A Billion Here, A Billion There – pretty soon, talking real oil

From the “Doom, postponed again” heading, we have had a couple of Billion bbl oil finds in the news in this month. I’d been planning to comment on the first one, then the second one hit before I was done.

First up, we all “know” that Alaska has been pumping like crazy for decades now and the Trans Alaska Pipeline is now running low. Tapped out, the North Slope is slowly dying and on a death watch, right? When flow rate gets too low, it will solidify the oil in the pipeline and that’s that. So finding more is rather important. (Ignore the vast amount of oil in the Navy Oil Reserve lands that are all off limits…) No, this is Yet More Oil beyond that.

http://money.cnn.com/2017/03/10/investing/alaska-oil-discovery-repsol-spain

Massive oil discovery in Alaska is biggest onshore find in 30 years

by Matt Egan @mattmegan5 March 10, 2017: 11:45 AM ET

Some 1.2 billion barrels of oil have been discovered in Alaska, marking the biggest onshore discovery in the U.S. in three decades.

The massive find of conventional oil on state land could bring relief to budget pains in Alaska brought on by slumping production in the state and the crash in oil prices.

The new discovery was made in just the past few days in Alaska’s North Slope, which was previously viewed as an aging oil basin.

Spanish oil giant Repsol (REPYY) and its privately-held U.S. partner Armstrong Energy announced the find on Thursday, predicting production could begin as soon as 2021 and lead to as much as 120,000 barrels of output per day.

The oil resources lie in a well, called Horseshoe, that’s 75% owned by Denver-based Armstrong. Repsol owns the rest of this well.

The discovery is 20 miles south of where the two companies have already found oil in a project known as Pikka. That northern project is already in early development and is 51% owned by Armstrong, which is the operator on both developments.

“The interesting thing about this discovery is the North Slope was previously thought to be on its last legs. But this is a significant emerging find,” Repsol spokesman Kristian Rix told CNNMoney.

Of course, this news won’t ease rising concern among investors about the stubborn glut of oil in the U.S. There are increasing signs that shale oil producers are preparing to ramp up output after surviving a two-year price war with OPEC.

An “aging oil basin”. A Billion bbls. “Massive find”. Not to mention that “Pikka” is also a new find.

Then there is that interesting phrase: “stubborn glut of oil”… and not including shale oil, yet…

So, about that whole “Running Out” thing…

Then, before I could get’r done:

http://www.bbc.com/news/uk-scotland-north-east-orkney-shetland-39406131

Hurricane makes ‘largest undeveloped’ oil find in UK waters

28 March 2017
From the section NE Scotland, Orkney & Shetland

An oil exploration firm has made what it has described as the “largest undeveloped discovery” of oil in UK waters.

Hurricane Energy said one billion barrels of recoverable oil could be contained within the Greater Lancaster Area, 60 miles (97km) west of Shetland.

The company hopes to begin production in 2019.

Dr Robert Trice, Hurricane’s chief executive officer, described the find as “exciting times”.

He said: “This is a highly significant moment for Hurricane.

“We believe that the Greater Lancaster Area is a single hydrocarbon accumulation, making it the largest undeveloped discovery on the UK Continental Shelf (UKCS).”

Giant field

The discovery is significantly larger than the average find in recent years, which has been about 25 million barrels.

However, it is still a fifth of the size of the Forties field, which contains about five billion barrels – of which approximately two billion have been recovered.

Hurricane discovered oil in two wells which sit about 30km apart.

BAM! Another Billion bbls. Shetland, Scotland, UK.

“Giant Field”. Then a mention of the “Forties field” that, it would seem, has 3 billion still in it (that they know of).

The company believes the oil they found forms part of the same giant field.

Drilling at the Halifax prospect found a column of oil-bearing rock of at least 1,156m. It has been described as “very significant” in an independent analysis.

I think that means 1.1 km thick oil strata… Yeah, “very significant” when you find a km of oil.

So is that IT? Is there nothing left after this one is tapped?

