Postponing Peak Oil
posted at 7:01 am on April 15, 2008 by Ed Morrissey
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Brazil has announced the find of a huge oil reserve that will place it among the top nations for future oil production. The new field may contain as much as 33 billion barrels. It will take years to begin production, but it will eventually decrease pressure on the oil markets:
Brazil has discovered what could be the third biggest oil reserve in the world, according to the head of the country’s National Petroleum Agency.
The deep-sea find by state-run oil firm Petrobras could yield 33 billion barrels in reserves.
Further tests are required to assess the scale of the find, off the coast of Rio de Janeiro, but analysts say it could have significant implications.
Brazil announced sizeable new gas and oil discoveries last year as well.
The economy of oil production requires more expensive surveys in deeper water. Most of the areas on land have already been checked where possible, as well as in shallower waters. With technology improving and prices rising, it becomes much more feasible to conduct test-drilling in deep seas, and more oil will be found.
The expense is considerable, however. Even with improved geological analysis, test holes only succeed at about a 40% rate. The costs for test holes in deep-sea locations can run $80 million or more, which means that the aggregate cost for a single successful hole is about $200 million. And that’s just to find it and cap it for production, which adds more to the cost. It’s not cheap, and the reward has to eventually outstrip the investment in time and money.
Will Peak Oil eventually arrive? Presumably; crude oil is not a renewable resource. However, we have a lot more places to explore, as Brazil proved. As technology improves and the economics of exploration become more supportive, that date may move significantly into the future.
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Considering there’s oil on planets outside our own, I’m doubting oil being a “fossil fuel” or that it’s finite.
Haunchie on April 15, 2008 at 7:06 AM
Will this lower oil prices?
Of course not. Its so ridiculous that they can discover more and more oil, technology can improve, and yet oil prices are still ridiculous and depend basically solely on unregulated speculators. Its the one place I feel I am being truly ripped off for no real reason at all.
jimmy the notable on April 15, 2008 at 7:09 AM
I hope the guy who invented the combustion chamber is burning in Hell right now and forever.
Amen.
Let us pray.
Indy Conservative on April 15, 2008 at 7:32 AM
Good for them and too bad we are not tapping our new 200 Billion reserve in North Dakota
http://www.nextenergynews.com/news1/next-energy-news2.13s.html
JeffinSac on April 15, 2008 at 7:38 AM
huh?
Mr. Bingley on April 15, 2008 at 7:40 AM
Considering there’s oil on planets outside our own
huh?
Mr. Bingley on April 15, 2008 at 7:40 AM
There was an article put out by a geologist that speculated that oil was naturally produced by planets due to extreme pressure on certain types of rocks. The guy was either talking way above my head(possible) or talking out his a**.
Don Carne on April 15, 2008 at 7:46 AM
Oil is a fossil fuel meaning its created by dead fossils meaning the planet must have life on it.
William Amos on April 15, 2008 at 7:50 AM
Really? I hadn’t heard that.
I always thought oil was produced by hillbillies firing shotguns into the ground…
Mr. Bingley on April 15, 2008 at 7:53 AM
Isn’t it about about time that we start drilling our own damn oil? ANWR is a place the size of Montana at the top of the world. The drilling will only affect 18 miles of coastal plain. I’ve been there, and it ain’t exactly the most scenic coast in the world. In late August 1990, it was a mud hole. I stood looking at it in driving sleet, thinking, drill it already. Then there’s Florida. Why is the California coast drilled, but we can’t touch Florida? Worse, the Chinese are slant drilling from Cuban waters to take the Florida coast oil reserves. For anybody who has seen “There Will Be Blood,” you will understand this as “Drinking our milkshake.” Let’s drill our own oil, people.
fleiter on April 15, 2008 at 7:56 AM
The myth of fossil fuels?
Buy Danish on April 15, 2008 at 8:05 AM
Don’t forget the just announced huge find in N.Dakota. However, unless the Dems win the WH, I don’t suppose we will be allowed to drill for it.
