Jawaharlal Nehru Technological University Hyderabad
Jawaharlal Nehru Technological University Hyderabad B.Tech IV PETROLEUM ECONOMICS, POLICIES AND LAWS Previous Question Paper (September - 2020 - R15)
Answer any five questions. All questions carry equal marks.
Main
The capital cost of a small portable pump is $7,000, with a lifetime of 20 years. If money can be invested at 6% (annual interest rate), calculate the annual depreciation costs and the annual capital recovery and compare between the two values.
Answer
To calculate the annual depreciation cost and annual capital recovery for the pump, we use the following parameters: Capital cost (P) = $7,000, Interest rate (i) = 6% or 0.06, and Lifetime (n) = 20 years. Assuming a salvage value (S) of $0 as it is not provided.
1. Annual Depreciation Cost (Straight-Line Method):
2. Annual Capital Recovery:
The capital recovery factor (CRF) is calculated using the formula: CRF = i(1 + i)n / ((1 + i)n - 1). Substituting the values:
The annual capital recovery (ACR) is the product of the capital cost and the capital recovery factor:
Comparison:
The annual capital recovery ($610.26) is significantly higher than the simple annual depreciation cost ($350). This is because the capital recovery calculation accounts for the time value of money, effectively including both the recovery of the initial investment and the interest that the capital could have earned if invested elsewhere at a 6% rate. Simple depreciation only considers the physical exhaustion of the asset's value over time without considering the opportunity cost of the invested capital.
Briefly explain the crude oil properties with graphical representation.
Answer
Crude oil is a complex mixture of hydrocarbons varying in molecular weight and structure. Key properties include:
- API Gravity: A measure of how heavy or light a petroleum liquid is compared to water. It is calculated as API = (141.5 / Specific Gravity) - 131.5.
- Viscosity: The resistance of the oil to flow, which is highly temperature-dependent.
- Sulfur Content: Classified as 'sweet' (low sulfur) or 'sour' (high sulfur), impacting refining costs.
- Pour Point: The lowest temperature at which the oil will flow.
Graphically, these properties are often represented on a TBP (True Boiling Point) curve, which plots the cumulative volume percentage of distilled fractions against temperature, showing the distribution of light to heavy hydrocarbons within the crude.
What is the accumulated sum after 1 year for a $1,000 principal compounded daily at a nominal interest rate of 20%? Repeat if compounding is done continuously. Calculate “ie” for both cases.
Answer
Sign in to view the complete answer paper.
A refiner determines that the total cost of producing Q barrels of gasoline per day is given by
Answer
Sign in to view the complete answer paper.
Explain in detail about natural gas reserves, production and consumption with graphical representation.
Answer
Sign in to view the complete answer paper.
Describe the structure of the world energy demand estimation model.
Answer
Sign in to view the complete answer paper.
Briefly describe the tanker planning and scheduling.
Answer
Sign in to view the complete answer paper.
Explain the composition of the World Long Haul Tanker Fleet.
Answer
Sign in to view the complete answer paper.
Explain the function of Directorate General of Hydrocarbons and Petroleum and Natural Gas Regulatory Board.
Answer
Sign in to view the complete answer paper.
Describe the role of New Exploration Licensing Policy (NELP) in upstream Oil and Gas industries.
Answer
Sign in to view the complete answer paper.