1,33

3.02,
1,24,

3,19
1,42

1947
1948

0.92

0,83,

1.00

0.87,

1,04

1925
1926

0.96
1,00
4,10

0,92,

1,09

4,02,

4,19

1927
1928

1.8S
2.83

1.79, 1.96
2.74, 2.91

1929

3.40

1930
1931

7.s5
2.1s

3,31,
7.46,

3,48
7.65

1932

0.57

2.06,
0,48,

2.24
0.65

1957
1958

1933
1934

1,44
2,83

1,36, 1.53
2,74, 2,92

19s9
1960

1935

3.09
5.35
3.52

3.00, 3.18
S.24, 5,47
3,43, 3.62

1961
1962
1964
196S

1,41
0%93
1,S4

1936
1937
1938

TO 1970

OF ~ (1920-1970),
WITH
IN BILLIONS
OF BARRELS

2,07

1923
1924

~a

VALUES
LIMITS,

1920
1922

ESTIMATES

The discussion
of this section
is restricted
to
the lower 48 and contigous
offshor~ areas.
*
When we plot the estimates
C1930 to C1970
against
time on a semilogarithmic
scale,
a clear
linear trend emerges (Fig. 2). (Fig. 2 is taken from
the data of Table 1 after exc!uding
C1968. ) A 41year linear trend, persistent
over the Depression,
World War II, post-war prosperity,
discovery
of the
and many other
political
and
offs$ore
fields,
must have major significance.
economic
crises,
Considering
the upheavals
during these years, it is
hard to imagine circumstances
that could radically
change the long-term downward movement. Thus, the
structure
underlying
Fig. 2 appears
to offer an
exceptionally
stable base for projections
into the
future.
Let

Discoverv
Yew (i)

and the 1968 to

THE TIME TREND OF DISCOVERY;

FORECASTS
OF FUTURE DISCOVERIES

10

RECOVERY

TABLE
1 ESTIMATED
95 PERCENT
CONFIDENCE
\

II

, R1g68, ~g70

The procedures outlined above produced estimates

of kAand Ci (i = 1920, 1921, . . . , 1970). The value
of k is O. 125, with upper and lower 95 percent
confidence
limi~s of 0.153 and 0.104, respectively.
The estimates
Ci and their exact confidence
Iimits
are given in Table 1. Ultimate
recovery
from all
U.S. fields discovered
in these years is estimated
at 140.5 billion bbl. The approximate
95 percent
confidence
bounds for the true value are 153.5 and
131.1, in billion-barrel
units.
If we add the API
estimate
of ultimate
recovery from pre-1920 fields
to our figure for the years 1920to 1970, we get
163.8 billion bbl as the ultimate recovery from all
fields discovered
prior to 1971. The analogous
API
1971 estimate is 132.3 billion bbl.

12 -

ULTIMATE

l\

13 -0

These are f?lg~s,lgfjg

1970 estimates
R1936,j,

1.63

3.s3

3,42,

3.67

1949

3.1s

3.05,

3.28

1950
1951

2.76
\.76

2.66,
1.69,

2.89
1.86
1.6s

1952
1953
1954
1955
19s6

1963

3,81,

4.01

1.88

1.79,

1,98

1940

3,64
2.18

3.54,
2,09,

3.75
2.28

1966

1941
1942
1943

1,45
1.36

1,36,

1.5S

1968
1969

1944

2.32
2,03

1.93, 2.13

1.62

1.51,

3.90

1,26, 1.45
2.22, 2,43

Limits

L42,

1939

1945

Confidence

1.s2
1.S6

1967

1970
Tetal

1.56

1.48,

2.39
2.36

2.28,

1.75
1,96

2.24,
1,6S,
1.84,

2.53
2.s2
1.88
2.11

2.38

2.23,

1.21
0,93

1,12,
0.85,

1.06
0,6S

0.97,
0,58,

1,18
0.74

1.40
0,97

1.26,
0,86,

1.S6
1,10

1.25,
1.s2,

1.60
1.96

0.79,

1,09

1.72

32.64
1.38
1,02
140.50

1+34,
28,45,

2.57
1.32
1.03

1,83
37,60

1.06,

1.76

0.44,
131.10,

1,66
153, XI

47

Yi

(7)

