Factor Analysis Of Trends In Energy And Metals Production And Consumption In Developed And Developing Countries

This paper presents a methodology used to combine energy and mineral market variables between Less Developed Countries (LDCs) and Developed Countries (OECD) over the past 24 years (I 966-1990). LDCs include all countries, except OECD and central planned economies (CIS) and other countries in Eastern Europe. This period permits a comprehensive view of the impact of the energy crisis and the changes in economic growth patterns, correlated with changes in trends of production and consumption of energy and metals in both country blocs. This complex relationship was evaluated by a factor model of consumption and production variables using the aluminum, copper, lead, and zinc industries. The following variables are used in the factor model: export dependence, geographic concentration of mining production, geographic concentration of refined demand, geographic concentration of refined production, import dependence, refined demand growth, stability of demand, income elasticity of refined demand, price stability, intensity of use, and intensity of energy. The model for all commodities shows that the factor scores projections for LDCs and OECD blocs depicted a clearly divergent trend after the two oil shocks (1973-1979), when the intensity of energy variable presents high loading in the factor. The results are in substantial agreement with findings that the demand for energy, as well as for metals, is growing more rapidly in LDCs than OECD. © 1998 International Association for Mathematical Geology.73211224Adelman, M.A., Energy-income coefficients and rations: Their use and abuse (1980) Energy Economics, 2 (1), pp. 2-4Berndt, E.T., Wood, D.O., An economic interpretation of the energy-GDp ration (1974) Energy: Demand, Conservation, and Institutional Problems, pp. 21-30. , in M. S. Macrakis, ed., Cambridge, MA, MIT PressThe British Petroleum Co, , BP Statistical Review of World Energy, London, (several issues)Château, B., Lapillonne, B., (1977) La prévision à long terme de la demande d'energie: Le modèle medée: Paris, p. 225. , Editions du CNRS, Collection Energie et SociétéCivettini, S., The intensity of competition in the American steel industries and the strategic groups concept (1995) Proceedings of the Mineral Economics and Management Society, Fourth Annual MEMS Meeting, pp. 50-61. , March 9-11, Boulder, ColoradoCriqui, P., (1982) Impacts Du Prémier Choc Pétrolier Sur Les Consommations D'energie Finale, (11), p. 12. , Economie Prospective IntemationaleCrowson, P., Keynote address (1986) Structural Changes in the World Mineral Industry: Implications for Canada: Proceedings of the CRS Police Discussion Seminar, (18), pp. 1-16. , in M. J. W ojciechowski, ed., Kingston, OntarioCrowson, P., Metals demand and economic activity: Some recent conundrums: (1996) Proceedings of the Mineral Economics and Management Society, Fifth Annual MEMS Meeting, pp. 28-42. , March 28-30, Montreal, QuebecDobozi, I., (1992) Competitiveness in Metals: The Impact of Public Policy London, pp. 162-211. , in M. J. Peck and others, eds, Mining Journal Books LTDEdwards, R., Ashok, P., Intensities of energy usage: An international and intertemporal comparison (1978) Energy Policy, 6 (1), pp. 66-75Furtado, A., Suslick, S.B., Forecasting of petroleum consumption in Brazil using the intensity of energy technique (1993) Energy Policy, 21 (9), pp. 958-968Furtado, A., Suslick, S.B., Energy and metals consumption and production patterns in LDCs: Raw materials report: (1995) Journal of Mineral Policy, Business and Environment, 11 (2), pp. 2-13Goldemberg, J., Johansson, T.B., Reddy, A.K.N., Williams, R.H., (1988) Energy for a Sustainable World, p. 220. , New Delhi, Wiley EasternHannan M., J., Tomes, T.J., Industry structure and capacity (1989) Surplus Capacity in the International Metals Industry, pp. 43-51. , in Cordes, J. A. and Torries, S T. E, eds., SME, chap. 5Yearbook, International Finance Statistics, , International Monetary Fund (IMF), D.C. (several issues)Imran, M., Barnes, P., (1990) Energy Demand in the Developing Countries, p. 83. , World Bank staffcommodity working paper, no.23: Washington, D.C., The World BankJohnson, R.A., Wichern, D.W., (1992) Applied Multivariate Statistical Analysis, p. 642. , New Jersey, Prentice Hall, 3rd edLabys, W.C., (1980) Market Structure, Bargaining Power, and Resource Price Formation:, p. 238. , Massachusetts, Lexington Books, Ist edLevine, M.D., Meyers, S., The contribution of energy efficiency to sustainable development in developing countries (1992) Natural Resources Forum, 16 (1), pp. 19-26Metallgesellschaft Aktiengesellschaft, Metallstatistik, annual, Frankfurt-am-Main, Germany, Metallgesellschaff AG,: (several issues)Mining Annual Review, , Mining Journal, (several issues)Nappi, C., (1989) Metal Demand and the Canadian Metal Industry: Structural Changes and Policy Implications, p. 135. , Kingston, Ontario, Centre For Resource StudiesPorter, M., The structure within industries and companies performance (1979) Review of Economics and Statistics, 61 (2), pp. 214-227Radetzki, M., Developing countries: The new growth markets (1990) World Metal Demand: Trends and Prospects, pp. 77-112. , in Tilton, J. E. ed, Washington, D.C., Resources for the futureTilton, J.E., The OECD countriesDemand trend setters (1990) World Metal Demand: Trends and Prospects, pp. 35-76. , in Tilton. J. E., ed, Washington, D.C., Resources for the FutureBureau of mines Mineral Commodity Summaries, , U.S. Department of the Interior, Washington, D.C. (several issues)(1986) Structural Changes in the World Mineral Industry: Implications for Canada, (18), p. 218. , Wojciechowski, M. J., ed., Proceedings of the CRS Police Discussion Seminar, Kingston, OntarioWorld Tables, , World Bank, Baltimore, MD, Johns Hopkins University Press (several issues)(1993) World Development Report, p. 308. , World Bank, World Bank, Washington, D.C., Oxford, Oxford University PressWorld Metal Statistics: Ware and London, , World Bureau of Metal Statistics, (several issues

The Quantification Of Mineral Consumption: A Preliminary Analysis [quantificacao De Demanda Mineral - Uma Abordagem Preliminar]

Presents models which provide a systematic approach for analyzing and forecasting the behaviour of mineral consumption. A number of important considerations must be taken into account in constructing the actual model: the primary, intermediate, or final levels of supply or demand; temporal or spatial configurations; simultaneous or recursive casuality; short, medium or long time span. In this work we have utilised three methodologies: econometric models, engineering models, and input-output models. Mineral modeling represents a growing interest of mineral industry in Brazil for achieving reliable decisions in private and state policy. -from English summaryno. especial17518

