Probability has been the traditional approach for representing uncertainty in hydrocarbon economic analyses. Probability, however, often cannot sufficiently represent the type of uncertainty commonly encountered in practice, since the prevalent uncertainty is frequently a result of the inherent vagueness of parameters values rather than randomness of the parameters.

An alternative approach to probability that provides a better representation of economic uncertainty is possibility distributions or fuzzy numbers. The theoretical requirements of possibility distributions are less stringent than those of probability, making them easier to apply in many economic analysis situations. This paper advocates the use of possibility distributions in oil and gas economic analysis.

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