‘Signs of optimism’

Operations had to stop for budget and safety reasons, but Hurricane Energy plans to return for further appraisal.

Shares rose 6% in early trading after the Halifax announcement. In the past year, their value has risen five-fold.

Hurricane Energy has focused its efforts on what it believes are neglected geological formations known as naturally fractured basement reservoirs.

These occur in a series of drilling blocks west of Shetland, which Hurricane has apparently named after RAF aircraft, also including Typhoon, Whirlwind and Warwick.

Lancaster and Halifax lie between the Schiehallion and Solan fields, west of Shetland, and to the south-east of Foinaven.

Hurricane Energy claims to have found more oil in UK waters than any other exploration company over the past 10 years. All its prospects are wholly owned by the one company.

‘Extremely exciting’

Deirdre Michie, chief executive of industry body Oil and Gas UK, said: “This is extremely exciting and welcome news for the UK Continental Shelf.

“Hurricane Energy’s announcement – coming just days after the Oil and Gas Authority awarded new licences to companies to explore for oil and gas in frontier areas – demonstrates the significant remaining potential of the UKCS.

“Signs of optimism, mainly led by exploration and production companies, are returning to the basin, which has worked hard to reduce its costs and improve efficiency.

“However, the UKCS needs fresh investment so it can capitalise on its potential, whether that be from new geological plays, or from enhanced recovery from existing fields.

“There are still up to 20bn barrels of oil and gas to go after in the UKCS
and we believe that makes the basin a very positive investment prospect indeed.”

Paul Wheelhouse, minister for business, innovation and energy said: “Today’s announcements of the first oil from the Flyndre field and the undeveloped discovery within the up to one billion barrels of oil equivalent thought to be recoverable from the Greater Lancaster field make it clear that the continental shelf in waters adjacent to Scotland, such as areas to the west of Shetland, continue to hold very significant potential.

“In total, it is estimated that up to 20 billion barrels of oil equivalent remains under the North Sea and in the wider basin.

“I congratulate both companies on their announcements which further demonstrate Scotland’s oil and gas industry has a bright future, for decades to come.”

Oh… 20 Billion more bbls likely to be lurking there…

Gee, if the UK leaves the EU, and the EU refuses to do a deal with them, wonder to whom all that loverly oil will be sold?…

Can you say “leverage”? I knew you could…

A Brexit we will go, a Brexit we will go, Hi Ho the Oil-O, a Brexit we will go…

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Economics - Trading - and Money, Energy and tagged , , , , . Bookmark the permalink.

14 Responses to A Billion Here, A Billion There – pretty soon, talking real oil

  1. Bobn says:

    Microwave drilling may replace Fracking – No water required.
    http://www.arescotx.com/microwave-technology-the-new-fracking/
    http://www.nextbigfuture.com/2008/01/microwave-oil-recovery-of-oil-shale-and.html

    Later reports are very good and low cost is possible. They use the gas they normally burn off to drive the generators so its lower cost than fracking and no water needed.

    North Dakota has new wells going in, I have relatives there.

    The US can flood the world with oil in a few years.

    I noticed oil imports were rising and that didn’t make sense, but upon checking they are using the vast US storage to off-load the tankers. It is about half the cost to store off-ship.

  2. Soronel Haetir says:

    And all this is ignoring that as price goes up fields that are unrecoverable at a lower price will suddenly become viable. I recall that bit being conveniently ignored (last year?) when Exxon had to remove fields from their books because they aren’t economic to recover at current prices.

  3. John F. Hultquist says:

    The stream was named after the oil that was found along its banks before the historic oil strike by Edwin Drake in Titusville, which Oil Creek flows through.
    https://en.wikipedia.org/wiki/Oil_Creek_(Allegheny_River)

    The above will give a sense of the region where many family and friends of mine come from. Some valleys and towns smelled a lot like oil — locals called it the smell of jobs, money, and well being.
    I, as a child of about 6, walked the hillsides with an uncle and we drained the water from the bottom of tanks of newly pumped oil. Leeks grew on that hillside, and mother gave me a grocery bag to fill. I liked the smell of oil, but not the leeks. Nothing changed in that. (Another uncle was a wildcatter.)

