From: Mike Lorrey (mlorrey@yahoo.com)
Date: Thu May 15 2003 - 17:48:46 MDT
--- Charles Hixson <charleshixsn@earthlink.net> wrote:
> Mike Lorrey wrote:
>
> > ...
> >
> >But what is the cost of production? These figures usually are tied
> >to a fixed cost of production, what is recoverable at those costs.
> >Is there some cost range specified?
> ...
> I'd be quite suspicious of cost estimates that were more than 5-10
> years in the future. Remember the spike.
Quite, However, energy companies actually have been pretty good in the
past in anticipating changes in recovery costs, since they've been in
business so long, their product is such a commodity, and the financial
analysis data is so well known on the academic side. They actually
preceded Moore in this, they just weren't so smug about it, cause the
curve isn't so pronounced.
This curve is matched up against other factors in an equation that
pitches depth of a deposit, water and gas percentages, and the
thickness of the various rock/sand layers (and their hardnesses), to
come up with the initial investment to tap a deposit, plus recurring
costs that don't change that much, and generally go up over time
because they are primarily based on human labor costs, or mechanisms to
increase the speed of delivery to market.
=====
Mike Lorrey
"Live Free or Die, Death is not the Worst of Evils."
- Gen. John Stark
Blog: Sado-Mikeyism: http://mikeysoft.blogspot.com/
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