[Graeme]

Ultra-deep drilling for oil is simply a red herring as prices militate against it

$this->bbcode_second_pass_quote('', 'A')t the moment there is little left that is economically viable to produce. The world is actually running out of offshore projects. That's why rig rates for three years from now are lower than today.

Another $10 or so on the oil price and this will release a few extra billion barrels.

Shift forward to an oil price of $100 and a lot more fields will be developed. But go much above that $100 and demand destruction begins to set in. Get to $150 and that's economic mayhem time.


Kerevan quotes Professor Chris Harvie, the SNP MSP, rejecting Harvie's belief that we will see peak oil within 30 years. Harvie is almost certainly wrong - but only because we won't need to wait 30 years.

Offshore production has peaked already and so has the production of both onshore and offshore light crude.

A large percentage of liquid fuels are now refined from heavy crude with an increasing amount coming from gas to liquid technology and from associated gas.

In fact, there is a real danger of a convergence between demand and supply as early as next year - which is earlier than even the IEA suggest in their latest report.


But even then there is only an estimated 400 billion barrels offshore technical reserves to play with globally.

Given recovery rates and what's truly economical, you can safely cut that estimate in half. There is perhaps 200 billion barrels oil equivalent left to recover.

[Tanada]

I can't say these conclusions surprise me. On the contrary, I kind of expected it, deep down inside. One of three scenario's come to mind with the end of cheap oil,

A) the economy stumbles along and demand remains high enough for deep drilling,

B) the economy collapses and the price falls with it making deep drilling uneconomic,

C) or my preferred solution a substitute just expensive enough to be cheaper than deep drilling which will erase growth for the sake of growth gets developed and deployed while the economy struggles and population falls.

[shortonoil]

Tanada said:

$this->bbcode_second_pass_quote('', 'I') can't say these conclusions surprise me. On the contrary, I kind of expected it, deep down inside.

[lawnchair]

$this->bbcode_second_pass_quote('Tanada', '
')C) or my preferred solution a substitute just expensive enough to be cheaper than deep drilling which will erase growth for the sake of growth gets developed and deployed while the economy struggles and population falls.

[Tanada]

$this->bbcode_second_pass_quote('lawnchair', '')$this->bbcode_second_pass_quote('Tanada', '
')C) or my preferred solution a substitute just expensive enough to be cheaper than deep drilling which will erase growth for the sake of growth gets developed and deployed while the economy struggles and population falls.

[cube]

$this->bbcode_second_pass_quote('Tanada', '.')..
Fortunately biofuels are not the only possible substitute, as a matter of fact i expect a bouquette of substitutes each doing part of the job of replacing fossil fuels, unless we get total economic collapse first.

[sicophiliac]

$this->bbcode_second_pass_quote('shortonoil', '[')b]Tanada said:

$this->bbcode_second_pass_quote('', 'I') can't say these conclusions surprise me. On the contrary, I kind of expected it, deep down inside.

[OilIsMastery]

http://www.fool.com/investing/general/2 ... r-day.aspx

$this->bbcode_second_pass_quote('', 'S')urprising absolutely no one, leading offshore contract driller Transocean (NYSE: RIG) reported a barnburner of a quarter. For the first time in the company's history, the overall fleet earned average dayrates north of $200,000. The 57% rise in rates, coupled with higher capacity utilization, drove contract drilling revenues up 64% over the prior year. Field operating income, which the company defines as sales minus operating and maintenance expense, hurdled 165% higher.

[essex]

Deep drilling is a huge challenge. I have a stake in CNR ( Canargo ) and the well they have drilled at Manavi ( M12 ) is arguably the most difficult well in the world. An acid frac will be done in Oct on what is potentially a huge field. For DD go to investorvillage.com, don't bother with the Yahoo message board. All the same whatever is produced is just a drop in the bucket when we look at world demand which is depleting world oil reserves by an accelerating minimum of 1% every two months. When you factor in the export land model, ie producing country domestic demand competing with and eventually overwhelming diminishing production for export then red lights should be flashing everywhere. So far this hasn't happened but I believe public awareness will be raised enormously in the next 6 months. Two weeks ago I was asked to talk to a local Rotary group about energy issues. 20 mins was allocated for the talk but it lasted 45 mins. They were like stunned mullets after I had finished.
A friend of mine has a son who manages offshore rigs for ExxonMobil in Australia. Privately Exxon executives are saying that the world has only 15 years of oil left, Australia only 5.

[shortonoil]

sicophiliac said:

$this->bbcode_second_pass_quote('', 'W')ell I disagree, the costs of producing energy will rise of course but as long as the net energy return is substantially positive then the value of that energy yielded will keep it economical.

[Tanada]

$this->bbcode_second_pass_quote('shortonoil', '[')b]sicophiliac said:

$this->bbcode_second_pass_quote('', 'W')ell I disagree, the costs of producing energy will rise of course but as long as the net energy return is substantially positive then the value of that energy yielded will keep it economical.