Is the world awash in oil?
Published On Sun Jan 31 2010
By David Olive Business Columnist
Latest finds make it seem that way, but it would be unwise not to expand alternative energy development
http://www.thestar.com/business/article/758270--olive-is-the-world-awash-in-oil
There is a growing consensus among world oil experts that the planet has an abundance of oil – "enough oil for at least 100 years," claims a top executive at Italian oil giant ENI SpA. Enough to fuel the industrial revolutions in China, India and elsewhere in the developing world. Enough to supply North America after it recovers from a recession in which oil consumption dropped 9 per cent.
The thesis is based on an unusually large number of recent major discoveries and on enhanced recovery techniques that have breathed new life into oilfields once thought to be tapped out.
While there's still an argument about oil's long-term future, there's no denying the evidence of newly abundant oil.
In November 2007, Brazil announced a massive offshore discovery of five billion to eight billion barrels of oil. A year later, oil major BP confirmed a Gulf of Mexico discovery of three billion barrels.
It was in 2008, too, that major oil producers finally began bidding on Iraqi oil leases, in the belief that oilfields long neglected by the late Saddam Hussein hold between six billion and 12 billion barrels of oil.
On Jan. 22 this year, the U.S. Geological Survey declared Venezuela's heavy-oil reserves are double what was previously thought, or a stunning 513 billion barrels. That's almost twice Saudi Arabia's estimated remaining reserves of 267 billion barrels.
It's nearly three times Canada's 178 billion barrels – pushing Canada down the ranks to third, from second-largest reserve holder.
Technological advances in deep-water drilling, defined as pools at least 300 metres below water, have created new exploration hot spots in Brazil, Angola, Russia, Nigeria, Ghana, Kazakhstan and elsewhere. These could add five million barrels a day to global output – equal to the entire increase in world production in the past five years.
Similarly, breakthroughs in enhanced recovery at existing fields, many in advanced states of depletion, could yield an astonishing 300 billion barrels. By the estimate of Royal Dutch Shell PLC, only 32 per cent of the oil in conventional reserves is pumped out – because only the most deep-pocketed oil producers can afford the leading-edge technology to coax more oil to the surface.
A prime example of turning around a declining field is Samotlor, Russia's largest oilfield. Its output was plummeting by the late 1990s. But Samotlor's owner, TNK-BP, a joint venture between Russia and BP, has since boosted production by one-third. TNK-BP uses 3-D seismic imaging to better delineate underground oil-bearing structures, and rearranges the placement of wells accordingly.
Given these circumstances, the optimistic outlook of producers is understandable.
"There are vast unexplored areas in deep water, so there are tremendous opportunities for growth" in production, Steven Newman, president of drilling-rig supplier Transocean Ltd., told the Wall Street Journal this month.
He would know. Chevron Corp. is paying Transocean $500,000 (U.S.) a day for use in the Gulf of Mexico of its Clear Leader drilling rig.
Some are still more bullish.
Leonardo Maugeri, a senior vice-president at ENI, predicts the recovery rate from oilfields will rise from the current 35 per cent to 50 per cent by 2030. "If my estimates are correct," Maugeri wrote in a recent report, "we will have oil for the rest of the 21st century."
There are problems with this abundant-oil scenario. Obviously, there is no getting around the role of oil and other fossil fuels in global warming, and the devastating impact that unchecked climate change will have on our species.
Much of this new abundant oil is to be found in the world's most dangerous neighbourhoods – Saudi Arabia, Pakistan, Kazakhstan, Nigeria, Sudan, Iraq, Yemen, Colombia and Syria, among others. Some are terrorist breeding grounds. Some are kleptocracies. Most are politically unstable.
Venezuela and Russia are given to expropriation. The Alberta tar sands are an ecological disaster. By now, the Pentagon, CIA and U.S. State Department each regard dependence on imported oil as a national security risk.
