LAUSR

Petroleum tax design analysis usually abstracts from the fact that taxation affects not only project selection but also concept design and drainage strategy, and thereby the extraction and recovery rate. The implicit assumption is that oil companies are unresponsive to tax changes where concept selection and production decisions are concerned. In his novel approach, Smith (2014) develops a broader model which accounts for the additional effects. This provides a consistent framework which permits analysis of specific settings. Berg et al. (2018) apply the model to establish the effect of a reduction in uplift on the Norwegian continental shelf (NCS) and find, for this case, that the traditional assumption of an unresponsive company still holds.