1Ogti

where ~ = 1.113

a = 3.050
6 = 0.024

From Fig. 2,

yi=bo-blti+~i.....-.(g)
where ti is time in years and ~i
normally
distributed
deviation
Setting
the time origin at the
estimating
ho and b 1 of Eq. 8
we get

to=

is an independent
with mean zero.
end of 1929 and
by least squares,

1.114,

~l=Oo024.(7)
Then the straight
line in Fig. 2, which represents
the estimated expected value of yi , has the equation,

!i=~(yl)

= 1.1!4

0.024

t\

Confidence
limits for the true expected
ultimate
recovery,
of which Eq. 11 is an estimate,
can be
calculated
by the procedure
described
in the
Appendix.
Unfortunately,
it is not possible
to
calculate
confidence
bounds
for the ultimate
recovery
that will actually
be observed
over the
time interval,
but these bounds, just as in Fig. 2,
will lie outside the confidence
band for the expected
value. The confidence
limits cited below pertain to
the expected
value only.
On the assumption,
then, that the 41-year trend
of Fig. 2 continues
indefinitely
into the future, we
find for the period 1971 to 1985,

10)

The two inner curves of Fig. 2, one on each side of

the line, are the 95 percent confidence
limits for
the true expected
value, E( Yi); the dashed,
outer
set of curves represents
the 95 percent confidence
bounds for an observed (i. e., computed) value of Yi.
In the Appendix,
starting
from Eq. 8, we show
that the estimated
expected
ultimate recovery to be
discovered
from the end of 1970 to the end of any
future year T is given by

1985
~
ti
i=1971

()

1929)]},

.,

. . (1I)

5.0

1,0
0.5
-1
J

z.

4.7

0.1

L
1930

1940 1950

. . . (13)

e ~ ti

()
ix)

10.0

= 15.2BB

is the implicit OSTG estimate

of ultimate recovery
to be discovered
over the 15-year
period.
The
estimates
of Eqs. 12 and 13 are, thus, entirely
consistent.
If we set T=~in
Eq. 11,

(~~/~){exp(-41t)

u)

. .(I3

Here and in the following,

BB stands
for billion
barrels. The 95 percent confidence
band associated
with Eq. 12 is [9.8 BB, 25.9 BB]. The Oil Supply
Task Group (OSTG),6 in a quite different approach,
estimates
that 41 BB of original oil-in-place
will be
found in the period Jan. 1, 1970, to Jan. 1, 1985.
This figure does not include the North Slope fields.
OSTG also projects
cumulative
recovery efficiency
to be 37.03 percent at the end of the period. Thus,

41 BB *0.3703

exp[-&(T-

= 15.9B8.

1960

1970

YEAR

FIG. 2 di VS TIME.

1980

1990

= 52.9

BB.

. . (14)

=1971

The 95 percent confidence

limits are 22.2 BB and
226.0 BB. OSTG projects
281 BB of original oil-inplace to be found from Jan. 1, 1970, to T = ~. OSTG
does not project recovery efficiency
beyond 1985,
but at 37.03 percent
efficiency,
281 BB original
oil-in-place
yields
104.0 BB of ultimate recovery.
This figure is nearly double that given in Eq. 14,
but the two forecasts
are reasonably
consistent
because of the very wide confidence band associated
with Eq. 14.
Thus, the two different approaches
yield roughly
the same results.
The statistical
analysis
of this
and quantifies
the very
paper, however, highlights
uncertainty
surrounding
forecasts
of oil
large
supply,
even when the underlying
mathematical
model (Eq. 8) is assumed to be true.

