Look at the future of this market and what it is going to take to keep up with our current natural gas demand. Now try adding the transporation industry.
Annual Energy Outlook 2006 with Projections to 2030, Oil and Natural Gas
Posted on 09/05/2006 10:03:24 PM PDT by demlosers
The elephants aren't extinct yet.
Chevron Corp. and its partners say they have tapped into an area that may contain as much as 15 billion barrels of oil in the ultradeep waters of the Gulf of Mexico — the kind of massive reservoir of crude that the industry dubs an elephant discovery.
The days of such discoveries were supposedly gone, with oil supplies peaking as the world simply ran out of big oil-producing fields, according to pessimistic forecasters. Instead, high technology and sky-high oil prices have combined to transform dud prospects into billions of barrels of crude.
“The industry is still very capable of coming up with new ways of producing oil,” says Michael Lynch, a prominent opponent of the notion of peak oil — that global supplies of crude are set for a marked decline.
The exact size of the reserves at the Chevron well, called Jack, aren't yet known. But the company said the wider area, known as the Lower Tertiary, could contain between three billion and 15 billion barrels of recoverable oil. At the upper end of the range, that would rival the Prudhoe Bay deposits in Alaska.
And it could increase U.S. domestic reserves by 50 per cent. Only part of that overall total, however, could be attributed to the Jack prospect, which some analysts said Tuesday is likely to amount to 500 million barrels.
Whatever the ultimate size of Jack, its true importance lies in when it was discovered — earlier this decade, rather than in the 1960s or 1970s, said Mr. Lynch, president of Strategic Energy and Economic Research Inc. It is proof positive that higher commodity prices and improvements in exploration technology can result in major new discoveries, he said.
That is the case at Chevron's Jack well in the Gulf of Mexico, nearly 300 kilometres from the U.S. coast. Massive caps and peaks of prehistoric salt had defeated earlier exploration efforts, chewing up the sound waves that the industry uses to create seismic pictures of reservoirs.
“It soaks it up, distorts it,” said Stephen Hadden, senior vice-president of exploration and production at Devon Energy Corp., which has a 25-per-cent stake in Jack and other prospects in the Lower Tertiary region.
Devon, with proved reserves of 2.1 billion barrels of oil and gas, said it could more than double its reserves from its holdings in the area. Devon said its Lower Tertiary prospects could contain the equivalent of six billion barrels of oil, using the expansive measure of unrisked resource potential. Despite the caveat, Devon shares jumped 12 per cent, with analysts saying the firm is an alluring takeover target.
“The larger companies are running out of room to grow and the deepwater Gulf of Mexico is right down their alley,” said Oppenheimer & Co. analyst Fadel Gheit. “They really have no options left — Russia is for all practical purposes closing its doors, the Middle East is radioactive, Venezuela is kicking us out, and the Canadian oil sands, I think, are played out.”
Devon's Mr. Hadden said several new technologies and techniques were brought to bear on Jack, combining to allow the partners to fashion a picture of the reservoirs underneath the previously impenetrable salt caps. More powerful computers and refined algorithms were part of that success. “It's a technology that's really evolved over the last six or seven years,” he said.
Such technology reduces the risk of ultradeep exploration in the gulf, where future wells are likely to cost up to $120-million (U.S.), Mr. Hadden said, declining to say how much Jack cost.
Jim Lovasz, senior engineering analyst at Ross Smith Energy Group Ltd. in Calgary, said new simulation technology is also playing a part in opening up new frontiers to oil exploration.
New frontiers such as the Lower Tertiary will keep the global supply of oil growing, Mr. Lynch said — although it's not likely to silence the advocates of peak oil.
“This won't convince the bulk of them. For the rest of us, it does serve as a reminder that there are still a lot of things that can still be done.”
I think they meant everything's spoken for and there aren't many new opportunities for anyone else to jump in - at least, that's how I took it.
There's nothing to "explain away". There will always be oil discoveries, some of them quite substantial. But you would have to have some super-gigantic totally unexplainable (by current science) accumulation, in order to break out of the box that encompasses existing reserves and the engineers' attempts to extrapolate the trends of discoveries and annual production to arrive at a "global estimated ultimate recoverable" reserves figure.
"Peak Oil" simply means that current levels of production are about the best we're going to be able to do. As we go forward, the decline of older accumulations' production rates offsets the incremental production rates of the newer discoveries. Given a finite oil reserve, it's mathematically inevitable.
The fallacy is in thinking that higher oil prices let you produce larger new resources. They don't. What higher oil prices buy you consists of two things:
Look at the future of this market and what it is going to take to keep up with our current natural gas demand. Now try adding the transporation industry.
Annual Energy Outlook 2006 with Projections to 2030, Oil and Natural Gas
Since ANWR coastal plain is estimated to have up 16 billion barrels, I am sure we will soon hear how this is too little oil to go after. < /sarcasm>
Oil sands played out?
this guy is a moron.
