Bayesian Non-linear Quantile Regression with Application in Decline Curve Analysis for Petroleum Reservoirs

distribution of the response variable are expressed as non-linear functions of the covariates. The non-linear quantile regression method would be used in a real field data related to production history in hydrocarbon reservoirs. Analysis of declining production rates and forecasting future performance of oil and gas wells is called decline curve analysis in petroleum engineering literature. Decline curve analysis is a basic tool for estimating recoverable reserves which can be used when the production history is long enough that a decline trend can be identified. Decline curve analysis is mainly a nonlinear regression model where certain types of standard curves are fit based on the past production performance and is then extrapolated to predict the future well performance. Arps (1945)[8] provided some theoretical justification based on physics about those standard types of curves, viz. hyperbolic, harmonic and exponential. The conventional way of decline curve analysis in the petroleum engineering community is to fit a mean regression model using least square method on the transformed production data. The fitted curve is defined as the P50 curve which is extrapolated for future prediction and reported to security exchange commission (SEC) for the reserves estimates. Surprisingly the definition of the P50 estimate in the SEC handbook is actually the 50-th percentile, not the predicted mean. When using the least square estimate what is being reported is the predicted mean of the curve, not the 50-th percentile or P50. Similarly, the prediction interval is used to report the P10 and P90 (the 10th percentile and the 90th percentile respectively) reserves. The use of quantile regression instead of the conventional mean regression would be appropriate in this context as the fitted quantile regression curves would have the correct interpretation for the predicted reserves. Here we could consider the hyperbolic curve as the non-linear quantile regression function when the exponential and the harmonic curve can be viewed as a special case of the hyperbolic curve. The information from the neighboring well production history and similar type of reservoirs would be incorporated as priors for the three decline parameters in the hy-