New Technologies May Unlock More Middle East Oil-(hmm is it ok to buy that suv)

Recently developed technologies will help find and extract more crude from the Middle East, the world's richest oil region, and are also a selling point for Royal Dutch Shell PLC (RDSB.LN), the head of the company's exploration and production division told Dow Jones Newswires.

In an interview at an oil technology conference here, Shell Executive Director Malcolm Brinded said he is seeing "more usage of advanced technologies in the region than is very often recognized."

If their use gets extended it will mean in the "long term, more supply, no doubt about it," through "more exploration success and more recovery from existing fields," he said.

"Raising average conventional oil recovery from 35% to 45%" by using new techniques in the Middle East and around the world "could add some 20 years of current production," Brinded said during an earlier speech at the conference.

The Middle East holds 62% of the world's proven estimated oil and gas reserves, or 733.9 billion barrels, according to BP PLC's (BP) annual statistical review. As of October, Middle Eastern countries produced 71% - or 21.1 million barrels of oil a day - of the total output of the Organization of Petroleum Exporting Countries, according to the International Energy Agency. Those figures don't include the U.S. or European countries.

But the resources take significant time and money to find and extract. Brinded's remarks suggest that using techniques not previously applied in the region may help ease tensions in global oil markets. Oil prices rocketed to $70 a barrel in September and still remain near $60. Rising consumption from China and India have led some experts to warn that the world could start using more oil than it discovers in a few years.

Brinded cited Saudi Arabia and Oman as examples of Middle Eastern countries in which innovative techniques to explore and produce oil more efficiently are being used.

State-owned Saudi Aramco "can be credited as the largest user of smart fields technology," he said, referring to the real-time monitoring, model updating and control of oil wells.

Brinded also pointed to Petroleum Development Oman, or PDO, which Monday formally launched the use of a technology called enhanced oil recovery, or EOR, to raise the percentage of extractable crude from the current 10% of reserves to over 40%. PDO is 60% controlled by the Oman government, with 34% owned by Shell and the rest by Total SA (TOT) and Partex.

PDO is using EOR - a technique that involves re-injecting gas into the reservoir to extract oil - for the first time at the Harweel field development in southern Qatar. "It requires injection pressures approaching 1,000 bars...which is like a significant number of elephants walking on a postage stamp," Brinded explained.

The executive also cited "seabed logging", or gathering data on an undersea reservoir, "which is used today in deep waters but should be used in a few years in shallow waters in the Gulf."

At the conference, which Brinded said was the first to focus on oil technology in the Middle East, oil ministers appeared to agree with the executive's views. Qatar Energy Minister Abdullah Bin Hamad al-Attiyah said recently developed drilling techniques and computer modeling had been used to increase the country's oil output.

Iraqi Oil Minister Ibrahim Bahr al-Uloum said that "with the right technology...the level of oil production from existing fields will reach 6 to 7 million barrels a day in the next few years" compared with 1.96 million on average in the past 10 months. Bahr al-Uloum, however, also pointed out that a lack of security and investment were the most pressing issues for the Iraqi oil industry.

But the increased diffusion of technologies not previously used in the region may also be a commercial argument for majors such as Shell, which find themselves increasingly squeezed out by national oil companies in their quest for new oil.

Countries such as Saudi Arabia, Iraq or Kuwait have yet to open their oil-producing fields to foreign companies, and the majors face increased competition from Indian and Chinese players expanding abroad when they bid for new licenses.

But to compete for resources in the Middle East, Shell offers "a toolbox, global experience and global integration." Brinded said. "A single technology doesn't solve a problem; it's the conjunction of putting them together," he added.

The integration of multiple technologies will help maximize recovery from existing fields, he said.

As for exploration, Brinded said the South Rub al-Khalil Co. Ltd., a Saudi gas joint-venture in which Shell owns 40%, was also "focused" on using state-of-the-art technologies. But Tom Ellacott, an analyst at consultancy Wood Mackenzie, said that all "supermajors are investing in proprietary technologies in a big way, not just Shell, but also BP PLC and ExxonMobil Corp. (XOM) to better compete."

Smaller, independent players, such as Occidental Petroleum Corp. (OXY), which is using EOR in Oman, are also implementing new technologies in the Middle East, he said.

Shell has a strong historical presence in the Middle East. This year, it won the right to participate in two large-scale projects in Qatar, the $6 to $7 billion Qatar Gas IV liquefied-natural-gas project and a $2 billion petrochemicals plant.

However, accessing new reserves in the oil-rich region may help rebuild its dwindling reserves after it dramatically cut its estimates in a scandal last year.

Brinded stepped in as head of exploration and production in March 2004, three months after the issue surfaced. For 2004, Shell announced a reserves-replacement ratio of 45% to 55%, before factoring in the impact of year-end pricing and divestments. The reserves-replacement ratio is the difference between reserves additions and depletion by production for a given year.

Looks like they are beginning to realize the Earth is not only good at producing unlimited amounts of food, but is a giant oil producing factory. It is distribution, control, and greed that curtails that reality.

Look at the bright side, when the ME finally becomes a giant sinkhole as all the oil is pumped out there will space for all that extra water as a result of global warming. ;-)

What's the old story? Oil comes from dead dinosaurs? Either there were a gazillion dinos that died or the stuff comes from somewhere else.

I mean really, at the rate we suck oil out of the ground wouldn't it be funny if someday all the Arab lands just imploded into the Earths crust several 1000 feet down like a prune and wiped that whole part of the world out? Well, it would not be "ha ha" funny. I mean if I thought that it was really funny then I'd be pretty demented. Maybe even a little imbalanced. Imagine all those moslems making their way to prayers and thinking about nothing but killing the infidels, beating their wives and taking over the world. One minute they are bent over in the mosque lovingly sniffing some guys butt then suddenly they are 1,000 feet underground squashed like bugs. Nah, that would not be funny at all. Forget I even brought it up. (stifling laughter)

Interestingly enough, there was a map published about 25 years ago, showing all of the continents and how much of the surface area had been explored and to what degree it was explored. The US was almost all back showing a high level of exploration. The entire middle East was white, showing virtually no exploration. Oil was so plentiful there and the fields so large that all one had to do was drill a hole and the oil would start flowing.

Now that some of those huge fields are starting to run down, just a moderate amount of exploration would uncover substantially more reserves.

Smaller, independent players, such as Occidental Petroleum Corp. (OXY), which is using EOR in Oman, are also implementing new technologies in the Middle East, he said.

Whoa, hold on...what is this about smaller independent players?? All I've heard from the "oil profits are evil" crowd is there are only five oil companies worldwide.

smaller independent players

Hard to fully comprend an industry where over $10 billion in sales for the last quarter qualifies as a small company.

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