Sunday, June 15, 2008

Adding percentiles means there's probably more oil than we thought

Isabel Lugo has an interesting post up that points out that because "proven reserves" figures for individual oil fields are given as the tenth percentile (that is, the amount of oil in a field is estimated to have a 90% chance of being larger than the stated amount), you can't just add up the individual "proven reserve" figures and have a figure that means the same thing. But apparently that's exactly what many bodies do with the figures!

(She refers to this New Scientist story.)

Isabel gives an example where adding two tenth percentiles gives much lower than the tenth percentile of the estimate of the total oil for both (with the implication that if you add enough of these things together, the true amount of oil is probably far, far larger).

[I pointed out in comments that the conservatism in the sum is not necessarily the case (but for readers here - it very likely is the case; the counterexample to conservatism that I give is not a likely situation).]

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