Also, Brazil is 100% ethanol dependent and self-sufficient, I believe. It has a sharply leftist government. That means no opposition to drilling– pure profit for the lefties in power.
It’s looking like fossil fuels are cheapest/most abundant renewable energy resource out there. Is crude oil really not being formed in the ground anymore?
JiangxiDad on April 15, 2008 at 8:08 AM
drilling more wells is not the problem/answer.
we,the US, hasn’t built a new refinery in 30+ years. the ones we have operate at about 98% capicaty. more barrels of oil won’t increase production.
marlin007 on April 15, 2008 at 8:10 AM
Oil is a hydrocarbon, nothing special about that. It does not have to be ‘fossil anything’ for man to make, as ethanol proves. Peanut oil was originally used for diesel fuel. Gasoline is just one type of fuel suitable for internal combustion engines. The fact that methane was discovered on other moons in our solar system says the formation of fuels may be natural and not fossil related.
It falls into the category that man, and all living things on Earth, are carbon life forms, and CO2 is their friend. So when measuring your carbon footprints, make sure you take into account what you actually exhale.
The Brazilian find in about 200 miles offshore in 8,000 feet of water. I wonder what we would find if we took similar drillings off the US coast? “Thunder Horse” is a US platform especially designed for deep water use. It got hit by a hurricane and tipped over, due to a design flaw and has been repaired and readied for action. Another hurricane hit it and there was no further damage. It’s going to be put into production in the Gulf of Mexico shortly.
tarpon on April 15, 2008 at 8:11 AM
Right now new oil reserve finds are good since they contribute to the whole oil availability issue.
But world wide the bigger issue is getting to be the refining capacity for even the oil being pumped.
Not so much here but in India and Saudi Arabia there are plans underway for major new refineries. In fact one massive one is getting ready to go into production in India.
It is much more energy efficient to ship refined product to the US from overseas via tanker than to ship raw crude here for processing when we don’t have enough capacity to handle the flow.
I don’t have the ratio handy but it takes a lot more than one tanker of crude to produce one tanker of refined product ready for use.
Our oil companies are in joint ventures on these refineries being built overseas since red tape and EPA restrictions and NIMBY types keep refineries from being built here.
I have seen figures 14% of our imports are already refined product and that number is only destined to go up.
CommentGuy on April 15, 2008 at 8:13 AM
Right now there is a 7 billion dollar expansion underway in Port Arthur Texas to handle the high sulfur crude most of the new deep water wells produce.
It is a Saudi/Shell joint owned existing refinery and when finished by 2010 it will produce 600,000 BPD.
CommentGuy on April 15, 2008 at 8:22 AM
Lets see,Brazil finds more oil,
The Liberals are complaining about the price of gas at
the pumps,and they want to tax big oil,and they want
investigations into big oil profits!
But,the Enviromental wackos don’t want any drilling
anywhere!
canopfor on April 15, 2008 at 8:25 AM
For believers in “fossil fuel,” I suggest reading “The Deep Hot Biosphere” by Thomas Gold. It makes a compelling case for the natural origin of methane and oil. The topic is also covered in “Nine Crazy Ideas in Science” by Robert Ehrlich.
bozo on April 15, 2008 at 8:34 AM
I don’t envision our government or our oil companies lifting a finger or spending a dime on exploration, as long as Mr. Consumer continues to drive up to the pump and pony up for exponentially increasing gas rates without even a whisper of complaint, except for under one’s breath.
When it comes to oil exploration we are the tortoise, while countries like China, Venezuela and Brazil are the hares passing us by like we are standing still. Except this isn’t a fairy tale and it won’t have a happy ending.
The USofA that was once the shining star on the field has become but a spectator. And the Dems are more than happy to stifle any new exploration in ANWR, in the Gulf of Mexico or anywhere else, since they take great pleasure in watching anyone but the US succeed and prosper.
