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READER COMMENT:

³YOU make a difference. Thanks!!² -- Carla

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ENDING THE END OF OIL
By Matthew Maier
Business2
December 2005 Issue

http://www.business2.com/b2/web/articles/print/0,17925,1134799,00.html

Tight supply and soaring prices have some experts predicting the demise of
the petroleum age. But those very economic forces are also spurring
innovation that could keep us in black gold for years to come.

............

The petroleum age dawned on a Texas hill called Spindletop more than 100
years ago. The first predictions of the demise of oil weren't far behind.

Todayıs talk of looming oil scarcity and permanently high prices echoes the
dire forecasts of earlier eras: Experts predicted the "end of oil" in the
early 1920s, again after World War II, and most famously in the 1970s -- not
long before oil prices collapsed from $38 a barrel to $9. In each case, what
doomsayers underappreciated was the powerful impetus that rising prices give
to innovation and technology; when prices surge, petroleum prospectors
become uncannily good at figuring out new ways to suck hydrocarbons out of
the ground.

Thatıs happening again today. Oil prices are hovering at about $60 a barrel
and arenıt likely to go down much in the short term. The high prices are
catalyzing experiments with new methods that promise a revolution in the
energy business. Some are old approaches that have been given new economic
life; others rely on massive computing power that simply wasnıt available
before. Researchers at the U.S. Geological Survey estimate that the energy
sources and technologies we discuss on the following pages could produce 4
trillion barrels of oil -- more than all the worldıs proven petroleum
reserves right now. The end of oil will surely come someday, but if these
approaches pay off, it wonıt come nearly as soon as some people fear.


SUPERDEEP OFFSHORE DRILLING

The hurricanes of ı05 have made clear how important offshore wells in the
Gulf of Mexico are to oil production. Before the storms hit, offshore rigs
were responsible for 30 percent of U.S. production. As of the end of
October, nearly a third of the gulfıs rigs or pipelines were down, cutting
production by 20 percent. Globally, nearly half of annual production comes
from rigs boring into the seabed.

Most petroleum engineers believe that thereıs plenty more juice out there in
the vast oceans. Now, thanks to the use of advanced fiber-optic technology,
specially designed underwater drilling machines, and autonomous undersea
robots, the hunt for hydrocarbons is reaching subsea depths it never could
before. Using the latest technology, companies are tapping new reservoirs
miles below the surface, off the coasts of Africa and Asia. Chevron and
Transocean, a firm that owns deepwater drill ships, set a world record when
they drilled a well almost two miles beneath the sea. ³This is really one of
the last frontiers for oil recovery,² says Guy Cantwell, a spokesman for
Transocean. All told, analysts at the U.S. Geological Survey estimate that
nearly 300 billion barrels of oil still rest below the sea worldwide.

Exxon Mobil and BP alone have invested nearly $15 billion in the past decade
in an attempt to harvest oil deep under the seafloor, bets that, as oil
prices have risen, seem all the shrewder. One of the biggest challenges is
to control the drills when theyıre nearly three miles down the hole, which
has led companies like Schlumberger to develop innovative drills that can
generate real-time video feeds of their environment, in addition to seismic
snapshots that allow the drill to be adjusted on the go by technicians at a
console on the rig. In the Gulf of Mexico, BP has already deployed a $1
billion rig that can drill nearly five miles down from waters more than a
mile deep.

The harsh demands of superdeep drilling have already created a new field of
robotic drilling technology. Among the leaders is Cybernetix, a French
technology firm that has developed a series of underwater autonomous
vehicles. Cybernetix is also perfecting a robot that will be able to fix
undersea valves, pipes, and other elements of the production process.


OIL SANDS

According to the International Energy Agency, oil production is declining in
33 of the 48 largest oil-producing nations. But thanks to a
27,000-square-mile swath of largely untapped deposits in northern Alberta,
Canada wonıt face that problem for decades. In fact, with an estimated 175
billion barrels of accessible oil buried in the tarlike sands scattered
throughout the frigid region, Canada sits atop one of the largest known oil
reserves in the world, two-thirds the size of Saudi Arabiaıs estimated 263
billion barrels.

