Energy, Natural Resources and Environmental Economics PDF
Preview Energy, Natural Resources and Environmental Economics
Energy Systems SeriesEditor: PanosM.Pardalos,UniversityofFlorida,USA Forfurthervolumes: http://www.springer.com/series/8368 Endre Bjørndal (cid:2) Mette Bjørndal Panos M. Pardalos (cid:2) Mikael Ro¨nnqvist Editors Energy, Natural Resources and Environmental Economics 123 Editors ProfessorEndreBjørndal ProfessorPanosM.Pardalos DepartmentofAccounting,Auditing DepartmentofIndustrial&Systems andLaw Engineering NorwegianSchoolofEconomics CenterforApplied andBusinessAdministration(NHH) Optimization,UniversityofFlorida Helleveien30 WeilHall303 5045Bergen P.O.Box116595Gainesville Norway FL32611-6595 [email protected] USA Pardalos@ufl.edu ProfessorMetteBjørndal ProfessorMikaelRo¨nnqvist DepartmentofFinance DepartmentofFinance andManagementScience andManagementScience NorwegianSchoolofEconomics NorwegianSchoolofEconomics andBusinessAdministration(NHH) andBusinessAdministration(NHH) Helleveien30 Helleveien30 5045Bergen 5045Bergen Norway Norway [email protected] [email protected] ISSN1867-8998 e-ISSN1867-9005 ISBN978-3-642-12066-4 e-ISBN978-3-642-12067-1 DOI10.1007/978-3-642-12067-1 SpringerHeidelbergDordrechtLondonNewYork LibraryofCongressControlNumber:2010931834 (cid:3)c Springer-VerlagBerlinHeidelberg2010 Thisworkissubjecttocopyright.Allrightsarereserved,whetherthewholeorpartofthematerialis concerned,specificallytherightsoftranslation,reprinting,reuseofillustrations,recitation,broadcasting, reproductiononmicrofilmorinanyotherway,andstorageindatabanks.Duplicationofthispublication orpartsthereofispermittedonlyundertheprovisionsoftheGermanCopyrightLawofSeptember9, 1965,initscurrentversion,andpermissionforusemustalwaysbeobtainedfromSpringer.Violations areliabletoprosecutionundertheGermanCopyrightLaw. Theuseofgeneral descriptive names,registered names,trademarks, etc. inthis publication does not imply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevantprotective lawsandregulationsandthereforefreeforgeneraluse. Coverillustration:Coverartentitled“WOODCOLORSINMOTION”isdesignedbyEliasTyligadas. Coverdesign:SPiPublisherServices Printedonacid-freepaper SpringerispartofSpringerScience+BusinessMedia(www.springer.com) Preface Thisbookconsistsofacollectionofarticlesdescribingtheemergingandintegrated areaofEnergy,NaturalResourcesandEnvironmentalEconomics.Amajorityofthe authorsareresearchersdoingappliedworkineconomics,finance,andmanagement scienceandarebasedintheNordiccountries.Thesecountrieshavealongtradition of managingnaturalresources.Manyof theapplicationsare thereforefoundedon suchexamples. ThebookcontentsarebasedonaworkshopthattookplaceduringMay15–16, 2008in Bergen,Norway.The aim of the workshopwas to create a meeting place for researchers who are active in the area of Energy,Natural Resource, and Envi- ronmentalEconomics,andatthesametimecelebrateProfessorKurtJo¨rnsten’s60th birthday. Thebookisdividedintofourparts.Thefirstpartconsiderspetroleumandnatural gas applications, taking up topics ranging from the management of incomes and reserves to market modeling and value chain optimization. The second and most extensive part studies applications from electricity markets, including analyses of marketprices,riskmanagement,variousoptimizationproblems,electricitymarket design, and regulation. The third part describes different applications in logistics andmanagementofnaturalresources.Finally,thefourthpartcoversmoregeneral problemsandmethodsarisingwithinthearea. Thecompiledsetof29papersattemptstoprovidereaderswithsignificantcon- tributionsineachoftheareas.Thearticlesareoftwotypes,thefirstbeinggeneral overviewsofspecificcentralsubjectareas,andthesecondbeingmoreorientedto- wardsapplied research.Thishopefullymakesthe bookinteresting forresearchers already active in research related to energy, natural resources, and environmental economics,aswellasgraduatestudents. WeacknowledgethevaluablecontributionsfromtheNorwegianSchoolofEco- nomics and Business Administration (NHH) and the Institute for Research in EconomicsandBusinessAdministration(SNF).Wearealsoverygratefultoallthe refereesandtoPh.D.studentVictoriaGribkovskaiaforherworkonthemanuscript. Bergen/Gainesville EndreBjørndal December2009 MetteBjørndal PanosPardalos MikaelRo¨nnqvist v Contents PartI PetroleumandNaturalGas InvestmentStrategyofSovereignWealthFunds ............................... 