What's Better?
Top-down analysis is based on, for example, the EIA saying there is 100 billion barrels of "technically" recoverable oil left in the Permian Basin and at some unknown price that is profitable enough to get it out of the ground, there is a 70% probability that at least 50% of that 100G BO WILL be recovered. At 6.1 MM BOPD and 2.27 G BO of current annual production that means there is 22 more years of drilling in the Permian... and we're good.
A bottom-up analysis would set aside conjecture and resource estimates and look at the annualized decline of legacy wells, R/Ps, EUR's, rock quality, unconformities in basin structure, depositional environments, TOC, carbonate content, well economics, ROIs, produced water disposal problems, well interference, well spacing, economic limits, increasing decline rates, normalized lateral lengths, drilling and completion costs, debt, plugging and decommissioning liability, labor, rust, etc. etc. That would then lead to the question, can we keep drilling enough of the same kind of wells we have in the past to make 2.27 G BO from the Permian Basin, every year, for the next 22 years?
You have to decide which methodology is better, particularly when determining energy policy and our nation's long term energy security.
"Question everything. Learn something. Answer nothing".
Euripides
When my buddy sends me a chart like this it's like Christmas. There are eight things I can learn from this chart that help me understand exactly what is occurring in the Permian Basin, what's not, what the direction is likely going to be...and why. I want the data and to be able to make up my own mind. I don't want people that have never operated, or owned working interest, never met a payroll on Friday afternoon tell me what they think the data means. If the opinion comes out of a machine, or from artificial intelligence, I generally dial it out. This is bottom-up stuff. Not always feel-good stuff.
https://www.eia.gov/todayinenergy/detail.php?id=62884, this means nothing to me. One, I don't trust the source, two its cabbage data made into coleslaw, mostly all fundamentally based on past results leading to the same future performance. Top-down stuff. This is almost always feel-good, we have no earthly idea where the money is going to come to make this happen, it will last forever stuff.
Who doesn't trust the EIA; its much smarter than I am. Thats why I want to work from the bottom up. To learn. And confirm.