Wednesday, September 14, 2005

View from the inside

For those of you who aren't Peak Oil disciples, The Oil Drum is becoming one of the main sites these days for day to day discussions about Peak Oil. Today there was a discussion going on there that I feel I would like to share here, mostly because it expands on my own view of the world. Here is an exerpt:

I called 6 different people last month, with 6 different companies. We all work in the oil field as drillers or geologists or petrophysicists. We all operate in various domestic and international areas. Everybody has the same outlook, and Bubba summed it up, but let me explain it once more for those new to the site.


We have found almost everything there is to find of consequence. What we are doing now is scraping the bottom of every known reservoir, and drilling almost any prospect that might have a shot. Our dry hole rates are all rising in spite of the new technologies. The real warning shot to the world should have been the mergers of the majors - the only logical reason to do this is because it is easier to buy reserves than to find them!


Is there more oil to be found? Yes, but not enough to prevent Chevron and Texaco from buddying up, or Exxon and Mobil or BP and ARCO. Those facts, in and of themselves, should make any thinking person realize that this industry has limited extraction options. When we got to places like Colombia (1992), where we have to fence in rigs and put up razor wire around the perimeter and hire mercenaries to secure a drilling site - it means this is the most economical field we can find, and THAT should tell people the state of exploration. When we go to places like Angola (1995), where you can have your throat slit for being the wrong color or because someone is having a bad day, THAT should tell people how difficult it is becoming to find oil.

Just to let you all know, I never heard of Peak Oil until I started my recent job which gave me a very up close and detailed look at nearly all of the exploration and development opportunities my company had in its portfolio. The emptiness staggered me. Moreover, because we partner with most of the other big oil companies throughout the world, I get to see many of their projects also, and from what I see, they are no better off. I came to the realization very quickly that reserves of oil were going to become very valuable as soon as the excess OPEC capacity was drawn down. I had no idea, however, that that time would happen so soon.