Ventana software support forum

Posted: **Fri Feb 19, 1999 8:17 am**

Contact Powersim in Norway. powersim@powersim.no. They have done a lot =
of work with the oil & gas industry.

From: "Ken Bradford" <kbradford@powersim.com>

Posted: **Fri Feb 19, 1999 9:39 am**

Although they relate to local activities and conditions, these two articles might help --

Davidson, Pal I., John D. Sterman, and George P. Richardson. 1990. A petroleum life cycle model for the United States with endogenous technology, exploration,
recovery, and demand. System Dynamics Review 6: 66-93.

Arif, M. Tasrif, and Khalid Saeed. 1989. Sustaining economic growth with a nonrenewable natural resource: the case of oil-dependent Indonesia. System Dynamics
Review 5: 17-34

Jim Thompson
Global Prospectus LLC

http://www.globalprospectus.com
jim@globalprospectus.com

Posted: **Wed Feb 24, 1999 3:29 am**

In addition to the chapter 10 (by Morecroft) of this book (Systems
Modelling for Energy Policy, (editors Bunn and Larsen)), chapter 11 by
David Lane is also an excellent read on how an actual SD model development
took place in Shell. It is called: Diary of an Oil Market Model: How a SD
Modelling Process was Used with Managers to Resolve Conflict and to
Generate Insight. The names and location details are hidden for commercial
reasons, but the analysis and modeling process details are clear and very
good. The clients (Shell managers) doubts are typical. "Martin" the SD
MIT modeler "is very keen that we avoid going by product prices" - BUT THEN
"our link between supply/demand ratio and indicated margin is received
badly" and on and on... This discussion on how to reflect prices in SD
modeling reflects IMHO an old-debate from the Limits to Growth days -
prices using supply-demand balance (as economic theory would dictate) or
via a simpler "indicated price" type mechanism?? This debate especially hit
home for me as I was involved in a similar struggle last year - trying to
model Chinese oil/natural gas prices in a model, without going the
complicated route of a supply-demand clearance mechanism, and not feeling
very comfortable with it. Bull:Red Cloth :: Neoclassical
Economist:Indicated Price.

Lane in the end makes a convincing case for the insight-building,
intuition-creating capabilities of SD.

If you havent seen this book, I would very strongly recommend it. It is
essential for anyone involved in SD applications in electric
utilities/energy/oil and natural gas industries. Links to this and other SD
book reviews available through the URL in my signature as usual (use mouse
"cut & paste" to locate book title).

Regards

Jaideep
From: j-d <j-d@technologist.com>
**************************************************************
Jaideep Mukherjee, Ph. D.
Phone: 713 523 2713; Fax: 713 523 0379
Virtual Office http://www.netopia.geocities.com/shunya/
**************************************************************

Posted: **Wed Feb 24, 1999 5:42 pm**

Good pricing formulations that Ive seen do not explicitly depend on
"demand" and "supply", because (in most markets) no one knows these
quantities.

Instead, good pricing formulations often work from "inventory" - if
inventories are high, prices are reduced; if inventories are low, prices are
increased. The formulation reflects supply-demand pressure because
inventories (and backlogs) accumulate the difference between supply and
demand.

This formulation is quite satisfactory for the many markets where prices are
set by the owners of the goods (e.g. most retail stores, brokers of
financial instruments, etc). Real-world price setters really do look at
their inventories in setting prices. Additional pressures are also commonly
modeled as influencing price, including competitors price and input costs.

__Molecules of System Dynamics Structure__ has a couple of sound pricing
formulations in it. These pricing formulations have the desirable property
that the price "integrates" the pressure - that is, price keep moving as
long as there is pressures on price.

Regards,
Jim Hines
MIT and LeapTec
From: "Jim Hines" <JimHines@Interserv.com>

Posted: **Wed Mar 10, 1999 1:21 am**

After all the discussion on oil price modeling, I am very interested in
some of the models that people are developing. I am aware that some
developed models are not publically available. But I would be interested in
what we could collectively develop through discussion and critique. I would
also volunteer to mediate such a colaborative work seperate from the list
and post a model library. If interested please email era96@hampshire.edu

Thank you,
Eric R. Anderson
From: Eric <era96@hampshire.edu>

Posted: **Thu Apr 08, 1999 6:53 pm**

Forgive slightly late reply - Ive had e-mail receipt problems and only
just got your mail from the SD list. My company is just about to
publish "Oil Producers Microworld", a scenario planning training tool
that uses the oil market (1985 & 1995) to look at various capacity/price
situations. It may not be what you need because, although it is an SD
model, the model itself cannot be accessed and it is a training
simulator not an analytical tool. Built at London Business School
(where I am) it has had a lot of input from Shell. Let me know if you
are interested.

I notice that Professor John Morecroft has also responded to your
enquiry....the model I describe above is essentially that used by Paul
Langley in his thesis.

kind regards,

Rod Brown.
From: Roderick D Brown <rdbrown@businessdynamics.demon.co.uk>

Posted: **Sun Apr 18, 1999 3:23 pm**

I am interested in SD models simulating the development of crude oil =
prices in a global market, or references to such models or =
papers/articles on the subject.

Regards
Arne-Helge Byrknes
abyrknes@online.no

Posted: **Mon Apr 19, 1999 8:32 am**

You might find "International Energy Futures: Petroleum Prices,
Power, and Payments" by Nazli Choucri of interest (MIT Press, 1981).

best,

--corey
From: corey lofdahl <lofdahl@isere.Colorado.EDU>

Posted: **Thu Apr 22, 1999 6:03 pm**

There are two papers in the public domain describing a
system dynamics simulation model of global oil markets. I originally
developed the model in collaboration with Royal Dutch/Shell.

Exploring Oil Market Dynamics, John Morecroft and Brian
Marsh, in Systems Modelling for Energy Policy, (editors Bunn and
Larsen), chapter 10, pp 167-203, Wiley, 1997.

Modelling the Oil Producers, John Morecroft and Kees A.J.M. van
der Heijden, in Modelling for Learning, special issue of European
Journal of Operational Research , vol 59, no 1, pp 102-122,
May 1992.

In addition Paul Langley used the model as the basis for experimental
work on learning environments in his PhD thesis at London Business
School:

Paul Langley, An Experimental Study of the Impact of Online Cognitive
Feedback on Performance and Learning in an Oil Producers Microworld,
London Business School PhD thesis, November 1995.

From: "John Morecroft" <jmorecroft@lbs.ac.uk>

Ventana software support forum

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