Hubbert Curve

DEFINITION of 'Hubbert Curve'

A statistical theory of oil production that states that the rate of extraction from a particular region follows a bell shaped curve. Initially, while there are minimum drilling operations the rate of production is limited. However, as infrastructure increases and larger portion of land are explored, resource production approaches peak production. Eventually, as the oil becomes depleted, extraction rates begin to slow down. The Hubbert curve characterizes the life cycle of a drilling operation.

BREAKING DOWN 'Hubbert Curve'

The predictions presented by the Hubbert Curve satisfy statistical constraints and are intuitively comprehensive. Technological improvements or estimated proven reserve changes realized during the production process can alter the shape of the curve.

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