Summary of the Economic Part of the Definition of an A
The price of the hydrocarbon’s in the world market is a crucial determining
factor in the ‘value’ of the ‘potential’ for the ANWR region, as this is the
factor that will ultimately make the distinction between drilling or not
drilling in a cost-benefit analysis.
According to the Bloomberg energy prices, the current value of hydrocarbons
are:
PETROLEUM ($/bbl)
PRICE* CHANGE % CHANGE TIME
Nymex Crude 30.16 -0.14
-0.46 10/24
IPE Crude 28.58 -0.05 -0.17
10/24
Dated Brent $ 30.02 0.55
1.87 10/24
WTI Cushing $ 29.98 -0.14
-0.46 10/24
NATURAL GAS ($/MMBtu)
PRICE* CHANGE % CHANGE TIME
Nymex Henry Hub 4.79 -0.13
-2.58 10/24
Henry Hub $ 4.8 -0.11 -2.24
10/24
New York City Gate $ 5.12 -0.4
-7.25 10/24
(these values are mirrored in other economic sources, such as the Economist,
and so can be considered trust worthy as- after all- it is the news agency’s
job to deliver the most accurate pricing for such a hot commodity).
As the numbers above demonstrate, there are different types of oil and natural
gas that sell for different prices. These prices are, however, very near each
other, and so in the long run can be considered the ‘same price.’
According to the OPEC tables of ‘global oil trends’ the lowest value of
oil is around $20 a barrel and the highest value peaks nearer to $35 a barrel.
This figure is subject to change due to political events, fluctuating oil
reserves/ production, and to the health of the oil market at the time. A concrete
formula for the ‘future value of oil’ has not yet been found: as a result,
an applet is being made that will return the ‘value’ of ANWR if inputted
a range of prices and volumes.
The revenue estimates would be equal to the volume of oil/gas extracted
multiplied by the value of unit volume. This is under calculation right now;
take Andrew’s table and multiply it by the lower value, middle value, and
upper value, and that will give the overall worth. [This is being done at
3:15 today…]
The “cost estimates” referred to in the Definition of an A refer to the
collaboration with Team 8 in comparing the cost of drilling (which Team E
will provide) with the potential value of the hydrocarbons that Team 1 will
provide. At this time, since the strategy is not made, this is not possible
to estimate.
The definition also calls for a ‘brief comparison to other world hydrocarbon
sources’ in order to give a general idea of how ANWR fares with respect to
the rest of the world. The following figures are from the OPEC yearly report:
Proven Reserves Production
Region Natural Gas (billion standard cu m)
Crude Oil (m. b) Natural Gas (million standard cu
m) Crude Oil (1000 b/d)
North America 6898 27646
722924 7256.1
Latin American 7507 111173
139750 9125.4
Eastern Europe 57493 79190
760950 9038.7
Western Europe 6955 18268
290640 5933.2
Middle East 71546 698906
243840 18655.4
Africa 13207 93550 138730
6459.5
Asia and Pacific 14118 38434
292070 7176.1
Further research is being conducted on finishing the over-due Applet; finding
the trends of oil in the world (whether the prices are increasing, decreasing,
at what rate, when, what the output usage is, etc.); the production figures
for the United States on a state-by-state basis (to compare Alaska directly
to other states); and the future US production trends.
The sources being used so far are primarily the articles and figures from
the American Petroleum Institute (which provides information on the US market
and production), documents from the Alaska Department of Energy (for information
directly related to Alaska), and the OPEC reports (both the yearly and the
monthly) which give information on global oil trends, figures etc. It is believed
that although these sources may have a slight bias (in order to promote their
own bureaucracy), their figures would be more accurate as they would be subject
to the scrutiny of the international community.
back to Research
this page updated on Nov. 12, 2003