If foreign countries take us down a notch or two, the Dems break out the horns and confetti.
fogw on April 15, 2008 at 8:53 AM
It may be more efficient to ship refined product than crude oil, but think about all of the jobs lost in the states. We need refineries and we need to drill. If one more freakin’ enviro nutlog tells me that all we need to do is cut consumption instead of drill, I swear to God I will punch him. These idiots believe that the next generation of cars will run on fairy dust. Or they think we’re all going to bicycle to work. Ain’t gonna happen. We need to drill and we need to build refineries.
fleiter on April 15, 2008 at 8:55 AM
Why are they drilling for oil in Brazil? That wonderful ethanol thing not working out for them? Brazil is the shining star, and we are suppost to strive to be like them!
I have a headache, I just can’t keep up.
Bicyea on April 15, 2008 at 9:12 AM
Exports make you a country less likely to be attacked. Really though, any Latin American country not named Venezuela that is discovering oil is a good thing for the United States and our allies in the region.
gabriel sutherland on April 15, 2008 at 9:22 AM
I’m beginning to wonder what does it matter how much oil we find, or how much new technology can clean it up, when the Dems will always find ways to keep it inaccessible.
petefrt on April 15, 2008 at 9:32 AM
Let’s see if they manage to screw even this up.
Reaps on April 15, 2008 at 9:35 AM
McCain was asked in a recent interview why he’s against drilling in ANWR and the only thing he came up with was, “Well, it’s pristine and…[changed the subject]”
His position against drilling REALLY bothers me.
CP on April 15, 2008 at 9:38 AM
Some recent evidence suggests that oil is formed geologically. If true, it is likely many more places than previously thought, and not a fossil fuel.
Clark1 on April 15, 2008 at 9:46 AM
.
Jiangxi Dad, you were misinformed. Brazil is only energy independent due to an oil strike two years ago.
Think_b4_speaking on April 15, 2008 at 9:53 AM
This is an important strike, as it is quite large, but it is also in over a mile of water, and under a half mile of salt lid. It will be a challenge to get it out. Easier will be the 200-500 b bbl of oil in N Dakota, ANWR, and offshore Florida.
Think_b4_speaking on April 15, 2008 at 9:55 AM
Cuba is going to take our Floridian oil, and Russia is going to take our Alaskan oil. Then sell it back to us. We don’t build refineries, we don’t maximize shale oil potential, Brazil wants to sell us both the cars and the fuel and like us and would be a good partner. Yet we insist on giving our dollars to middle eastern countries that want to use our dollars to fund jihad to blow us up. The world is laughing at us, for good reason.
JustTruth101 on April 15, 2008 at 9:59 AM
Thanks. You are quite right. Their “independence” comes from drilling!
(I read an article from an MSM source not too long ago. I should have realized it was biased in favor of ethanol.)
I appreciate the correction.
JiangxiDad on April 15, 2008 at 10:03 AM
BTW, folks, I am in the oil industry, so can share a few things on the concept of peak oil. The largest producer of oil in the world is Russia, number two is Saudi, and number three is the US (you heard that right). We import so much because we use so much, not because we don’t have plenty. Kazakhstan, Iraq, Iran, Brazil, Mexico, Venezuela and Canada all have large amounts of undeveloped oil, so don’t let the doom and gloomers persuade you. Were we to produce ANWR and offshore Florida along with N Dakota we could reduce our imports 10% or more, which would give us the freedom to de-fund some dictators. If you go into oil shale and tar sands (which we will by necessity at some point) the US and Canada will have more oil equivalent than Saudi, Russia, Iraq, Iran and Kazakhstan combined. I expect in the next 20 years that we will be into shale oil and tar sand oil, and in fact investments are being made to anticipate that. It is going to be just too costly to rely on dictators and unstable regimes for a portion of our energy needs.