EFFECT

OF ADDING

1972 API ESTIMATES

After this paper,

including
the Appendix,
had
been written,
the 1972 API estimates
of u[timate
If the model (Eq. 1),
recovery
were published.
apparently
adequate
to describe
the API estimation
process
through 1971, were in fact defective,
the
addition of another 52 independent
data points (a 25
percent increase)
could seriously disrupt the picture
outlined above. This possibility
was investigated
by adding the 1972 estimates
to the existing
data
bank, retaining
the previous weighting
scheme hnd
recalculating
all the important
parameters.
The
following
changes
were
noted.
The estimated
parameter
k increased
from 0,125 to 0.128. The
estimated
weighted
standard
deviation
of ~ii
i~creased
from 0.035 to 0.037. Repotting
of the
Cis as in Fig. 2, and overlaying
the pIot in Fig. 2,
showed only minor changes in the positions
of the
most recent three or four points. The double r test
of the residuals
(within and across aI1 time series)
increased
deviations
from zero,
but
produced
because deviations
as great as or greater than this
would be observed about one out of six times when
the model is valid, these deviations,
as well as all
others described
above, are not significant.
At this time, then, Model 1 appears valid, and the
the following conclusions
hold as originally written.
CONCLUSIONS
I. The API annual
estimates
of ultimate
oil
recovery from all U. S. fields discovered
in a given
year increase
with time. The estimation
process
and the growth in time of the estimates
are described
mathematically
by Eq. 1.
2. The unknown parameters
in Eq. 1 and their
exact confidence
limits are estimared by procedures
described
in the text and Appendix.
3. The ultimate
recovery
from all U. S. fields
discovered
before 1971 is estimated
to be 16328 BB.
4. When the estimated
ultimate recovery,
Ci, for
fields discovered
in year i is plotted against
time
on a semi Logarithmic scale, a clear 41-year Iinear
trend shows up. This trend must be considered
of
major significance.
5, On the assumption
that the trend continues
indefinitely
into the future, the expected
ultimate
recovery
from all U. S. fields,
excluding
Alaska,
that will be discovered
after 1970 is estimated
to
be 52.9 BB. The 95 percent con fide~ce band for
this figure covers the range of 22.2 BB to 226.0
BB. Confidence
limits on the ultimate recovery that
will actually be observed are even broader.
6. This and other forecasts
based on the model
developed
here are consistent
with projections
of
the Oil Supply Task Group made on a quite different
basis.
The statistical
analysis
of this article,
however,
points up and quantifies
the very large
uncertainties
surrounding
all such projections,
even
when
based
on an exact
mathematical
model
assumgd
to be true. When, along with this, we

recognize
that the real model is quite unknown, the
fog of uncertainty
through which we peer into the
future seems thick indeed.
NOMENCLATURE
a=

ebo

BB = billion
b= bl

bbl

bO = parameter
bl = coefficient
Eq. 8

in linear

regression,

Eq. 8

of time in linear regression,

Ci = true

ultimate
recovery
from fields
discovered
in year i
vector of Ci values
LS solution vector of increments,
Eq.
A-22

~.
~.

E()=

expected
value of random variable
in
parentheses
F(l,n-p, y) = value of F ratio with 1 and (n-p)
degrees of freedom at y significance
level
F.-, = E (Ci/Rij)
. :/2 (ij, Eqs. A-14 and following
fi~ = *~1
~ = vector Of /ij values
k= coefficient
of time in Eq. 1
k* z an arbitrary or trial value of k
k~, k$= lower and upper 100 (1 - y) percent
confidence
limits for k
LS = least squares
n= number of terms in a series,
Eqs. A-1
and A-2; or number of observations
minus the number of zero weights,
Eqs. A-23 and A-24
p= number of parameters estimated

Qi =
Qij=
$?
Rijz

T.
tij

g.

