Ever since oil hit $147 a barrel last summer, analysts predicting “peak oil” – the point at which oil production begins sliding inexorably – have had a field day. Perhaps it’s true, but the earth doesn’t seem to want to cooperate, at least not yet.
BP yesterday announced the discovery of a “giant” oil field in the deep waters of the Gulf of Mexico, 250 miles south and east of Houston. BP’s partner in the venture is PetroBras, the state-owned Brazilian oil company that itself has made such huge strikes off the shores of Brazil that that country will likely become an oil exporter in a few years. While BP is coy about the exact size of the new field, I am privately told by sources that it could rival BP’s existing Thunder Horse field in the GoM, which is the second largest in the US, after Prudhoe Bay, Alaska. The technology involved in reaching this oil ought to boggle the mind: The platform sits nearly a mile above the ocean floor, while the oil and gas sit nearly seven more miles below that, under layers of rock and salt. The technology to go after these deposits, which are under enormous pressure at temperatures in the thousands of degrees, simply can’t be bought “off the shelf.” Energy companies file literally dozens, sometimes hundreds, of patents on each of these projects. The commitment of shareholder money, on something that is anything but a sure bet, is simply staggering.
I say “ought” to boggle the mind because no one seems much impressed with these amazing technological feats anymore. We used to be. The Trans-Continental Railroad, the Brooklyn Bridge, the Panama Canal, the Empire State Building, the Grand Coulee Dam, etc. (Woody Guthrie wrote a song about the latter.) Like so many things, the thrill seemed to drain away in the 1970s. The Trans-Alaska Pipeline, an engineering marvel, even today, was passed only when then-Vice President Spiro Agnew cast a tie-breaking vote in its favor on July 17, 1973. (The-freshman Sen. Joseph Biden of Delaware led the opposition to the pipeline, BTW.) Americans seem to take such things for granted today, which is sad.
The Tiber strike, of course, only underlines what this country is likely missing in the areas offshore where drilling has not been allowed for over three decades: the eastern GoM off Florida, the coast of California and ANWR. It also underlines the cluelessness of America’s bipartisan don’t drill/no nukes/wind-and-solar-will-save-us energy “policy” that benefits no one but the sheiks who run Saudi Aramco.
9 responses so far
1 SFTor1 // Sep 3, 2009 at 2:07 pm
Peak oil has been talked about for years, and obviously the concept is real, unless a certain geologist’s contention is right that oil is being continually produced by micro-organisms. (Don’t look to me to validate the theory, I have no idea.)
It’s a good concept to sensitize our economy to the use of a finite resource, but we are at peak oil yet.
2 EscapeVelocity // Sep 3, 2009 at 2:24 pm
Not years, decades.
While we certainly should diversify our energy production as a matter or national and economic security, with also considerations for future generations and ecological welfare….
this fearmongering isnt very productive. But I dont put this in the same league as the Anthropogenic Global Warming religious belief system used to drive a Socialist Leftwing agenda.
3 forgetn // Sep 3, 2009 at 2:48 pm
So many wrong things here, $147 had nothing to do with peak oil, it had to do with demand and supply which are , in the short term, inelastic. Moreover, the price has something to do with the flow of investment money into the sector — that’s why oil price fell so rapidly once the recession began (demand supply re-balancing), and outflow of investment money.
The BP find is large, but 3billion bbl is not “that” large, especially when you consider how deep it is, and how hard it will be to recover. Cantarell (which was really large) was initially estimated to contain 35 billion bbl, nearly 10 times what BP found. At any rate there will still be large discovery in 100 years, the problem is that what is considered large today and what was considered large in 1976 (Cantarell) are very different thing.
Peak Oil may or may not be here, but you cannot infer from $147 or one large oil find anything about Peak oil. You need to look at the global picture (very difficult, especially in the Middle East, Africa and Russia e.g. the biggest producers), but it would seem that new discovery while still large, are just not occurring as frequently as they used to, and this despite massive exploration budgets — based on 2008’s $147 price tag.
You may object to peak oil based on your philosophical outlook, which among conservatives seems to be ’steady as she goes”, but that’s just your opinion. There may be lots of oil left in the ground (since apparently you are an executive in the E&P sector), we may be very far from peak oil, but one thing for sure, the new stuff is harder to extract (and harder translates into more expensive), so either way a primary component of the “American way of living” — cheap energy is on the way out. Will we see oil at $200 maybe, will we see oil at $13 probably not unless the world economy has a “depression”.
4 SFTor1 // Sep 3, 2009 at 3:02 pm
I meant to say that “we are not at peak oil yet.”
5 robert // Sep 3, 2009 at 3:20 pm
The larger point here is that it is becoming increasingly difficult and expensive to find and produce oil. The author of the post speaks of the dozens of new patents that result from each of these projects as if it was something good, but all of these innovations and one-off solutions merely raise the price of production.
Luckily, (for us) the Middle Eastern countries are also finding it more difficult and expensive to produce oil. The days of oil literally bubbling out of the ground are all but over. Case in point, the Saudis are about to bring a field online that required the construction of hundreds of miles worth of water lines, pumping stations, and filtration sites in order to pump sea water into the ground, thus creating enough back pressure to bring the oil out of the ground. This level of expenditure is only possible if oil stays in the $80+ range.
Finally, one thing all of the articles and reports regarding the BP find have seemingly ommitted is that in most cases the amount of oil that is actually recoverable from these super sites is far less than the initial estimates.
6 sinz54 // Sep 3, 2009 at 3:21 pm
NM Gusher: You left out the whole issue of global warming.
The day of “peak oil” may be postponed indefinitely, if new technology makes shale oil and oil from tar sands commercially viable. (The U.S. alone has well over a trillion barrels of such oil waiting to be tapped.)
But there’s that pesky problem of greenhouse gas emissions. We can’t burn another trillion barrels of oil, even if it were cheap.
OTOH, the opposition to nuclear power is totally irrational. The argument about nuclear waste is a red herring. We could resume reprocessing and get rid of most of the waste that way. We could store it in Yucca Mountain and get rid of it that way. The opponents of nuclear power are sublimating their opposition to nuclear WEAPONS by demonstrating against all things nuclear.
And that’s totally irrational. It would be like demonstrating against Boeing 747s as a way of showing your opposition to B-52 strategic bombing.
7 EscapeVelocity // Sep 3, 2009 at 5:22 pm
Yes, shale and sand oil is already break even at $40 of so….and the US and Canada is loaded with it. Additionally, so is the Artic Ocean, and Canada is sitting on a pile of that too. Having these reserves in the future so close to home and friendly soil is very good indeed.
8 balconesfault // Sep 4, 2009 at 6:35 pm
The technologies being brought to bear to extract more of earth’s resources are remarkable – but slowing our consumption is useful to, as noted above, slow the creation of greenhouse gasses … and also to reduce other forms of pollution that inevitably result from the production, transport, and consumption of oil.
9 joedee1969 // Sep 5, 2009 at 2:39 pm
I just read C. Rich’s new book. ” The Conservative Reconstruction Project” and it was right on point with the conservative movement. I sent him an e-mail telling him about this site. He checked it out and wrote me back and said he loved it. He even put it on his blogroll and that guy never puts a whole lot on his link list. He must have love it. Anyway check out this link:
http://americaspeaksink.com/the-conservative-reconstructon-project/
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