Papers by Janie M Chermak
Impacts of Completion and Production Decisions for Vertical versus Horizontal Technologies on Shale Gas Well Cumulative Productivity 1
We develop a theoretical model for optimal discrete capital investment, discrete completion, and ... more We develop a theoretical model for optimal discrete capital investment, discrete completion, and dynamic production of shale gas wells. We then econometrically estimate early period cumulative production functions for vertical and horizontal shale gas wells that require an initial capital investment for production. Results indicate reservoir and completion outcomes have significant impacts that are consistent in sign across the two technologies, but the magnitudes and probabilities of these impacts vary, sometimes substantially so. The impact of completion decisions on cumulative production is highly variable, with differences in early period production declines across the two well technologies. These results may, in part, explain the downward trend in reserve estimates for shale gas, as there is uncertainty in the impact of completion choices early period production.
Empirical Analysis on Vertical and Horizontal Wells in San Juan Basin
New Mexico was at the forefront of the nuclear age, producing more uranium (U) than any other sta... more New Mexico was at the forefront of the nuclear age, producing more uranium (U) than any other state in the U.S. for more than three decades until the early 1980s. The state is also unique because these historic activities have been studied and quantified over during this time, providing a unique opportunity to identify how historic uranium mining operations were influenced by economics and policy. In order to quantify these relationships, this study used a system dynamics approach to determine how these factors affected mining industry decisions and how those impacts varied based on mine size. The results of this work found that as the industry evolved over time, the influence of these factors changed and that they did not impact all mining operations equally. Results indicate that price guarantees for U concentrate and subsidies for mining and milling in the early years (1948–1964) of U mining encouraged mines of all size, although smaller mines opened and closed more quickly in re...
Journal of Environmental Economics and Policy, 2020
A recently offered alternative to eliminating or mitigating hypothetical bias associated with sta... more A recently offered alternative to eliminating or mitigating hypothetical bias associated with stated preference surveys is the solemn oath script. While the efficacy of solemn oath script is still debatable, the objective of this analysis is to provide an initial field setting test of the solemn oath script to a particular discrete choice experiment survey application to solar energy. We conducted a discrete choice experiment survey with two treatment groups: with and without having respondents sign the solemn oath prior to taking the survey. Utilizing random parameter logit models in both preference-space and willingness to pay (WTP)-space, results provide no evidence that the solemn oath script lowers respondents' WTP for the good in question. Either there is no hypothetical bias in this solar energy case study, which we are unable to test as there is no real expenditure at issue, or the solemn oath script may have limited application outside of the experimental lab and is not effective under every condition. Lastly, this calls for more research on the efficacy of a solemn oath script.
The Decision to Manage Invasive Weeds: Which Factors Matter? *
Borders Crossing Borders: Efficiency and Equity Considerations of Groundwater Markets in the Ciudad Juárez/El Paso Region Along the Mexico/United States Border
International Seminar on Nuclear War and Planetary Emergencies 26th Session, 2002
PLAN or Get SLAM\u27ed: Optimal Management of Invasive Species in the Presence of Indirect Health Externalities
This paper examines invasive species management when invasive species impact health outcomes indi... more This paper examines invasive species management when invasive species impact health outcomes indirectly through changes to environmental quality. For example, the emerald ash borer (EAB) has destroyed millions of ash trees throughout North America and has the potential to impact rates of cardiorespiratory mortality and morbidity through ash trees’ ability to capture airborne pollutants. Optimal management inclusive of indirect health externalities may be different than status quo plans because the links between nature and health are complex, dynamic, and spatially heterogeneous. We produce a novel dynamic bioeconomic-health model to determine optimal EAB management in the face of such health effects. Our results show that including health increases net benefits of management substantially and that a “one size fits all” management approach is suboptimal given forest cover and demographic spatial heterogeneity. Net benefits to society are 873% higher and air pollution related mortalit...
Introduction to the Economics of Animal and Plant Biosecurity
Advances in Human Services and Public Health, 2022
The economics of plant and animal health protection influence country policies through rapidly ev... more The economics of plant and animal health protection influence country policies through rapidly evolving benefit-cost tradeoffs that are difficult to forecast. Increased threat of infestation by invasive species following novel trade pathways is one recent trend, being counteracted by advances in data analytics to target interventions on higher risk pathways. The availability of increasingly large, complicated datasets generated from daily enforcement of regulations are available to safeguarding analysts. These data resources used to monitor and evaluate pathways are increasingly available electronically with shorter time lags. But the efficacy of increased analytic capabilities requires a clear objective of what is optimal. Economic frameworks can help focus the analytics. For example, increased protection that costs more than the benefit generated is not efficient. Economic theory provides a systematic method with which to develop policy or to assess existing programs. This chapter...