ii

im
V()=
y.

ijl
wij2
ii

in r test,

Eq. A-1

~ij% (Rij _ ~i xij)r Eq. A-19

vector of Qii values, Eq. A-21
API estimate,
published
in year j, of
ultimate
recovery
from all fields
discovered
in year i
time in years, AD
time

t=
tit

random variable

time in years
origin

measured

from arbitrary

matrix of ~ii values, Eq. A-16

, .% ~ ip Eq. A-14 and following
= l?
of the
= in the r test, the mth residual
ith series
variance
of
parentheses
matrix of Wij~A
= tiiiyz (dRij/dCi),
= ~ij% (dRij/k*),
= 1 _ exp (_ktij),

random
values,

variable

in

Eq. A-21

Eq. A-19
Eq. A-19
Eq. A-14

49

is positive,
is ~egative,
r is

In Ci
of zij values

vector

E(eqi)

V(r)

the series
the trend

= 2(2n+5)/[9n(n-1)]

significance
level of F ratio
random deviation
in Eq. A-7
increment

of Ci, Eq. A-19

increment

of k*, Eq. A-19

vector

of increments,

in Eq. 1

random deviation

in Eq. 8

defined

=26/108

. . . . . . ..

(A-z)

for a series with four terms. The average value of

ri (= ?) for the 47 series was found to be 0.08. If
the series are all independent
and if they show no
significant
trend, F should be normally distributed
with mean O and standard
deviation
(V(7) /47)~.
Then the quotient

Eq. A-21

random deviation

exhibits positive
trend; if r;
negati~e.
The variance o~

is

by Eq. A-23

variance
rank correlation

coefficient

weight

to rj th observation

assigned

estimated

value of quantity

(7-o)

underneath

0.08/0.0715

REFERENCES
1. Reserves

of Crude Oil,
Natural Gas Liquids,
and
Natural
Gas in the United States and Canada and
United States Productive
Capacity,
AGA, API, CPA

(1967 to 1971) Vol. 21 to 25.

2. Aitchison,

J. and Brown, J. A. C.: The Logtrormal

Disfribufiorz,
Cambridge ( 1957).
3, Bradley, P. G.: ~(Exploration Models and petroleum
Oil:
costs
and
Production
Economics, Alaskan
Supply, Frederick A. Praeger, Inc., New York (197 1).
4. Kendall,

M. G. and Stuart, A.: The Advanced Theory

Charlea Griffin & Co., London (1966)

o/ Statistics,

vol.

3,

5. Marsh, G. R.: How Much Oil Are We Really Finding?

Oil ar.rd Gas ]. (April 5, 1971) 100-104.
6. National
Initial

Petroleum

Appraisal

Council:

/[v(d/47]2=

U. S. Energy Outlook:
Vol. 2, 25-53.

An

1971-1985 (1971)

is

standard

normal

variate.

The

indicates
no significant
departure
so we conclude
that on the average
series
is consistent
with the model

. . (A-3)
value

1.12

from normality,
the set of times

of Eq. L
To check whether the average deviation
is near
zero
because
early
time series
depart
in one
direction
from the model and later series go in the
for a net zero effect, we may
opposite
direction,
use the series
of Qs already
calculated.
The
foregoing
procedure
was repeated
on this single
series of 47 terms. The value of r was found to be
-0.0338.
From Eq. A-2, the standard deviation
of T
for a series of 47 numbers is 0.1009. The distribution
of r under the null hypothesis
is again normal with
mean zero, and the standard normal variate is

7. Williama, E. J.: Exact Fiducial Limits in Non-Linear

~~timation,?j Series B, 24, J. Royal Stat. SOC. (1962)
125-139.

= 1.12.