Impacts Of Environmental Constraints On The Optimal Decision-making Process Applied To Brazilian Petroleum Industry

Environmental assessment affects negatively the decision to invest when production oil projects are evaluated under traditional analytical methods such as net present value (NPV), because the environmental requirements may generate a delay in the start-up of production. Contrarily, under a real options approach, if the delay period provoked by legal and environmental requirements is close to the investment timing (postponement period), some decisions to produce may be unaffected. Thus, the decision-making process according to the real option theory is more realistic, since it considers uncertainty over future costs and output prices, investment irreversibility, and managerial flexibility (as option to delay investment), which means that the decision is not "now or never" (as in the case of NPV), but "now or wait". This paper discusses an option model based on the stochastic behaviour of output prices, and its relationship with the optimal rules of decisions in terms of timing period. We conclude that, if this period length is longer than that of typical production delay time in an offshore oil project in Brazil due to environmental restrictions, decisions to produce are unaffected.4193743Beanlands, G.E., Environmental assessment requirements of the world bank. Evaluation of environmental impact: Current situation and perspectives (1993), pp. 91-105. , University of São Paulo, in PortugueseEvaluation of environment impact (1995) Social Stakeholders, Procedures, and Tools., p. 132. , IBAMA-Instituto Brasileiro de Meio Ambiente e Recursos Naturais RenováveisBrasília, in PortugueseTommasi, L.R., Environmental impact studies (1994) Terragraph Artes e Informática., p. 354. , São Paulo, in PortugueseTourinho, O.A., The valuation of reserves of natural resources: An option pricing approach (1979), Tese de doutorado. University of California, Berkeley: Ph.D. dissertationBrennann, M.J., Schwartz, E.S., Evaluating natural resources investment (1985) Journal of Business, 52 (2), pp. 135-157. , AprilPaddoc, J., Siegel, D., Smith, J., Option valuation of claims on real assets: The case of offshore petroleum leases (1988) The Quarterly Journal of Economics, pp. 479-508. , AugustOliveira, C.A., Evaluation and management of petroleum reservoirs - A comparative study between NPV traditional approach and real options theory (1991), pp. 3-8. , Boletim Técnico da Petrobrás, janeiro/marçoRio de Janeiro in PortugueseMyers, S., Majd, S., (1983) Calculating the Abandonment Value Using Option Pricing Theory, , MITDias, M.A., Rocha, K., Petroleum concessions with extendible options using mean reversion with jumps to model oil prices (1997) 3a International Conference on Real Options, The Netherlands, pp. 1-27. , June 6-8Hull, J., (1997) Options, Futures and Other Derivatives Securities, , Prentice HallTrigeorgis, L., (1998) Managerial Flexibility and Strategy in Resources Allocation, , The MIT Press, Cambridge, MassachusettsBlack, F., Scholes, M., The pricing of options and corporate liabilities (1973) Journal of Political Economy, 81, pp. 637-659Cox, J.C., Ross, S.A., Rubinstein, M., Option pricing: A simplified approach (1979) Journal of Financial Economics, 7, pp. 229-263McDonald, R., Siegel, D., The value of waiting to invest (1986) Quarterly Journal of Economics, 101, pp. 707-728. , NovemberDixit, A.K., Pindyck, R.S., (1994) Investment Under Uncertainty, , New Jersey, Princeton University Pres

A New Approach For Accessing Offshore Decommissioning: A Decision Model For Performance Bonds

A discussion covers the financial assurance system (bonding system), an innovative incentive mechanism being adopted by several countries in different productive areas with the objective of guaranteeing the availability of sufficient financial resources for the compliance of end-of-leasing environmental obligations; a general outlook of the many decommissioning related issues that economically impact oil projects around the world; several advantages provided by the bonds, e.g., ensure satisfactory regulatory compliance, safeguard government and taxpayers by attaining reasonable protection from default at a minimum increase in project costs, and protect the environment from potential harm resulting from failure to carryout proper decommissioning operations in a timely fashion; corporate environmental costs and liabilities related to the abandonement and decommissioning processes; and a decision model aimed at improving financial performance from companies under a hypothetical bonding regime within the Brazilian legal and fiscal framework. This is an abstract of a paper presented at the SPE International Conference on Health, Safety and Environment in Oil and gas Exploration and Production (Stavanger, Norway, 6/26-28/2000).Anderson, R.C., Lohof, A.Q., (1997) The United States Experience with Economic Incentives in Environmental Pollution Control Policy, , U.S. Environmental Protection Agency - EPA, Environmental Law Institute, Washington, D.CBorghini, S., Bartolomeo, M., Molinari, S., Ratti, S., The role of environmental costs and liabilities in the decision making process of oil and gas exploration and production companies (1998) Paper SPE 46654 Presented at the 1998 SPE International Conference on Health, Safety and Environment in the Oil and Gas Exploration and Production Proceedings, , Caracas, Venezuela(1999) Editora Brasil Energia, Ltda., , several issues. In PortugueseBryan, V.J., (1998) Reclamation Bonding for Coal Mining Operations, , US Department of Interior, Office of Surface Mining Reclamation and Enforcement (not published)Cornwell, L., Costanza, R., An experimental analysis of the effectiveness of an environmental assurance bonding system on player behavior in a simulated firm (1994) Ecological Economics, 11, pp. 213-226(1995) An Introduction to Environmental Accounting as a Business Management Tool: Key Concepts and Terms, , U.S. Environmental Protection Agency Publication, EPA 742-R-95-001 (Jun.)Ferreira, D.F., Suslick, S.B., Financial assurance system in the oil industry: A decision model for an environmental bond scenario (1999) Proc., 15 th Brazilian Congress of Mechanical Engineering/COBEM 99, , Águas de Lindóia, Brazil (Nov.)Ferreira, D.F., Suslick, B.S., (2000) Reducing Financial Impacts of Bonding Requirements on Offshore Oil Projects in Brazil, , State University of Campinas/UNICAMP, discussion paper (Jan.). Not PublishedFormigli, J., Porciuncula, S., Campos basin: 20 years of subsea and marine hardware evolution (1997) Proc., Offshore Technology Conference, , Houston, Texas, OTC 8489Griffin, W.S., Regulatory considerations - International issues (1998) Proc., Joint Workshop on the Decommissioning of Offshore Oil and Gas Platforms, , Jakarta, IndonesiaMcElfish, J.M., Bernstein, T., Bass, S.P., Sheldon, E., (1996) Hard Rock Mining: State Approaches to Environmental Protection, , Environmental Law Institute, Washington, D.COffshore decommissioning communications project (1998) International Offshore Oil and Gas Industry, , http://www.oilrigdisposal-options.com, June 30, [18.03.99]Pane, S.Z., Hendarjo, G., The challenges of abandonment and disposal of offshore structures in Indonesia (1998) Proc., Joint Workshop on Decommissioning of Offshore Oil and Gas Platforms, , Jakarta, IndonesiaPoremski, H.J., Life cycle assessment - Development planning through decommissioning (1998) Umweltbundesamt (Federal Environmental Agency - Germany), Proc., Offshore Technology Conference, , Houston, OTC 8788Prasthofer, P.H., Offshore decommissioning communications project (ODCP) (1998) Proc., Offshore Technology Conference, , OTC 8785(1997) Socio-Economic Impacts of Varying Decommissioning Options, , The International Offshore Oil and Gas Industry, The Offshore Decommissioning Communications Project, Prognos. Not PublishedThornton, W.L., Decommissioning: Review of 1995-1997 and the global opportunities (1997) Proc., 8 Th Annual ASME/API Energy Week 97 Int. Conf. Proceedings Book 3, pp. 264-270. , HoustonRobinson, G., Ireland, S., The cost of abandonment (1995) Proc., Strategies for Successful Abandonment Conference, p. 7. , IBC Tech. Derv. LTD, London, EnglandTyagi, R., Regulations for the decommissioning of oil and gas platforms in the United States (1998) Proc., Joint Workshop on the Decommissioning of Offshore Oil and Gas Platforms, , Jakarta, IndonesiaTwachman, R., Offshore-platform decommissioning perceptions change (1997) Abandoning Offshore Platforms - Oil & Gas Journal, , (Dec.)Watson, T., Re-use and disposal considerations (1998) Proc., Joint Workshop on Decommissioning of Offshore Oil and Gas Platform, , Amoco Exploration Company, Jakarta, Indonesi

