Journal of the Nigerian Association of Mathematical Physics

Log in or Register to get access to full text downloads.

Remember me or Register

DOWNLOAD FULL TEXT Open Access  DOWNLOAD FULL TEXT Subscription or Fee Access

Modeling Economic Planning for Exhaustible Natural Resources

KI Idigbe, AA Adeniji


Petroleum economics is a key component of any field development plan (FDP) for crude oil and natural gas fields having finite life. This paper presents an analytical equation to model the relationship between initial speculative fund(s) and investment cost(s) in a project with finite life. We define a utility function for three categories of risk. The convolution of
the utility function and decline income is our objective function to be maximized subject to the rate of increase of capital. The results show that the return on investments will have the characteristic exponential decline.

AJOL African Journals Online