Ownership Risk, Investment, and the Use of Natural Resources

The effect of insecure ownership on ordinary investment and on the exploitation of natural resources is examined. Insecure ownership is characterized as a positive probability that a typical asset or its future return will be confiscated. For empirical analysis, the probability of confiscation is modeled as a function of observable political attributes of countries, principally the type of government regime in power (democratic versus non-democratic) and the prevalence of political violence or instability. A general index of ownership security is estimated from the political determinants of economy wide investment rates, and then introduced into models of petroleum and forest use. Ownership risk is found to have a significant, and quantitatively important effect. Empirically, increases in ownership risk are associated with reductions in forest cover and with slower rates of petroleum exploration. Contrary to conventional wisdom, greater ownership risk tends to slow rates of petroleum extraction, apparently because the extraction process is capital intensive.

Energy Alarmism: The Myths That Make Americans Worry about Oil

Many Americans have lost confidence in their country's "energy security" over the past several years. Because the United States is a net oil importer, and a substantial one at that, concerns about energy security naturally raise foreign policy questions. Some foreign policy analysts fear that dwindling global oil reserves are increasingly concentrated in politically unstable regions, and they call for increased U.S. efforts to stabilize -- or, alternatively, democratize -- the politically tumultuous oil-producing regions. Others allege that China is pursuing a strategy to "lock up" the world's remaining oil supplies through long-term purchase agreements and aggressive diplomacy, so they counsel that the United States outmaneuver Beijing in the "geopolitics of oil." Finally, many analysts suggest that even the "normal" political disruptions that occasionally occur in oil-producing regions (e.g., occasional wars and revolutions) hurt Americans by disrupting supply and creating price spikes. U.S. military forces, those analysts claim, are needed to enhance peace and stability in crucial oil-producing regions, particularly the Persian Gulf. Each of those fears about oil supplies is exaggerated, and none should be a focus of U.S. foreign or military policy. "Peak oil" predictions about the impending decline in global rates of oil production are based on scant evidence and dubious models of how the oil market responds to scarcity. In fact, even though oil supplies will increasingly come from unstable regions, investment to reduce the costs of finding and extracting oil is a better response to that political instability than trying to fix the political problems of faraway countries. Furthermore, Chinese efforts to lock up supplies with long-term contracts will at worst be economically neutral for the United States and may even be advantageous. The main danger stemming from China's energy policy is that current U.S. fears may become a self-fulfilling prophecy of Sino-U.S. conflict. Finally, political instability in the Persian Gulf poses surprisingly few energy security dangers, and U.S. military presence there actually exacerbates problems rather than helps to solve them. Our overarching message is simply that market forces, modified by the cartel behavior of OPEC, determine most of the key factors that affect oil supply and prices. The United States does not need to be militarily active or confrontational to allow the oil market to function, to allow oil to get to consumers, or to ensure access in coming decades

Modeling petroleum resources in provinces of the Former Soviet Union

This paper estimates petroleum endowment volumes for provinces of the Former Soviet Union (FSU) that have not been previously assessed by other organizations. The study uses the United States Geological Survey World Petroleum Assessment (USGS, 2000) as a starting point. It then ultilizes nonlinear regression to estimate parameters of a Variable Shape Distribution (VSD) model that calculates the total petroleum endowment throughout the FSU. Earlier size distribution models used to evaluate unassessed petroleum resources relied mainly on the fractal and lognormal distributions. In fact, all the methods used historically have been based on an assumed form of the size distribution of nature's endowment of petroleum resources. The VSD model is different in that it allows the actual petroleum data from USGS (2000) to determine the form of the size distribution of petroleum resources. The model is validated by a good fit of actual data, supported by coefficients of determination (R2) equal to 0.98 or greater. It is concluded that there is a large petroleum endowment in the FSU that will last for several decades and can contribute signficantly to domestic energy needs as well as export requirements

Modeling the estimation of petroleum resources in the United States

"D-3887."Bibliography: p. 27-30.by John D. Sterman, George P. Richardson, Pål I. Davidsen

Do primary energy resources influence industry location?

By choosing to locate in a particular place, firms create employment opportunities for workers living there. And the wages they pay increase demand for local goods and services, creating additional job opportunities and further increasing the tax base. Consequently, state and local governments go to great lengths to encourage firms to locate within their boundaries.> In recent years, volatility in energy markets due to deregulation and events in the Middle East have increased the role that energy resource endowments may play in firm location. Thus, economic development agencies in energy producing states have highlighted their natural advantages as a way to attract and retain businesses. Yet there is scant evidence that firms base their location decisions on the availability of primary energy resources, such as coal, oil, and natural gas.> Martinek and Orlando explore the role of primary energy resources in industry location. They examine the relationship between state energy supplies and employment in energy-intensive industries and suggest there is a limited relationship between the production of primary energy resources and industry location. State energy supplies are associated with the location of only the most energy-intensive firms. In other energy-intensive industries, firm location decisions appear largely unresponsive to state energy conditions.Industrial location ; Natural resources ; Employment (Economic theory)

