Tuesday, July 11, 2006

Is Oil Running Out? Not Heavy Oil

As crude oil prices rise, the market communicating “increase supply”, there are the incentives to supply more oil. Read the Wall Street Journal July 10, 2006 article
Loading results Saudi Arabia Tests Its Potential For Unlocking Heavy-Oil Reserves by Bhushan Bahree and Russell Gold. [subscription required]

Article includes:
Ø “With global energy demand soaring, Saudi Arabia,… is looking to unlock its huge, hard-to-tap and largely unexploited reservoirs of heavy crude.”
Ø “the effort could significantly increase Saudi Arabia's oil reserves … It would also be a blow to so-called peak-oil theorists who have forecast that world oil production is on the brink of peaking.”
Ø “While there is still plenty of oil left in the ground, most of the supplies that are easy to reach already have been developed, forcing the global petroleum industry to turn to oil deposits that are trickier to recover.”
Ø “Chevron and the Saudis say initial results are promising and that the technique could greatly enhance recovery at some huge fields.”
Ø “Chevron has used steam injections successfully for decades to greatly boost production in heavy-oil fields in California and Indonesia. Now, the Saudis and Chevron want to see if the technique will work in the more porous rock formations common in Middle East.”
Ø “In some ultra-heavy-oil fields -- like the massive Canadian tar-sands deposits, where production is rapidly gearing up -- the oil is far heavier than in Saudi Arabia.”
Ø “In century-old oil fields outside Bakersfield, Calif., Chevron has used steam injection for years to drastically increase the amount of oil that can be pulled out of the earth, radically extending the productive life of the fields.”
Ø “Operating costs in Chevron's California heavy-oil fields were $14 a barrel last year, well above costs in the Middle East. That suggests that the Saudis could pay a premium to extract their heavy-oil deposits and still make a huge profit.”


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