Since the year 2000, Russian oil production has increased by practically 50%, but this growth appears to have now peaked. The supply on Non-OPEC oil peaked early in this decade and it was only Russia, returning to force from the prior financial crisis that could offset the fall in the remaining parts of this sector. Non-OPEC accounts for about 60% of world oil production, but within the sector it is Russia alone that has maintained the plateau, providing almost one quarter of its output. Without Non-OPEC it will not be possible to raise world oil supply, and without Russia it would have already fallen. Russia alone could not maintain growth in Non-OPEC, and the peak in Russian supply means that it and world oil volumes must begin to decline.
The unavoidable fall in world oil production has excited the potential for exploration in extremely inhospitable regions of the world, particularly the Arctic. As a kind of dry-run for exploration above the Arctic circle, the Nordic Explorer vessel has "sailed" for Cape Farewell on the southern tip of Greenland. I cannot avoid thinking that the term "Farewell" is an ironic coincidence for the future of a world powered by oil, and the desperation to grab whatever of it is left to be grabbed; wherever that may be. According to the US Geological Survey, there could be as much as 50 billion barrels worth of oil under Greenland, which is around eighteen months worth for the word as a whole and can be compared with the 38 billion barrels produced in the North Sea since development of the region began in the 1960s.
Exploration of Greenland is not new, but so far the few wells that have been drilled there proved to be dry. However, with an inevitable long-term rising price of increasingly scarce oil and rising demand for it, further exploration projects there begin to look viable, on the basis that sooner or later someone will strike lucky. Global warming may prove an ally in this intention, since hitherto ice-blocked waterways will become open, thus rendering greater access to whatever oil and other mineral wealth may lie there. In the past two years, seven companies including Exxon Mobil, Chevron and the UK-based Cairn Energy have bought exploration blocks of southern and western Greenland.
In consequence of the long-term production of North Sea oil, the reserves there are notably depleted and it will require considerable investment and new technologies to get out what remains. The low price of a barrel of oil in consequence of last year's economic crash has discouraged many putative exploration projects, and now the US based Noble Energy has put its North Sea business on the market for $350 million. The firm thus joins an exodus of UK based oil-companies from the region in a move where long-established fields are sold-off in order to fund exploration in new regions, including deepwater projects and indeed the Arctic.
Related Reading.
[1] "Oil Supply: As Russian Production Tops Out, World Supply Will Continue to Slip," By Gregor Macdonald. http://seekingalpha.com/article/161119-oil-supply-as-russian-production-tops-out-world-supply-will-continue-to-slip
[2] "Oil giants zero in on untapped Greenland." http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6832247.ece
[3] "American oil group Noble Energy joins UK exodus from North Sea," By Danny Fortson. http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6832263.ece#cid=OTC-RSS&attr=1185799
4 comments:
Hi Chris,
I have a feeling that for the foreseeable future there will always be about 25 years of oil available. This is because, when I worked for BP, many years ago, whilst attending an in-house seminar, I heard from some senior person that BP only forecast for 25 years ahead (a). Governments, the EU, the UN, they don’t do exploration. If they want figures, they go to the likes of BP.
BP have an enormous discovery in Mexico, OK, they have to drill down about 5kM to get to it, but they can do it (if not they, others will).
There is talk about large reserves under Greenland. The ice over Greenland, despite the savage Gore-ing it has received from the AGM-ists, remains stubbornly several kilometres thick, and no one has the faintest idea what lies under that mini-continent. The Vikings of old aren’t tellin’.
I have heard rumours over the years about a huge “Paris Basin”, situated you know where. Why bother asking a Frenchman about it? As De Gaulle said to an American on the day they entered a newly liberated Paris, “…we French don’t have friends, only interests…”
Consider the sheer enormity of Siberia. Look at it on any global atlas, book or screen, it really is huge. And mostly frozen. What on earth lies beneath all of that permafrost?
I have long contended that one (b) of the good results of GM (no “A”) will be the gradually increasing availability of previously inaccessible regions, Greenland, Northern Canada, Alaska, Northern Scandinavia and Siberia, to exploration of all kinds, one of them, of course, being oil exploration. It would appear that there are 3 possibilities:- either (1) no oil in all of those enormous landmasses (2) there is some oil, and (3) there is a lot of oil. Take your choice.
(a) Another thing I learned, probably more useful, from a chemist in the men’s loo, was “..don’t splash. Urine rots shoe leather…”, but that is beside the point.
(b) More CO2 means healthier plant life. Unfrozen land means more croplands to feed the Earth’s teeming billions.
(b1) Warmer lands means more space for those teeming billions to live in. Etc…
Anyway, it is sure there will be shortages of all basic resources, so we have to arrange that what we have is wisely used and of course recycled, but perhaps the oil dearth might not happen in the near future.
On the other hand, if those who now claim that global warming has stopped, are proved right, then mankind faces a truly catastrophic future. Massive population increases and continued icecaps. No new discoveries. No new croplands. No new places to live. Just massive overcrowding and shortages of everything. May Heaven help our descendants, no one else can.
Hi,
and thanks for your insight. I think there is plenty of oil down there and we will be producing it for decades yet but it is the rate of recovery that seems to be the problem.
This is made keener by the lack of recent investment in new exploration projects because of the low price of a barrel of oil - that is rising sharply now.
I hadn't heard that GW may be over now but the whole issue is highly contentious and I think it is overly simplistic to say "it's all our fault" albeit there is a close correlation between the amount of carbon burned since 1950 and how much is in the sky. The falling 13C/12C isotope ratio seems to support this too.
That said, how the planet will respond to initial heating is a good point. One the one hand there is the catastrophic runaway greenhouse effect, although I think nature is smarter than that and so there is option 2, where the melting ice shuts down the Atlantic Conveyor and the gulf stream so it gets mighty cold in these parts and London is something like Hamilton, Ontario.
If the warming has stopped as you say, this could be a sign that we are on the edge of the next ice age and I did read some while ago that the Atlantic Conveyor has slowed for a short period.
It could be indeed that GW is the least of our worries but that relentless population rise may be quelled by a deep freeze.
I am a chemist by training and so I don't pee on my shoes either!
As you say, heaven help those to come!
All the best,
Chris.
Sorry, I didn't mean to be contentius, just wanted to say that with so many variables in the pot, it it really difficult for a rational man to be able to hold any single clear position. About the only non-variable I can see on the horizon is the relentless population increase, which is seemingly unstoppable, until perhaps the "Gee-Whiz" curve curse strikes.
Not at all. I appreciate your insight as I said. There are indeed many variables, none of which look to good for the future of the human race. I try to be modestly upbeat but I don't think we are going to switch over from oil to hydrogen overnight, say, and personally I hope that we will be "in-oil" for many years to come.
Nonetheless, it would be a service to future generations to begin finding alternative lower energy ways to live now while we have enough energy in hand to make the necessary changes.
I have friends in the US who think that these are the "end times" and we are all doomed to the scenario described in the Chapter of Revelations. Maybe they are right; meanwhile I live in the hope of some alternatives.
BTW I see there are BIG drilling plans to explore for oil off Brazil with a coup,e of dozen new rigs being ordered. I might post about that.
All the best,
Chris.
Post a Comment