Economic Analysis of Undisovered Petroleum Resources in the Unopened Sea Areas off the Lofoten Islands in Northern Norway : A Combined Monte-Carlo and Scenario Planning Approach

Knowledge of a country’s oil and gas resources and the expected economic value of these resources are essential for the Government and the Parliament (Storting) to formulate an effectiv petroleum-, energy- and economic policy. There are still large parts of the Norwegian Continental Shelf which the Norwegian Parliament has yet not opened for petroleum activities, including all of the northern Barents Sea and the sea areas off the Lofoten islands. Based on the Parlament's consideration of the comprehensive management plan for the Barents Sea and the waters off Lofoten (Storting White Paper No. 8 (2005-2006)) the Norwegian Petroleum Directorate (NPD) was given the assignment of conducting geological mapping of potential petroleum deposits in the Lofoten areas and estimate the resource potential of these waters (Norwegian Petroleum Directorate (2010)). This paper describes and quantifies the expected and potential economic values based on the assessments of petroleum resources in the area. Economic analysis of undiscovered petroleum resources in an unopened area is often done deterministic by calculating the value of the expected resources based on a mean development scenario (see Northern Economics (2009)). We have used economic Monte Carlo simulation based on geological play analysis to calculate the expected economic value of the whole resource distribution