Issues in the Experimental Determination of Urban Water Demand
International Journal of Electrical Power & Energy Systems, 2022
COVID-19's widespread distribution is wreaking havoc on people's lives all over the world. This p... more COVID-19's widespread distribution is wreaking havoc on people's lives all over the world. This pandemic has also had a significant impact on energy consumption. Its influence can be seen in the power system's operation and the market as well. The power consumers' habits and demand curves have been changed at a breakneck pace. In this work, a one-year mixed-integer programming (MIP) problem has been developed to compare the power consumption between 2019 and 2020 in the United States as an example regarding the COVID-19 pandemic effect in order to better prepare for possible similar future events. 100% renewable single microgrids (SMGs) are studied using wind turbines and photovoltaics. Batteries are also employed since it is inevitable when the system uses renewables. Additionally, it is possible for the SMGs to trade power with the main grid as needed. The effect of the SMGs' clustering to form the multi-microgrids (MMGs) is also considered. In order to investigate the risk of the system during the COVID-19 and formation of MMG, downside risk constraints are applied to the proposed model. Furthermore, a stylized short-run consumers demand model is proposed, using elasticity and assessed responses regarding the average household consumption for households during on-peak and off-peak periods. The simulation results show that COVID-19 generally reduces the demand, increases the profit of the system, and decreases the economic risk of the power system's operation. Moreover, SMGs clustering to organize MMG dramatically enhances the profit of the system as well as improves the risk level of the system.
Many western states have relatively abundant energy but scarce water resources. The nexus between... more Many western states have relatively abundant energy but scarce water resources. The nexus between these energy resources, the required water to complete wells, and the concurrent water produced with the hydrocarbon results in complex resource and disposal problems. The produced water is of low quality, containing a variety of contaminants, for example, hydrocarbons, total dissolved solids, or salts. While the regulations vary by state, in many cases, produced water is classified as a hazardous waste and must be disposed of, or cleaned in order to re-use. Because of the availability of alternative water sources, the high cost of treatment, and regulations that often make it difficult to even consider beneficial use of the water, most produced water is disposed of, often through injection wells (although some operators are now augmenting with produced water). This can result in high production costs for hydrocarbons, as disposal costs are not trivial. And in some cases, unexpected consequences in the form of increased seismic activity add to the complexity. In the arid west, where water supplies are fixed, demand is increasing, drought is a common occurrence, and the effects of climate change may potentially be severe, so the practice of disposing of produced water may need to be reexamined. Water demands in the west are much further reaching than the oil field and increased water scarcity may suggest the value of water is substantially higher than what we traditionally consider. For example, a 2014 Arizona State University study estimated a 10% decrease in water availability in the Colorado River Basin would result in a total economic cost to the states involved of $143 billion. This equates to a value of over $80 per barrel for water in some areas. It should be noted that their modeling approach is very restrictive and most certainly these values overestimate the value, but given reported costs of up to $10 per barrel for treatment, there is the potential that produced water may be a good rather than a bad. This research considers the potential for produced water as both a by-product for the private, profit-maximizing firm, as well as its production from a social perspective.
Option Values of Alternative Completion and Production Strategies in Shale Gas Plays
Renewable Energy Projects: A Socioeconomic and Environmental Case Study for New Mexico
The Rio Chama between the El Vado and Abiquiu reservoirs has no substantive consumptive flows. Th... more The Rio Chama between the El Vado and Abiquiu reservoirs has no substantive consumptive flows. The economic value of this stretch of river is, instead, centered on instream flow values. Management of these flows to consider non-consumptive values (e.g., hydropower, recreational fishing and boating) has the potential to increase the economic value of the river. In addition, the economies of surrounding rural communities could greatly benefit from increased economic activity through improved outdoor recreation. The difficulty in assessing the efficacy of peak flow management is the complexity of the potential spatial and temporal tradeoffs between alternatives within the region, as well as any impacts downstream. We model the economic value of alternative management plans to assess the efficacy of alternatives, as well as the tradeoffs between plans. A catalog of the potential economic factors is developed that includes not only the activity, but also the spatial and temporal aspects ...
Applied Economics, 2020
Compared with the rest of the world, the US prison system is characterized by high incarceration ... more Compared with the rest of the world, the US prison system is characterized by high incarceration rates, high recidivism, and substantial incarceration costs. The US has increasingly turned to private prisons, resulting in a debate concerning the efficacy of these private prisons. While the private system may produce cost savings it may have also have negative consequences including increased recidivism. Although numerous studies have investigated the cost savings associated with private prisons and their effect on recidivism, to our knowledge no work has evaluated the joint impact. In this paper we evaluate these impacts jointly within a dynamic system model, utilizing cost, incarceration and recidivism estimates from the literature. Overall, considering the tradeoff between cost efficiency and recidivism rates, we find that public prisons are less costly in the long term than private prisons. Considering a 25-year time horizon, we find that total inflationadjusted costs are approximately 1.5% higher for private prisons than public prisons. Considering a 40-year time horizon, we find that private prisons are 3% more costly than public prisons. Thus, results suggest that estimated short-term cost efficiency provided by private prisons may not be worth the long-term consequences of potential increases in recidivism.