But extracting the bitumen -- a gooey, viscous form of petroleum that can be
further refined to produce a synthetic form of crude oil -- from the
Albertan sands is a costly and environmentally punishing process. First the
oil sand is dug out of the earth in a massive strip mine using 30-foot-high
dump trucks. The sand is then crushed and separated in huge extraction
plants before being diluted with naphtha, a highly toxic and flammable
liquid that thins out the raw bitumen. The pricey equipment and laborious
process costs the producers roughly $20 per barrel of crude, despite recent
technological advances.

When oil prices hovered around $25 a barrel, as they did for much of the
past decade, oil sands projects were considered prohibitively expensive.
Suncor extracted crude oil from the Albertan sands 35 years ago, but it
wasnıt until recently, when oil prices spent months above $60 a barrel, that
oil sands became one of the petroleum industryıs most important targets.
³The current prices have moved projects from the possible to the probable
column very quickly,² says Suncor spokesman Brad Bellows. The oil sands
region of Alberta already produces nearly 1 million barrels a day, a figure
expected to double in the next five years.


INTELLIGENT WELLS

To understand how advances in computing technology are affecting the
petroleum industry, look no further than the Pod. Designed by Landmark
Graphics, a unit of Halliburton that specializes in developing software for
oil companies, the Pod is an Imax-style viewing room powered by a
supercomputer. With a 45-foot screen and a 64-bit Unix-based operating
system designed by Silicon Graphics, the Pod enables oil companies such as
Shell and Chevron to create astonishingly accurate 3-D seismic models that
highlight strata where oil and gas pockets lurk, taking much of the
guesswork out of the drilling process.

Specialized software from companies like Landmark and new, low-cost
supercomputers are bringing petroleum exploration and recovery closer to
being an exact science. In the North Sea, Norwegian petroleum giant Statoil
is using the latest software to help it position wells for optimal recovery
from deposits at the bottom of the ocean.

Statoil estimates that its IT initiatives will bring in an additional $400
million from its existing wells while saving $20 million in drilling costs
over the next several years.

Advances in sensor technology and seismic surveying are also helping
drillers find new oil, making the extraction process more efficient by
orders of magnitude. Pressure and temperature sensors are beginning to
supply companies with accurate profiles of wells and reservoirs to help them
optimize the rate at which oil is withdrawn.


OIL SHALE

Legendary American geophysicist M. King Hubbert famously predicted in 1956
that U.S. oil production would peak in the early 1970s. Though ridiculed at
the time, his prediction -- today known as ³Hubbertıs peak² -- came true,
and domestic production has declined ever since. In the coming decade,
however, American oil production could be on the upswing again. It isnıt
likely to be the controversial proposed drilling in the Arctic National
Wildlife Refuge that does the trick, though that would boost production. The
bigger kick could come from oil hidden in sedimentary rock known as oil
shale found in vast quantities throughout western Colorado and parts of Utah
and Wyoming. Government scientists have estimated that the United States is
sitting on 2.6 trillion barrels of reserves in oil shale form, spread across
an area of nearly 16,000 square miles of federal and privately owned land.
The oil-rich terrain is the single largest untapped petroleum reserve in the
world.

Like oil sands, oil shale is witheringly expensive to exploit; such efforts
in the late 1970s famously collapsed when oil prices dropped from the highs
of the Iran hostage era. The technology for extracting oil from shale has
improved drastically since those days; industry leader Shell has come
closest to perfecting a commercial process but still remains several years
away. Shellıs process involves drilling a series of holes, each as deep as
600 feet, which are then filled with heavy-duty electric heaters that warm
the rock to 700 degrees Fahrenheit. The heating process releases a
combination of oil and gas that can then be pumped out of the well. ³Weıre
confident that high-quality crude can be produced from shale for roughly $30
per barrel,² says Shell spokeswoman Jill Davis.

Shell, Chevron, and six other firms have recently descended on the western
slope of the Rocky Mountains, submitting applications to the Bureau of Land
Management, which manages most of the oil shale reserves, to drill test
wells. The U.S. Energy Policy Act, passed in August, requires that the
agency issue licenses for research and development by February. Prices will
have to stay high for oil shale to pay off, but the upside could be
enormous.


