Research on Factors Affecting the Optimal Exploitation of Natural Gas Resources in China

Jianzhong Xiao, Xiaolin Wang and Ran Wang
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Jianzhong Xiao: School of Economics and Management, China University of Geosciences, Wuhan 430074, China
Xiaolin Wang: School of Economics and Management, China University of Geosciences, Wuhan 430074, China
Ran Wang: Resources and Environment Economic Research Center, China University of Geosciences, Wuhan 430074, China

Sustainability, 2016, vol. 8, issue 5, 1-13

Abstract: This paper develops an optimizing model for the long-term exploitation of limited natural gas reserves in China. In addition to describing the life cycle characteristics of natural gas production and introducing the inter-temporal allocation theory, this paper builds the optimal exploitation model of natural gas resources within a gas field in the Ordos Basin as an example to analyze its exploitation scale and how influence factors, such as recovery rate, discount rate and the gas well exhausting cycle, affect the optimal exploration path of this gas field. We determine that an increase in the discount rate stimulates investors to invest more aggressively in natural gas exploitation in the early period due to the lower discounted value, thereby increasing the pace of the exploitation of natural gas and the exhaustion of gas fields. A higher recoverable factor implies more recoverable reserves and greater potential of increasing the output of gas fields. The exhaustion rate of gas wells affects the capability of converting capacity to output. When exhaustion occurs quickly in gas wells, the output will likely increase in the output rising period, and the output will likely decrease at a faster rate in the output reduction period. Price reform affects the economic recoverable reserves of gas fields.

Keywords: natural gas resources; optimal exploitation model; recovery rate; discount rate; exhausting rate; gas pricing (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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