Risk Analysis Applied To Petroleum Exploration And Production: An Overview

During the past decades, there have been some significant improvements in risk analysis applied to petroleum exploration and production. This special issue is dedicated to show some contributions and developments of risk analysis applied to petroleum exploration, field appraisal and development, production forecast under uncertainty, decision-making process, portfolio management, and real options approach. A brief overview is presented in this paper in order to introduce the universe of risk analysis, followed by a summary of the main contributions for this special edition and discussion and implication of the main trends in risk analysis. © 2004 Elsevier B.V. All rights reserved.441-219Allais, M., Évaluation des Perspectives Économiques de la Recherche Minière sur de Grands Espaces - Application au Sahara Algérien (1956) Revue de L'Industrie Minérale, pp. 329-383. , Paris, JanuaryArps, J.J., Arps, J.L., Prudent risk taking (1974) Journal of Petroleum Technology, pp. 711-716. , JulyAttanasi, E.D., Drew, L.J., Lognormal field size distributions as a consequence of economic truncation (1985) Mathematical Geology, 17, pp. 335-351Back, M.J., A discussion on the impact of information technology on the capital investment decision process in the petroleum industry (2001), SPE 71420, SPE Annual Technical Conference and Exhibition, New OrleansBall, B.C., Savage, S.L., Holistic vs. Hole-istic E&P Strategies (1999) Journal of Petroleum Technology, p. 74. , SPE 57701 SeptemberBallin, P.R., Aziz, K., Journel, A.G., Quantifying the impact of geological uncertainty on reservoir performing forecast (1993) Symposium on Reservoir Simulation, , New Orleans, Louisiana, SPE 25238, FebruaryBernstein, P.L., (1996) Against the Gods: The Remarkable Story of Risk, , New York: WileyBjerksund, P., Ekern, S., Managing investment opportunities under price uncertainty: From last chance to wait and see strategies (1990) Financial Management, 19, pp. 65-83. , (3, Autumn)Brennan, M.J., Schwartz, E.S., Evaluating natural resource investment (1985) Journal of Business, 58 (2), pp. 135-157Chorn, L.G., Croft, M., (1998) Resolving Reservoir Uncertainty to Create Value, , SPE 49094Chorn, L.G., Croft, M., Resolving reservoir uncertainty to create value (2000) Journal of Petroleum Technology, pp. 52-59. , (August)Covello, V., Mumpower, J., Risk analysis and risk management: An historical perspective (1985) Risk Analysis, 5, pp. 103-120Cozzolino, J., A simplified utility framework for the analysis of financial risk (1977) Economics and Evaluation Symposium of the Society of Petroleum Engineers, , Dallas, Texas Paper 6359Crovelli, R.A., The generalized 20/80 law using probabilistic fractals applied to petroleum field size (1995) Nonrenewable Resources, 4 (3), pp. 233-241Crovelli, R.A., Schmoker, J.W., Balay, R.H., U.S. Department of Interior U.S. Geological Survey: Fractal lognormal percentage analysis of the U.S. Geological Survey's 1995 National Assessment of Conventional Oil and Gas Resources (1997) Nonrenewable Resources, 6 (1), pp. 43-51Damsleth, E., Hage, A., Hydro, N., Volden, R., Maximum information at minimum cost - A north sea field development study using experimental design (1991), Offshore Europe Conference, SPE 23139, AberdeenDavidson, L.B., Davies, J.E., Simple, effective models for evaluating portfolios of exploration and production projects (1995), SPE 30669 Texas SPE Annual Technical Conference and ExhibitionDejean, J.P., Managing uncertainty on production predictions using integrated statistics (1999), Annual Technical Conference and Exhibitions, Houston, EUA, SPE 56696, OctoberDemirmen, F., Subsurface appraisal: The road from reservoir uncertainty to better economics (2001), SPE Hydrocarbon Economics and Evaluation Symposium, Dallas, 2-3 April SPE 68603Dixit, A., Pyndyck, R.S., (1994) Investment Under Uncertainty, , New Jersey: New Jersey Univ. PressDrew, L.J., Grid-drilling exploration and its application to the search for petroleum (1967) Economic Geology, 62, pp. 698-710Erdogan, M., Mudford, B., Optimization of decision tree and simulation of portfolios: A comparison (2001), SPE 68575 SPE Hydrocarbon Economics and Evaluation Symposium, DallasFichter, D.P., Application of genetic algorithms in portfolio optimization for the oil and gas industry (2000), SPE 62970 SPE Annual Technical Conference and Exhibition, TexasGalli, A., Armstrong, M., Jehl, B., Comparison of three methods for evaluating oil projects (1999) Journal of Petroleum Technology, pp. 44-49. , (October)Garcia, J., Holtz, M.H., Integrated prospect portfolio management for 3D seismic volumes combining geologic, engineering, and economic risk (2003), SPE82017 SPE Hydrocarbon Economics and Evaluation Symposium, DallasGorell, S., Bassett, R., Trends in reservoir simulation: Big models, scalable models? Will you please make up your mind? (2001), SPE 71596, Annual Technical Conference and Exhibition held in New Orleans, Louisiana, 30 September-3 OctoberGrayson, C.J., (1960) Decisions Under Uncertainty, Drilling Decisions By Oil and Gas Operators, , Boston: Harvard Business School, Division of ResearchHarbaugh, J.W., Quantitative estimation of petroleum prospect outcome probabilities: An overview of procedures (1984) Marine and Petroleum Geology, , 1 NovemberHarbaugh, J.W., Doveton, J.H., Davis, J.C., (1977) Probability Methods in Oil Exploration, , New York: Wiley-InterscienceHarris, D.P., (1984) Mineral Resources Appraisal: Mineral Endowment, Resources and Potential Supply: Concepts, Methods and Cases, , Oxford: ClarendonHarris, D.P., (1990) Mineral Exploration Decisions: A Guide to Economic Analysis and Modeling, , New York: WileyHastings, J.J., Muggeridge, A.H., Blunt, M.J., A new streamline method for evaluating uncertainty in small-scale, two-phase