You can all rest easy now the world has an “endless” supply of oil. I know that resource exists because I read it in this week’s issue of BusinessWeek, which is written for hard-working, Type A people who believe that markets can solve anything. I have been working around that kind of person for much of my career; their optimism and willingness to work long hours can be quite irritating.
While it may be true that there is still a lot of oil left in the ground, I am not reassured. The article starts by talking about the rejuvenation of a one billion barrel oil field in the Netherlands whose existence has been known for decades. Royal Dutch Shell and ExxonMobil operated the field until the 1990s, but then shut down their production when they determined that the “thick, hard-to-extract crude” that was still left in the ground was not worth the trouble of extracting it. Now, the owners are going back to that field to apply innovative technology – like steam heat – to the task of freeing up a bit more of the remainder.
Aside: Please note my sarcasm; steam heat is not new, neither is the knowledge that heating a “thick, hard-to-extract crude” makes it flow better. The real problem is answering the difficult question – where does the continuous heat supply come from? End Aside.
Here is how a project spokesman describes the future of Schoonebeek, the field in the Netherlands that is being rehabilitated to allow future production:
“We wouldn’t do this if the price was really low,” says Michael Lander, the Shell executive running the project. The venture is expected to produce 120 million barrels from the reopened western section of Schoonebeek over 20 years.
Somehow, in a world where market demand in a reasonable economy is about 80 million barrels of oil per day, a project that may produce 120,000,000 barrels over a twenty year period (about 16,500 per day) does not lead a skeptical engineering type like me to the following conclusion:
Schoonebeek will not flood the world with crude. But its success presents a stiff challenge to those who argue that oil production is in irreversible decline. Consumer demand, technology, and global politics are shifting in a way that could spell a future of oil abundance, not of catastrophic dearth. As Leonardo Maugeri, a senior executive at Italian oil major ENI, puts it: “There will be enough oil for at least 100 years.”
I can do the math – it would take more than 4800 fields like Schoonebeek to meet CURRENT world oil demand, assuming that there is some magic heat source that can make them all productive. I am also not reassured by the graph of future oil production supplied by Cambridge Energy Research that BusinessWeek used to illustrate their article.
Much of what that graph labels as useful under the “optimist’s case” is similar to the resources available at Schoonebeek; it is thick, hard-to-extract, and challenging-to-refine crude. Another major portion of the remaining resource is like the deep water oil that the Wall Street Journal described in an article titled Cramped on Land, Big Oil Bets at Sea.
Big Oil never wanted to be here, in 4,300 feet of water far out in the Gulf of Mexico, drilling through nearly five miles of rock.
It is an expensive way to look for oil. Chevron Corp. is paying nearly $500,000 a day to the owner of the Clear Leader, one of the world’s newest and most powerful drilling rigs. The new well off the coast of Louisiana will connect to a huge platform floating nearby, which cost Chevron $650 million to build. The first phase of this oil-exploration project took more than 10 years and cost $2.7 billion — with no guarantee it would pay off.
I read the BusinessWeek article and the earlier one in the Wall Street Journal from the perspective of a lazy engineer. I hate working long hours, cannot stand wasting time and effort, and do not understand why anyone would want to go to the trouble of building large extraction systems to squeeze out the remaining crude since we long ago discovered nuclear fission, a far simpler alternative that is actually more capable than crude oil.
The oil industry is led by people who are well aware of the capability of atomic fission, but love to talk about it in the future tense. For example, I recently read about an upcoming book titled “Why We Hate the Oil Companies: Straight Talk from an Energy Insider” by John Hofmeister, a former Shell Oil executive. I found the mention on Dr. Gail Marcus’s Nuclear Power Talk blog in a post titled A New Take on Energy Policy.
Though my time around people from the oil industry is somewhat limited, I can imagine that Hofmeister is sharing a perspective that is common among petroleum industry leaders in the following quote:
I contacted John to ask him how his coverage of nuclear power turned out. He said that at the end of the book, “I describe a future where we have standardized on sizes and designs, simplified permitting, established liability reforms, have doubled the nuclear fleet to over 200 plants by 2060 and suggest it should double again. My described future energy system beyond 2060 and into the 22nd century relies primarily on nuclear and (much advanced) solar for the vast electricity requirements of the future. I also bring up the need for education of the grassroots regarding nuclear and criticize public officials who slander nuclear for political purposes.”
I made a comment on Gail’s blog to the effect that such a statement sounds kind of positive about nuclear energy – until one realizes that the US was once well on its way to having more than 200 plants before the year 2000. I made that statement based on the number of plants being completed and those already on order and under construction in 1975 – more than 35 years ago.
Here is my take on the text between the lines in publications coming from the “oil optimists” – you nukes go and do your research. Play with all of those wonderful options that you describe. Consumers, you keep buying our oil at ever increasing prices and keep putting obscene profits into our pockets. When the economic pain from that arrangement gets to a level that you simply cannot bear anymore, the nukes will be allowed to build systems slowly to ease the pain a bit and allow us to gradually transition to a wonderful nuclear powered future where we – the current energy oligarchs – control the rate at which we allow that technology to deploy.
Sorry. I am just too ornery and naturally competitive to think that is a good idea. Nukes already know how to produce cost competitive power sources. Our second generation machines, using 1950s and 1960s technology already produce power that is so predictably cheap it could be profitably sold on a monthly subscription basis without the need to meter the actual power usage. We already sequester our waste products and keep them from causing environmental damage. We have been doing that for about 60 years!
We know that there are many improvements that we can make in our systems, but that should not stop us fr
om building systems and selling competitive power NOW, any more than the knowledge of Moore’s Law stopped Intel from building many generations of microprocessors because the engineers knew there were ways to build them better in the future.