Natural Gas Reserves in Bolivia and Schrödinger’s Cat

Natural Gas Reserves in Bolivia and Schrödinger’s Cat

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Eager to know how a mini Mauricio Medinaceli would see, I still remember the anxiety I felt when I expected the results of the first ultrasound of my son. Everything was uncertainty, starting with standard medical concerns and ending with my basic frivolities, especially if my son will have his father’s nose. Ah! of course, also wondered about the sex of the baby.

Why start this post with a family anecdote?, when I’m writing about natural gas reserves in Bolivia? Turns out, interestingly, both events, determination of hydrocarbon reserves and characteristics of a baby, share the same technology. This technology allows us to now the structure of a body, even if we can’t see it using sound waves. Thus, even if you’re a hard engineer reservoirs or a friendly «baby doctor» you will use this technology.

Now, imagine you’re a «baby doctor » has a young couple in front of him who, filled with excitement and eager to «build the nest» asked repeatedly about the sex of the baby, because they want to choose the name, pick the colors of the crib, inform the respective mothers-the color of its nearby tissues, etc. You tell the young couple that is just two months of pregnancy and for that is very difficult to forecast such a sensitive issue, since there is only a 50% chance of success… however, based on your experience (and indulging his adventurous spirit) you think might be male.

Time passes and the sweet young couple makes another ultrasound and this time, with more information, you notice that instead of «he» the baby will be «she». Medical and dads exchange glances and you would have to recognize that the initial prognosis was wrong. Naturally parents show their anger, they don’t understand that the probability of error was high.

After many explanations parents notify you that they will not longer need your services and further, you will not be subject of future recommendations. With your experience you saw a lot of new parents and in a very calm mood you said good bye with a strong handshake. However, an idea is spinning in your head: «does anyone should regulate this?» Appealing to your deepest regulatory side, you think that the Government could do something about it. Months later, after extensive debate in Congress (pardon the new Bolivian Assembly) and thanks to your efforts, laws become more rigid about to telling parents the sex of unborn babies.

Satisfied with the task accomplished, now you will expect new parents with whom, under the new legislation, you will be more cautious about making predictions. Certainly, parents may only know the baby’s sex one or two months before birthday.

Among other factors, something very similar happened in Bolivia. Change the characters: 1) the «baby doctor» it’s now the certifying company; 2) the parents are the Bolivian Government and; 3) the sweet baby is natural gas reserve. Changes in methodology (thanks to greater regulation to the certifying companies), increased knowledge of hydrocarbon fields and geological problems inherent to the sector, which now make certification should be more cautious when making a prediction about the amount of natural gas reserves in the country. Because as many countries in the world we will only know the amount of reserves once they are completly depleted… very similar to Schrödinger’s cat problem .

What is my guess? Although I’m economist I have very good engineers friends who commented me about how wealth is Bolivia regarding natural gas… «don’t worry about it» they often tell me. So where is the problem? I consider more important than knowing the exact natural gas reserves the problem is to found new attractive markets for our natural gas.

Get and consolidate an attractive market and with high probability, new investments and new reserves of natural gas will grow to supply it. Using baby’s analogy maybe we should not be worry about baby’s sex, instead we should be worried about giving him good education and health.

When in the nineties Bolivia decided to sell natural gas to Brazil opted for a project that was considered good and profitable, today’s Bolivian economy can’t be explained without this project. Using once again the analogy, that baby now is twenty years old and now he feed us… in this sense, the new question is: Can Bolivia think of a new baby to feed us in the future?

Mauricio Medinaceli Monroy

Dubai, May 13, 2011

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