Still...glad we found this in the Gulf.
Seen any of those triple decker rigs drilling for that deep gas in Oklahoma lately?
I'm working on this very project right as we speak. We're converting a VLCC (a supertanker) into a floating refinery called an FPSO (Floating Production Storage Offloading). The hull will be mated with the topsides in either Dubai or Malaysia, and then parked off the coast of Brazil for 20 or so years. The vessel will do almost all the stuff a land based refinery can do. Very interesting stuff!
That is not true at all. The thirty five year gap between Prudhoe and this 'domestic' discovery in international waters never implied there would be no more large discoveries.
Precisely. And, as a corollary, the cost of hydrocarbon substitutes in noncombustible uses. Setting fire to low viscosity sweet crude is, well, dumb, given its higher value in fabrication and the lack of ideal substitutes. The issue will be our ability to capitalize on low grade hydrocarbons as "clean" combustibles, and the concomitant costs of that technology.
I think they make the tanks out of carbon fiber.
Hee's an article I read a while back.
http://www.freerepublic.com/focus/f-news/1674915/posts
From the article:
"The SEC makes it a federal felony for an energy company to claim gas reserves as assets if they’re not determined by obsolete technology, i.e., you have to drill a hole. Modern 3D seismic methods get a far better picture of an NG reservoir — but since you don't have to drill a hole, whatever reserves are found by 3DS, the SEC won’t allow it.
The government screws things up more — much more — by not allowing gas exploration companies to survey the offshore continental shelf of over 90 per cent of the US coastline excluding Alaska. They can survey along the coasts of Texas and Louisiana — but not Washington, Oregon, California, Alabama, Mississippi, Florida, Georgia, the Carolinas, Virginia, Maryland, New Jersey, New York, and New England.
There’s likely as much gas off the mouth of the Columbia River as the Mississippi, possibly the same with Chesapeake Bay and the Hudson River. The gas companies know there are fantastic amounts of gas off California, Florida, and much of the eastern seaboard — but the government won’t let them have it.
Gas exploration is not allowed on much of federal land — and one third of the US is owned by the Feds. On what little land they can explore, with 3DS they are discovering huge amounts in “low-permeability reservoirs” — some 460 tcf (trillion cubic feet), tripling alone current US gas reserves.
Put this all together and you have US gas reserves ten to twenty times as greater as the 150 tcf or “3 percent” of world reserves. This is enough to last the US for decades to come, even if we double or triple NG use (which we will with the Natural Gas Solution — the US currently uses some 22 tcf a year)."
No - I don't know much about the oil find you mentioned. I DO know that on the first rig I was working on in Wyoming the driller said we stopped short of the gas zone (I imagine he knew where it was as he had been drilling in that region for several years). He said the company would do that once in awhile and could claim the hole as a loss for tax purposes, then when gas prices went up they would go the last few thousand feet and open it up - but with most of the labor being done at cheaper rates.
The more I think about it though I'm not so sure he was right. It's an awful big deal to get a rig set up that can get down 25k feet. And I would imagine that the environmental permitting would have to be done all over again.
"If you spend billions $$ why would you divert to a totally different produce?"
I am not suggest that the oil companies divert to a different product. They should continue doing what they do best, but since the world need for vehicle fuel is growing so rapidly, other fuel sources should also be at work.
As for distribution at service stations, certainly the independents should have an interest in selling E85 if the consumers want it.
Colorado?
There is a theory out there called the abiotic theory of petroleum formation. In other words, methane gas combined with other compounds is actually how petroleum is formed. Biotic formation utilizes the formation of methane from living sources. If this theory is correct, then the earth is continually producing petroleum and that the amount of it on this planet is many times larger than now realized.
We cannot draw lines on maps and outlaw drilling in vast areas of US territory and claim with any honesty that we are "dependent" on foreign oil. That flimsy claim no longer holds any water with me.
Colorado is where the shale oil is. That's oil that has to be cooked out of the shale because it's bound to the rock and doesn't flow. The oil in ND and Mont is oil that can be drilled and will flow given the use of new technology like horizontal drilling and fracturing the shale rock the oil is found in. An incomplete survey by a USGS geologist in 1999 estimated there was as much as 400 billion barrels of oil in the so called Bakken shale in that region.
Recent state estimates are more conservative and put the amount anywhere from 10 billion to 200 billion barrels. The problem is that there's been no definitive USGS survey done so there's real idea what's there. The last USGS survey done put the amount of recoverable oil at a little below 1 billion barrels but technology has advanced since then. Google the Bakken Shale if you're interested.
Thanks for the ping. You know how much I like to *drop* in to such topics.
Played out from an exploration point of view, I would say. We know where the oil sands deposits, at least the ones recoverable by the current technology (ie digging it up and processing it), are so it's just a matter of actually digging it up.
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