Tuesday, 28 February 2012

Has 'peak oil' just been deferred by three days?

I don't understand the numbers being bandied about in this press release from Reuters:

Spain's Repsol and China's Sinopec have made an oil discovery offshore Brazil that could be one of the biggest so far in the area and that boosted confidence that Angola's deepwater reserves may be abundant too... Repsol did not provide an estimate for the size of the find, but one of its partners, Norway's Statoil, said it was a "high-impact" one: it could hold more than 250 million barrels of oil equivalent (boe) or provide 100 million boe net to Statoil.

That sounds like a lot, but global oil demand is currently eighty million barrels per day.

For comparison, Wiki's article on North Sea oil says this:

The British and Norwegian sections hold most of the remainder of the large oil reserves. It is estimated that the Norwegian section alone contains 54% of the sea's oil reserves and 45% of its gas reserves. More than half of the North Sea oil reserves have been extracted, according to official sources in both Norway and the UK. For Norway, the Norwegian Petroleum Directorate gives a figure of 4,601 million cubic metres of oil (corresponding to 29 billion barrels) for the Norwegian North Sea alone (excluding smaller reserves in Norwegian Sea and Barents Sea) ultimate of which 2,778 million cubic metres (60%) has already been produced prior to January 2007...

Yes, if they've found oil at one spot, the chances are that there is plenty more nearby, so yippee, but unless I've made a fundamental mistake, those 250 million barrels are approx. equal to one year's extraction in the North Sea. Or do they mean that they'll be able to extract 250 million barrels per year for the foreseeable, which would be about one per cent of global production/demand?


JJ said...

I would imagine Mark its about 250 million barrels a year, surely that figure cannot be the total amount available.
You're probably looking at a few billion barrels in totality.

Mark Wadsworth said...

JJ, hmm, let's hope so.

Macheath said...

When you begin a post with the words 'I don't understand the numbers...', I know there's no point in me even trying.

Nick Drew said...

come on guys, everyone always talks up their discoveries!

Mark, your arithmetic is correct - but 250 million x $100 / bbl is still a decent wedge: what you are doing is effectively illustrating just how big the global oil industry is

for a local point of reference, the largest UK North Sea field is Forties, with about 5 billion barrels at the outset & has been in production since 1975

(though this is not even remotely one of the world's biggest)

a discovery of 250 million barrels in the North Sea would still be viewed as a big & juicy find today (depending on depth of water & other aspects concerning accessibility)

a field of twice that size (Buzzard) was the biggest UK discovery in a couple of decades and was a matter for much rejoicing in the industry

SadButMadLad said...

It is a TOTAL of 250 million barrels. They are looking to extract 5000 barrels a day.

So a small find and nothing compared to the potential output from shale gas that could supply world level output for hundreds of years.

But each small find gets more and more economical to extract as the technology and techniques advance. So there will probably be loads more such finds which together will keep "peak oil" away for many years to come.

Anyway "peak oil" is a bit of a misnomer since there has always been new sources of fuel being found. All the charts showing oil output have not shown any sign of reaching a peak.

Mark Wadsworth said...

McH, that is why we have people like Nick Drew!

ND, thanks, I was hoping you'd drop in. I suppose the big question is: is this find just one of dozens or hundreds? That will make a difference.

SBML, yes, fingers crossed for shale gas.

Kj said...

This was in the business papers a couple of days ago, about the same find (Campos in Brazil):

Analyst Thomas Aarrestad at Pareto Securities writes in an update Monday that he thinks the discovery is at least one billion barrels of oil equivalent. Based on a value of four dollars per barrel, he estimates the value of the discovery in two to three per share.

It's impossible to know what is stock-talk and what is factual, and presumably, mr. Arrestad is no petroleum engineer, but I believe that when they say high-impact, they mean the impact on Statoil's share-price, not global oil-supply...
The Barents Sea is still relatively unexplored. 60 new search-licenses were awarded this year.

Kj said...

Here is also a summary of last year exploration on the norwegian continental shelf:
Half of the exploration wells that were drilled last year, led to a discovery. There were 22 new discoveries on the Norwegian continental shelf last year. The Oil Director devoted the greatest attention to the twin findings Aldous / Avaldsnes in the North and Skrugard / Sea ice in the Barents Sea...
She presented the Directorate's new estimate of Aldous / Avaldsnes that sounds at 1.800 million barrels of oil equivalent, but also stressed that the uncertainty is large

Bayard said...

SBML, one day the oil is going to run out. By that time we need to have nuclear fusion reactors up and running. Fusion is theoretically possible, "the rest is just engineering" to quote Iain M. Banks.

Kj said...

The oil may be running out, but there are always novel sources of gas + coal, and there is already technology for converting gas/coal to liquid fuels, so I'm not scared of the supply for the foreseeable future. ofcourse all the better would be to have solar-to-liquid conversion up and running, plaster half of a Saharan country with solar installations, and we could get on with business without the uncertainties.

neil craig said...

This is onl;y 1 new field and new fields are only 1 relatively small part of our increasing resources. Tar sands, like Canada has and converting shale gas to oil are both massive resources available because of technological breakthroughs. Oil from algae and from methane hydrates require other breakthoughs - whuch are being worked on and clearly will come.

"Peak oil" is simply another political scare story. The age of cheap energy has not yet arrived but that is solely because of the political parasites.