TMJC 2025 J1H2 C1 Lecture 7 Extractive Industries

1 WHAT IS A RESOURCE? A resource is anything that has a utility value. Natural resources refer to things with utility value that are derived from earth (atmosphere, lithosphere, hydrosphere, biosphere) and exist independently of human activities. WHAT ARE THE DIFFERENT WAYS OF CLASSIFYING RESOURCES? Resources can be classified into 2 different categories (in this syllabus): Renewable Resources: Renewable resources are resources that are naturally renewed within a sufficiently short timespan to be of use to human society. 1. Refers to resources that can be depleted in the short run but can replace themselves in the long run e.g. water; fisheries; forestry 2. Some Renewable resources are more renewable than others and may always exist in relatively constant supply e.g. Solar; Wind; Tidal energy [These can also be seen as Renewable Energy Resources] Non-renewable resources Non-renewable resources are resources that have taken millions of years to form and so their availability is finite. There is no possibility of them being replenished on a timescale of relevance to human society. 3. Non-renewable resource (stock resource) • Refer to energy resources that exist in finite supply e.g. fossil fuels (Coal, Oil, Natural Gas) • Mineral resources that also exist in finite supply e.g. Gold, Silver, Lithium, Jade, Diamonds etc… Higher 2 (9173) Cluster 1: Development, Economy and Environment TMJC Cluster 1 Lecture 7 Natural Resources and Extractive Industries 2025

2 WHAT ARE THE DIFFERENT WAYS OF CLASSIFYING RESOURCE AVAILABILITY? Reserves refer to the known and estimated amount of resources for future use. The concept of reserves is used most frequently for minerals or petroleum. Resource Availability (Rees, 1985) Types of resource Definition (must know) Example Proven Resource Deposits already discovered and known to be extractable under current demand, price and technological conditions. Extent is of a proven reserve is dynamic and dependent on: o Availability of the technology and skills to exploit the resource, o Level of demand, o Cost of production and processing, EG1: Oil is a proven resource which continues to be economically extractable at even greater depths. Today’s’ technology is able to recover resources ion geological and environmental conditions that were previously uneconomic. In the Deepwater Horizon drilling to a vertical depth of 10683m. EG2: Shale gas production, which relies on new technologies of drilling horizontal wells in shale rocks and hydraulic fracturing (or fracking) to release the natural gas trapped in shale deposits far below the ground at competitive cost. This has resulted in a dramatic surge in natural gas production in the U.S. Boundary between proven and conditional reserves is dynamic and bi- directional (meaning resources that change from conditional to proven reserves can, if conditions change, revert to conditional status).

3 o Price it can command in the marketplace, o Availability and price of substitutes, and o The environmental and social costs of developing the resource. EG3: Extraction of oil and gas extraction in the North Sea is done in a physically challenging environment. This was made possible by advances in offshore drilling and production technologies. Conditional Reserve Deposits that have already been discovered but are not economic to work at prevailing price levels using currently available extraction and production technologies. Boundary between proven and conditional reserves is dynamic and bi-directional (meaning resources that change from conditional to proven reserves can, if conditions change, revert to conditional status). EG1: Canadian oil sands have high production costs and need an oil price of at least $65/barrel to be profitable. High oil prices in the 2000s have promoted to growth of oil production from Canadian oil sands. However, falling oil prices to $50/barrel in 2017 have made it not profitable and some companies have downscaled their production of oil. Despite that, Alberta’s oil sands still remain an large and lucrative industry in Canada and there are about 120 oil sands project that produce 2.6million barrels of oil every day. EG2: In the early 1900s, copper ores with less than 10% metal content could not be use in most smelters and therefore virtually useless. However, 40 years later, technological changes coupled with major demand increases, had allowed deposits with only 1% metal to be defined as proven reserves. Hypothetical reserves Resources that that are not known deposits but those that we may expect to find in the future in areas that have only been partially surveyed and developed. The Arctic and Antarctica are area of hypothetical reserves. Due to the harsh cold conditions, many of the oil and gas reserves still remain unexplored. The USGS estimates that 13% of undiscovered oil and 30% of undiscovered gas could be found in the Arctic. Speculative reserves Resources that might be found in unexplored areas which are thought to have favourable geological conditions. In the early 1900s, when there was a rush to explore for oil, gas and mineral resource, the Arctic and North Sea was an area where only speculative resources might exist. However, with technology improvements, the area is assumed to have hypothetical resources which will be located in time.

4 Evaluation: (+) The strength of the classification is that it stresses on the highly dynamic nature of resource reserve. (-) The danger is that it leads to the view that society will never run out of resources because there are always more to discover and technological progress will continue to make new resources available for exploitation. Our Earth now faces the additional problem that consuming resources, such as fossil fuels, is threatening the ecosystem. Hence, other than thinking about resource availability, it should also take into account the ecological cost of our current reliance on fossil fuels. WHEN ARE RESOURCES (IN)SUFFICIENT? Resource Scarcity refer to the insufficiency of resources and can be either seen as: 1. Absolute Scarcity • Refers to supplies of resources that are insufficient to meet present and future demands 2. Relative Scarcity • Refers to uneven spatial distribution of resources resulting in insufficient resources in some places while surplus in others Yet, whether resources face absolute or relative scarcity changes over time and depends on the scale of analysis or scarcity of resource. For example, food tends to be a resource in relative scarcity. We are currently producing enough food to feed the world. As of 2012, a report by Food First (an Institute for Food and Development Policy), showed that are already producing enough food for 10 billion people. However, 21,000 people are dying everyday due to hunger or hunger related cause. The food supply and distribution of food is unequal, causing a relative scarcity of this resource. This food resource is mainly concentrated in the develo ped world which also experiences a large amount of food wastage a day. Therefore, relative scarcity occurs when one group is able to control the ownership or distribution of resources at the expense of another group. Africa is a net exporter of food when many people in Africa are going hungry each day. This is because the ownership and distribution of food is controlled by companies and corporation from the developed world. Resource scarcity can also change over the long -term. For example, the energy (oil) crisis in 1970s result in oil being in absolute scarcity in the US and Europe . This resulted in high oil prices. However, new technology in discovery and extraction of oil, coupled with energy efficient technology to reduce dem