flow properties (2001), SPE Reservoir Simulation Symposium, Houston, Texas, SPE 66349, 11-14 FebruaryHoward, R., Decision analysis: Practice and promise (1988) Management Science, 34 (6), pp. 679-695Kaufman, G.M., (1963) Statistical Decision and Related Techniques in Oil and Gas Exploration, , Englewood Cliffs, NJ: Prentice-HallKeeney, R.L., Decision analysis: An overview (1982) Operations Research, 30, pp. 803-808Keeney, R.L., Raiffa, H., (1976) Decisions With Multiple Objectives: Preferences and Value Tradeoffs, p. 501. , New York: WileyKester, W., Today's options for tomorrow's growth (1984) Havard Business Review, pp. 153-160. , March/AprilKirkwood, C.W., Strategic decision making: Multiobjective decision analysis with spreadsheets (1996), p. 345. , Local Belmont, CA: Duxbury PressKrumbein, W.C., Graybill, F.A., (1965) an Introduction to Statistical Models in Geology, , New York: McGraw-Hill BookLaughton, D.G., The management of flexibility in the upstream petroleum industry (1998) Energy Journal, 19 (1), pp. 83-114. , JanuaryLerche, I., MacKay, J., (1999) Economic Risk in Hydrocarbon Exploration, , London: Academic PressLigero, E.L., Machio, C., Schiozer, D.J., Quantifying the impact of grid size, upscaling and streamline simulation in the risk analysis applied to petroleum field development (2003), 17th Reservoir Simulation Symposium, Houston, USA, SPE79677, FebruaryLuenberger, D.G., (1997) Investment Science, , New York: Oxford Univ. PressMarkowitz, H.M., Portfolio selection (1952) Journal of Finance, 7 (1), pp. 77-91. , MarchMason, S.P., Merton, R.C., The role of contingent claims analysis in corporate finance (1985) Recent Advances in Corporate Finance, pp. 7-54. , E.I. Altman, M.G. Subrahmanyan (Eds.), Homewood, IL: Richard D. IrwinMcDonald, R., Siegel, D., Investment and the valuation of firms when there is an option of shut down (1985) International Economic Review, 28 (2), pp. 331-349. , JuneMcDonald, R., Siegel, D., The value of waiting to invest (1986) Quarterly Journal of Economics, pp. 707-727. , NovemberMegill, R.E., (1977) an Introduction to Risk Analysis, , Tulsa: The Petroleum PublMyers, S., Finance theory and finance strategy (1987) Midland Corporate Finance Journal, 5, pp. 6-13. , SpringNepomuceno, F., Suslick, S.B., Walls, M., Managing technological and financial uncertainty: A decision science approach for strategic drilling decisions (1999) Natural Resources Research, 8 (3), pp. 193-203Newendorp, P.D., (1975) Decision Analysis for Petroleum Exploration, , 1st ed. Tulsa, OK: PennwellNewendorp, P.D., Schuyler, J.R., (2000) Decision Analysis for Petroleum Exploration, , 2nd ed. Colorado: Planning PressOrman, M., Duggan, T.E., Applying Modern Portfolio Theory to Upstream Investment Decision-Making (1998), Paper SPE 49095 presented at the 1998 Annual Technical Conference and Exhibition, New Orleans, Sept. 27-30Paddock, J.L., Siegel, D.R., Smith, J.L., Option valuation of claims on real assets: The case of offshore petroleum leases (1988) Quarterly Journal of Economics, pp. 479-508. , AugustPinto, A.C.C., Guedes, S.S., Bruhn, C.H.L., Gomes, J.A.T., Sá, A.N., Fagundes Neto, J.R., Marlim complex development: A reservoir engineering overview (2001) SPE Latin American and Caribbean Petroleum Engineering Conference, , Buenos Aires, Argentina, SPE 69438, MarchPratt, J.W., Risk aversion in the small and in the large (1964) Econometrica, 32, p. 1. , JanuaryRaiffa, H., (1968) Decision Analysis: Introductory Lectures on Choices Under Uncertainty, , Reading, MA: Addisson-WesleyRose, P.R., Dealing with risk and uncertainty in exploration: How can we improve? (1987) AAPG Bulletin, 71 (1), pp. 1-16Rose, P.R., Chance of success and its use in petroleum exploration (1992) The Business of Petroleum Exploration. AAPG Treatise of Petroleum Geology-Handbook of Petroleum Exploration, pp. 71-86. , R. Steinmetz (Ed.), Tulsa: AAPG Chap. 7Rose, P.R., Risk analysis and management of petroleum exploration ventures (2001) AAPG Methods in Exploration, 12, p. 178. , Tulsa: AAPGSalomão, M.C., Grell, A.P., Uncertainty in production profiles on the basis of geostatistic characterization and flow simulation (2001) SPE Latin American and Caribbean Petroleum Engineering Conference, , Buenos Aires, Argentina, SPE 69477, MarchSavage, L.J., (1954) The Foundations of Statistics, , New York: WileySchailfer, R.O., (1969) Analysis of Decisions Under Uncertainty, , New York: McGraw-HillSubbey, S., Christie, M., A strategy for rapid quantification of uncertainty in reservoir performance prediction (2003), SPE79678 17th Reservoir Simulation Symposium, Houston, USA, FebruarySuslick, S.B., Furtado, R., Quantifying the value of technological, environmental and financial gain in decision models for offshore oil exploration (2001) Journal of Petroleum Science and Engineering, London, 32 (2-4), pp. 115-125Tourinho, O.A.F., (1979) The Valuation of Reserves of Natural Resources: an Option Pricing Approach, p. 103. , University of California, Berkeley, PhD Dissertation, November 1979Trigeorgis, L., The nature of options interactions and the valuation of investments with multiple real options (1993) Journal of Financial and Quantitative Analysis, 28, pp. 1-20. , (1, March)von Neumann, J., Morgenstern, O., (1953) Theory of Games and Economic Behavior, , 3rd ed. Princeton, NY: Princeton Unversity PressWalls, M.R., Corporate risk tolerance and capital allocation: A practical approach to implementing an exploration risk policy (1995) Journal of Petroleum Technology, 47 (4), pp. 307-311Walls, M.R., Developing an Exploration decision support system (EDSS): A strategy for combining information and analytics (1996) Nonrenewable Resources, 5 (3), pp. 181-192Walls, M.R., Dyer, J.S., Risk propensity and firm performance: A study of the petroleum exploration industry (1996) Management Science, 42. , (7, July

