Www.geohelp.ab.ca Resource Development Model Dave Russum Geo-Help Inc.
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Transcript of Www.geohelp.ab.ca Resource Development Model Dave Russum Geo-Help Inc.
www.geohelp.ab.ca
Resource Development Model
Dave Russum
Geo-Help Inc.
www.geohelp.ab.ca
Concept
• Simple method to look at resource development
• Applicable to all non-renewable resources• Applicable to renewable resources where
production exceeds sustainable levels• Can be applied to a single project or to a total
world assessment of a resource• Provides some predictability to future trends
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Renewable and Non-Renewable Resources
• Renewable – the resource is constantly being replaced eg. Timber, fish– Production could be sustained forever
• Non-renewable – the resource is not being replaced in the normal timeframe of man’s activities eg. Oil, gas– When used it is gone forever
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Resource Development Model – 8 Stages
1. Discovery
2. Evaluation
3. Development
4. Expansion
5. Hey-day
6. Denial
7. Reality
8. Abandonment
TIME
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Stage 1: Discovery
• Idea
• Exploration
• Recognition of the Resource
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Stage 2: Evaluation
• Determination of the economic viability of the resource
• Decision to proceed
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Stage 3: Development
• Bringing the resource into production – Creating the infrastructure – Creating ability to process the resource
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Stage 4: Expansion/Growth
• The initial discoverer and others recognize the potential for expansion.
• Competition creates rapid growth.
• Cost may escalate
• Hasty investment decisions may be made
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Stage 5: Hey-day
• Intense production to profit from the resource. • Production accelerates beyond reasonable
levels. • Related industry may develop close to the
resource rather than shipping all the product to a distant market
• Decisions tend to be based on a herd mentality and the assumption of virtually unlimited future production
• Technology helps sustain activity
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Stage 6: Denial
• Limits to resource ignored • Companies, workers, politicians, regulators and
consumers predict and expect continued growth in production (and pay cheques)
• Spending based on unrealistic future expectations
• Early investors may quietly exit• Costs to maintain production increase• Opinions that all is not rosy are ignored or not
welcome
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Stage 7: Reality
• Limitations of resource recognized, • Quotas or regulations may be applied
to extend the life of the resource • generally too little to late.
• Remaining quality resources become a cash cow
• Small, low cost operators pursue remaining marginal resources.
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Stage 8: Decline/Abandonment
• Remaining resource is not economically viable and man moves on.
• Restoration often does not occur because it is not economically viable creating the “ghost towns” that are common in any natural resource area.
• Resource not completely produced; it is simply not economically viable to extract what remains or a more viable alternative have been discovered.
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Reserve Growth
1 2 3 4 5 6 7 8
Stages
Reserves
Predictions
Unbridledoptimism
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Production
1 2 3 4 5 6 7 8
Stages
RapidGrowth
Technology and $’s
Steepdecline
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Texas Onshore gas production
0
2000
4000
6000
8000
10000
12000
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
Pro
du
cti
on
in
Bc
f/d
ay
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
# P
rod
uc
ing
We
lls
Gas Production
Producing Gas Wells
CurrentStage: 7(Reality)7
Real6
Den5
Hey4
Expan
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Alberta gas production and gas wells (CAPP Data)
0
2000
4000
6000
8000
10000
12000
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
Bc
f/Y
ea
r
0
10000
20000
30000
40000
50000
60000
70000
# P
rod
uc
ing
ga
s w
ells
AB Gas Production
AB Gas Wells
2 3 4 5
CurrentStage: 6(Denial)- RapidlyMoving to Reality
6
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Texas Remaining Reserves
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
195019
5219
5419
5619
5819
6019
6219
6419
6619
6819
7019
7219
7419
7619
7819
8019
8219
8419
8619
8819
9019
9219
9419
9619
9820
00
Res
erve
s B
cf
0.0
5.0
10.0
15.0
20.0
25.0
30.0
R/P
Natural Gas Reserves
R/P
PeakProduction
Peak(1971):
Reserves >120Tcf,R/P = 15
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Alberta Remaining Reserves and R/P
0
10000
20000
30000
40000
50000
60000
70000
195019
5219
5419
5619
5819
6019
6219
6419
6619
6819
7019
7219
7419
7619
7819
8019
8219
8419
8619
8819
9019
9219
9419
9619
9820
0020
02
Res
erve
s B
cf
0
5
10
15
20
25
30
35
R/P
Alberta Reserves
R/P
PeakProd’n
Peak(2001):
Reserves 42 Tcf,R/P 8.5
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Texas vs. Alberta StatisticsTexas Alberta
Area (sq. miles) 269,000 255,000
Prodn. 1956-2002 319 Tcf 109 Tcf
Rem. Reserves (2002)
43 Tcf 40 Tcf
2002 Production 5600 Bcf 4900 Bcf
2002 Gas wells 65,686 70,000
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Stages
• Not consistent in length
• Will be some overlap of stages
• Stage may be skipped or take hundreds of years
• New technology or price may rejuvenate an existing project/resource
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Resource Development Model – WELSH COALFIELDS
