Mar 10, 2014
A Tough-Oil World
Posted on Mar 14, 2012
By Michael T. Klare, TomDispatch
As with all such extreme energy scenarios, increased production in the Arctic will significantly boost oil company operating costs. Shell, for example, has already spent $4 billion alone on preparations for test drilling in offshore Alaska, without producing a single barrel of oil. Full-scale development in this ecologically fragile region, fiercely opposed by environmentalists and local Native peoples, will multiply this figure many times over.
Tar Sands and Heavy Oil
Another significant share of the world’s future petroleum supply is expected to come from Canadian tar sands (also called “oil sands”) and the extra-heavy oil of Venezuela. Neither of these is oil as normally understood. Not being liquid in their natural state, they cannot be extracted by traditional drilling materials, but they do exist in great abundance. According to the USGS, Canada’s tar sands contain the equivalent of 1.7 trillion barrels of conventional (liquid) oil, while Venezuela’s heavy oil deposits are said to harbor another trillion barrels of oil equivalent—although not all of this material is considered “recoverable” with existing technology.
Those who claim that the Petroleum Age is far from over often point to these reserves as evidence that the world can still draw on immense supplies of untapped fossil fuels. And it is certainly conceivable that, with the application of advanced technologies and a total indifference to environmental consequences, these resources will indeed be harvested. But easy oil this is not.
The development of Venezuela’s heavy oil will require investment on a comparable scale. The Orinoco belt, an especially dense concentration of heavy oil adjoining the Orinoco River, is believed to contain recoverable reserves of 513 billion barrels of oil—perhaps the largest source of untapped petroleum on the planet. But converting this molasses-like form of bitumen into a useable liquid fuel far exceeds the technical capacity or financial resources of the state oil company, Petróleos de Venezuela S.A. Accordingly, it is now seeking foreign partners willing to invest the $10-$20 billion needed just to build the necessary facilities.
The Hidden Costs
Tough-oil reserves like these will provide most of the world’s new oil in the years ahead. One thing is clear: even if they can replace easy oil in our lives, the cost of everything oil-related—whether at the gas pump, in oil-based products, in fertilizers, in just about every nook and cranny of our lives—is going to rise. Get used to it. If things proceed as presently planned, we will be in hock to big oil for decades to come.
And those are only the most obvious costs in a situation in which hidden costs abound, especially to the environment. As with the Deepwater Horizon disaster, oil extraction in deep-offshore areas and other extreme geographical locations will ensure ever greater environmental risks. After all, approximately five million gallons of oil were discharged into the Gulf of Mexico, thanks to BP’s negligence, causing extensive damage to marine animals and coastal habitats.
Keep in mind that, as catastrophic as it was, it occurred in the Gulf of Mexico, where vast cleanup forces could be mobilized and the ecosystem’s natural recovery capacity was relatively robust. The Arctic and Greenland represent a different story altogether, given their distance from established recovery capabilities and the extreme vulnerability of their ecosystems. Efforts to restore such areas in the wake of massive oil spills would cost many times the $30-$40 billion BP is expected to pay for the Deepwater Horizon damage and be far less effective.
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