MassiveIndustry

(Wed, 15 Jan 2020) Depending on the nature of oil and natural gas resources specific to particular regions, changes in future oil prices can produce very different results. Relatively higher oil prices push investment toward oil projects and away from natural gas projects, and relatively lower oil prices typically produce the opposite effect. In regions where oil and natural gas resources do not tend to be comingled, such as Australia, higher oil prices increase oil production without much effect on natural gas production. However, in regions with comingled oil and natural gas resources, such as Brazil, the competition is more complex with less straightforward results. We model production under three oil price cases in Australia and Brazil to illustrate how the combination of resource configurations and price incentives result in different production projections.