Modelling the costs of non-conventional oil: A case study of Canadian bitumen
AbstractHigh crude oil prices, uncertainties about the consequences of climate change and the eventual decline of conventional oil production raise the issue of alternative fuels, such as non-conventional oil and biofuels. This paper describes a simple probabilistic model of the costs of non-conventional oil, including the role of learning-by-doing in driving down costs. This forward-looking analysis quantifies the effects of both learning and production constraints on the costs of supplying bitumen, which can then be upgraded into synthetic crude oil, a substitute to conventional oil. The results show large uncertainties in the future costs of supplying bitumen from Canadian oil sands deposits, with a 90% confidence interval of $7-12 in 2030, and $6-15 in 2060 (2005 US$). The influence of each parameter on the supply costs is examined, with the minimum supply cost, the learning rate (LR), and the depletion curve exponent having the largest influence. Over time, the influence of the LR on the supply costs decreases, while the influence of the depletion curve exponent increases.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Energy Policy.
Volume (Year): 36 (2008)
Issue (Month): 11 (November)
Contact details of provider:
Web page: http://www.elsevier.com/locate/enpol
Non-conventional oil Uncertainty Experience curve;
Other versions of this item:
- Méjean, A. & Hope, C., 2008. "Modelling the costs of non-conventional oil: A case study of Canadian bitumen," Cambridge Working Papers in Economics 0810, Faculty of Economics, University of Cambridge.
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chakravorty, Ujjayant & Roumasset, James, 1990. "Competitive oil prices and scarcity rents when the extraction cost function is convex," Resources and Energy, Elsevier, Elsevier, vol. 12(4), pages 311-320, December.
- Rehrl, Tobias & Friedrich, Rainer, 2006. "Modelling long-term oil price and extraction with a Hubbert approach: The LOPEX model," Energy Policy, Elsevier, Elsevier, vol. 34(15), pages 2413-2428, October.
- John Hartwick, 1975.
"Exploitation of Many Deposits of an Exhaustible Resource,"
Working Papers, Queen's University, Department of Economics
182, Queen's University, Department of Economics.
- Hartwick, John M, 1978. "Exploitation of Many Deposits of an Exhaustible Resource," Econometrica, Econometric Society, Econometric Society, vol. 46(1), pages 201-17, January.
- Grubler, Arnulf & Nakicenovic, Nebojsa & Victor, David G., 1999. "Dynamics of energy technologies and global change," Energy Policy, Elsevier, Elsevier, vol. 27(5), pages 247-280, May.
- Toman, Michael & Krautkraemer, Jeffrey, 2003. "Fundamental Economics of Depletable Energy Supply," Discussion Papers, Resources For the Future dp-03-01, Resources For the Future.
- Chakravorty, Ujjayant & Roumasset, James & Tse, Kinping, 1997. "Endogenous Substitution among Energy Resources and Global Warming," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(6), pages 1201-34, December.
- Adelman, M A, 1990. "Mineral Depletion, with Special Reference to Petroleum," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 1-10, February.
- Paul Stevens, 2005. "Oil Markets," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 21(1), pages 19-42, Spring.
- Roumasset, J. & Isaak, D. & Fesharaki, F., 1983. "Oil prices without OPEC : A walk on the supply-side," Energy Economics, Elsevier, Elsevier, vol. 5(3), pages 164-170, July.
- Soderbergh, Bengt & Robelius, Fredrik & Aleklett, Kjell, 2007. "A crash programme scenario for the Canadian oil sands industry," Energy Policy, Elsevier, Elsevier, vol. 35(3), pages 1931-1947, March.
- McDonald, Alan & Schrattenholzer, Leo, 2001. "Learning rates for energy technologies," Energy Policy, Elsevier, Elsevier, vol. 29(4), pages 255-261, March.
- Grubb, Michael, 2001. "Who's afraid of atmospheric stabilisation? Making the link between energy resources and climate change," Energy Policy, Elsevier, Elsevier, vol. 29(11), pages 837-845, September.
- MÃ©jean, AurÃ©lie & Hope, Chris, 2013.
"Supplying synthetic crude oil from Canadian oil sands: A comparative study of the costs and CO2 emissions of mining and in-situ recovery,"
Energy Policy, Elsevier,
Elsevier, vol. 60(C), pages 27-40.
- Méjean, A. & Hope, C., 2010. "Supplying Synthetic Crude Oil from Canadian Oil Sands: A Comparative Study of the Costs and CO2 Emissions of Mining and In-Situ Recovery," Cambridge Working Papers in Economics 1014, Faculty of Economics, University of Cambridge.
- Sena, Marcelo Fonseca Monteiro de & Rosa, Luiz Pinguelli & Szklo, Alexandre, 2013. "Will Venezuelan extra-heavy oil be a significant source of petroleum in the next decades?," Energy Policy, Elsevier, Elsevier, vol. 61(C), pages 51-59.
- Méjean, A. & Hope, C., 2010. "The Effect of CO2 Pricing on Conventional and Non-Conventional Oil Supply and Demand," Cambridge Working Papers in Economics 1054, Faculty of Economics, University of Cambridge.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.