The oil is there, but can we access it all?
Posted on 04/22/2004 5:19:54 AM PDT by Momaw Nadon
Oil is making headlines again.
Never far from newsworthy, such is its over-riding economic and political importance, the spotlight has returned as harsh as ever.
The price of benchmark US light sweet crude recently reached its highest level for 13 years, and the cartel of petroleum exporting nations, OPEC, maintained its decision to cut production - potentially fuelling yet more rises.
Add increasing violence in Iraq delaying its return to full oil production, and it is understandable that oil analysts have been getting the jitters.
Not to forget President George W. Bush, who in an election year really does not want to see car-loving Americas moaning about high gasoline prices, which have also risen as a consequence.
And oil giant Shell already admitting twice this year that it has over-estimated its own oil reserves.
But looking behind the politics and other reasons for the upward pressure on prices (such as historically low oil and petrol stockpiles in the US), just how much oil is left under the surface of Planet Earth?
The oil is there, but can we access it all?
Technological advances
Loads - or more than 1,000bn gallons of proven (we know for sure) reserves to be precise, up to 40 years' worth.
Add that still yet to be discovered, and the figure and timescale is much higher still.
Yet before you go out and buy your own oil-fuelled power station, there are two small cautioning factors.
Firstly that the world is consuming oil as fast as it can get its hands on it (75m barrels a day rising to 120m by 2030 according to the International Energy Agency); and secondly, will it be economically viable or technically possible to get our hands on all the remaining oil?
Bruce Evers, oil analyst at Investec Bank, says trying to determine how many more decades of oil the world can enjoy is like asking the question 'how long is a piece of string?'.
"Technology has improved so much over the last 10 to 15 years that companies can now get at oil reserves that previously would have been considered impossible." he said.
New reserves
"And over the next decade or so even better technologies will no doubt come on stream.
"For example, engineers can now take 3D or even 4D seismic images to stretch existing reserves and aid the finding of new ones."
"Obviously the future depends on continuing demand for oil, but there are a number of newly developing fields around the world - such as Azerbaijan, Russia and Angola," Mr Evers added.
"Oil remains pretty popular."
The impact of ongoing technological advancements aiding oil exploration is the main factor put forward by Chris Hayes, of Cambrian Group, a Wales-based oil and gas consultancy whose engineers help the industry's main players find and best access reserves around the world.
"If you go back 20 to 30 years, firms were only able to drill for oil in shallow waters," said Mr Hayes, well operations business development director.
"Today there are a growing number of deep-water projects."
Where the oil is
The Middle East remains the biggest player in oil – especially when it comes to reserves.
Dominated by those of Saudi Arabia and Iraq, it dwarfs the rest of the world, ensuring the region’s prominence on the global political stage.
The North Sea and Canada still have substantial reserves, but they would prove very expensive to extract.
How long will it last?
The short answer is no-one knows, but even the oil industry suspects the world "peak" is now approaching.
It says it has 40 years of proven reserves at the moment - but it also said that 30 years ago.
In fact, the estimate has actually increased in recent years as production has fallen. Cutting consumption would prolong oil's life.
Global production
The Middle East is also the biggest oil producer, currently providing nearly one-third of the world's total.
But Europe and Eurasia (mainly Russia and the UK) and North America are also big producers.
The difference is, nearly all the Middle East oil is for export while Europe and the US do not produce enough to meet their own needs.
Imports and use
Western Europe and Japan are heavily dependent on oil imports as production cannot meet massive domestic demand.
The gas-guzzling US is the world's largest per-capita oil consumer but produces much of its requirements itself.
Producers in the Middle East, where oil costs so little, are also heavy users. Poorer countries consume much less per head.
The cost of oil
For a century the price of oil remained stable. But it soared in 1973 when oil cartel Opec blocked exports to the West after Israel's victory, with Western support, over Arab states in the Yom Kippur war.
Prices tripled, plunging the West into recession. The Iranian revolution had a similar impact, and prices peaked again after the two Gulf wars.
OPEC's bid to keep prices high
Green alternatives
Mr Hayes added that while oil supplies would eventually dry up, that point could be a century away.
"If you stand back and look at it totally objectively, it took millions of years to develop each drop of oil, which we now use in seconds, so it is 100% certain that oil will one day run out," he said.
"However, we have potentially got another 100 years of oil production. Yet as it becomes more scarce, prices will no doubt go up, and there will inevitably have to be a gradual move to alternative power sources."
It is this switch to alternative - and renewable - energy sources that Greenpeace has long campaigned for.
Its argument is that because oil is a pollutant, reserves should be left in the ground.
Reliance
"If all the remaining reserves were burnt it would cause massive amounts of pollution," said a Greenpeace spokeswoman.
"Instead we need to be phasing out fossil fuels and moving towards renewable alternatives."
Yet such is the overriding reliance upon oil, it is going to require a seismic advance in alternative power sources for cars and other vehicles before this situation changes.
Without such a development you can see countries and companies trying to get at the very last drop.
I'm waiting for someone to write a piece explaining the complexities of the industry and the symbiotic relationships which exist between the industry and the rest of the world.
I doubt you will read it on FR. I don't think we have enough bandwidth.
Without that knowledge, however, we can never form an opinion.
I thought I read somewhere in the past month or so that Iraq was up to 125% of pre-war production -- ???
World population will continue to increase. Reducing consumption of oil is laughable. Totally impossible. At best, we can slow the rate of demand growth.
But in a world where energy demand will still need to be filled, alternative energy sources are few because the energy released by a barrel of crude provides the most bang for the buck by a large margin.
I wonder how it is that Africa with a huge land mass could have just 7% of the worlds oil. There is so much land and so many unreliable leaders, that I doubt much money has been spent to survey its true potential.
Regarding your points, when they mention world needs it is like cars will continue to have gas only engines and that nuke power and coal will not replace much of the gas.
so your comment holds on for years while the data floats around in the heads of petro engineers.
When China becomes totally electrified with dams like the one across the Yangtze, they will explode as an industrialized nation.
We will be replaced as the world's number one energy consumer.
They call it a "non renewable" resource, but who says it is "non-renewable"? I think it is renewable and that's what we're seeing. The only shortages factually have always been self induced for one reason or another, within or w/o the control of the U.S.
It's good to go after new and better sources of energy to be sure. But why aren't we drilling in ANWR yet? For what, mosquitoes that are the size of crows?
The animal rights activists should be all over drilling. The Alaskan pipeline is almost singlehandedly responsible for bringing back the endangered Elk population and a handful of oil rigs amongst millions of acres of land isn't going to do anything but good for animals up there by providing them with similar benefits.
It's hysterical actually. Every picture you see of ANWR is tantamount to a tundral desert! What kind of wildlife is in there? Bugs? Slugs? Grubs?
Besides, building a few oil installations would be like spitting into an olympic sized swimming pool at least.
"Precise"????
Do you think "precision" is the reason reserves were expressed in "gallons" rather than "barrels"???
Heck, if the author wants to be "precise", why not express the quantity in milliliters??? </sarcasm>
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