Characterizing Natural Fractures and Their Interactions with Hydraulically Induced Fractures

Natural fractures are preexisting micro-cracks and fissures that can have a critical impact on hydraulic fracture treatments in shales. Most shale formations contain natural fractures, but the characteristics of these natural fractures can vary significantly. For example, the natural fractures in the Barnett Shale are mostly narrow, long, and sealed with calcite cement. The natural fractures in the Wolfcamp Shale are much more heterogeneous as a whole, but tend to be clustered in similar groupings based on the lithology of certain areas of the formation. The creation and development of natural fractures prior to any hydraulic fracturing treatments is primarily a function of mineralogy, total organic carbon, and in-situ stresses. During hydraulic fracturing treatments, certain characteristics, such as the relative angle between the natural and hydraulic fractures, the length of the natural fractures, the differential stress of the formation rock, and certain completion design variables, will determine how the natural and induced fractures interact and create a fracture network. The creation of a natural fracture network can have a positive effect on the ultimate hydrocarbon recovery in some cases. Natural fractures provide accumulation space and travel pathways for hydrocarbons, which is critical in low porosity and low permeability shales. However, natural fractures can result in higher rates of fluid leakoff, which will result in less efficient hydraulic fracture treatments overall. Also, natural fractures can provide an undesirable connection to water accumulations, which can negatively impact the economics of a well because of the disposal costs associated with water production. This thesis seeks to characterize natural fractures and also to describe the author's work on a hydraulic fracture simulation software that takes the impact of natural fractures into account.Petroleum and Geosystems Engineerin

Diagenetic controls of reservoir quality in the Mississippian Wayne Beds in the Williston Basin, Bottineau County, North Dakota

The carbonate Wayne beds of the Frobisher-Alida interval (Mississippian Mission Canyon Formation) in the Williston Basin, North Dakota, are capable of producing as much as 400,000 barrels of oil per well at depths of only 3,100 feet. Wayne production is from structural traps in the intertidal packstone-wackestone lithofacies; however, the ultimate recoverable reserves of oil per well is controlled neither by structure, nor by depositional environments. The Wayne beds underwent cementation and micritization in the marine phreatic diagenetic environment. Hypersaline diagenesis caused minor dolomitization and anhydritization. Dissolution and minor cementation occurred in the freshwater vadose zone. Freshwater phreatic diagenesis resulted in mineralogical stabilization and minor cementation. Compaction, pressure solution, dolomite and calcite cementation, and anhydritization occurred in the burial diagenetic environment. Depleted o13C in the carbonates immediately below the pre-Mesozoic unconformity surface suggests that vugular and solution-enlarged porosity formed in the freshwater vadose zone. Beneath paleoislands, mineralogical stabilization in the freshwater phreatic zone prevented later porosity reduction by compaction or cementation. On the flanks of the paleoislands and in paleolows, porosity was occluded by dolomite and calcite cement. The dolomite cement has 6180 consistent with a burial diagenesis origin. Permeability reduction by pore-bridging anhydrite cements post-date the pore-occluding dolomites. Wayne beds contain much less pore-bridging anhydrite beneath paleohighs where the overlying Glenburn evaporites were removed due to erosion than beneath paleolows where the Glenburn is still present. Sulfur stable-isotope data suggest that the sulfur in these pore-bridging anhydrites originated in the Glenburn evaporites. The amount of Wayne oil production from structural traps in the study area is controlled by diagenetic rather than depositional features. Porosity was occluded by burial dolomite and calcite cements in paleolows. Permeability was reduced by burial anhydrite cements in localities where the Glenburn has not been eroded. Thus, the best production within a field comes from those portions of the reservoir which were once beneath islands and/or eroded highs

Fluid Flow and Sealing Properties Associated with an Active Faults - Kura Basin, Azerbaijan

With the advent of stereoscopic data such as as Landsat and SPOT imagery, these methods have been applied to satellite data and used to successfully obtain quantitative measurements over large areas. On this connection, these methods have assisted considerably in fault analysis considerations and detection hydrocarbon seeps in surface of the Kura basin which are considered main oil and gas bearing region in onshore Azerbaijan. The satellite imagery interpretation drew upon knowledge of structural geology and geomorphology and detected hydrocarbon seeps related to fault and mud volcano geomorphology. The main objectives are to determine the role of faults and mud volcanoes within the geologic structure of the study regions and to guide future oil exploration. Remote sensing to detect hydrocarbon seepage onshore allowed recognition of marginal and sub-marginal low-relief structural prospects and stratigraphic traps that is overlooked by reflection seismic surveys. Remote sensing data and images were integrated in hydrocarbon exploration programs with other exploration data such as seismic surveys, well logs, gravity surveys, and other geologic-geophysical investigations. Analysis of satellite data allowed to determine the geometry of the fault system and around them distributions of hydrocarbon seeps and to predict hydrocarbon potential of the Kura basin