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Awash in Oil
There's plenty of cheap oil, says the
U.S. Geological Survey
The debate over this summer's skyrocketing gasoline prices-an issue that has drawn the ire of both U.S. presidential candidates, Congress and the Federal Trade Commission-obscures what may be a larger truth: there's gobs of oil out there.
In June, after a five-year study, the U.S. Geological Survey raised its previous estimate of the world's crude oil reserves by 20 percent, to a total of 649 billion barrels. The USGS team believes the largest reserves of undiscovered oil lie in existing fields in the Middle East, the northeast Greenland Shelf, the western Siberian and Caspian areas, and the Niger and Congo delta areas of Africa. Significant new reserves were found in northeast Greenland and offshore Suriname, both of which have no history of production. "What we did is look into the future and predict how much will be discovered in the next 30 years based on the geology of how it gets trapped," explains Suzanne D. Weedman, program coordinator of the USGS World Petroleum Assessment 2000. "We also believe that the [oil] reserve numbers are going to increase."
Besides relying on geological surveys, the USGS also based its numbers on changes in drilling technology that are making it easier to find new supplies and to squeeze more oil out of existing fields. Petroleum companies are flushing out oil with pressurized water and carbon dioxide and using improved robot technology to construct offshore drilling rigs in up to 3,500 feet of water. They are also conducting three-dimensional seismic imaging of underground and underwater fields.
The idea of an expanding "reserve growth" of undiscovered oil isn't shared by everyone. Colin J. Campbell, an oil industry analyst based in Ireland, believes the USGS estimates are overly optimistic. "It's only the low end of this scale that has any practical meaning; the other end of the scale is a very bad estimate," argues Campbell, who warned of an impending crunch, based on projections of current production and reserves, in an article in Scientific American ["The End of Cheap Oil," March 1998]. Weedman says the USGS report is documented with 32,000 pages of data. "We've looked at all the information," she states, "and tried to predict on the basis of science and not on past [oil] production."
-- Banned Person (NonPerson@EZbanned.edu), August 25, 2000
That's a good article about the long term and about new reserves which may be worked within a few years. The short-term outlook though increasingly looks like tight supplies and much higher prices of home heating oil (and also natural gas) this winter. I have no doubt there are reserves out there which would become productive if oil were $40 or $50 a barrel. The problem right now is that crude oil prices are near 10-year highs and yet as high as prices currently are, U.S. crude inventories are near a 24-year low.
The oil market and production will eventually reach a healthy equilibrium -- it always does. But we could also see some temporary economic pain, the kind the country had in 1974-75 or 1981-82 when high energy prices were a heavy drag on the economy.
-- Short-term (firstname.lastname@example.org), August 26, 2000.
American Petroleum Institute reports big drop in crude oil inventories (Aug. 22)
-- (email@example.com), August 26, 2000.
Do you cretins understand the meaning of the words "inventory" and "reserves"?
-- cpr (firstname.lastname@example.org), August 26, 2000.
With consumption at 75,000,000 bpd and a 1.5% annual consumption increase rate, the 649,000,000,000 barrels that the USGS identifies at the world reserve level, there is currently about a 20 year supply of oil. This is hardly comforting, knowing the lack of research being allocated to alternative energy sources.
-- Years left (email@example.com), August 26, 2000.
Thanx for the credits BP. The '98 link at the end of the article is worth reading too.
-- Carlos (firstname.lastname@example.org), August 26, 2000.
Colin Campbell responded to the USGS last spring thusly:
Dr. Campbell provides these comments on the US Geological Survey Press Release of March 22, 2000, "USGS Reassesses Potential World Petroleum Resources: Oil Estimates Up, Gas Down."
The USGS has released a most unfortunate preliminary statement of its latest study of world oil. But we have been there before. Let us not forget that McKelvey, a previous director of the USGS, succumbed to government pressure in the 1960's to discredit Hubbert's study of depletion, which was subseqently vindicated in the early 1970's after US production actually peaked as Hubbert had predicted. (USGS) did so by assuming that all the world's basins would be as prolific as Texas in a very damaging report by Bernardo Grossling that successfully misled many economists and planners for years to come. This conspiracy was unearthed by a Senate Investigating Committee and is a matter of public record. [The National Energy Conservation Policy Act of 1974, Hearings before the Subcommittee on the Environment of the committee on Interior and Insular Affairs, House of Representatives, June 6, 1974.]
It is no coincidence that the present press release appeared on the eve of a critical OPEC meeting. By issuing these bald numbers they seek to stake a position without revealing the definitions or detailed assumptions behind the study that could be contested.
To claim that Europe can find 22 Gb more oil is utterly implausible on the basis of the past discovery rate. But I too could easily deliver such a number by taking every undrilled prospect and attributing a 5-10% probability of success to it. No geological assessor will ever give a zero probability, despite the fact that most prospects fail absolutely and many basins turn out to be barren.
Adding up a large number of low probability estimates will give a high number but it is a statistically flawed procedure as only mean estimates may be summed.
It is curious that technology has made great advances over the past years; that the USGS has increased its estimates, but that actual discovery should have fallen.
When the details become available, we will probably find that the USGS has denied itself critical knowledge of discovery rate. As in the past, they will no doubt protect their professional integrity by carefully chosen qualifying words in the accompanying text.
In any event it is an exceedingly unfortunate development, especially as they are also seeking now to influence the International Energy Agency, which recently did manage to come out with a sound assessment (World Energy Outlook), however obliquely stated.
It is ironic that OPEC puts out excessive numbers to discourage western investments in renewables, energy saving, etc., and the US does the same thing to try to undermine OPEC's confidence."
-- JLB (JLB@heretoday.com), August 26, 2000.