The global economy continues its journey of evolution and progression driven by industrialism as its primary force. With such a fast pace of development and recovery from several recessions over a number of years, dependency on energy sources became inevitable to satisfy the rising demand. This paper represents a proposed global energy price model that has the flexibility of modeling the energy price, using data from specific regions of the world, as well as the global energy pricing equation. The ANM (Alternate Novel Model) is presented here.
The model focuses mainly on oil price modeling, since oil accounts for more than 84% of the current world energy supply. The model duration is 50 years; starting from 1980 to 2030, model matching period from 1980 to 2011, and the prediction period is from 2012to 2030.
The modeling approach used in ANM adopts weighted averaging of individual factors and it relies on line regression technique. Therefore, future trends are being predicted based on the cyclic nature of the market and historical data "the future is reflection of the past??. ANM can then preduct the future oil prices, depending on the factors and variables that have been placed in the process for the output results.
The paper aims to propose a reliable model that accounts for most governing factors in the global energy pricing equation. All steps followed and assumptions made will be discussed in detailto clarify the working mechanism for this model and pave the road for any future modifications.
Summit review - No abstract available.
Companies listed on the big six markets (Australia (ASX), Canada (TSX), USA (NYSE), UK (LSE Main Market and AIM), Singapore (SGX Main Market and Catalist) and Hong Kong (HKEx)) all have requirements of some form when it comes to reporting oil and gas reserves and resources. The requirements may be specified by the market rules, the market financial regulators, extra-territorial legislation, accounting standards or standards published by technical societies and are usually supported by Government Legislation. The requirements vary considerably and place very different technical and administration demands on oil and gas companies.
This paper provides an engineer's broad brush overview of the various requirements, provides a comparison to SPE PRMS, makes a qualitative comment on the strength and weakness of the exchange rules and ultimately provides some best practice considerations.
This paper can benefit all listed companies who need to know the rules they are required to comply with, can benefit all unlisted companies by giving them an insight into the types of reporting that investors may typically demand and can benefit petroleum professionals by enabling them to know what they must provide.
Stock Exchange Overview
Excluding National Oil Companies, due to the capital requirements of the industry, it would be fair to assume that the majority of oil and gas companies of substance are public companies listed on one or more stock exchange.
These listed companies are usually contractually bound to report to investors using the policies, rules and guidelines that the stock exchange publishes from time to time.
Not only is there a binding contractual arrangement between the stock exchange and the listed company but, in the country where the stock exchange operates, there may also be Government legislation that supports the policies, rules and guidelines of the stock exchange. This legislation provides the regulators the power to penalise companies (and directors and officers) who breach the stock exchange and reporting obligations.
Investors who buy and sell the shares and options of public listed companies on a stock exchange ideally do so in a fully informed manner where the oil and gas companies have disclosed all the information that is necessary for the investors to make a buy, hold or sell decision.
On most markets there is also the concept of continuous disclosure where any matter that may be expected by a reasonable person to affect the price of a share or option must be immediately disclosed to the market. In addition to the concept of continuous disclosure, some markets have specific requirements for oil and gas companies.
Shale gas is widely considered to be revolutionizing the industry in the U.S. Various countries have begun shale exploration, but none have begun pursuing it with the aggressive growth characteristic of the North American experience. While the price of natural gas in some regions can be three to five times higher than in the U.S., the nature of lease agreements, geological characteristics, and political and societal factors all shape different emerging shale development models.
In North America, variations in shale gas plays have resulted in differences in technology and equipment design. The Horn River, for example, is located in a flat environment with very cold winters, while the Marcellus is located in a population-dense area with small local roads. These examples result in differences to field, well, and equipment design. This will be exaggerated as we move to international locations. In Europe, for example, road regulations restrict weight and dimensions, requiring rigs to break into smaller modules, and limiting the horsepower on a single fracture pumping unit. Novel fracture methods, such as pin-point fracturing, may be given different considerations internationally, potentially reducing horsepower requirements. Additionally, as international markets move into commercial development of resources, the truck traffic, emissions reduction, and need for smaller overall surface footprint will likely drive the market toward more wells per pad. This will cause rig design to follow closely the development seen in Canada's multi-well pad design with load limits and equipment designed more like the Marcellus.
This paper investigates the impact of varying emerging global markets on the future of technology and innovation in shale and tight gas reservoirs. The influences such as geological, political, and infrastructure on equipment design for varying gas reservoirs will be discussed.
A simplified version of the Smith and Nau (1995) integrated solution scheme is applied to the valuation of an oilfield project possessing salvage options and both private and public uncertainties. It is shown that the computed valuation is consistent with the definition of the real option price as the maximum value that could be obtained, without market risk, from an ensemble of projects that sample the private uncertainty. The attainment of this value requires an optimal decision strategy and a hedging strategy, both of which are obtained as a byproduct of the valuation. The interpretation of the obtained value is validated by forward simulation over an ensemble of projects, by use of a fully reproducible worked example.
Economist's Corner - The oil and gas industry is unique: It is subject to constant scrutiny and regulation from multiple angles. It consists of two distinct cultures, one in the corporate setting and the other in the field. It can also be exceptionally lucrative at both the company and investor level. In addition, the oil and gas sector differs from other industries in the way energy companies are valued by the financial community.
