The X-axis represents the degree of geological uncertainty, whereas the Y-axis
indicates whether the project is economically justifiable or not.
Nowadays only a certain surface – the part in blue – of the wide rectangle is
being exploited. The total surface of this lower left quadrant (the reserves), can
increase or diminish by means of the X-axis and/or by means of the Y-axis. It can
for example happen by means of the X-axis if prospection is intensified. More
prospection leads usually to the discovery of still undiscovered mineral resources.
The reserve area can also expand through a better technology which is represented
on the Y-axis. The use of new drill techniques or new processing methods of the
minerals generally result in an expansion of the extraction quantity at equal costs.
The currently exploitable reserves will also increase or decrease by means of the
same Y-axis as a result of changes in mineral prices. Since higher prices mean
larger income for the extraction project, exploitation companies will be inclined to
find new locations to exploit minerals. On the opposite if the market price of a
certain mineral drops too low a level, some exploitation projects will have to be
terminated, though temporarily. In general, the scarcity of a mineral implicates
higher exploitation costs and consequently higher mineral prices.
39.3 A New Three-Dimentional Vision
Although the technical and economic factor are incontestably correct, at present
quite more other elements should be considered at the decision-making stage of
exploitation projects. For example ecological problems caused by the winning of
specific mineral resources are not taken into account. The same applies to the
political aspects, the application of the law and legal obligations, both national
and international. For instance until the middle of the twentieth century most
present day African countries were still colonies of Western countries and political
factors were not considered in the analyses concerning extraction of minerals. In the
case of Portugal, Angola represented an immense source of economic and
Fig. 39.1 The classic two-dimensional McKelvey-diagram
39 A Three-Dimensional Approach to Oil and Gas Shale Exploitation in the US
647
indicates whether the project is economically justifiable or not.
Nowadays only a certain surface – the part in blue – of the wide rectangle is
being exploited. The total surface of this lower left quadrant (the reserves), can
increase or diminish by means of the X-axis and/or by means of the Y-axis. It can
for example happen by means of the X-axis if prospection is intensified. More
prospection leads usually to the discovery of still undiscovered mineral resources.
The reserve area can also expand through a better technology which is represented
on the Y-axis. The use of new drill techniques or new processing methods of the
minerals generally result in an expansion of the extraction quantity at equal costs.
The currently exploitable reserves will also increase or decrease by means of the
same Y-axis as a result of changes in mineral prices. Since higher prices mean
larger income for the extraction project, exploitation companies will be inclined to
find new locations to exploit minerals. On the opposite if the market price of a
certain mineral drops too low a level, some exploitation projects will have to be
terminated, though temporarily. In general, the scarcity of a mineral implicates
higher exploitation costs and consequently higher mineral prices.
39.3 A New Three-Dimentional Vision
Although the technical and economic factor are incontestably correct, at present
quite more other elements should be considered at the decision-making stage of
exploitation projects. For example ecological problems caused by the winning of
specific mineral resources are not taken into account. The same applies to the
political aspects, the application of the law and legal obligations, both national
and international. For instance until the middle of the twentieth century most
present day African countries were still colonies of Western countries and political
factors were not considered in the analyses concerning extraction of minerals. In the
case of Portugal, Angola represented an immense source of economic and
Fig. 39.1 The classic two-dimensional McKelvey-diagram
39 A Three-Dimensional Approach to Oil and Gas Shale Exploitation in the US
647