Friday, September 22, 2006
The alleged "gusher paradox" and killjoy journalism
Here's one way of looking at incredible good fortune:
The recent discovery of a massive oilfield under the Gulf of Mexico appears to be a godsend for our crude-hungry country. It's not that simple, however. The new deep-water find is a pointed example of the way elevated oil and gas prices always seem to lead us to new technologies and, eventually, to renewed supplies. But one giant new gusher does nothing to get us off the gerbil wheel of ever more consumption creating ever more demand.
In case you missed it, in early September a consortium of Chevron (Charts), Devon Energy (Charts), and Norway's Statoil announced it had struck oil at the Jack No. 2 well, some 170 miles southwest of New Orleans and 29,000 feet down through water and earth. Geologists estimate that the area contains anywhere from three billion to 15 billion barrels.
If the find comes in at the upper end of that range - and of course the oil whisperers believe that will be the case - it will be the largest U.S. oilfield. (Alaska's Prudhoe Bay, where BP (Charts) recently had some pipeline problems, is currently the biggest, with some 12 billion barrels produced.) The deposits could increase U.S. reserves, now at about 29 billion barrels, by 50%. No wonder the strike added to the downward momentum on oil prices: Since peaking at $77 in mid-July, the cost of a barrel of crude has fallen below $64....
Just finding the oil represents a major technological breakthrough. More than five miles below the surface of the gulf, the wells will be the deepest on earth. Less than a decade ago this oil would have been considered untouchable.
But in 2000, new-generation drill ships were launched that allow for exploration in water up to 10,000 feet deep. And the seismic technology that penetrates the thick salt layer that covers this section of the gulf oilfields is also brand-new. "Before that technology you'd just have been drilling blind," says Nichols.
So, new technology, investment in which became economical because oil prices rose, has enabled the discovery of a massive new field that may increase American reserves by 50%. Once again, for the millionth time in a row, the day we "run out of oil" is further in the future than
Now, regular readers know that I would much prefer that the United States burn a lot less oil, at least as long as we can preserve our robust economic growth and manly automobiles. I am no fan of shipping countless billions of dollars to the most repulsive people on the planet (and, no, I'm not talking about Norwegians, Canadians, or Mexicans), and I am at least a little worried that just maybe it isn't a good idea to pump so much carbon into the atmosphere. But -- and this is a huge "but" -- when it comes to massive new oil discoveries there are only three options: (1) there are none, (2) they happen in other countries, or (3) they happen in our country. I assume most of my readers join me in choosing door number three.
There is no "gusher paradox." There are only enemies of madcap economic growth and cars that at least can go fast.
4 Comments:
By 
, at
Fri Sep 22, 02:27:00 AM:
Dear Mr. Nittany Lion..err TigerHawk,
This news was out there at least Labor Day Weekend, I was down the Jersey Shore and read it in the local liberal newspaper. Or maybe it was sunstroke and I was in dreamland. It's amazing how they can do the tech to drill so deep and with the bucks to go for the gamble..God Bless Chavez & his tinkerbell Bud from Iran. I'll miss them at Thanksgiving Day Threats..err.. Prayers. What I really want to know is why wasn't the GAY former Gov. of NJ allowed to speak at the UN. I believe he's asking for more understanding of his way. It fit's right in at the UN. He needs a burka in a big way:)
Mike S
By 
Dan Kauffman, at
Fri Sep 22, 05:54:00 AM:
" and I am at least a little worried that just maybe it isn't a good idea to pump so much carbon into the atmosphere"
And where did the carbon come from?
I was listening to an enviromentalist(?) the other night on a show ranting about how all the world's forests were in danger of total destruction, an impending eco-catastrophe,
I wondered, how did the world's forests escape total destruction BEFORE the carbon was locked up in fossil fuels?
By TigerHawk, at
Fri Sep 22, 06:27:00 AM:
I wondered, how did the world's forests escape total destruction BEFORE the carbon was locked up in fossil fuels?
Well, I have no idea if higher carbon or its hypothesized consequence, higher temperatures, are a threat to forests. However, in defense of smart biologists, and I'm related to a few, they usually don't make the argument in the abstract. They do not say "there is too much carbon in the air" or "it will be too warm." They say that these changes will occur much too quickly for much non-human life to adapt, and therefore a great many species will die. So, while it is true that the world was probably covered with forests when carbon levels and temperatures were higher, they weren't the forests that we have today. The trees we have today are specialized to grow under certain conditions, and if those conditions change too quickly, they will not survive, at least in the places that they are growing right now (perhaps some tree species will spread to the north, displacing other trees that cannot survive newly warmed climes). The risk of drastic climate change is not the fact of it, but its speed.
By Papa Ray, at
Sat Sep 23, 10:10:00 PM:
Well, leave it up to the media to give everybody the wrong ideas.
First off, the media frames this in a stupid way, but I guess that is only to be expected. They recently found the biggest oil field ever in the Baltic and the media gushed that it could fill Swedish demand for a year. What they didn't mention was that it would fill global demand for only 30 hours.
If the this field is 15 billion barrels, (and there is no guarantee of that) it's the biggest find in like 15-20 years. Slightly bigger than the 10 billion barrel Kashgan field in Kazaksthan which was found in the early 90's(and just now starting to produce enough to start to pay for the billions of dollars invested).
This "Biggest find in 20 years", is just enough to sustain 6 months of global consumption. We must find two fields like this every year to keep up with depletion and then put them into production to keep up with production declines in other fields. And then we need another two fields like this next year. And the year after that. And after that. And the year after that, and this must continue for as long as we want to maintain our current oil consumption.
If we want to increase consumption we must find new oil even faster.
BTW, this new find (which really isn't new, just confirmed this year, announced in 2004,) will not be in production before about 2013.
And that is only if the price of oil stays around 70 dollars and no easy oil is found in the meantime.
Why, because this is deep oil and it's expensive and slow producing. Imagine trying to drink your swimming pool dry through a soda straw.
Papa Ray
West Texas
USA
