ENE476 Offshore Energy Resources

• Topics

  The most important offshore energy resources are oil and natural gas. The course begins with an overview of the law of the sea, which regulates national jurisdiction over offshore resources. Then follows an overview of the oil and gas markets in a historical perspective. We move on to economic principles of oil and gas extraction, issues such as field unitization, optimal depletion rates, and optimal stopping time. World gas markets are discussed, especially the European gas market. A session is devoted to offshore wind, with issues such as intermittency, differential contracts and levelized cost of energy. Rents and taxation of oil and gas resources are discussed, and the final meeting is devoted to the issue of transferring non-renewable wealth to renewable wealth (oil and gas funds) and the challenges to sustainability that arise in the management of such wealth funds.

  Topics

  • Overview of energy markets in historical perspective
  • The international law of the sea and offshore oil and gas extraction
  • Economic analysis of oil and gas extraction
  • Price formation and markets for oil and gas
  • Tax regimes for oil and gas extraction
  • Challenges of the green transition

• Learning outcome

  Knowledge

  Upon completing the course the student has knowledge of

  • How world energy markets have developed since World War II.
  • The Exclusive Economic Zone and its meaning for offshore oil and gas extraction, offshore wind, as well as supplementary rules in the UN Law of the Sea Treaty.
  • Basic dynamics governing oil and gas extraction and its shut-down date.
  • Theories of price formation for non-renewable resources such as oil and gas.
  • Basic challenges and pitfalls in designing tax regimes for oil and gas extraction.
  • Challenges in dealing with intermittency of wind power.
  • Development and status for emissions and concentration of carbon dioxide in the atmosphere.

  Skills

  Upon completing the course the student has

  • Ability to formulate and solve simple numerical models in Excel spreadsheets.
  • Ability to formulate and solve analytical models.

  General competence

  Upon completing the course the student will be able to

  • Assess the likelihood of slow versus rapid energy market transformation.
  • Identify the main drivers behind price changes in markets for oil and gas.
  • Evaluate alternative taxation regimes for oil and gas resources.
  • Discuss in an informed manner basic issues of energy markets.

• Teaching

  Morning sessions with lectures and work on analytical and modeling assignments under supervision in the afternoon.

• Credit reduction due to overlap

  None.

• Compulsory Activity

  Attendance of morning lectures and analytical and modeling sessions in the afternoon. Students are expected to attend all lectures.

• Assessment

  Successful completion of analytical and modeling exercises discussed in the afternoon sessions (in groups of maximum 5 students). These will be posted day by day and then transmitted together to the students in Wiseflow at the end of the seminar with a delivery deadline of two weeks.

  Answers that show that the students have not attended the lectures will not receive a pass grade.

• Grading Scale

  Pass-Fail

• Literature

  This is a short seminar with a tight schedule, so the lecture slides are meant to be self-contained. References to relevant literature will be provided in the lectures, as needed.