REVITALIZING OLD FIELDS

One of the most promising areas of oil exploration involves a staggeringly
simple insight: There are still hundreds of billions of barrels of oil
stranded in existing reservoirs. When a major prospector like BP or Exxon
Mobil discovers a promising field, it sets up its equipment and spends years
extracting oil until the pressure in the wells ebbs and it becomes more
difficult -- and costlier -- to force the stuff to the surface. Once the
output starts to decline, the majors often sell off the asset to a smaller
petroleum firm and move on to the next field. When they depart, these giants
can leave as much as 70 percent of the wellıs resources untapped.

That realization has companies like Anadarko Petroleum, Newfield
Exploration, and others scrambling to apply advanced oil recovery techniques
to these aging fields. Their methods range from the straightforward (pumping
water into the wells to force out the oil) to the truly inspired -- like
filling wells with bioengineered microbes that help release oil stuck in
microscopic holes, making it easier to extract. Called microbial-enhanced
oil recovery, this approach is being perfected by researchers at Caltech and
the University of Kansas. Dane Cantwell, an area manager at Anadarko
Petroleum, estimates that applying these secondary and tertiary techniques
could raise production from existing oil fields tenfold. At the Forties oil
field in the North Sea, Apache has boosted annual production by 100 percent
to 80,000 barrels a day by installing new pumps to increase water flow.

The techniques arenıt cheap -- some can cost as much as $3 million per well
-- but with many analysts expecting oil prices to remain high for the
foreseeable future, enhanced oil recovery methods are attracting a flood of
new players. ³Most people say the easy oil has been found,² says Richard
Ward, director of research with the Cambridge Energy Research Association.
³So these techniques are not only attractive, theyıre absolutely mandatory
to keep the oil flowing.²

------------

PEAK OIL RELATED LINKS:

ASPO
The official site of the Association for the Study of Peak Oil & Gas.
http://www.peakoil.net/

ASPO-USA:
http://www.aspo-usa.com/

THE OIL DRUM:
http://www.theoildrum.com/

ENERGY BULLETIN
Clearing house for news regarding the peak in global energy supply.
http://www.energybulletin.net/

POWERSWITCH
Dedicated to raising awareness & discussion of the impending & permanent
decline of cheap oil & gas supply.
http://www.powerswitch.org.uk/

ODAC
Oil Depletion Analysis Centre working to raise awareness and promote better
understanding of the world's oil-depletion problem.
http://www.odac-info.org/

GLOBAL PUBLIC MEDIA
Public service broadcasting for a post carbon world.
http://www.globalpublicmedia.com/

POST CARBON INSTITUTE
Learning to live in a low energy world.
http://www.postcarbon.org/

PEAKOIL.COM
US site and forum to educate and promote awareness of global hydrocarbon
depletion.
http://www.peakoil.com/

FEASTA
The Foundation for the Economics of Sustainability
http://www.feasta.org/

VITAL TRIVIA
Chris Vernon's Peak Oil Blog
http://www.vitaltrivia.co.uk/

CULTURE CHANGE
http://www.culturechange.org/

LIFE AFTER THE OIL CRASH
http://www.lifeaftertheoilcrash.net/

CLIMATE CHANGE ACTION
http://climatechangeaction.blogspot.com/

THE ENERGY BLOG
http://thefraserdomain.typepad.com/

PEAK OIL PRIMERS: WHAT IS PEAK OIL?
http://www.energybulletin.net/primer.php
http://en.wikipedia.org/wiki/Peak_oil
http://www.answers.com/peak+oil

------------

PREVIOUS NHNE NEWS LIST ARTICLES:

U.S. HAS PLANS FOR CANADA OIL SANDS (11/28/2005):
http://groups.yahoo.com/group/nhnenews/message/10440

PEAK OIL CAUCUS FORMED IN U.S. HOUSE OF REPRESENTATIVES (11/27/2005):
http://groups.yahoo.com/group/nhnenews/message/10432