    Sometime in the future personal transportation (autos) will see a decrease in oil (gasoline), while transitioning to some other power source. I vote for nuclear produced electric. There are lots of urban style transport needs that can be served by electrics.
    Still, in the USA, sales this year are expected to be upward of 17 Million units. And they last many years. Further, despite dreamer’s views, urban areas cannot be easily restructured and much personal travel is in most people’s future. Some people fail to grasp that a battery is not a source of power.
    Society needs the oil, so it’s good they keep looking.
    I’ll check out before the transition to something else if very far along.

  4. andysaurus says:

    Then, when all that runs out, there are huge deposits of oil and gas in Australia onshore. Many of them are in States that have labor (U.S Liberal) governments that have banned exploiting them. We are just about to run out of gas because we sold what we have developed overseas
    .
    You know about South Australia and closing down coal fires power stations. A huge one is closing in Victoria this week too. So a country that should be making the most of cheap and plentiful energy has tied a ball and chain round its ankles. I hope Trump-sense catches on.

    Mind you, I don’t think we’re as stupid as Britain has been.

  5. tom0mason says:

    Now Britain has formally signed the document to leave the EU they might actually get on and exploit its oil reserves (~100billion brls) under Gatwick . Or maybe they will dump all energy subsidies and hand out a few more licenses for natural gas fracking.

    They may actually recognize that the nation’s economic balance would move back into the black when industry expands from utilizing low cost energy. Then of course with those riches they could afford some of those cost-effective nuclear power plants to secure an industrial future. Of course these scenarios prejudges that the UK government wishes to govern an industrial nation and all the difficulties that involves.

  6. philjourdan says:

    A comment was made over at WUWT on the subject of “Peak Oil”. It was a simple statement, that I have been trying to make for years. And yet most still ignore the simple truth of it.

    The statement is in reference to “running out of oil”. We never will. It is simple economics. Eventually the cost of extraction will drive the price of oil up to a point where alternatives will be more economical, thus reducing the demand of oil to a point where the supply will be in balance. The oil being found today costs more to find (and usually to extract) because it is economical to spend the money finding it and extracting it (the price has gone up from the 70s).

    What the alternative will be, I do not know (but those who guess right are the next Warren Buffetts). I doubt it will be electrical (as someone else pointed out, batteries are not a SOURCE of power, merely a storage medium). Cracking water? The McFusion? The replacement may already be here, but so expensive that it is not seen as the alternative. But then oil is still relatively very cheap, so it does not have many competitors.

  7. cdquarles says:

    Hi John,

    I don’t know how much this is true of the rest of the world, but I can tell you that the US public “school’s” actual educational value is pretty low now and has been dropping for decades. Too few know enough math, chemistry, physics, economics, history, languages (including the mother tongue), and basic logic to think for themselves. Well educated but not so much of it being formal education of the grandparents of my generation knew more and could survive well compared to that of my own grandchildren’s; and even though I work on my own kids and grandkids, they’ll be swamped by the know-nothings our ‘educational’ system produce. Thus, we have a public, particularly in the inner cities, that is easily frightened by boogie-man stories in the ‘main-stream’ media that are variants of the old “Child Who Cried ‘Wolf!” fable, which I am thinking isn’t presented to them any more.

  8. cdquarles says:

    Batteries are a source of power, however it is very limited, due to the electrochemical oxidation-reduction reactions that generate elections on one side and remove them from the other. The amount of power is fixed by the mass of the reactants and the nature of the reaction.

    Electrochemical fuel cells, which simply are pumped-recharge cells (like our own body’s cells), have fewer limitations on mass. Keep pumping in the reactants, the reaction continues. [Think small log fire. Once the reacting mass is consumed, it goes out. Keep feeding it, it keeps going. Feed it indefinitely, it’ll never stop.]