Then there's the spectacular cost of exploiting "new" oil. Chevron Corp. spent a decade and $2.7 billion (U.S.) to bring into production a Gulf of Mexico play that yields a modest 125,000 barrels a day. The 250,000 barrels a day produced by the Gulf's biggest rig, BP's Thunder Horse, accounts for just 0.3 per cent of world consumption.
The technology is mind-boggling, from the satellites now used to keep immense drilling platforms from drifting, to the supercomputers required to bring more precision to seismic delineation.
Even then, it's a crapshoot. "You don't really know what's down there until you drill," as one exploration veteran puts it.
"This is technology capable of going to the moon," Robin West, chairman of energy consulting firm PFC Energy, told the Journal this month about this new era of oil exploration. It involves "extraordinary uncertainty, immense levels of information processing, and staggering amounts of capital."
China has a better idea.
Even as it undergoes an industrial revolution at several times the pace of the West in the 18th and 19th centuries, consuming tremendous amounts of fossil fuels, China is enforcing a "green agenda" that requires the nation to derive 15 per cent of its burgeoning energy needs from alternative sources by 2020. That's up from an impressive 9 per cent today. China has also emerged as the world's top producer of solar panels.
No one would accuse Beijing, a traditional laggard on climate-change reforms. China aims to "climb the value chain" by exporting high-value eco-technology rather than $9 sweatshirts to Wal-Mart.
Ontario is thinking along the same lines in its $6.6 billion (U.S.) deal with Korea's Samsung C&T to build wind- and solar-power facilities in Ontario. They will generate 2,500 megawatts of electricity, enough to power 580,000 homes.
The four Ontario plants Samsung is obliged to build, turning out wind and solar equipment, will create 16,000 direct and indirect jobs. They are intended by the Koreans as a base for their plan to crack the U.S. market. The undertaking is so large and early in the green-economy game that competing against it will be a formidable task for those who try.
In inking the deal, Dalton McGuinty said: "If you ask around state capitals in the U.S., they would be secretly asking themselves why they didn't do it first."
The premier was bragging, of course. But he's also right.
________________________________________________________________
Well so much for peak oil anytime soon.
But I think China has the right idea with 15% alternative energy sources.
Published On Sun Jan 31 2010
By David Olive Business Columnist
Latest finds make it seem that way, but it would be unwise not to expand alternative energy development
http://www.thestar.com/business/article/758270--olive-is-the-world-awash-in-oil
There is a growing consensus among world oil experts that the planet has an abundance of oil – "enough oil for at least 100 years," claims a top executive at Italian oil giant ENI SpA. Enough to fuel the industrial revolutions in China, India and elsewhere in the developing world. Enough to supply North America after it recovers from a recession in which oil consumption dropped 9 per cent.
The thesis is based on an unusually large number of recent major discoveries and on enhanced recovery techniques that have breathed new life into oilfields once thought to be tapped out.
While there's still an argument about oil's long-term future, there's no denying the evidence of newly abundant oil.
In November 2007, Brazil announced a massive offshore discovery of five billion to eight billion barrels of oil. A year later, oil major BP confirmed a Gulf of Mexico discovery of three billion barrels.
It was in 2008, too, that major oil producers finally began bidding on Iraqi oil leases, in the belief that oilfields long neglected by the late Saddam Hussein hold between six billion and 12 billion barrels of oil.
On Jan. 22 this year, the U.S. Geological Survey declared Venezuela's heavy-oil reserves are double what was previously thought, or a stunning 513 billion barrels. That's almost twice Saudi Arabia's estimated remaining reserves of 267 billion barrels.
It's nearly three times Canada's 178 billion barrels – pushing Canada down the ranks to third, from second-largest reserve holder.
Technological advances in deep-water drilling, defined as pools at least 300 metres below water, have created new exploration hot spots in Brazil, Angola, Russia, Nigeria, Ghana, Kazakhstan and elsewhere. These could add five million barrels a day to global output – equal to the entire increase in world production in the past five years.
Similarly, breakthroughs in enhanced recovery at existing fields, many in advanced states of depletion, could yield an astonishing 300 billion barrels. By the estimate of Royal Dutch Shell PLC, only 32 per cent of the oil in conventional reserves is pumped out – because only the most deep-pocketed oil producers can afford the leading-edge technology to coax more oil to the surface.
