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This paper presents a statistical model of the natural gas depletion process. The model is developed to estimate gas-well recoverable reserves and predict first-year production rate in a typical mature petroleum basin in the U.S. Our empirical results suggest that we can estimate, using least squares approach, new gas-well gas recoverable reserves and predict its first year production using our knowledge of the well's absolute open flow potential and the prevailing wellhead natural gas prices. Our results also suggest that we have no strong statistical evidence to reject the null hypothesis that per gas-well recoverable reserves and first-year gas production increase with wellhead natural gas prices. Given a set of geologic conditions, we utilized the model to determine the sensitivity of gas-well reserves and first-year production to changes in wellhead prices.


The discovery and development of new gas reserves occur as a result of exploration and development drilling activities. Usually, drilling outcomes and the subsequent stream of revenues from new reserves are stochastic in nature. Thus, natural gas producers—majors and independents alike—are faced with the decision problem of maximizing the present value of the expected net benefits from all future investments in natural gas exploration, development and production. The maximization problem is subject to resource availability, economic, market and reservoir conditions.

Reliable estimates of gas-well recoverable reserves and first-year gas-well production are some of the key parameters needed by natural gas producers to facilitate investment and management decisions.

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