Modelling the costs of non-conventional oil: A case study of Canadian bitumen
High 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 alternative fuels. The results show large uncertainties in the future costs of supplying synthetic crude oil from bitumen deposits, with a 90% confidence interval of $7 to $11 in 2025, and $6 to $13 in 2050. The influence of each parameter on the supply costs is examined, with the minimum supply cost, the learning rate, and the depletion curve exponent having the largest influence. Over time, the influence of the learning rate on the supply costs decreases, while the influence of the depletion curve exponent increases.
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.:
- McDonald, Alan & Schrattenholzer, Leo, 2001. "Learning rates for energy technologies," Energy Policy, 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, vol. 29(11), pages 837-845, September.
- Chakravorty, Ujjayant & Roumasset, James & Tse, Kinping, 1997. "Endogenous Substitution among Energy Resources and Global Warming," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1201-34, December.
- Toman, Michael & Krautkraemer, Jeffrey, 2003. "Fundamental Economics of Depletable Energy Supply," Discussion Papers dp-03-01, Resources For the Future.
- 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.
- Rehrl, Tobias & Friedrich, Rainer, 2006. "Modelling long-term oil price and extraction with a Hubbert approach: The LOPEX model," Energy Policy, Elsevier, vol. 34(15), pages 2413-2428, October.
- Grubler, Arnulf & Nakicenovic, Nebojsa & Victor, David G., 1999. "Dynamics of energy technologies and global change," Energy Policy, Elsevier, vol. 27(5), pages 247-280, May.
- Paul Stevens, 2005. "Oil Markets," Oxford Review of Economic Policy, Oxford University Press, vol. 21(1), pages 19-42, Spring.
- Chakravorty, Ujjayant & Roumasset, James, 1990. "Competitive oil prices and scarcity rents when the extraction cost function is convex," Resources and Energy, Elsevier, vol. 12(4), pages 311-320, December.
- Soderbergh, Bengt & Robelius, Fredrik & Aleklett, Kjell, 2007. "A crash programme scenario for the Canadian oil sands industry," Energy Policy, Elsevier, vol. 35(3), pages 1931-1947, March.
- Roumasset, J. & Isaak, D. & Fesharaki, F., 1983. "Oil prices without OPEC : A walk on the supply-side," Energy Economics, Elsevier, vol. 5(3), pages 164-170, July.
- John Hartwick, 1975.
"Exploitation of Many Deposits of an Exhaustible Resource,"
182, Queen's University, Department of Economics.
- Hartwick, John M, 1978. "Exploitation of Many Deposits of an Exhaustible Resource," Econometrica, Econometric Society, vol. 46(1), pages 201-17, January.
When requesting a correction, please mention this item's handle: RePEc:cam:camdae:0810. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Howard Cobb)
If references are entirely missing, you can add them using this form.