. 1/2

.-

(r-ov[v(dj

APPENDIX
THE r TEST
This test is described
in Ref. 4. In the present
.
.
aPP~lcatlon there are 47 time series ..> each with four
residuals
of the form ~im = Rim - Rim (m = 1, 2, 3,
4). The residuals
for Series i are, thus, tiil, ~i2,
ui3, ui4. To make the within-series
test, count the
number of us, in Series r that are less than uil. To
this value, add the number of ui3 and ~i4 that are
less than ~i2. Then, if ui4 is les~ than ~i3} add 1
to this sum. Clearly,
a similar procedure
can be
carried
out over all mem~ers of any series
with
more than four terms. The total thus obtained
is
assigned
the symbol Qd Calculate
the Qis of all
series. Set
q

l-(

l-[4Qi/n(n-1)]=

50

n is the number

of terms

in the series.

If ri

(A-4)

This is well within the range of likely values for a

normal variate. Hence, the r-test applied both within
and across
series
shows no significant
deviation
from Model 1.
ESTIMATION

OF FUTURE

From Expressions
immediately

&

cr2. The expected

E(e7i)=

DISCOVERIES

7 and 8 of the

-blti
*~o*

where Ii is an
random deviation

Qi/3)

. . . . . . . . . . . . . . . . . . <A-1)
where

(-0.0338-0)/o.l~09=-o.336. . . . . . . . . . . . . . . . .

text,

eqi
9

we get

(A-5)

independent,
normally distributed
having a zero mean and variance
value

of e i is (Ref. 2)

u=#22,. . . . .

(A-6)

so that we can put

e~~~~+$it.........

(A-7)

where 8i is a nonnormal
mean value. On setting

random variable

with a zero

(i=$7,ei)*

ebo=a,
bl=b,
we get

s ~~-bi

;i

The expected

~=+~i~.

value

. . . .

(A-8)

bi . . . . . . .

(A-9)

of ~i is

E(8i)=~6~-

In order to integrate
over a time interval,
find parameters
A and B, such that

we must

*-M

df

=Ati-B+(e

T- I
-1)/B

=aae-bT

Thus,

. .

.(A-lo)

B=b,

or

at points on the boundary of the joint 95 percent

confidence
ellipse
of 6., bl. The maximum and
minimum
values
of Eq. A-12 observed
on the
boundary are the nearly exact 95 percent confidence
limits for

A(e

B-l)/

B=

A=

bua/(eb

aa,
-l)

If, as earlier estimated,

b has a value near 0.02,
then A is very nearly equal to au. Eq. A-9 in a form
suitab!e for integration
is, thus,

E(t)

=aae-bt.

. . . ,

Confidence
limits for k and the Cis of Eq. 1
require a different
approach.
Although the method
employed here is new, it descends
from a suggestion
put
forward
several
years
ago by Williams. 7
Williams
original
procedure,
however,
could not
handle sets of equations
like Eq. 1. The general
theory underlying
the method has been developed
in a separate document to be published
in a journal
specializing
in mathematical
statistics.
It would
take us too far afield to quote the document in any
detail. We therefore limit the exposition
to showing
how exact confidence
limits for the parameter
k of
Eq. 1 are calculated.
To simplify the development,
put
t

ij=(]-i),

. . . . . . . . ..

and then transform

the indices
i and j so that i
ranges from 1 to 51, and j from 1 to 4. Thus, in the
case of i, 1 designates
fields discovered
in 1970,
2 designates
fields discovered
in 1969, . . . . . . .
and 51 designates
fields discovered
in 1920. For
index
j, 1 designates
1968 API estimates,
2
designates
1969 API estimates,
3 designates
1970
API estimates
and 4 designates
1971 API estimates.
For example,
R42 IS the API estimate
(published
in 1969) of ultimate recovery from fields discovered
in 1967, and t42 is 2 years.
In addition,
we use
weighted
observations
as discussed
in the text.
Weights are assigned
the symbol o. Put

,(A-11)

1/2
The unbiasect
a

estimate

of a is

ij

=1.113,

CONFIDENCE

aa

-41b
(

-e

2, pages
the text

~IMITS

Confidence
limits
for Eq.
small effect due to the variation
found by evaluating

= ij

Uij =

found by the procedure

described
in Ref.
45-46.
From these
results
Eq. 11 of
follows immediately.

