Oil and natural gas reserve prices : addendum to CEEPR WP 03-016 ; including results for 2003 revisions to 2001

Introduction. A working paper entitled "Oil and Natural Gas Reserve Prices 1982-2002: Implications for Depletion and Investment Cost" was published in October 2003 (cited hereafter as Adelman & Watkins [2003]). Since then we have obtained data for 2003 and estimated oil and natural gas reserve prices for that year. We have also revised our previous estimates of reserve prices for 2001. This addendum paper reports on the nature and significance of the results for 2003 and the revisions to 2001. We have also extended the analysis by adding two new features. First is the expression of reserve prices in real terms -- previously we had only reported nominal prices. Second, we have estimated levelized or constant field prices that appear to underlie reserve prices, for each year. We refer to these as planning prices. Previously we had only published estimated growth rates in field prices from levels prevailing for a given year, congruent with our estimates of reserve prices. Section 1 of this Addendum paper highlights the 2003 results. Section 2 discusses the revisions for year 2001. Section 3 outlines the nature of the analytical extensions, presents the results, and discusses what they show. Concluding remarks are in Section 4. Adelman & Watkins [2003] included an extensive set of tables in Appendices. The revisions to all these tables to include 2003 and revised 2001 data are attached here as Appendices. This paper is to be read in conjunction with, not as a substitute for, Adelman & Watkins [2003]: analysis and description in the 2003 paper is not repeated here

World oil : availability and price the next ten years

This report was prepared as a background paper for presentation and discussion at the Asian Development Bank's Regional Meeting on Energy Policy held on December 11-12, 1986 in ManilaNational Science Foundation, SES-8412971 and Center for Energy Policy Researc

Crude oil supply curves

Short-run cost curves shift over time as depletion counters increasing knowledge. Under competition, a rightward (leftward) shift indicates lower (higher) cost and greater (lesser) productivity. A simple coefficient captures the slope, and its changes. USA crude oil productivity rose for many years, declined after 1972. In natural gas it can only be discerned since 1984, but has if anything increased. OPEC productivity rose greatly before 1970, reflecting greater plenty not scarcity; later years are not measurable. Non-OPEC productivity increased greatly after 1980.Supported by the MIT Center for Energy and Environmental Policy Research

Sustainable growth and valuation of mineral reserves

The annual change in the value of an in-ground mineral is equal to the increase or decrease of inventories ("reserves"), multiplied by the market value of a reserve unit. The limited shrinking resource base does not exist. Its inter-generational optimizing is a phantom problem. If there is any "Hotelling rent" it is captured by the reserve market value, which is created by investment in knowledge (exploration) and in productive facilities (development). There are problems of concepts and data. But examples for recent years suggest that mineral value changes are small

Producers, consumers, and multinationals : problems in analyzing a non-competitive market

A paper written two years ago gave a general analysis of the current world oil market, indicating why the price had nothing to do with real scarcity, but was set by a monopoly both vulnerable and very strong. The purpose is now t analyze the market more closely, with a view to making some predictions about future prices. Non-competitive markets are notoriously hard to analyze, because we have no precise theory of small-group actions. Furthermore, the current cartel2 is very recent, and its great successes since the 1970 Libyan negotiations have been and still are a learning process. But we can at least identify the principal factors, and eliminate irrelevant or wrong hypotheses

USA oilgas production cost : recent changes

During 1984-1989, oil development investment cost in the USA fell, but only because of lower activity. The whole cost curve shifted unfavorably (leftward). In contrast, natural gas cost substantially decreased, the curve shifting rightward. This is an additional reason why measures of cost or value "per barrel of oil equivalent" should be avoided

An aggregate model of petroleum production capacity and supply forecasting

This paper presents a complete discussion and documentation of the M.I.T. World Oil Project Aggregate Supply Model. First, the theoretical development and methodology are presented. The relationships between geologic and economic characteristics are analyzed and a system of equations representing the inertial process model are derived. Next, the construction of the data is described and the data, by country segment, is presented in detail. Methods of bridging the many gaps in the data are discussed. Finally, the simulation forecasts of the model are presented through 1990. *This research has been supported by the National Science Foundation under Grant No. DAR 78-19044. However, any opinions, findings, conclusions or recommendations expressed herein are those of the authors and do not necessarily reflect the views of NSF. The work also is supported by the M.I.T. Center for Energy Policy Research. We wish to thank the following individuals for their comments on earlier drafts: P. Eckbo, H. Jacoby, R. Pindyck, J. Smith, and M. Zimmerman. Also, for research assistance and help in data analysis we thank J. Carson, W. Christian, D. McDonald, H. Owsley, G. Ward, and, in particular, A. Sterling. For editing and typing we are grateful to S. Mehta and A. Sanderson.NSF grant no. DAR 78-19044

Oil and natural gas reserve prices, 1982-2002 : implications for depletion and investment cost

A time series is estimated of in-ground prices - as distinct from wellhead prices ₆ of US oil and natural gas reserves for the period 1982-2002, using market purchase and sale transaction information. The prices are a measure of the unit investment cost (long-run marginal cost) of creating new oil and gas reserves. The data are also used to examine the impact of reserves status (producing or not), the rate of production (R/P ratios) and of wellhead prices on reserve prices, and to reveal oil and natural gas price expectations embedded in reserve prices. Noticeable differences are disclosed between oil price expectations (ambiguous) and natural gas (positive). Estimates are made of current market values of US oil and gas reserves. Over the 21 year time span studied the trend in oil reserve prices is zero to mildly negative, that in natural gas is zero to mildly positive. All of these results -- the reserve prices themselves, their trends, and estimates of one year returns on holding reserve assets-- are incompatible with Hotelling doctrines. All these estimates refute the assumption of a fixed stock of hydrocarbons whose incessant decrease by production makes the still unproduced remainder constantly more valuable. The results are compatible with a process whereby investment adds to reserves even as production depletes them