1. Discovery (Pre 1850)
2. Evaluation (2 years?)
3. Development (1850’s)
4. Expansion (1850-1880)
5. Hey-day (1880-1900)
6. Denial (1900-1970)
7. Reality (1965-1980)
8. Abandonment (1990s)
TIME
Current Stage: 8
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Resource Development Model – COD FISHERIES
1. Discovery (1700s)
2. Evaluation (1 year?)
3. Development (18th Century)
4. Expansion (19th Century)
5. Hey-day (19th- mid 20th Century)
6. Denial (1950-1990)
7. Reality (1990’s)
8. Abandonment (1990s)
TIME
Current Stage: 8
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Resource Development Model – Leduc
1. Discovery (1947)
2. Evaluation (1 month?)
3. Development (1947- 1950)
4. Expansion (1948-1955)
5. Hey-day (1950-70?)
6. Denial (1965-1975)
7. Reality (1975-Present)
8. Abandonment (2005?)
TIME
Current Stage: 7/8
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Resource Development Model – Ladyfern
1. Discovery (3 years)
2. Evaluation (1 week?)
3. Development (6 months)
4. Expansion (1.5 years)
5. Hey-day (1 day?)
6. Denial (1 day)
7. Reality (Present)
8. Abandonment
TIME
Current Stage: 7
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Resource Development Model – Alberta Tarsands
1. Discovery (1778)
2. Evaluation (to 1965)
3. Development (1967)
4. Expansion (1967-Present)
5. Hey-day (Present?)
6. Denial
7. Reality
8. Abandonment
TIME
Current Stage: 4/5
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Resource Development Model – Alberta Gas
1. Discovery (1880’s)
2. Evaluation (20 years?)
3. Development (1910- 1950)
4. Expansion (1950-1990)
5. Hey-day (1990-2000)
6. Denial (2000- Present)
7. Reality
8. Abandonment
TIME
Current Stage: 6
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Resource Development Model – Canada CBM
1. Discovery (1970’s?)
2. Evaluation (2000-2003?)
3. Development (2003 Onward)
4. Expansion
5. Hey-day
6. Denial
7. Reality
8. Abandonment
TIME
Current Stage: 2/3
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Resource Development Model – Canada Gas Hydrates
1. Discovery (1970 - 2002?)
2. Evaluation (2000-2025?)
3. Development (2025 Onward)
4. Expansion
5. Hey-day
6. Denial
7. Reality
8. Abandonment
TIME
Current Stage: 1/2
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Resource Development Model – BC Gas
1. Discovery (1948)
2. Evaluation (1950-1960?)
3. Development (1960’s)
4. Expansion (1970’s-1990’s)
5. Hey-day (Present)
6. Denial
7. Reality
8. Abandonment
TIME
Current Stage: 5
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Resource Development Model – Saskatchewan Gas
1. Discovery (1950’s)
2. Evaluation (1950-1990?)
3. Development (1990’s)
4. Expansion (Present)
5. Hey-day
6. Denial
7. Reality
8. Abandonment
TIME
Current Stage: 4
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Resource Development Model – Scotian Shelf Gas
1. Discovery (1960’s)
2. Evaluation (1960-1990’s)
3. Development (1999)
4. Expansion (Present?)
5. Hey-day
6. Denial
7. Reality
8. Abandonment
TIME
Current Stage: 4or 7?
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Resource Development Model – Mackenzie Delta Gas
1. Discovery (1970’s)
2. Evaluation (1970-Present)
3. Development
4. Expansion
5. Hey-day
6. Denial
7. Reality
8. Abandonment
TIME
Current Stage: 2/3
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Canada’s Hydrocarbon Stages Stage 1
Disc
2
Eval
3
Dev
4
Expn
5
Hey
6
Den
7
Real
8
Abn
AB Gas
BC Gas
Sask. Gas
E. Coast Gas ? ? ?
Mackenzie Gas ?
CBM
Gas Hydrates
AB Oil - Light
AB Oil - Heavy
Tar sands ?
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Resource Development Model – Alberta Coal (Mining)
1. Discovery (1800’s)
2. Evaluation (1850-80)
3. Development (1880’s)
4. Expansion (1880=1900)
5. Hey-day (1900-1920)
6. Denial (1930’s-1960)
7. Reality (1960’s)
8. Abandonment (1970’s)
TIME
Current Stage: 8
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Resource Development Model – Alberta Coal (Opencast)
1. Discovery (1800’s)
2. Evaluation (to 1950’s)
3. Development (1960’s?)
4. Expansion (1970’s)
5. Hey-day (Present)
6. Denial
7. Reality
8. Abandonment
TIME
Current Stage: 5Demand/price could move to Stage 4
?