11, neglecting
the
about a, are easily

-b(T -1929)

(A-13)

. . . . . . . . . . . . . . . . .

b
(A-12)

v2x
(bl~j

f ij = w,,/2

ij B
Cij

The weights ~ij are 3.0, 0.16 or 1.0, as also

in the text. From Eq. A-14, Eq. 1 becomes

ij

)/

Rij ,

=ciuij+

or in matrix
~=~~+f

fij$

. . . . ..

(A-I4)
stated

(A-15)

form,
. . . . . . . ..(A-l6)

s]

The first
(u~~,
The

column,

transposed,

u~2, tf13, U14, 0>0,

transpose

(0,0,0,0,

~=~~+~

of the ~ matrix is
0, . ..!

of the second

column

is
0) ,

(
of the ~ vector

~ is a 204-element
column vector.
With k fixed at k*, the I-S solution
vector is

is

WI12*

232J

We wish to test whether the value .k* falls at the

boundary
of the 100 (1 y) perc~nt confidence
region for k. At the fixed point @*, Q), assumed to
the true value (k, ~), we may expand
be near
Eq. 1 in Taylors series to linear terms:

Rij~6i[l-exP(-ktij)]

are evaluated

= ij

WiJ2

at (k*, ~i). Put

Uijz(Rij- eixij)

%ij is calculated

iji

of the ~ is

83p

Eq. A-21 is linear

for ~ be ~. Thus,

Wij

using

L*),

12 ( dRij/dci)

/2

~z=~h

(~~ij/dk

)$

From Eq. A-18, approximately,

In matrix

l$

82 )

in & Let the I-S solution

vector

. . . . . .(A-22)

we calculate

(Qw----Q-d
WQ),,
. (A-23)
.
and compare q5(k*, ~~ with F(1, n - p, y). Here n is
the total number of observations
(51 x 4 = 204)
minus the number of observations
with zero weights
(1 1); p is the number of parameters
estimated
(52).
F(17 n - p, y) is the value of the F ratio for 1 and
(n -p) degrees of freedom at the y significant
level.
This number can be read from a table of F-values.
Thus, to find 100 (1 - y) percent confidence
limits
for k, one must find the minimum values of
[#(k*,

. . . . . . . . . ..(A-19)

= ail

.*51,

#=(@)-l~t~.

Wijl

form:

~2wij2

+ fij

. (A-2O)

&)-F

(l,

The quantity
(Eq. A-24)
points, kf, kf, where
f<;

Qij

51,2,2

Rij/dci)~ci

The derivatives

(where

222

51,4,2

The transpose

Finally,

. . . . . . . . . . . . . . . . (A-18)

Qij =

W142* 212

242too*tw51,1,2*

51,3,2
for the

1321

122$

($p~zp

+(d

(A-21)

The first 51 columns of the ~ matrix have the same

form as the columns of the ~ matrix, with elements
wijl substituted
for ~ij. The 52nd column of ~,
transposed,
is

rq~, u~*# u~3, u~41 0, 0, 0, $..,

and so on. The transpose

. . . . . . . . ..

< ~;

n-p,
has

zero

Y)]2
values

(A-24)
at two

. . . . . . . . . . . (A-25)

These points can be rapidly located by a Fibonacci

search over k.
The foregoing procedure
is valid if (1) the /ii of
Eq. A-20 ~re normally and independently
distributed
wirh mean value O and constant
variance
a , and
(2) the denominator
of Eq. A-23 is essentially
constant
for all values
of k* falling
within the
prescribed
100 (1 - yj percent confidence
band.
These conditions
were observed
to hold in the
present
instance.
***