Ultra-deep drilling for oil is simply a red herring

GEORGE Kerevan argued in this column on 8 August that there is no shortage of oil in the ocean if we drill in the ultra-deep. This is a red herring. There is a simple rule about oil and gas reserves.

The higher the oil price the more will get developed.

At 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.

To go ultra-deep as Kerevan suggests will require very high prices.

That is why the Russians are piddling in the wind over the deep Arctic.

The oil price would have to be well over $100 to make that economically viable. That apart, there is actually no real proof that there is oil and gas to be found there.

Scotsman