A prime example of turning around a declining field is Samotlor, Russia's largest oilfield. Its output was plummeting by the late 1990s. But Samotlor's owner, TNK-BP, a joint venture between Russia and BP, has since boosted production by one-third. TNK-BP uses 3-D seismic imaging to better delineate underground oil-bearing structures, and rearranges the placement of wells accordingly.
Given these circumstances, the optimistic outlook of producers is understandable.
"There are vast unexplored areas in deep water, so there are tremendous opportunities for growth" in production, Steven Newman, president of drilling-rig supplier Transocean Ltd., told the Wall Street Journal this month.
He would know. Chevron Corp. is paying Transocean $500,000 (U.S.) a day for use in the Gulf of Mexico of its Clear Leader drilling rig.
Some are still more bullish.
Leonardo Maugeri, a senior vice-president at ENI, predicts the recovery rate from oilfields will rise from the current 35 per cent to 50 per cent by 2030. "If my estimates are correct," Maugeri wrote in a recent report, "we will have oil for the rest of the 21st century."
There are problems with this abundant-oil scenario. Obviously, there is no getting around the role of oil and other fossil fuels in global warming, and the devastating impact that unchecked climate change will have on our species.
Much of this new abundant oil is to be found in the world's most dangerous neighbourhoods – Saudi Arabia, Pakistan, Kazakhstan, Nigeria, Sudan, Iraq, Yemen, Colombia and Syria, among others. Some are terrorist breeding grounds. Some are kleptocracies. Most are politically unstable.
Venezuela and Russia are given to expropriation. The Alberta tar sands are an ecological disaster. By now, the Pentagon, CIA and U.S. State Department each regard dependence on imported oil as a national security risk.
Then there's the spectacular cost of exploiting "new" oil. Chevron Corp. spent a decade and $2.7 billion (U.S.) to bring into production a Gulf of Mexico play that yields a modest 125,000 barrels a day. The 250,000 barrels a day produced by the Gulf's biggest rig, BP's Thunder Horse, accounts for just 0.3 per cent of world consumption.
The technology is mind-boggling, from the satellites now used to keep immense drilling platforms from drifting, to the supercomputers required to bring more precision to seismic delineation.
Even then, it's a crapshoot. "You don't really know what's down there until you drill," as one exploration veteran puts it.
"This is technology capable of going to the moon," Robin West, chairman of energy consulting firm PFC Energy, told the Journal this month about this new era of oil exploration. It involves "extraordinary uncertainty, immense levels of information processing, and staggering amounts of capital."
China has a better idea.
Even as it undergoes an industrial revolution at several times the pace of the West in the 18th and 19th centuries, consuming tremendous amounts of fossil fuels, China is enforcing a "green agenda" that requires the nation to derive 15 per cent of its burgeoning energy needs from alternative sources by 2020. That's up from an impressive 9 per cent today. China has also emerged as the world's top producer of solar panels.
No one would accuse Beijing, a traditional laggard on climate-change reforms. China aims to "climb the value chain" by exporting high-value eco-technology rather than $9 sweatshirts to Wal-Mart.
Ontario is thinking along the same lines in its $6.6 billion (U.S.) deal with Korea's Samsung C&T to build wind- and solar-power facilities in Ontario. They will generate 2,500 megawatts of electricity, enough to power 580,000 homes.
The four Ontario plants Samsung is obliged to build, turning out wind and solar equipment, will create 16,000 direct and indirect jobs. They are intended by the Koreans as a base for their plan to crack the U.S. market. The undertaking is so large and early in the green-economy game that competing against it will be a formidable task for those who try.
In inking the deal, Dalton McGuinty said: "If you ask around state capitals in the U.S., they would be secretly asking themselves why they didn't do it first."
The premier was bragging, of course. But he's also right.
________________________________________________________________
Well so much for peak oil anytime soon.
But I think China has the right idea with 15% alternative energy sources.