Think_b4_speaking on April 15, 2008 at 10:24 AM
Think_b4_speaking on April 15, 2008 at 10:26 AM
I still think that given more time, we will find abiotic oil the theory that is correct. We have proved it in small quantities, we now need it proved in larger quantities in the earth’s crust.
Tim Burton on April 15, 2008 at 10:28 AM
Yep, the biotic oil theory, and Peak Oil, depends on the concept that oil is the result of bio-activity in the past, that mother nature has transformed into this limited amount of magical goo that we need to be thrifty about.
On the other hand, the abiotic, or Russian model postulates that the formation of gas and oil deposits is a naturally occurring, ongoing process, through which existing, ongoing processes in the earth’s crust are constantly transforming quasi-organic chemical compounds into oil and gas. While there currently is no data, or even estimates, of what this production level might be, practical application of the theory has revealed oil deposits in locations that should have been empty, following the biotic model.
The indications that sway one to the abiotic model include the continual discovery of ‘new’ pockets of petroleum, and the actual prevalence of petroleum pockets worldwide. And if you look at a graphic of the distribution, it becomes obvious there’s quite a few areas that we haven’t looked at with an ‘abiotic eye’. The indications also include evidence from other locations in the solar system - both the Jovian moons and particularly Titan at Saturn contain naturally occurring hydrocarbon compunds - in abundance. So, unless someone wants to make the case that Dino the Dinosaur and his fern forests were either intrepid space-farers, or that their very distant cousins once roamed these bodies…
A friend of mine mentioned something which sounds almost trooferish on its face, but kinda makes sense if you think about it - that although there may not be an official, announced policy by the government or the oil companies, the true US strategy is to use everyone else’s oil first, and only seriously tap into our own when we’re the only ones still producing any. He cited as his evidence the fact that most midwestern US and Texas fields are currently capped (not dry, just not producing), the reluctance to open ANWAR, and the decidedly low-key response and downplay of the Bakken formation in North Dakota. A ‘grand conspiracy’ does sound extremely far-fetched, but one would have to study the effect of $100/barrel prices on the decisions of individual well owners overall to produce. It’s likely the data would show less than a unanimous front on the issue.
Regardless, there still seems to be quite a lot of area of the planet that has NOT been completely probed and evaluated for the actual presence of petroleum. The mid-sea Pacific areas, (gasp) Antarctica, swaths of the Indian Ocean, underneath the Arctic (where the Russians have recently been maneuvering to lay economic claim to vast tracks of sea floor area, btw). A planetary model with any sort of quasi-uniform distribution to it seems like it would virtually guarantee that there is oil out there that has yet to be discovered.
And until the day comes that everyone, and I mean everyone - finally agree that a complete survey of the planet is finished, and that every single oil deposit in existence has been identified, located, and mapped - well, then, if it turns out that oil is a constantly naturally produced item, we’d then be faced with determining what that level of production was, and adjust accordingly, which the free market will probably be very, very useful in doing. On the other hand, if it isn’t being naturally produced, and it truly is a finite resource, once we reached the actual, no BS ‘we found it all’ point, the oil that currently makes up our ’strategic reserve’ stockpile will provide us with from 10 to 12 years of oil, at rates of consumption that would likely decrease dramatically should gasoline eventually climb to $6, $7, or even $10/gallon in todays dollars. Despite 10 to 12 years not really sounding like a lot of time, it is a sufficient space for a market-driven, viable replacement system of energy distribution for transportation, electrical generation, and heating to grow to maturation.
But perhaps I’m just living in la-la land, and the chicken littles are right. We’re all gonna die, cold, hungry, homeless, and alone, with nothing but nature’s contempt for the foolish humans…
Wind Rider on April 15, 2008 at 10:30 AM
I think THomas Gold’s “Deep Hot Biosphere” theory is right, oil isn’t a “fossil fuel” and limited, but rather being produced in the core of the earth and gradually bubbling up to crust. Which also explains alot of anamolies in which they find oil in parts of world were there aren’t any fossils, or tap out Oil wells then go back years later and there is more oil there, etc.
jp on April 15, 2008 at 10:32 AM
I have seen some interesting examples of this, but at this time it cannot be proven. It could be that the rock surrounding the wellbore was depleted by the well, and then over several years more remote oil in the same pool re-saturated the rock near the wellbore. Also, a big issue most folks don’t realize is that a given well only produces 20-30% of the known oil. With each passing year, technology improves to get more and more percentage of oil out, so many wells that have been capped can be re-entered, and using the newer technology, more oil produced.
