Monday, February 26, 2007

North Sea Oil and Gas Output Down by 10%.

It is anticipated that production of both oil and gas from the reserves under the North Sea will be down by about 10% from previous estimates according to a new survey of the U.K. energy industry. This means that the U.K.'s "security of supply" is further compromised, making us even more dependent on imported oil and gas, and this will hit the Chancellor of the Exchequer's budget, along I suppose with the cost of diverting military might from Iraq to Afghanistan. Someone will have to pay for it, and I imagine that will be the punter and the taxpayer - most of us being both. Indeed, I expect that the real indicator of peak oil (and peak gas too) will be rising prices, signifying the decline of resources. There is apparently a surge of interest (mostly from small companies) wishing to explore the North Sea, in consequence of the increasing cost of its bounty, but of course this merely means that more people will make a quick buck if they are successful, while depleting the resource even faster. There is only so much oil and gas down there: enhanced production only shortens the term of our reliance upon these fuels. As I noted in my immediately previous posting, the U.K. now produces half its electricity using coal, which has been substituted for gas now the price has gone up. It is ironic that in the early 1980's, Britain switched much of its coal-fired power stations over to gas, due to the cheaper nature of the latter; now it appears that coal will be the better buy and so we will use more of it once again. I read the other day that "U.K. Coal" is set to import considerable quantities of coal from Australia, which has enormous reserves. I remember too that the U.K. abandoned its production of "town gas" in the early 1970's, and all cookers and other such appliances were converted to "North Sea Gas", being principally methane with a higher calorific value, when this new supply was initially tapped. My father worked for the South Eastern Gas Board at the time, among the many, many different occupations he had during his interesting working life, and I used to go around with him while he did the necessary engineering. Since he had left home by this stage, this was how I spent a number of school holidays in my early teens, when I went to stay with him. I also recall reading of a number of failed suicide attempts when it was not understood that natural gas is effectively non-toxic, compared to the "old" town-gas which, being rich in carbon monoxide, provided the ideal means for "doing oneself in" by turning the gas on and sticking your head in the gas-oven. Should society return to making town-gas from coal, as it very probably will, this option will return too!
The North Sea fields are a microcosm of the world situation, since although there is a decline in production, there remains an estimated equivalent of 16 -25 billion barrels worth of oil and gas left to be extracted (around 1% of the world's total), and so there will be plenty of oil and gas for many years to come, it is simply that we cannot continue to draw it from the Earth at current rates. Old wells are running dry and new wells are fairly small in their capacity. Last year the production of oil and gas was 2.9 million barrels per day, which is sharply down from 4.5 million barrels as a daily output in 1999. By 2010, it is expected to be down to 2.6 million barrels a day. The main reason for the fall in supply is described as "poor reservoir performance". Now this appears an ominous euphemism. It may mean that there is less oil and gas than was originally estimated (I was going to use the word "gauged" but of course there is no direct measurement and all quoted figures for reserve capacity are only estimates), or that the geology is such that the well is less permeable than it was thought to be, meaning that less of its capacity can actually be extracted, whatever it may total. Either way, the cost will soar, and since everything demands on oil or gas both for manufacturing and transport, including food, that means the price of everything will be hiked-up.


Armenian Radio said...

Nuclear sources are better anyway...

energybalance said...

Hello Armenian Radio!

I have visited Yerevan, actually in connection with the Metsamor nuclear power plant, and I was interviewed on B.B.C. Radio 4 about the project.

I think nuclear will play a role in providing energy in the future, along with a mixture other energy sources. Providing fuel for cars etc. seems to be the biggest problem, and I think we will see some fuels being produced from bio-sources but also from coal-liquefaction.

Thanks for your interest in my article!

Chris Rhodes.