The Effect of a Random Planning Horizon on Production and Investment for Petroleum Reservoir -- A Note on Kuller's and Cumming's Model

There have been several formulations of models for crude oil production which tried to identify the elements of user cost and show their effect on production and investment decisions. In this chapter, previous results are extended by incorporating the uncertainty regarding the date of arrival of the backstop technology in the model. This uncertainty adds a new element to the user cost identified previously and is shown to affect the production and investment decisions.