Financial Assurance Bonds: An Incentive Mechanism For Environmental Compliance In The Oil Sector

The present paper describes different financial assurance systems (bonding systems) used to provide economic incentives for environmental compliance within the oil sector. Bonds may be applied in all phases of oil projects to reduce the risk of accidental, continuous, and, mainly, ex post environmental damages. The most common application of bonds is aimed at guaranteeing or funding end-of-leasing obligations, including closure and decommissioning operations. Currently, there are several forms of instruments available that could satisfy bonding requirements. This paper discusses some of the main characteristics and attributes of such instruments according to the perspectives of both regulators and industry. Since bonding requirements are currently present in several parts of the world, based on a hypothetical scenario, this paper proposes a model to enable lessees to anticipate and measure potential financial impacts of such requirements on the cash flow of oil projects. In order to provide optimum flexibility for lessees, the model offers four instrument options: (1) surety bonds, (2) a paid-in cash account, and (3) a special account allowing periodic payments. This methodology identifies surety bonds as the best instrument choice, allowing NPV maximization under the hypothetical regulatory regime.965974(1998) Financial Security - Risk Assessment Model, , Alberta Environmental Protection, Land Reclamation Division. Internal Draft Publication. Edmonton, April, 1998Alberswerth, D., The 1872 Mining Law: Time to Pull the Plug (1991) Natural Resources & Environment, 5, p. 34Anderson, R.C., Lohof, A.Q., (1997) The United States Experience with Economic Incentives in Environmental Pollution Control Policy, , U.S. Environmental Protection Agency - EPA, Environmental Law Institute, Washington, D.C(2000) Brazilian Petroleum Agency - Interview with Officials, , Rio de Janeiro, 2000Arney, C.E., Estimating decommissioning costs (1996) Decommissioning of Offshore Structures Conference Proceedings, p. 21. , IBC Tech. Serv. LTD., HoustonAtkinson, S., Lewis, D., Determination and implementation of optimal air quality control strategies (1976) Journal of Environmental Economics and Management, 3, pp. 363-380Baumol, W., Dates, W., (1988) The Theory of Environmental Policy, p. 299. , Cambridge University Press, New York, NYBohm, P., (1981) Deposit-refund Systems: Theory and Application to Environment, Conservation, and Consumer Policy, , John Hopkins Press, BaltimoreBorghini, S., Bartolomeo, M., Molinari, S., Ratti, S., The role of environmental costs and liabilities in the decision-making process of oil and gas exploration and production companies (1998) SPE International Conference on Health, Safety and Environment in Oil and Gas Exploration and Production Proceedings, , Caracas, Venezuela, 1998. SPE 46654ANP: Old fields, new business (2000) Brazil Energy, 21 (337), pp. 26-27Bryan, V.J., (1998) Reclamation Bonding for Coal Mining Operations, , US Department of Interior. Office of Surface Mining Reclamation and Enforcement (not published)Coleman, H., Decommissioning offshore installations: A global problem - A costly solution? (1997) Management Report, Executive Summary, , http://www.ftenergy.com/oil/oilrs28.htm, [27/02/1999]Conrad, K., An Incentive scheme for optimal pricing and environmental protection (1987) J. Int. Theor. Econ., 143, pp. 402-421Cornwell, L., Costanza, R., An experimental analysis of the effectiveness of an environmental assurance bonding system on player behavior in a simulated firm (1994) Ecological Economics, 11, pp. 213-226Cornwell, L., (1997) Policy Tools for Environmentally Sustainable Development: Environmental Bonds and Participatory Modeling, , PH.D. Dissertation - University of Maryland at College Park. UMI Dissertation ServicesCostanza, R., D'Arge, R., DeGroot, R., Farber, S., Grasso, M., Hannon, B., Limburg, K., Van den Belt, M., The value of the world's ecosystem services and natural capital (1997) Nature, 387. , 15 MayDella, G.A., Offshore facility management: How to render rational the underwater inspection and removal planning (1997) Offshore Mech. and Arctic Eng. Int. Conference Proceedings, 2, pp. 251-260. , Yokohama, JapanGuidance notes for industry on the decommissioning of offshore installations and pipelines (2000) DTI Report, , http://www.og.dti.gov.uk, June. [On-line] [06/02/2000]Ferreira, D.F., Suslick, S.B., A new approach for accessing offshore decommissioning: A decision model for performance bonds (2000) SPE International Conference on Health, Safety and Environment in Oil and Gas Exploration and Production Proceedings, , Stavanger, Norway, 2000. SPE 61219Ferreira, D.F., Suslick, S.B., Identifying Potential Impacts of Bonding Instruments on Offshore Oil Projects (2001) Resources Policy Journal, 27, pp. 43-52. , 2001Griffin, W.S., Evolution of the global decommissioning regulatory regime (1998) Offshore Technology Conference Proceedings, , Phillips Petroleum Company. Houston, 1998, OTC 8784Johnson, M., Performance bonds (1986) A Final Report Prepared for the US Environmental Protection Agency, , Office of Waste Programs Enforcement, contract number 15-4040-00. Washington D.CLeving, M., Elman, B., The case for environmental incentives (1990) The Environmental Forum, 7-11Miller, G.C., Use of environmental surety instruments in mining (2000) International Council on Metals and the Environment Newsletter, 8 (1). , 2000(1998) US Department of the Interior Minerals Management Service, Gulf of Mexico OCS Region. Notice to Lessees and Operators of Federal Oil and Gas and Sulphur Leases in the Outer Continental Shelf, , MMS - NTL 98-18N. MMS Publication, December 28, 1998(2000) Interview with MMS Officials - New Orleans, , 2000Decommissioning and removal in Norway (1993) IBC - Decommissioning and Removal of Offshore Structures Conference Proceedings, , Norwegian Petroleum Directorate. September, 1993, London(2000) Norwegian Petroleum Directorate - Interview with Officials, , Stavanger, 2000(1998) Offshore Decommissioning Communications Project, , http://www.oilrigdisposal-options.com, International offshore oil and gas industry, June 30, [On-line], [18.03.99]Pane, S.Z., Hendarjo, G., The challenges of abandonment and disposal of offshore structures in Indonesia (1998) Joint Workshop on Decommissioning of Offshore Oil and Gas Platforms Proceedings, , Jakarta, IndonesiaPatin, S., (1999) Environmental Impact of the Offshore Oil and Gas Industry, pp. 53-55. , EcoMonitor Publishing, East Northport, NYPerrings, C., Environmental bonds and the incentive to research activities involving uncertain future effects (1989) Ecol. Econ., 1, pp. 95-110Ekofisk I disposal: Impact assessment environmental and societal impacts (2000) Internal Report, , Phillips Norway. Stavanger, NorwayPoremski, H.J., Life cycle assessment - Development planning through decommissioning (1998) Umweltbundesamt, , Federal Environmental Agency, Berlin, Germany, Offshore Technology Conference Proceedings, 1998, Houston, OTC 8788Prasthofer, P.H., Decommissioning technology challenges (1998) Offshore Technology Conference Proceedings, , Offshore Decommissioning Communications Project (ODCP)/Exxon, Houston, OTC 8785(1997) Socio-economic Impacts of Varying Decommissioning Options, , International offshore oil and gas industry. The offshore decommissioning communications project, Prognos, Not PublishedRobinson, G., Ireland, S., The cost of abandonment (1995) Strategies for Successful Abandonment Conference Proceedings, p. 7. , IBC Tech. Derv. LTD. London, England, 1995Rowe, M., (1987) Guarantees, Standby Letters of Credit and other Securities, , Euromoney Publications, LondonStollery, K., Environmental controls in extractive industries (1985) Land Econ., 61, pp. 136-144Twachtman, R., Offshore-platform decommissioning perceptions change, abandoning offshore platforms (1997) Oil & Gas Journal, , Dec. 1997The Auris report: An assessment of the environmental impacts of the decommissioning options for the oil and gas installations in the UK North Sea (1995) Ukooa Ltd.'s Internal Report, , not publishedWatson, T., Re-use and disposal considerations (1998) Joint Workshop on Decommissioning of Offshore Oil and Gas Platform Proceedings, , Amoco Exploration Company, Jakarta, IndonesiaWebber, B., Webber, D., Promoting economic incentives for environmental protection in the surface mining control and reclamation act of 1977: An analysis of the design and implementation of reclamation performance bonds (1985) Nat. Resourc. J., 25, pp. 390-41

