The replacement cost integration program

Abstract

The Replacement Cost Integration Program (RCIP) forecasts the annual additions to proven reserves and production of domestic crude oil. The inputs to RCIP include parameters (discount rate, tax rate, and supply elasticity), expected oil prices, and process model output. The process model output consists of capital costs, operating costs, and production levels for 31 regions. For each region and year, RCIP calculates expected profits and forecasts the level of reserve additions. Two production profiles relate reserve additions to future oil production. The parameters in the model were estimated using data for 1970 to 1986. Results are presented for two sets of prices: high and low. For the period from 1987 to 2020, the cumulative production of oil increases by 64 percent from the low case to the high case, while the cumulative additions to proven reserves increase by more than a factor of three.