The Valuation of the Alberta Oil Sands (original) (raw)
Related papers
Policy Analysis of the Canadian Oil Sands Experience
2013
Canadian oil sands reserves are located in three major areas, Athabasca, Cold Lake and Peace River, in the Province of Alberta. According to Alberta's government, Canadian oil sands are the second largest source of oil in the world following Saudi Arabia, with proven reserves of over 168 billion barrels 1 as compared to Saudi Arabia's 264 billion barrels. 2 The Government of Alberta expects to increase production from 1.31 million barrels per day in 2008 to 3 million barrels per day in 2018. 3 The Alberta government owns 81% of the province's mineral rights; the remaining 19% are freehold mineral rights owned by the federal government on behalf of First Nations or in National Parks (11%), and by private individuals and companies (8%). 4 By contrast, the U.S. oil sands resource is fairly small. U.S. oil sands resources are spread over several states, with the Utah oil sands resource comprising 93% of the total domestic resource; Utah's oil sands resource is 11.5 billion barrels (of oil equivalent) of proven resources and an additional 20.7 billion barrels of unproven resources. 5 Domestic resources are spread across federal, state, private and tribal lands. 6 1 About 80% of the 170 billion barrels of remaining established reserves are suited for in-2 Government of Alberta, Energy, Facts and Statistics, http://www.energy.alberta.ca/OilSands/791.asp (accessed July 24, 2013). Measured in terms of resource "rent," the difference between the price of oil and the cost of producing it from the given resource, inclusive of opportunity costs, the "size" of the oil sands resource would be somewhat less, but still formidable.
Valuation of Crude Oil and Gas Reserves
SSRN Electronic Journal, 2000
The valuation of crude oil and gas reserves is a critical step in pricing crude oil and gas producing firms. This is of interest both to academics and practitioners who are called upon to value these firms. It is also of interest to regulators, particularly in their oversight of mergers and acquisitions and the issue of securities to the public. Our results reject the notion that the market value of crude oil and gas per unit of reserves varies one-to-one with the current price, net of extraction costs (Hotelling model). Crude oil and gas reserve pricing is more complex in practise with both production rate and the proportion of developed proven reserves playing a role in valuation. We use fixed effects panel methods in analysis of data provided by IHS Herold Inc, which comprises 409 crude oil and gas producers (3303 firm-years) over an 18-year period from 1992 to 2008. We find no evidence to support the Hotelling model prediction of a one-to-one relation between the market value of crude oil per unit of reserves and the price of these reserves, net of extraction costs. There is evidence of time variation in this pricing relationship, with the relation being correlated with extraction rate. Further, there is evidence that the proportion of proven reserves that are developed is positively correlated with the market value of reserves. The main implication to be drawn from this study is that the valuation of crude oil and gas reserves requires more information than just reserve volume and spot price.
The Canadian oil sands: environmental, economic, social, health, and other impacts
WIT Transactions on Ecology and The Environment, 2013
As world energy demands increase, so will the exploration and exploitation of alternative energy resources. The present level of energy generation cannot meet the needs of future generations if the pace of population growth and energy consumption continues at the current rate. While some unconventional energy sources are still in research and development phase, others have been effectively implemented. The impacts of different energy operations are still being debated, with respect to environmental, social, economic, and health effects. The definition of sustainable development adopted by United Nations (UN) uses the expression "…meets the needs of the present…" to indicate the required development by a current generation to maintain its standard of living while minimizing environmental, economic, social impacts. Large industrial developments will affect a range of stakeholders, and may entail cultural and political change. The level of impacts and their implications depends on many characteristics of the development, such as its size, production rate, duration of exploitation, processes used (including treatment of waste streams), and regulatory standards. While local communities, businesses and surrounding areas are first expected to be impacted, certain developments can attract global attention. Canadian oil sands developments are of interest to oil producers because of the size of the proven reserves; but the scale of development and the perceived enduring impacts are of concern to different stakeholders. This work presents a discussion and analysis of the economic, social, health, and other impacts of current operations in Canadian oil sands that are of concern to different stakeholders, including some uncertainties in levels and persistence of
Transformism in Alberta : the environmental political economy of the bituminous sands
2018
The author retains copyright ownership and moral rights in this thesis. Neither the thesis nor substantial extracts from it may be printed or otherwise reproduced without the author's permission. AVIS: L'auteur a accordé une licence non exclusive permettant à la Bibliothèque et Archives Canada de reproduire, publier, archiver, sauvegarder, conserver, transmettre au public par télécommunication ou par l'Internet, prêter, distribuer et vendre des thèses partout dans le monde, à des fins commerciales ou autres, sur support microforme, papier, électronique et/ou autres formats. L'auteur conserve la propriété du droit d'auteur et des droits moraux qui protège cette thèse. Ni la thèse ni des extraits substantiels de celle-ci ne doivent être imprimés ou autrement reproduits sans son autorisation. In compliance with the Canadian Privacy Act some supporting forms may have been removed from this thesis. While these forms may be included in the document page count, their removal does not represent any loss of content from the thesis. Conformément à la loi canadienne sur la protection de la vie privée, quelques formulaires secondaires ont été enlevés de cette thèse. Bien que ces formulaires aient inclus dans la pagination, il n'y aura aucun contenu manquant.
2011
In a much cited paper, demonstrated the application of contingent claims analysis to the valuation of a nonrenewable natural resources project when the decision-maker has flexibility to choose from several modes of operations -open, closed and abandoned. The authors assumed fixed extraction costs and that the price of the resource follows Geometric Brownian Motion. The resulting stochastic optimal control problem must be solved numerically, such as with a finite difference approach. For natural resource extraction projects, uncertain costs are also important in optimal decisions and have been less studied in the literature. An example is the oils sands industry where natural gas is used as energy to extract the bitumen, and contributes more than 25 percent of the total per barrel cost. In this paper, we extend the model to account for stochastic extraction cost as well as stochastic convenience yield and resource price, and we study the impact on the value of an oil field and optimal decisions regarding extraction. We show that introducing stochastic extraction cost has a substantial impact on value and on the cut-off prices at which it is optimal for the field to switch from one operation mode to another. We use a relatively new method for the evaluation of American-type options -the Least Squares Monte Carol method -which can more easily deal with multiple stochastic factors than traditional numerical approaches.
The bituminous sands : a canadian mirage
2009
Canada ranks second after Saudi Arabia, and ahead of Iran, in the amount of proven oil reserves. Canada‟s oil reserves are mostly in the form of bituminous sands, 10% of which can be recovered under existing political and economic contexts as well as existing technology, and constitute the country‟s current proven reserves. The bitumen reserves are located in the north-eastern part of the western Canadian province of Alberta. It involves a large territory nearly twice as vast as the UAE and slightly larger than England. That is the surface area involved is 140,000 km 2 (the UAE are 83 600 km 2 ). Alberta is the home to the largest deposits of crude bitumen in the world. The paper questions the actual controversy about the potential role of a major increase in Canadian oil snads production so as to bridge the upcoming gap between the world‟s ever increasing demand and the total recoverable oil supply. The actual potential of crash scenarios is presented, the prediction cost forecasts...