An Integration Of Real Options And Utility Theory For Evaluation And Strategic Decision-making In Oil Development And Production Projects

The results from the Discounted Cash Flow (DCF) are limited as a tool for decision-making in the petroleum industry because they don't properly take into account four important features of the modern investments: uncertainty, irreversibility, timing, and corporation's risk-aversion. Recent developments in real options and preference theories have allowed decision-makers to employ these two approaches separately in the process of valuation and decision-making of risky projects. This paper presents a model for valuation and decision-making integrating discounted cash flow, real options and preference theory and aims at answering the following questions: i) What is the current value of an oil project? ii) What is the optimal working interest in this project venture? iii) What are the criteria to select projects considering investment irreversibility, uncertainty and timing to implement decisions? This model is applied to valuation and decision-making of a project to produce oil from a deep-water reservoir and its results are compared to those of the traditional approach. Traditional model suggests that, as the project value is above its investment cost, the corporation should invest immediately and incur in 100% working interest. Contrarily, for an specific analysis, the integrated model suggest the corporation should invest as long as project current value is as large as 1.85 times investment cost and should take only 44.38% working interest, whereas partners fund and acquire the remaining 55.62% of the project. In general, results indicate that NPV tends to pay more attention on return and does not account properly for risk. Then, as the uncertainty (volatility) of strategic variables increase, the two models give more divergent results. Copyright 2005, Society of Petroleum Engineers Inc.227239Dixit, A.K., Pindyck, R.S., (1994) Investment under Uncertainty, , New Jersey: New Jersey University PressLima, G.A.C., Suslick, S.B., Impacts of environmental constraints on the optimal decision-making process applied to Brazilian petroleum industry (2002) Journal of Canadian Petroleum Technology, 41, pp. 37-43Black, F., Scholes, M., The pricing of options and corporate liabilities (1973) Journal of Political Economy, 81, pp. 637-659McDonald, R., Siegel, D., The value of waiting to invest (1986) Quartely Journal of Economics, 4 (101), pp. 707-727Wilkerson, J.P., (1988) A Case History Application of Risk Preference Techniques to Evaluate Petroleum Exploration Prospects, , PhD. Dissertation, University of Texas, AustinLima, G.A.C., (2004) Using Real Options and Preference Theory in Projects of Production and Exploration of Petroleum, , PhD. Dissertation, State University of Campinas, CampinasTrigeorgis, L., (1996) Real Options - Managerial Flexibility and Strategy in Resources Allocation, , Cambridge: MIT Press, third editionLerche, I., Mackay, J., (1999) Economic Risk in Hydrocarbon Exploration, , San Diego: Academic PressCopeland, T., Antikarov, V., (2001) Real Options: A Practitioner's Guide, , Texere LLC (New York, NY)Brealey, R.A., Myers, S.C., (1992) Corporate Finance. Fourth Edition, , New York: McGraw-HillVon Neumann, J., Morgenstern, O., (1953) Theory of Games and Economic Behavior, , Princeton University Press, Princeton, New Jersey, 3rd EditionLuenberger, D., (1998) Investment Science, , Oxford University PressNewendorp, P.D., (1975) Petroleum Explorations and Decisions Analysis, , PenWell BooksCampbell Jr., J.M., Campbell Sr., J.M., Campbell, R.A., (2001) Analyzing and Managing Risky Investments, , John M. CampbellCozzolino, J., (1980) Controlling Risk in Capital Budgeting: A Practical Use of Utility Theory for Measurement and Control Petroleum Exploration Risk, 25 (3). , Engineering Economist: American Society for Engineering Education & American Institute of Industrial EngineersNepomuceno, F., Suslick, S.B., Walls, M., Managing technological and financial uncertainty: A decision science approach for strategic drilling decision (1999) Natural Resources Research, 8 (3), pp. 193-203Walls, M., Corporate risk tolerance and capital allocation: A practical approach to implementing an exploration risk policy (1995) Journal of Petroleum Technology, 47 (4), pp. 307-311Walls, M., Dyer, J., Corporate risk propensity and firms performance: A study of petroleum exploration industry (1996) Management Science, 42 (7), pp. 1004-102