Environmental Research Letters, 2018
Hydraulic fracturing (HF) and horizontal drilling have revolutionized the fossil fuel industry by... more Hydraulic fracturing (HF) and horizontal drilling have revolutionized the fossil fuel industry by enabling production from unconventional oil and gas (UOG) reserves. However, UOG development requires large volumes of water, and subsequent oil and gas production from both conventional and unconventional wells generate large volumes of produced water (PW). While PW is usually considered a waste product, its reuse may lessen demand for freshwater supplies, reduce costs for transportation and disposal, and reduce the risks for injection-induced seismicity. Whether this water is disposed of or treated and reused, both methods require significant amounts of energy. The objective of this study was to identify the primary energy demands of alternative water management strategies, and to characterize and quantify their geographic variability in four oil and gas producing basins in New Mexico using a single year of production. Results illustrate the importance of each component of each produced water management strategy in determining its total energy footprint. Based on 2015 production and water use data, the energy to extract fresh groundwater for hydraulic fracturing (34 GWh-th yr −1 .) exceeds the energy that would be required if the same volume of PW were treated chemically (19 GWh-th yr −1 .). In addition, the energy required to transport fresh water and dispose of PW (167 GWh-th yr −1 .) is far greater than that required to move treated PW (8 GWh-th yr −1 .) to a point of reuse. Furthermore, transportation distances, which contribute significantly to the total energy footprint of a given management strategy, are underestimated by nearly 50% statewide. This indicates that reuse may be an even more energy efficient way to manage PW, even with energy-intensive treatment strategies like electrocoagulation. Reuse of PW for HF is not only more energy efficient than conventional management techniques, it also reduces both demand for scarce fresh water resources and use of disposal wells. By evaluating components of each management strategy individually, this work illustrates how the energy footprint of regional PW management can be reduced. The advent of UOG recovery in the last decade highlights the need to understand existing water management in the industry, identify opportunities and strategies for improvement, and recognize that these dynamics are likely to change into the future.
SSRN Electronic Journal, 2007
Empirical tests of the theory of exhaustible resources have provided mixed results regarding empi... more Empirical tests of the theory of exhaustible resources have provided mixed results regarding empirical validity of the theory. This paper considers differences in the primary testing methodologies and alternative measures of the in situ resource price. We demonstrate that in situ price measures common in the literature are theoretically equivalent for the vertically integrated firm. We also show that empirical shadow price test methodologies imply the same restricted econometric model, while the unrestricted models diverge. We find that the Halvorsen and Smith (1991) test methodology is relatively efficient, and, using data on natural gas wells, reject the unrestricted transition equation of traditional methodology. We conclude that discrepant empirical test results may be an artifact of the econometric testing methodologies rather than a reflection on the validity of the theory. This version of the paper was presented at the American Economic Association meetings in 2008 (session details below) and is currently under revision. We would like to especially thank Peter Berck for very helpful and constructive comments, as well as Michael Caputo, Scott Farrow, and other participants in the session.
The Theory of Exhaustible Resources: What are the Econometric Methods Testing?
SSRN Electronic Journal, 2005
Empirical tests of the theory of exhaustible resources have come to conflicting conclusions conce... more Empirical tests of the theory of exhaustible resources have come to conflicting conclusions concerning the validity of the theory to exhaustible resources to explain owners’ production decisions. This paper develops the theoretical framework, alternative measures of the unobservable in situ resource price, and evaluates the potential impacts of processing of the resource on the test results, as well as those of incomplete data and/or information. We evaluate the consistency of the two commonly used test methodologies and the impacts on results of alternative measures of the unobservable in situ resource price. We show how, all else equal, the tests methodologies diverge; as a result, the possibility of discrepant results should not be a surprise. In regards to the impacts of processing, data and information, we find the potential for inaccuracy in the estimate of the in situ resource price, which may result in biased test results.
Difficulties in developing precise economic policy models for water reallocation and re-regulatio... more Difficulties in developing precise economic policy models for water reallocation and re-regulation in various regional and transboundary settings has been exacerbated not only by climate issues but also by institutional changes reflected in the promulgation of environmental laws, changing regional populations, and an increased focus on water quality standards. As complexity of the water issues have increased, model development at a micro-policy level is necessary to capture difficult institutional nuances and represent the differing national, regional and stakeholders' viewpoints. More often than not, adequate "local" or specific micro-data are not available in all settings for modeling and policy decisions. Economic policy analysis increasingly deals with this problem through data transfers (transferring results from one study area to another) and significant progress has been made in understanding the issue of the dimensionality of data transfers. This paper explores...
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Papers by Janie M Chermak