Think_b4_speaking on April 15, 2008 at 10:41 AM
Bicycling, like fuel from corn, is highly inefficient. The human body is quite inefficient in comparison to the internal combustion engine and consumes a large amount of energy intensive fuel. There are benefits to biking to work, but fuel conservation is not one of them. When I commuted into Seattle accross the I-90 bridge, I always got a kick whenever it rained because there would be 8 lanes of cars stopped in traffic, but I always had an entire lane several miles long all to myself in the bike lane. Apparently no sacrifice is to great to Gaia.
Also, the 200 billion of shale oil turned out to be just 4 billion.
pedestrian on April 15, 2008 at 10:43 AM
Conoco-Phillips is working on a multi-billion $$$ expansion of their Roxana, IL refinery to handle the Canadian Oil sands product. This is supposed to increase product at that location to about 400,000 BPD.
tgharris on April 15, 2008 at 10:45 AM
Forgot…I wanted to mention Shell’s work with oil shale in the CO, WY, UT area. They are working on a process of heating the shale underground, then extracting the oil….no mining involved.
tgharris on April 15, 2008 at 10:49 AM
BTW, all these capital expenditures to increase/improve our energy supply were brought to you by those of us working for “Evil Big Oil”, lol.
Think_b4_speaking on April 15, 2008 at 10:54 AM
Don’t be so sure. I’ve come across theories that the Earth is continually making oil.
misterpeasea on April 15, 2008 at 11:10 AM
very interesting, wind rider. thanks!
i like the idea of using up everyone else’s first, but that theory, like most trutherisms, requires far more competence than our gubmint has so far displayed.
Mr. Bingley on April 15, 2008 at 11:29 AM
Peak oil? Who cares.
We have enough discovered reserves to last a couple of hundred years. Who cares. We will never use it. It will become like coal as wood did before that.
Probably within your lifetime, assuming you are under thirty, there will be a new cheaper fuel source that takes over. The combustion engine will go the way of the buggy whip and Saudis princes will once again disappear as they did 1500 years ago when the Frankincense market collapsed.
Right now a kid in a garage somewhere is working out the details…..
patrick neid on April 15, 2008 at 11:43 AM
Peak oil is another myth of neo-marxists who can’t imagine that things could be going well for much longer, and so we should start getting miserable and huddle around a single tallow candle in our one-room shanty while we still can. Posted to the Internet by a mass-produced electronic device sucking up more power on its own than a modern microwave.
Hypocrites, all of ‘em. Social treason FTW!
Neo on April 15, 2008 at 12:07 PM
I’m so glad I bought PBR stock months ago. I made a hefty sum of money yesterday.
spec_ops_mateo on April 15, 2008 at 12:11 PM
Maybe, maybe not.
http://www.questionsquestions.net/docs04/peakoil1.html
I don’t know much about this, but I ran across something similar on Planet Gore a while back and it piqued my interest.
VolMagic on April 15, 2008 at 12:14 PM
If oil is a product of fossils (animals), just how many animals did it take to make 1 barrel of oil? And aren’t we lucky that all of these dead animals died in the same proximately to make these big pools of oil.
This is the crap that I was taught in grade school oh so many years ago.
I had never heard of the biotic oil theory until now, and that sure makes more sense than the idea of fossil fuels.
cjs1943 on April 15, 2008 at 12:31 PM
I’m waiting for the chemical, electrical, and mechanical engineers to develop a mehtod to get hydrogen out of water on demand to fuel our future needs.
