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North Sea Oil’s New Boom

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there is no reason to doubt that the North Sea story of renewed viability and new, if more difficult to extract, prospects can be replicated in other parts of the world. And it makes a nonsense of peak oil theories that predict steep and imminent decline for global oil reserves.

Energy insiders are only too aware that it is in the long-term financial interest of the oil companies to understate energy reserves. Announcing less conservative figures would likely attract higher taxes from covetous politicians. So too, anti-carbon political zealots would be eager use higher energy tax cash to further subsidize highly expensive wind, solar and other alternative energies.

In 2008, British economist Peter Odell of Holland’s Erasmus University argued that every year more barrels of oil are added to the world’s reserves than are used up. Odell points out that when major oil companies cut production they do so to avoid would “undermining the market value of oil, and thus reduce their profits”. What was simple hard ‘above the ground’ political and economic factors, is too often misinterpreted or worse, misrepresented by peak oil theorists as ‘below the ground’ dwindling supply. Odell believes the indications suggest there is still much more to come from the North Sea’s still unexplored areas.

Dr Richard Pike, CEO of the Royal Society of Chemistry, has also consistently made out a case that there is at least twice as major oil producers would have us believe. Pike states that the industry practice of reporting “proven reserves” is an “historic convention” with little relevance to actual production.

In our forthcoming book Energy and Climate Wars Michael Economides and myself devote a chapter to debunking “oil is running out” that suggests even Dr Pike’s doubling of the current proven reserves may prove a conservative estimate.

A resurgent UK North Sea oil industry has real implications for panicky peak oil assessments. Not only does it offer a hard lesson in the impact of “above the ground” economic factors on extraction, it offers a major case study that could be extrapolated across the globe.

Energy Tribune

8 Comments on "North Sea Oil’s New Boom"

  1. ian807 on Fri, 23rd Jul 2010 9:59 am 

    Drivel, like the much of the Energy Tribune. Convenient that they have no way to receive or display feedback. Their corporate masters, apparently, have no balls.

  2. SilentRunning on Fri, 23rd Jul 2010 10:44 am 

    My prediction: New North Sea wells will be drilled, but the new wells will fail to stem the decline of production.

    The “Boom” will turn out to be highly over-rated.

    I don’t get the cornicopians – if they were right we should be able to get the entire world’s oil needs from Western PA. After all – it’s simply IMPOSSIBLE that any field can ever really run dry – or even drop in output.

  3. Aaron on Fri, 23rd Jul 2010 10:52 am 

    “A conservative estimate of reserves across the Falklands Basin suggests a minimum recovery of 3.5 billion barrels of oil. The estimate of the British Geographical Society suggests around 60 billion barrels, the equivalent of the UK’s North Sea deposits. Though such a figure, as some oil executives have told the UK’s Channel 4 News, may be an optimistic figure.”

  4. Peter C Glover on Fri, 23rd Jul 2010 4:02 pm 

    Ian 807 is clearly not a man interested in facts. For one, Energy Tribune doesn’t have “corporate masters”. ET is wholly and independently owned by Michael Economides who derives his income from his university professorship and from his engineering consultancy work, mostly for foreign governments.

    If Big Oil really is willing to pay for work like mine, perhaps the all-knowledegable Ian807 might let me know where I can sign up for the megabucks on offer.

    Or he could just try getting the facts right.

  5. Richard on Fri, 23rd Jul 2010 6:36 pm 

    Even if there are 60 billion barrels there it wouldn’t last more than two years when you look at global oil usage. And that is with the most favourable forecasts which probably won’t be accurate in the first place.
    When it comes to Peak Oil, too many people are in denial.

  6. indigoboy on Fri, 23rd Jul 2010 9:35 pm 

    I suppose the whole point of Energy Tribune is to talk up the future prospects of oil, so we can’t really be surprised at this kind of article. After all who would buy from a fishmonger who shouted ‘come and buy my rotten fish’.

    But whenever I see someone write (“oil is running out”), it tells me immediately that they do not (or do not want to), get ‘Peak Oil’.

    Getting oil out of the ground or from miles under the sea, to the market,is very ‘doable’ at $75, $80, $90…..

    Come back and tell us when and where we can get it for $20 again.
    And that’s the point Peter C. Glover. We’ve based our economic growth on cheap $20 oil. At $75 to $100 per barrel the economy is begining to grind to a halt.

  7. KenZ300 on Sat, 24th Jul 2010 1:09 am 

    Energy security and National Security demand that we diversify our energy resources. Alternatives need to ramp up each year to reduce our dependence on oil and countries that want to do us harm.

  8. Simon Wigzell on Sat, 24th Jul 2010 3:37 am 

    Nothing really new here. We know that if the price goes high enough it will be possible to extract the more expensive half of the oil in a deposit. But the cost is the whole point.

    Best estimates say the Earth had 3 trillion barrels of oil initially of which half are gone. At the current extraction rate of 30 billion barrels a year that would be 50 years supply. Well no it won’t, lucky to get half of that, a fair amount of the Earth’s oil will never be extracted no matter how high the price gets. So 25 years supply at the current rate of extraction. That would be impossible to maintain, it is just an scientific and engineering fact that no matter what efforts are made the yearly extraction will be going down just as demand is going up.

    This story does nothing to disprove the worst outcomes of Peak Oil.

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