Thread by @davidmihalyi

Excited to share findings from my new working paper:

The Long Road to First Oil

[THREAD] 1/

It evaluates factors affecting speed at which petroleum fields go from discovery -> production. It is based on global proprietary dataset of 25,000+ fields globally.
2/

On avg it takes 7 years from discovery to first oil/gas, with s.d. of 9 years. 1/4 of fields yet to reach production. For giant fields avg is 10 years. Big regional variation. 3/

Geology obviously matters, e.g. gas & deep(er) offshore fields are slower. There are time factors at play, fields gotten slower to get approval but quicker to develop. 4/

But institutions matter too. More democratic regimes are associated with quicker timelines after controlling for geology&time factors.
E.g. In autocracies it takes twice the time to develop a similarly large gas find. 5/

National oil company (NOC) participation is associated with quicker timelines at home (after controlling for country fe), but slower timelines when involved in fields abroad. 6/

I also look at event studies around the time when these NOCs were set up (@paashamahdavi's dataset) . I find a 20% increase in likelihood of projects starting up in the decades after these (partial) sector nationalization events. 7/

Why do these results matter? 8/

For #resourcecurse research:
There is a growing lit. assuming giant discoveries cause exogenous oil production increase with uniform (5 yr) lag. My results call these earlier finding into question. 9/

They underestimate post-production impacts from countries that are slower to extract their resources. Alternatively, some of the impacts they reported (e.g. borrowing ⬆️) may in fact have happened prior to production start.
#presourcecurse 10/

For energy transition policy:
Earlier work on ET scenarios assumed geology & extraction costs is what drives which oil projects will become stranded. My research suggests NOCs could push their own domestic projects harder. 11/

Caveat #1: I can't prove causality. There may be third factors (e.g. resource nationalism) which partly drive both nationalization&project speed.
Still the broader point holds, it ain't just geology&technology driving project speed, institutions matter too. 12/

Caveat2: This is my first sole-authored research paper & it's first public draft.
papers.ssrn.com/sol3/papers.cf…
All comments welcome.
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