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A Tough-Oil World

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Posted on Mar 14, 2012
Azzazello (CC-BY)

By Michael T. Klare, TomDispatch

(Page 2)

Deepwater Oil

Oil companies have been drilling in offshore areas for some time, especially in the Gulf of Mexico and the Caspian Sea. Until recently, however, such endeavors invariably took place in relatively shallow waters—a few hundred feet, at most—allowing oil companies to use conventional drills mounted on extended piers. Deepwater drilling, in depths exceeding 1,000 feet, is an entirely different matter.  It requires specialized, sophisticated, and immensely costly drilling platforms that can run into the billions of dollars to produce.

The Deepwater Horizon, destroyed in the Gulf of Mexico in April 2010 as a result of a catastrophic blowout, is typical enough of this phenomenon. The vessel was built in 2001 for some $500 million, and cost around $1 million per day to staff and maintain. Partly as a result of these high costs, BP was in a hurry to finish work on its ill-fated Macondo well and move the Deepwater Horizon to another drilling location. Such financial considerations, many analysts believe, explain the haste with which the vessel’s crew sealed the well—leading to a leakage of explosive gases into the wellbore and the resulting blast. BP will now have to pay somewhere in excess of $30 billion to satisfy all the claims for the damage done by its massive oil spill.

Following the disaster, the Obama administration imposed a temporary ban on deep-offshore drilling.  Barely two years later, drilling in the Gulf’s deep waters is back to pre-disaster levels. President Obama has also signed an agreement with Mexico allowing drilling in the deepest part of the Gulf, along the U.S.-Mexican maritime boundary.

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Meanwhile, deepwater drilling is picking up speed elsewhere. Brazil, for example, is moving to exploit its “pre-salt” fields (so-called because they lie below a layer of shifting salt) in the waters of the Atlantic Ocean far off the coast of Rio de Janeiro. New offshore fields are similarly being developed in deep waters off Ghana, Sierra Leone, and Liberia.

By 2020, says energy analyst John Westwood, such deepwater fields will supply 10% of the world’s oil, up from only 1% in 1995. But that added production will not come cheaply: most of these new fields will cost tens or hundreds of billions of dollars to develop, and will only prove profitable as long as oil continues to sell for $90 or more per barrel.

Brazil’s offshore fields, considered by some experts the most promising new oil discovery of this century, will prove especially pricey, because they lie beneath one and a half miles of water and two and a half miles of sand, rock, and salt.  The world’s most advanced, costly drilling equipment—some of it still being developed—will be needed. Petrobras, the state-controlled energy firm, has already committed $53 billion to the project for 2011-2015, and most analysts believe that will be only a modest down payment on a staggering final price tag.

Arctic Oil

The Arctic is expected to provide a significant share of the world’s future oil supply. Until recently, production in the far north has been very limited. Other than in the Prudhoe Bay area of Alaska and a number of fields in Siberia, the major companies have largely shunned the region. But now, seeing few other options, they are preparing for major forays into a melting Arctic.

From any perspective, the Arctic is the last place you want to go to drill for oil. Storms are frequent, and winter temperatures plunge far below freezing. Most ordinary equipment will not operate under these conditions. Specialized (and costly) replacements are necessary. Working crews cannot live in the region for long. Most basic supplies—food, fuel, construction materials—must be brought in from thousands of miles away at phenomenal cost.

But the Arctic has its attractions: billions of barrels of untapped oil, to be exact. According to the U.S. Geological Survey (USGS), the area north of the Arctic Circle, with just 6% of the planet’s surface, contains an estimated 13% of its remaining oil (and an even larger share of its undeveloped natural gas)—numbers no other region can match.

With few other places left to go, the major energy firms are now gearing up for an energy rush to exploit the Arctic’s riches. This summer, Royal Dutch Shell is expected to begin test drilling in portions of the Beaufort and Chukchi Seas adjacent to northern Alaska. (The Obama administration must still award final operating permits for these activities, but approval is expected.) At the same time, Statoil and other firms are planning extended drilling in the Barents Sea, north of Norway.


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By prosefights, April 25, 2012 at 12:55 pm Link to this comment

Readers may benefit from

Toward Energy Literacy

http://www.energypulse.net/centers/article/article_display.cfm?a_id=2526

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By Jozef Oud, April 24, 2012 at 5:12 pm Link to this comment
(Unregistered commenter)

To quote the last line of this excellent article: Who would want it? Indeed! I certainly don’t. But we are all being forced into this even as clean, sustainable energy is abundant! I’m talking about HYDROGEN, the most common element on the planet. But the technology to use it is being suppressed by the fossil fuel companies. Wake up, people, defend our Earth against the evil greed. Demand we switch to clean energy by investing all that money it will cost to get the oil into renewables. Refuse to pay fuel taxes, break free, we’ve all been held hostage for far too long! Now is the time!

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By diman, March 16, 2012 at 12:02 pm Link to this comment

For those of you interested in the problem, watch the documentary “Collapse” with Michael C. Ruppert.

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By prosefights, March 15, 2012 at 6:54 am Link to this comment

BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

IN THE MATTER OF THE APPLICATION OF NEW MEXICO GAS COMPANY FOR APPROVAL OF 2012 ENERGY EFFICIENCY PROGRAMS AND PROGRAM COST TARIFF RIDER PURSUANT TO THE NEW MEXICO PUBLIC UTILITY AND EFFICIENT USE OF ENERGY ACTS.

NEW MEXICO GAS COMPANY, Applicant.  )

Case No. 11-00369-UT

PROPOSED DECISION OF HEARING EXAMINER

http://www.prosefights.org/nmgco/intervene/hearing/hearing#response

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Clash's avatar

By Clash, March 14, 2012 at 9:18 pm Link to this comment

Yup slim Picken’s buying up as much of the water in the Ogallala Aquifer as he can, so he can sell it back to?

I don’t no about spearing the Earth, and pumping toxic chemicals to cool drills, and hydraulically fracture rock for the gas, but the additives in the water sure taste great, probably good for you to?

Sorta like the Hanford plume.

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By Clash, March 14, 2012 at 5:21 pm Link to this comment

March 11, passed by and I didn’t see any articles here about the emperors plans to back the building of 2 more machines from hell, happy Fukushima day.

I know they say it will all be cleaned up in 30 years, but I think they left some 0’s out of their number.

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By Clash, March 14, 2012 at 5:02 pm Link to this comment

The end of the age of oil, finally? That easy, I don’t think so, not till those who control the resources make the earth a grave.

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