This paper outlines an innovative technique for identifying and subsequently optimizing superior investments in the energy sector, both from the point of view from the individual and institutional investor. The first step presents how to organize perspective energy stocks and then subsequently calculate expected returns based on historical stock prices. The expected return results from the selected energy stocks are then contrasted against the S&P 500 performance over the same period to eventually illustrate the energy stocks generally performed significantly better than the market over the past 5 years. The next step outlines how to calculate and determine the optimum energy portfolio utilizing advanced portfolio theory and the
efficient frontier methodology. Analysis of this optimum portfolio indicates that the optimal portfolio mix, for the given stocks, is comprised of nine energy stocks and his heavily leveraged in Super Major stock. Finally, risk mitigation strategies are discussed and a workflow for optimizing portfolio diversification is presented. The results of which indicate that seven individual stocks were needed to effectively diversify a portfolio of positively correlateable stocks to a point where the standard deviation of the portfolio would be below 8%. This information can be used by investors to identify trends and arbitrage opportunities in the energy sector. In addition, this information can be used by operating companies to effectively contrast their performance versus their peers and the sector as a whole in an effort to attract new investors and secure market confidence. Additionally, individuals and institutions can use the information and techniques presented to optimize their own risk management strategies.
Demand for natural gas is increasing more rapidly than anticipated in Far East markets because (1) China has modified its policies in order to increase reliance on gas, in part to mitigate the growth in its coal consumption (which now stand at almost half of world coal production), (2) Japan has announced its intention to eventually shutdown its nuclear power industry, and (3) India, which currently has more than 400 million people without electricity, desires to accelerate electrification. This analysis investigates the potential role of stranded gas from Central Asia, Russia, Southeast Asia, and Australia in meeting Asia's future demand for gas imports. It initially surveys the discovered or known gas in stranded gas accumulations in Central Asia, Russia, Australia, Indonesia, and Malaysia. It then examines the primary gas import markets of China, India, Japan, and South Korea by describing energy use, gas demand trends, and domestic gas supplies to establish boundaries that encompass the wide variation in gas import demands in these markets during the two decades following 2020.
Then the cost of developing and delivering gas through overland pipelines from selected stranded gas fields in Central Asia and Russia to China is examined. Analysis shows that for the Shanghai market in China, the costs of developing and delivering Russia's stranded gas from the petroleum provinces of eastern Siberia are competitive with costs estimated for stranded gas from Central Asia. However, for the Western Siberian Basin, delivered gas costs are at least 3 US dollars per thousand cubic feet (USD/Mcf) higher than delivered gas from Central Asia.
The extraction and transport costs to a liquefaction plant for gas from stranded gas fields located in Australia, Indonesia, Malaysia, and the basins of eastern Siberia are then evaluated. The resource cost functions presented show development and extraction costs as a function of the volume of stranded gas developed for each country. The analysis demonstrates that, although the Russian fields in areas of eastern Siberia are large with relatively low extraction costs, distances to a potential liquefaction plant at Vladivostok make them initially the high cost suppliers of the liquefied natural gas (LNG) market. For the LNG markets examined, Australia and Malaysia are initially the lowest cost suppliers. For the Shanghai market, a comparison of the cost of supplying gas by pipeline with the cost of supplying LNG shows that the pipeline costs from areas of eastern Siberia and Central Asia are generally lower than delivered cost of gas as LNG from the LNG supply sources considered.
The perception of natural gas today is radically different from what it was 10 years ago. Years ago, the natural gas was perceived as a noble fuel, reserved for premium uses. Today, it is used in a variety of sectors and applications and is experiencing significant growth as a fuel for electricity generation.
During the years 1990-1997, twenty six countries around the world introduced the participation of private capital in the natural gas transmission. The major participation of private capital has been located in Latin America and Caribbean countries. Argentina, Peru and Colombia have undertaken the most ambitious privatization efforts. Mexico expects its gas demand to more than double, with about half the gas used in power generation.
The expected expansion of the North American gas market will require considerable investment in new pipeline capacity from more distant resources. In North America, the gas demand growth is strong, in special in the power generation sector. Major pipeline expansions between Canada and the United States have been completed.
The gas transmission in Europe has been focused on the privatization of existing assets, which are property of the state. Belgium, Germany, France, Italy, the Netherlands and United Kingdom have been working to transmit and sell gas to regional distributors receiving individual tariffs for it. It is known as vertical integration. Italy is one of the countries with greater profits received. Different kinds of alliances and joint ventures have been observed during the last years.
The gas transmission in Eat Asia countries such as the Republic of Korea, Malaysia and Thailand is still a business reserved for the public sector. In Indonesia and Philippines, South Asia, the Middle East and North Africa, the private gas transmission has been limited to Greenfield projects.
During the next 20-40 years, the natural gas will play a substantial role in Russian exports. Statistical Review from World Energy 2012 reported that Russia has about 44.6 trillion cubic metres (TCM) of natural gas in proved reserves, which are the largest in the world. About a third of natural gas exports might be destined to Asia region from Russia, Central Asia, the Middle East and Australia.
The gas demand will develop differently from one world region to another in function of the size of gas reserves, their distance from the markets, the maturity of markets and of the competition from other energy sources.