Here are a couple of links that I found that are interesting: http://water4gas.com/2books.htm?hop=sdcowboy
and http://www.sdcowboy.com/buylessoil.html
cjs1943 on April 15, 2008 at 12:37 PM
The problem is not so much the energy itself — we can have plenty of that with nuclear plants — it’s the storage and transport involved. Having energy where you need energy is the part that gets tricky.
Electricity needs wires, oil needs pipelines and tankers. Coal needs rail cars. If people want energy in their houses and places of business, and portable uses of energy to take them from one to another, then there is going to be continued demand for multiple forms of energy.
Here in California, there has been much talk about hydrogen-fueled vehicles — which have gone, basically, nowhere because hydrogen fueling stations are not as ubiquitous as gas stations. Liquid fuels, by contrast, have a large advantage in handling when it comes to portable energy use, and the infrastructure is pretty much built out. Much as environmentalists hate them, the liquid-hydrocarbon-fueled automobile is probably the last place I would expect to see changes.
cthulhu on April 15, 2008 at 2:10 PM
Peak Oil is voodoo. It is predicated on a theory that stipulates that higher order giant preadators (whales) have a scarcity comparable to all petroleum resources on the planet. As long as we do not scare ourselves to death, we can continue to convert coal or switch grass to gasoline pretty much forever using nuclear power to run the elaborate refineries.
The combustion engine is not the problem. As an energy transmission method, it is acceptable and has predictable and manageable side effects. The problem is that the expense of developing these newly found resources is large enough to stall development while the profits are high. For that matter, there are so many development efforts that they are causing their own market scarcities while trying to alleviate market scarcities.
Hydrogen is not a power source, it is a transmission method. Hydrogen is not something we are finding in an energetic medium, it is something we are developing into an energetic medium for transmission elsewhere. The water engine is a fantasy.
Patrick_Lasswell on April 15, 2008 at 2:32 PM
OK so apparently they were talking over my head. Not the first time. I was always leery of biotic oil. There couldn’t've been that many dinosaurs all dieing in one place to produce oil. Coal, I can understand, but abiotic origins makes more sense.
Kinda like Intelligent Design.
Don Carne on April 15, 2008 at 3:43 PM
And whose fault is that??? The Eco-Fascists and lilly-livered politicians who won’t allow a new refinery to be built. This is the same crowd which is causing the nuclear fuel storage problem by blocking implementation of nuclear fuel recycling technology developed in the US nearly four decades ago (and now in use in Europe)!!!
Our main problem is self-destructive ignorance…not lack of oil. All we have to do is force our politicians to stop obstructing energy production and we will have U.S. energy independence for many centuries.
landlines on April 15, 2008 at 6:13 PM
Well damn. I thought we had reached the “peak” of peak oil back when I first heard of this in the early 70’s.
You mean we aren’t there yet? Somebody has been consistently and pervasively wrong on this issue for 30+ years. Lets see what they have to say now.
Hey, they say we’re at the “peak” of peak oil, and civilization will collapse unless we change our energy usage today.
Odd, thats exactly what they’ve said every year for the past 30. Maybe its a recording…
gekkobear on April 15, 2008 at 6:29 PM
“Here in California, there has been much talk about hydrogen-fueled vehicles — which have gone, basically, nowhere because hydrogen fueling stations are not as ubiquitous as gas stations.”
Understood. Seriously, I’ll live next door to a Nuke plant first. I know the safety and reliability of Nuke plants. But living next door to a hydrogen bomb, that will go off about as often as a gas station fire occurs?
Um, I don’t think my insurance will cover that. Heck my life insurance policy will probably try to call it suicide if I intentionally lived in such a condition.
This sounds like as good an idea as the LNG (Liquefied Natural Gas) Tankers. One of those takes a bad turn and you can lose a major port city in a hurry.
gekkobear on April 16, 2008 at 1:01 PM