The Application Of Bonding Mechanisms For Environmental Compliance And Its Economic Impacts On Oil Projects

The present paper describes the financial assurance system (bonding system), an incentive approach being adopted by several countries to guarantee or fund environmental obligations and ensure environmental performance. Environmental compliance involves meeting all end-of-leasing obligations, including closure and decommissioning operations. This paper also identifies the main forms of potential environmental damages resulting from upstream activities and their potential financial impact on the regulatory agency. It will be demonstrated how bonding instruments may help reduce such risks by: (1) providing financial incentive for environmental compliance; (2) safeguarding government and taxpayers by attaining reasonable protection from default at a minimum increase in project costs; and (3) protecting the environment from potential harm resulting from failure to carryout proper closure operations in a timely fashion. A model is proposed for a hypothetical scenario and an analysis is performed in order to identify potential financial impacts on oil projects.1421428Financial security - Risk assessment model (1998), AEPAlberta Environmental Protection, Land Reclamation Division. Internal Draft Publication. Edmonton, April, 1998Alberswerth, D., The 1872 mining law: Time to pull the plug (1991) Natural Resources & Environment, 5Anderson, R.C., Lohof, A.Q., The United States experience with economic incentives in environmental pollution control policy (1997), U.S. Environmental Protection Agency - EPA, Environmental Law Institute, Washington, D.CBrazilian petroleum agency - Interview with officials (2000), ANPRio de Janeiro, 2000Arney, C.E., Estimating decommissioning costs (1996) Decommissioning of Offshore Structures Conference Proceedings, Houston, p. 21. , IBC Tech. Serv. LTDAtkinson, S., Lewis, D., Determination and implementation of optimal air quality control strategies (1976) Journal of Environmental Economics and Management, 3, pp. 363-380Baumol, W., Oates, W., The theory of environmental policy (1988), p. 299. , Cambridge University Press, New York, NYBohm, P., Deposit-refund systems: Theory and application to environment, conservation, and consumer policy (1981), John Hopkins Press, BaltimoreBorghini, S., Bartolomeo, M., Molinari, S., Ratti, S., The role of environmental costs and liabilities in the decision-making process of oil and gas exploration and production companies (1998) SPE International Conference on Health, Safety and Environment in Oil and Gas Exploration and Production Proceedings. Caracas, Venezuela, 1998, , SPE 46654(2000) ANP: Old Fields, New Business, 21 (337), pp. 26-27. , Brazil EnergyBryan, V.J., Reclamation bonding for coal mining operations (1998), US Department of Interior. Office of surface Mining Reclamation and Enforcement (not published)Coleman, H., Decommissioning offshore installations: A global problem - A costly solution? (1997), http://www.ftenergy.com/oil/oilrs28.htm, Management Report. Executive Summary. [On-line][27/02/1999]Conrad, K., An incentive scheme for optimal pricing and environmental protection (1987) J. Int. Theor. Econ., 143, pp. 402-421Cornwell, L., Costanza, R., An experimental analysis of the effectiveness of an environmental assurance bonding system on player behavior in a simulated firm (1994) Ecological Economics, 11, pp. 213-226Cornwell, L., Policy tools for environmentally sustainable development: Environmental bonds and participatory modeling (1997), PH.D. Dissertation - University of Maryland at College Park. UMI Dissertation ServicesCostanza, R., D'Arge, R., DeGroot, R., Farber, S., Grasso, M., Hannon, B., Limburg, K., Van Den Belt, M., The value of the world's ecosystem services and natural capital (1997) Nature, 387. , 15 MayDella, G.A., Offshore facility management: How to render rational the underwater inspection and removal planning (1997) Offshore Mech. and Arctic Eng. Int. Conference Proceedings, Yokohama, Japan, 2, pp. 251-260Guidance notes for industry on the decommissioning of offshore installations and pipelines (2000), http://www.og.dti.gov.uk, DTIDTI Report, June. [On-line][06/02/2000]Ferreira, D.F., Suslick, S.B., A new approach for accessing offshore decommissioning: A decision model for performance bonds (2000) SPE International Conference on Health, Safety and Environment in Oil and Gas Exploration and Production Proceedings. Stavanger, Norway, 2000, , SPE 61219Ferreira, D.F., Suslick, S.B., Identifying potential impacts of bonding instruments on offshore oil projects (2001) Resources Policy Journal, 27, pp. 43-52Griffin, W.S., Evolution of the global decommissioning regulatory regime (1998) Offshore Technology Conference Proceedings. Houston, 1998, OTC 8784, , Phillips Petroleum CompanyJohnson, M., Performance bonds (1986), A final report prepared for the US Environmental Protection Agency, Office of Waste Programs Enforcement, contract number 15-440-00. Washington D.CLeving, M., Elman, B., The case for environmental incentives (1990) The Environmental Forum, pp. 7-11Miller, G.C., Use of environmental surety instruments in mining (2000) International Council on Metals and the Environment Newsletter, 8 (1)(1998), MMS - NTL 98-18NUS Department of the Interior - Minerals Management Service, Gulf of Mexico OCS Region. Notice to Lessees and Operators of Federal Oil and Gas and Sulphur Leases in the Outer Continental shelf. MMS Publication, December 28, 1998Offshore facility decommissioning costs - Pacific OCS Region (1999), MMSMarch 31, 1999(2000) Interview with MMS Officials - New Orleans, 2000, , MMSDecommissioning and removal in Norway (1993) IBC - Decommissioning and Removal of Offshore Structures Conference Proceedings. September, 1993, London, , NPDNorwegian Petroleum Directorate(2000), NDPNorwegian Petroleum Directorate - Interview with officials Stavanger, 2000International offshore oil and gas industry (1998), http://www.oilrigdisposal-options.com, ODCPOffshore Decommissioning Communications ProjectJune 30, [On-line][18.03.99]Pane, S.Z., Hendarjo, G., The challenges of abandonment and disposal of offshore structures in Indonesia (1998) Joint Workshop on Decommissioning of Offshore Oil and Gas Platforms Proceedings. Jakarta, IndonesiaPatin, S., (1999) Environmental Impact of the Offshore Oil and Gas Industry, pp. 53-55. , EcoMonitor Publishing, East Northport, NYPerrings, C., Environmental bonds and the incentive to research activities involving uncertain future effects (1989) Ecol. Econ., 1, pp. 95-110Norway, P., Ekofisk I disposal: Impact assessment - Environmental and societal impacts (2000), Internal Report. Stavanger, NorwayPoremski, H.J., Life cycle assessment - Development planning through decommissioning (1998) Offshore Technology Conference Proceedings, 1998, Houston, OTC 8788, , Umweltbundesamt (Federal Environmental Agency), Berlin, GermanyPrasthofer, P.H., Decommissioning technology challenges (1998) Offshore Technology Conference Proceedings, Houston, OTC 8785, , Offshore Decommissioning Communications Project (ODCP)/ExxonSocio-economic impacts of varying decommissioning options, the international offshore oil and gas industry (1997), PROGNOSThe offshore decommissioning communications project, Prognos, Not PublishedRobinson, G., Ireland, S., The cost of abandonment (1995) Strategies for Successful Abandonment Conference Proceedings. London, England, 1995, p. 7. , IBC Tech. Derv. LTDRowe, M., Guarantees, standby letters of credit and other securities (1987), Euromoney Publications, LondonStollery, K., Environmental controls in extractive industries (1985) Land Econ., 61, pp. 136-144Twachtman, R., Offshore-platform decommissioning perceptions change, abandoning offshore platforms (1997) Oil & Gas Journal, , (Dec. 1997)The Auris report: An assessment of the environmental impacts of the decommissioning options for the oil and gas installations in the UK North Sea (1995), UKOOAUkooa Ltd.'s internal report (not published)Watson, T., Re-use and disposal considerations, Amoco Exploration Company (1998) Joint Workshop on Decommissioning of Offshore Oil and Gas Platform Proceedings, Jakarta, IndonesiaWebber, B., Webber, D., Promoting economic incentives for environmental protection in the surface mining control and reclamation act of 1977: An analysis of the design and implementation of reclamation performance bonds (1985) Nat. Resourc. J., 25, pp. 390-41

