THE ECONOMICS OF ARCTIC OIL TRANSPORTATION

This article documents a comprehensive analytical framework or model which has been developed at M.I.T. for determining that combination of production schedule and transportation system which will maximize the after tax profit to investors in the petroleum resources at Prudhoe Bay, Alaska, given a set of user-supplied input variables describing the geologic, economic, legal and financial characteristics of the problem. A computer program implementing this model has been developed and exercised on a number of representative sets of input variables. It is emphasized that the value of this model lies in its generality and its flexibility. The model is designed to accept any values for the major system parameters such as; system element cost, or reservoir characteristics, or future market prices which a representative of government or industry might want to investigate. It is important to realize that even though specific values for such items as transportation vehicle cost, dry hole ratio, and market price will be used in this report, these quantities are retained as input variables. It is hoped that this will offer the maximum flexibility to future users of the model. The model simulates the year by year development of the field, giving such information as the number of wells, the division of transport capacity between tankers and pipelines, the capital requirements, and the distribution of crude. All such data is displayed through time as the patterns of demand and supply change. This allows rapid access to the information necessary to choose between the different production schedule-transportation system pairs. The model could easily be adapted for use in analyzing other potential producing areas, such as the North Sea or the Canadian archipelago.

  • Supplemental Notes:
    • Report index number is 71-604-NEM.
  • Corporate Authors:

    Massachusetts Institute of Technology

    Department of Ocean Engineering, 77 Massachusetts Avenue
    Cambridge, MA  USA  02139
  • Authors:
    • Lassiter III, J B
    • Devanney III, J W
  • Publication Date: 1971

Media Info

  • Pagination: 25 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00043748
  • Record Type: Publication
  • Source Agency: Massachusetts Institute of Technology
  • Report/Paper Numbers: MITSG 71-4
  • Files: TRIS
  • Created Date: Apr 27 1973 12:00AM