  9. RobL says:

    for perspective, 1billion barrels is about 10days consumption for the world. Oil recovery is unlikely to be economic by 2100 – but it can be synthesised from nuclear heat for somewhere in the $100-200/barrel range, which is low enough that we don’t have any real problem to face.

  10. R. de Haan says:

    We’re going to need every drop of oil, every cubic feet of gas and all other energy resources available. Very interesting video’s about the mechanism of ice ages claiming it is going down from this moment on right into the next ice age: Beyond Melankovitch: https://www.youtube.com/channel/UCKE0qdPuLg2l0IWnSfgsBSg

  11. R. de Haan says:

    Interesting video about the upcoming ice age, man made global warming called a dead horse: https://www.youtube.com/channel/UCKE0qdPuLg2l0IWnSfgsBSg

  12. Larry Ledwick says:

    Intersting topic, I got through the first 55 minutes and had to give up, he just keeps saying the same thing over and over and over and over again, probably could cover the key points in about 10-12 minutes.
    Did he say anything interesting in the last hour of the video?

  13. R. de Haan says:

    @Larry Ledewick,
    I can’t tell you as I stopped watching after 12 minutes and flagged it “Watch the remainder of this video Later”.
    Enjoyed the electric plasma universe theory though powering our sun and solar system.
    Anyhow, it will pay out to move close to the equator, get a dug out boat, a dug out car, a dug out plane, shovels and snow ploughs.

    P.s. I’d love to imagine Al Gore’s snout as he wakes up at his sea side home to find the sea level lowered by 300 feet and a glacier crashing into his back yard.

  14. E.M.Smith says:

    @BobN:

    Interesting tech.

    BTW, the technology for the USA to be energy independent has existed since about 1980. The political will is all that is lacking. It isn’t a technical problem, it is the willingness to tell powerful groups to screw off…

    @Soronel:

    That’s always the truth in energy economics. All resources, really. It is deliberately ignored by the Running Out!!! scare folks. We never run out of resources. The price rises and more becomes recoverable, or a substitute is used.

    @John F.:

    Coal to any of: gas, gasoline, methanol, ethanol, MTBE and more is already proven technology. We can run cars on motor fuel for a few hundred years just on known coal with known technologies and at lower costs / gallon than in Europe today.

    There is no energy shortage. There is no fuel shortage. There is only a shortage of will.

    @Andysaurus:

    I think it’s pants down around the ankles and bent over too…

    But don’t worry. I’m confident after the lights have gone out enough times y’all will come to your senses and get a new batch of crooks elected. It’s what we here in the USA do. ;-)

    @tom0mason:

    With any luck…

    @CDQuarles:

    Batteries are only a source of power if primary batteries AND the metal used is not needing refining first. Since little cell material is found native, they are a net energy sink to construct…

    Per our schools:

    After a generation of concerted Left Wing Effort, they are now useless for much beyond indoctrination centers. Sadly.

    @R. de Haan:

    I’ll watch the videos when I have time. For now, see RoB L comment just above yours. We can make oil (and plastics and fertilizers and metals and…) using nuclear power. It’s the magic key to no shortages or running out. That is why it is attacked so forcefully.

    Any Ice Age Glacial onset can be dealt with. (WILL we deal with it is another matter). It takes decades to become problematic. In that time we can build fleets of nuclear power plants (of several kinds and several fuels) and use them to power LED lit green house food factories.

    The ice build up takes centuries. You can outrun the glacier at 800 feet per year… so I’m not real worried. The only real risk is that a sudden weather shift causes a food crisis and instead of doing reasonable things (like NOT feeding 90% of our food production to animals and cars) we instead start a global war over things. Dodge that bullet the rest is manageable.

    FWIW, Florida does really really well during Glacials. Gets about 2 to 3 x the land area too!

    Texas also does OK and the Gulf States grow seaward into lots of new rich silt lands. So you don’t need to leave the USA, just the North… (Hey, You Canadians! Y’all will be welcome down here, when the time comes…)

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