3 TrondDøskeland ChasingReserves:IncentivesandOwnership .................................. 19 PetterOsmundsen Elastic Oil: A Primer on the Economics of Exploration andProduction..................................................................... 39 KlausMohn Applied Mathematical Programming in Norwegian PetroleumFieldandPipelineDevelopment:SomeHighlights fromtheLast30Years............................................................. 59 BjørnNygreenandKjetilHaugen AnalysisofNaturalGasValueChains........................................... 71 KjetilT.MidthunandAsgeirTomasgard OnModelingtheEuropeanMarketforNaturalGas.......................... 83 LarsMathiesen EquilibriumModelsandManagerialTeamLearning .........................101 AnnaMetteFuglsethandKjellGrønhaug RefineryPlanningandScheduling:AnOverview..............................115 JensBengtssonandSigrid-LiseNona˚s vii viii Contents PartII ElectricityMarketsandRegulation MultivariateModellingandPredictionofHourlyOne-Day AheadPricesatNordpool.........................................................133 JonasAnderssonandJosteinLillestøl TimeRegularitiesintheNordicPowerMarket:Potentials forProfitableInvestmentsandTradingStrategies?............................155 OleGjølberg ValuationandRiskManagementintheNorwegianElectricity Market(cid:4) .............................................................................167 PetterBjerksund,HeineRasmussen,andGunnarStensland Stochastic Programming Models for Short-Term Power GenerationSchedulingandBidding.............................................187 TrineKroghKristoffersenandStein-ErikFleten OptimizationofFuelContractManagementandMaintenance SchedulingforThermalPlantsinHydro-basedPowerSystems..............201 RaphaelMartinsChabar,SergioGranville,MarioVeigaF.Pereira, andNikoA.Iliadis Energy Portfolio Optimization for Electric Utilities: CaseStudyforGermany..........................................................221 SteffenRebennack,JosefKallrath,andPanosM.Pardalos InvestmentinCombinedHeatandPower:CHP ...............................247 Go¨ranBergendahl CapacityCharges:APriceAdjustmentProcessforManaging CongestioninElectricityTransmissionNetworks..............................267 MetteBjørndal,KurtJo¨rnsten,andLindaRud HarmonizingtheNordicRegulationofElectricityDistribution..............293 PerJ.AgrellandPeterBogetoft Benchmarking in Regulation of Electricity Networks inNorway:AnOverview..........................................................317 EndreBjørndal,MetteBjørndal,andKari-AnneFange OnDepreciationandReturnontheAssetBaseinaRegulated CompanyUndertheRate-of-ReturnandLRICRegulatory Models...............................................................................343 L.PeterJennergren Contents ix PartIII NaturalResourcesandLogistics RescuingthePreybyHarvestingthePredator:IsItPossible? ...............359 LeifK.SandalandSteinI.Steinshamn Absorptive Capacity and Social Capital: Innovation andEnvironmentalRegulation...................................................379 ArentGreve IssuesinCollaborativeLogistics .................................................395 SophieD’AmoursandMikaelRo¨nnqvist PilotAssignmenttoShipsintheSeaofBothnia................................411 HenrikEdwards Transportation Planning and Inventory Management intheLNGSupplyChain.........................................................427 HenrikAndersson,MarielleChristiansen,andKjetilFagerholt PartIV GeneralProblemsandMethods Optimal Relinquishment According to the Norwegian PetroleumLaw:ACombinatorialOptimizationApproach...................443 HorstW.HamacherandKurtJo¨rnsten AnOverviewofModelsandSolutionMethodsforPooling Problems ............................................................................459 DagHaugland CooperationUnderAmbiguity ...................................................471 SjurDidrikFla˚m ThePerpetualAmericanPutOptionforJump-Diffusions....................493 KnutK.Aase DiscreteEventSimulationintheStudyofEnergy,Natural ResourcesandtheEnvironment..................................................509 IngolfSta˚hl Overview of the Contributions PartI:PetroleumandNaturalGas Sovereignwealthfunds(SWF) isthenewnameforassetsheldbygovernmentsin anothercountry’scurrency.Thesefundsaregrowingatanunprecedentedrate and are becoming important players in global financial markets. Døskeland describes thesefundsandclassifiesdifferentinvestmentstrategies. Osmundsen discusseschallenges,incentives,andownershipofpetroleumreserves. TheissuesarediscussedinrelationtotwocasestakenfromRussiaandBrazil. Mohn describes how predictions from a geophysical approach to oil exploration and production suggests that oil production will develop according to a predeter- minedandinflexiblebell-shapedtrajectory,quiteindependentofvariablesrelating totechnologicaldevelopment,economics,andpolicy. NygreenandHaugen discussapplicationsofmathematicalprogrammingtoolsand techniquesinfielddevelopmentplanningfortheNorwegiancontinentalshelf. MidthunandTomasgard provideanoverviewofthenaturalgasvaluechain,mod- elling aspects and special properties of pipeline networks that provide challenges whendoingeconomicanalyses. Mathiesen describes equilibrium models to analyze the European Market for NaturalGas. FuglsethandGrønhaug describehowequilibriummodelscanenhancemanagerial teamlearningincomplexandever-changingsituations. BengtssonandNona˚s surveytheplanningandschedulingofrefineryactivities. The focus is on identification of problems, models, and computationaldifficulties introducedbythemodels. xi xii OverviewoftheContributions PartII:ElectricityMarketsandRegulation Andersson and Lillestøl exploit multivariate and functional data techniques to capture important features concerning the time dynamics of hourly day-ahead electricitypricesatNordpool. Electricityis a non-storablecommodityandelectricitypricesfollowfairly regular fluctuations in demand, stemming from time dependent variations in economic activityandweatherconditions.However,itispossibletostoreelectricityasadif- ferentenergycarrier.TheseaspectsaredescribedbyGjølberg. Bjerksund, Rasmussen, and Stensland analyze valuation and risk managementin theNorwegianelectricitymarket. Kristoffersen and Fleten provide an overview of stochastic programmingmodels inshort-termpowergenerationschedulingandbidding. Chabar, Granville, Pereira, and Iliadis present a decision support system that determines the optimal dispatch strategy of thermal power plants while consider- ingtheparticularspecificationsoffuelsupplyagreements. Rebennack,Kallrath,andPardalos discussaportfoliooptimizationproblemoccur- ringintheenergymarketwhereenergydistributingpublicserviceshavetodecide howmuchoftherequestedenergydemandhastobeproducedintheirownpower plant,andwhichcomplementaryamounthastobeboughtfromthespotmarketand fromloadfollowingcontracts. Bergendahl investigatestheadvantagesofinvestinginplantsforcogeneration,i.e., Combined Heat and Power (CHP), in case the heat is utilized for district heating. AfocusissetonSwedishmunicipalitieswheretheseareanimportantpartofenergy production. Bjørndal, Jo¨rnsten, and Rud describe a price adjustment procedure based on capacitychargesformanagingtransmissionconstraintsinelectricitynetworks. AgrellandBogetoft analyzeelectricitydistributionsystemoperatorsandparticular challengesintheNordiccountries. Bjørndal,Bjørndal,andFange provideanoverviewoftheNorwegianregulationof electricitynetworksaftertheEnergyActof1990.Variousdataenvelopmentanalysis (DEA)modelsarediscussed. Jennergren discusseselementarypropertiesofalloweddepreciationandreturnon theassetbaseforaregulatedcompanyundertworegulatorymodels,thetraditional rate-of-returnmodelandthemorerecentlongrunincrementalcost(LRIC)model.
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