Energy Exploration & Exploitation

Norway is in most parts a mountainous country with ample precipitation and since such regions are thinly populated the exploitation of the hydro resources (which provides 99% of electricity) has been generally coupled with the development of power-intensive industries, e.g. aluminium, ferro alloys, nitrogen fixation, and carbides production.

Investors (many of them foreign) were attracted by cheap power that could be developed on a reasonable scale. Power plant and the industry were initially built as integrated, and isolated, units by private investors. More recently the State and the communities have taken a bigger stake in the development and a common grid that now covers the entire country has been established. Today, less than 20% is privately owned, about 1/3 belonging to the state and the rest split between county and local communities.

Availability of hydro power is subject to variations in precipitation and in addition a large fraction falls as snow (October–April) in the mountains where its potential is highest, but its contribution to the energy supply very small until it has melted. Economically exploitable hydro power in Norway is 170 TWh/year of which 95 TWh/year is fully developed (25 TWh will be exempted because of nature conservation) leaving room for substantial expansion. Although the off/shore oil and gas resources are now at the centre of the Nation's expectations (and, admittedly, these energy resources surpass hydro by some orders of magnitude) hydro power is still vital to the country's development.

Less than 10% of the total is marketed by a ‘Power Pool’ who fix night and day prices and coordinate supply from the power companies. As in most countries, electricity prices are subject not only to cost and market forces, but also to political considerations. Most households and general industry pay 20 øre (ca. 2 UK-p) per kWh (per capita consumption is >20 000 kWh/year), while the large-scale power-intensive industry may have long range contracts at 6–8 øre and even lower. This includes an electricity tax of 2 øre for most users. The Norwegian electricity system is energy dimensioned, the main problem being the collection and storage of water, while it is relatively cheap to supply sufficient power. This points to benefits from cooperation between Swedish nuclear power, Danish coal-fired stations and Norwegian hydro plants (a 500 MW DC-cable connects Denmark and Norway).

Inconsequences and neglected areas abound in the exploration history of hydrocarbons, both spatially and temporally, and as a result of geologic/technical and economic/political factors. Inorganic hydrocarbons, deep-Earth gas, continental sources and natural coal gasification — are these so rarely considered because of scientific inhibition? Might not vast new areas be opened up to exploration if the rigid beliefs of prospectors on the influence of effusiva and depth of burial could be modified? Our understanding of regional tectonic units is limited but may provide vital clues as to potential for as yet unsuspected exploitable deposits. The essence of a successful outcome will be in the development of an intelligent and organised approach, and an unbiased attitude.

For a world in search of energy diversification, natural gas is a particularly attractive source. Its abundance and its facility for being substituted for petroleum products over a wide range of uses should certainly mean that it will play a much more important role in filling world energy needs. Nonetheless, many obstacles are hindering its progress.

This article outlines the leading technical and economic parameters, which should influence the development of the world gas industry, and the prospects for its production and international trade evolution between now and the end of the century.

The recent dramatic fall in oil demand has been parallelled by significant changes in the level of oil reserves, reserve/production ratios and the utilisation of OPEC production capacity.

This paper reviews recent production trends worldwide, analyses the latest reserve developments and the relationship between OPEC capacity utilisation and market pressure and assesses the longer-term prospects for reserves.

It is shown in this paper that the price of an exhaustible resource in an economy of pure competition is not equal to the marginal cost of production and that, in this respect, the classical theory is the ‘worst possible case’ were the resources considered to be inexhaustible. The price of an almost depleted resource is shown to be equal to the marginal cost of production when the resource is exhausted, and on the other hand, its level depends on three factors: (a) the present cost of a substitute; (b) the life expectancy of the resource remaining; (c) the rates of interest on the international capital market. We have calculated from a coherent data assemblage the ‘right’ price for oil in the context of the theory, as it appeared prior to the 1973 crisis. This may be seen to have approximated the actual price ($2/bbl.). This is the optimal theoretical price produced using the pure competition of world resources.

The technical, historical and strategical reasons behind this noteworthy convergence are given, reasons which establish scientifically the crisis as an ‘impasse’ in an outdated strategy which had become unable to adapt to new production characteristics. However, the theory of exhaustible resources shows that, even in an economy of pure competition, there is a natural revenue which cannot be considered systematically to be a revenue of a monopolistic nature, or even be judged in regard to the conclusion of the classical theory of pure and perfect competition.