Estimating The Volatility Of Projects Of Mineral Goods [estimativa Da Volatilidade De Projetos De Bens Minerais]

Projecting the volatility of a mineral asset depends on its future cash-flow, and as such, should be estimated using its intrinsic economical-financial and operational characteristics instead of its past history. Because of lack of information, in many cases, it is assumed that the project and commodity (oil, gold, as well as other commodity minerals) share the same volatility. Nevertheless, this approach may give misleading results. This paper proposes a framework to estimate the volatility of oil and gold considering that commodity price evolves over time following a Geometric Brownian Motion Model or Mean-Reversion Motion Model. Main results indicate that project volatility is equal to that of its commodity only in very special cases, i.e., low operational costs and high prices, which is currently unrealistic for most industries.5913746www.hndes.gov.hr, Página acessada em Março de 2004Black, H., Scholes, M., The pricing of options and corporate liabilities (1973) Journal of Political Economy, 81, pp. 637-659Bordieri, C.A., (2005) Um Método Quantitativo Para Estimativa da Volatilidade de Projetos de Produção de Petróleo, 110p. , FEM e IG/UNICAMP: Programa de Ciências e Engenharia de Petróleo, (Dissertação de Mestrado)Bordieri, C.A., Lima, G.A.C., Suslick, S.B., A quantitative method for estimation of volatility of oil production projects (2005) Hydrocarbons Economics and Evaluation Symposium, , Dallas: SPEBrennan, M.J., Schwartz, E.S., Evaluating natural resource investment (1985) Journal of Business, 58 (2), pp. 135-157Campbell, J., Lo, Y., Andrew, W., Mackinlay, A.C., (1997) The Econometrics of Financial Markets, , Princeton University PressCox, John, J., Mark, R., (1985) Options Markets, 498p. , Englewood Cliffs, New Jersey: Prentice-HallDavis, G.A., Estimating volatility and convenience yield when valuing real options to invest or to abandon (1986) Quartely Review of Finance, 38, pp. 715-754Dixit, A.K., Pindyck, R.S., (1994) Investment under Uncertainty, 476p. , New Jersey: New Jersey University PressGentry, D.W., O'Neil, T.J., Mine investment analysis (1984) AIME, 502p. , New York: Society of Mining EngineersHull, J., (1999) Options, Futures and Other Derivative Securities, 698p. , Upper Saddle River: Prentice-HallLima, G.A.C., (2004) Uma Proposta de uso Ja Teoria da Preferênria e das Opções Reais em Projetas de Exploração e Produção de Petréleo, 226p. , IG/UNICAMP, Tese de doutoradoLima, G.A., Suslick, S.B., Impacts of environmental constraints on the optimal decision-making process applied to Brazilian petroleum industry (2002) Journal of Canadian Petroleum Technology, 41 (9)LUENBERGUER, D.G., (1998) Investment Science, 494p. , Oxford: Oxford PressMcdonald, R., Siegel, D., The value of waiting to invest (1986) Quarterly Journal of Economics, 101, pp. 707-728. , NovemberZvi, B., Kane, A., Marcus, A.J., (2000) Fundamentos de Investimentos, 628p. , Bookman Companhia EditoraMerton, R.C., (1990) Continuous Time Finance, 732p. , Blackwell Publishers IncPindyck, R.S., (2001) The Long Run Evolution of Energy Prices, 35p. , Massachusetts Institute of Technology (MIT). Working paper, Q 30, Q 40Pindyck, R.S., Rubinfeld, D.L., (1991) Econometric Models and Economic Forecasting, , McGraw-HillRoss, S.A., Westerfield, R.W., Jaffe, F.J., (1999) Administração Financeira, , São Paulo: AtlasSick, G., (1999) Analysing Volatility of A Petroleum Property, , Working Paper. Real Options Group e University of CalgaryPaddock, J.L., Siegel, D.R., Smith, J.L., Option valuation of claims on real assets: The case of offshore petroleum leases (1988) The Quartely Journal of Economics, 103 (3), pp. 479-508Stermole, F.J., Stermolh, J.M., (1993) Economic Evaluation and Investment Decision Methods. 8th Ed., 479p. , Golden, Colorado: Investment Evaluations CorporationTrigeorgis, L., (1996) Real Options - Managerial Flexibility and Strategy in Resources Allocation. Third Edition, 427p. , Cambridge: The MIT Pres