Estimating The Future Supply of Shale Oil: A Bakken Case Study

James L. Smith

January 2017

We propose a new way to estimate the remaining volume of recoverable shale oil resources in the U.S. Our method applies the principle of “successive sampling without replacement” to derive from historical drilling data maximum likelihood estimates of the number and productivity of remaining drilling sites. Unlike existing techniques, this approach identifies the portion of “technically recoverable” resources that can be developed economically at alternative price levels. For the Bakken, we estimate that 50% of remaining technically recoverable resources—roughly 8 billion barrels—could be developed if the oil price remains near $50/barrel.

JEL Codes: L71, Q35, Q41
Keywords: shale oil supply, MLE, drilling productivity, sequential sampling