MORE ON SASPO-USA PEAK OIL CONFERENCE (11/20/2005):
http://groups.yahoo.com/group/nhnenews/message/10383

SUMMARY OF ASPO-USA PEAK OIL CONFERENCE (11/20/2005):
http://groups.yahoo.com/group/nhnenews/message/10382

WORLD'S 2ND BIGGEST FIELD STARTS TO RUN OUT OF OIL (11/13/2005):
http://groups.yahoo.com/group/nhnenews/message/10331

THE NATURAL GAS CLIFF (11/10/2005):
http://groups.yahoo.com/group/nhnenews/message/10314

HOW SOON WILL WORLD'S OIL SUPPLIES PEAK? (11/10/2005):
http://groups.yahoo.com/group/nhnenews/message/10312

SAUDI OIL FORECASTS ARE DOUBTED (10/28/2005):
http://groups.yahoo.com/group/nhnenews/message/10223

PERSPECTIVE: KATRINA, NEW ORLEANS, & PEAK OIL (9/6/2005):
http://groups.yahoo.com/group/nhnenews/message/9910

PETROCOLLAPSE CONFERENCE OCT. 5, 2005 NYC (8/30/2005):
http://groups.yahoo.com/group/nhnenews/message/9834

OPEC REVEAL GLOBAL LIGHT SWEET CRUDE PEAKED (8/26/2005):
http://groups.yahoo.com/group/nhnenews/message/9815

PO: THE END IS NIGH (8/24/2005):
http://groups.yahoo.com/group/nhnenews/message/9800

TOWN OF WILLITS TACKLES PEAK OIL (8/23/2005):
http://groups.yahoo.com/group/nhnenews/message/9794

OIL EXPERT PREDICTS APOCALYPSE, BUT FEW ARE LISTENING (8/22/2005):
http://groups.yahoo.com/group/nhnenews/message/9787

SAUDIS WARN OF SHORTFALLS AS OIL HITS $61 (7/7/2005):
http://groups.yahoo.com/group/nhnenews/message/9524

PERSPECTIVE: END-TIME FOR USA UPON OIL COLLAPSE (6/27/2005):
http://groups.yahoo.com/group/nhnenews/message/9454

SIMULATED OIL MELTDOWN SHOWS U.S. ECONOMY'S VULNERABILITY (6/25/2005):
http://groups.yahoo.com/group/nhnenews/message/9444

EXXONMOBIL EXPECTS PEAK OIL IN 5 YEARS (5/27/2005):
http://groups.yahoo.com/group/nhnenews/message/9244

THE END OF OIL IS CLOSER THAN YOU THINK (4/21/2005):
http://groups.yahoo.com/group/nhnenews/message/9056

GOODBYE TO ALL THAT OIL (4/5/2005):
http://groups.yahoo.com/group/nhnenews/message/8987

DVD: 'THE END OF SUBURBIA' (12/5/2004):
http://groups.yahoo.com/group/nhnenews/message/8449

JOE FIRMAGE ON "PEAK OIL", "THE SINGULARITY" & KEN WILBER (11/2/2004):
http://groups.yahoo.com/group/nhnenews/message/8199

OIL & GAS RUNNING OUT MUCH FASTER THAN EXPECTED (10/6/2003):
http://groups.yahoo.com/group/nhnenews/message/6054

WORLD OIL SUPPLY COMFORTABLY EXCEEDS DEMAND (6/18/2003):
http://groups.yahoo.com/group/nhnenews/message/5550

NEW BOOK: WHEN THE OIL RUNS OUT, HORRIFIC PROBLEMS WILL FOLLOW (5/14/2003):
http://groups.yahoo.com/group/nhnenews/message/5304

OIL MORE PLENTIFUL THAN PREVIOUSLY THOUGHT (4/27/2002):
http://groups.yahoo.com/group/nhnenews/message/3067

AGE OF OIL ABOUT TO END (6/24/2000):
http://groups.yahoo.com/group/nhnenews/message/427

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Published by David Sunfellow
NewHeavenNewEarth (NHNE)
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