Before moving to my next scheduled post (“Shifting Gears”) I thought it worthwhile to offer some commentary on a January 25th news/financial item I came across today (See http://stocks.investopedia.com/stock-analysis/2010/Exxon-Mobil-Rejuvenates-Mature-Oil-Field-XOM0125.aspx – Exxon Mobil Rejuvenates Mature Oil Field by Eric Fox) regarding Exxon Mobil’s decision to invest some $700 million for an enhanced oil recovery project at the Hawkins Field near Dallas, Texas. It’s been in production for some seventy years, and has produced a reported 800 million barrels of oil over that time.
I’ve raised the following theme in several prior posts, and another nice post earlier this week by Kurt Cobb echoes this theme. (See http://resourceinsights.blogspot.com/2010/01/days-of-world-consumption-warning-label.html – Sunday, January 24, 2010, Days of world consumption: A warning label for oil and gas discoveries):
Those who dispute the concept of Peak Oil by touting “significant” new discoveries of oil or by uttering similar pronouncements about already-discovered resources (such as the tar sands and oil shale) conveniently omit key facts on a regular basis. The years it will likely take to bring these supposed resources to fruition, the hundreds of millions and even ten billions of dollars required to do so, the energy output and effort necessary to successfully produce these finds, and a truthful explanation about what the eventual totals represent are among the more important facts that tend to get glossed over, if they are mentioned at all.
The uninformed reader is thus left thinking that “x” millions of barrels of newly-discovered or additionally-produced oil is a magnificent bit of news that potentially solves all of our future energy needs. Who needs to worry about Peak Oil when XYZ Corp. just discovered 63 million or 300 million or 1.2 billion barrels of oil?!
Today’s referenced article states that “Another cherished myth of the peak oil crowd may have fallen by the wayside, as Exxon Mobil has figured out how to pump another 40 million barrels out of an oil field discovered more than 70 years ago, and at a stunningly low price.”
Just a few pesky facts that perhaps should be considered (they are indeed annoying when you are trying to ignore evidence to make a point!):
(1) No mention is made of how long this will take, but it’s safe to assume it won’t happen quickly. Best guess is at least a year or two (I’m ever the optimist!)
(2) While touting a relatively low cost of $17.50 per barrel, the article does nonetheless speculate that that may not be all: “Of course it’s possible that Exxon Mobil was only disclosing part of its cost. Perhaps this is only the capital cost to construct the pipelines and injection equipment to bring the nitrogen to the field.” Of course!
(3) The articles states that there is another 900 million barrels of oil likely to be recovered “using a future technology.” We’re supposed to just count on this as a given? What future technology? When?
(4) More great news! A company by the name of Rex Energy is injecting “alkaline surfactant polymer” into its mature oil field in the Illinois Basin to produce almost the same amount of oil as Exxon Mobil will extract via similar enhanced techniques at its Hawkins Field. Wow!
(5) If in fact these two companies succeed at producing their respective 40 million or so barrels of oil at breakfast-time tomorrow, it would have ALL been consumed before breakfast the next day!
We’re supposed to be thrilled with this? More than a billion dollars and untold amounts of effort and energy expenditures for this? This is another refutation of Peak Oil?
