The age of easy, cheap oil maybe getting over slowly
Published: Aug 28, 2010 23:58 Updated: Aug 28, 2010 23:58
ENERGY world is under the spell of two distinct, yet contradictory, schools of thought.
While there are people, including a few influential ones, who insist that with new technology available the oil era is far from over and that there would be plenty of oil resources available in decades to come, there are others who are definitely concerned. And there is no dearth of them too. These do not necessarily include the Peak Oil theorists. One could class them more as among the skeptics — not very sure of how things would shape up in the years and decades ahead.
They are thus bent upon capitalizing, developing and getting hold of each and every new source from Africa to Arctic that one could lay hands on. New, and still controversial, frontiers are thus being tapped and explored to ensure regular energy suppliers in the mid- to long-term.
The peaceful, otherwise sleepy and icy Arctic is thus set to become the world’s latest dash for oil after a British company reported a discovery off the coast of Greenland. Cairn Energy said it had found oil- and gas-bearing sands in one of its exploration wells, indicating there was an “active hydrocarbon system” there. “I am encouraged that we have early indications of a working hydrocarbon system with our first well in Greenland, confirming our belief in the exploration potential,” Cairn Energy Chief Executive Sir Bill Gammell said in a statement.
Exploration director Mike Watts added that the gas was of a type that is sometimes found in association with oil.
The find was reported from a new frontier operation targeting potential oilfields 200 km offshore in the Davis Strait. Known locally as “Iceberg Alley,” the region is one of the most remote and extreme on the planet. Conditions here are such that one could operate offshore only in the summer months, before the harsh winter sea ice season sets in.
Already the company is drilling the second of its two exploratory wells there.
The Edinburgh-based company is drilling in a basin the size of the North Sea, meaning the find is potentially of enormous significance. Many, however, argue that the extraction process could — rather would — ravage the local environment, resulting in loss of traditional areas and a decline in wildlife populations in the territory.
This also means a new rush to secure strategic political positions in the area — a new era of claims and counterclaims, of new strategic alignments and realignments on the global strategic map. Researchers from Durham University’s International Boundaries Research Unit (IBRU) have worked to produce a map to illustrate current boundaries, possible future claims and potential disputes in the region. That was ominous.
The Arctic is thought to hold the world’s largest reserves of untapped oil and gas, with as much as a fifth of remaining undiscovered oil located there. It is also one of the most remote and extreme regions on the planet. As per a 2008 US Geological Survey report, the Arctic Circle could hold estimated 90 billion barrels of recoverable oil. It also said the Arctic holds around 30 percent of the world’s undiscovered natural gas and 20 percent of the undiscovered natural gas liquids.
But with the specter of dwindling energy resources haunting some, exploiting these new “frontier” resources is becoming increasingly apparent. Martin Pratt, director of research at IBRU underlined that “for any state, control over hydrocarbons is significant as other resources dwindle.”
Pratt insisted that the race for resources would be the key motivation for states. “The other aspect is the melting of the polar ice and that is making it easier to explore the area which is why the oil and gas industry is looking at it,” he said.
“It is now becoming a potential area of development rather than a hypothetical one.”
“In terms of reserves, the Arctic has plenty. It is about being able to find it at a level that doesn’t involve too much cost and too much risk,” says Amrita Sen of Barclays Capital.
“You’re looking at 10 or 20 years at least (before it becomes a big supplier) because it’s not just about the finds, it’s about building the pipelines and the infrastructure to be able to get that oil out into the world.
“Potentially by that time the easily accessible fields of Norway, the UK and Mexico are dwindling quite fast, so the Arctic may make up a significant proportion — even up to 10 percent — of global supplies.”
Manouchehr Takin, of the London-based Centre for Global Energy Studies, added that the sheer size of potential reserves hidden below the icy waters meant the region would not be overlooked. However, the dangers, challenges and difficulties of accessing the supplies were numerous, he underlined.
Icebergs definitely pose a threat, exploration and production remains limited to the summer and there is no opportunity to have a base nearby. So all the basic necessities for the drilling and the workers would have to be prepared in advance and when oil begins to be produced in the region, firms have to make a decision over where and how to station the infrastructure and transport.
The enhanced energy profile of the region could not be overlooked — from a geopolitical angle, too. As soon as the possibility of extracting energy resources from the region appeared viable, Russia, under aggressive Vladimir Putin, the old KGB hand, planted a flag on the ocean floor underneath the North Pole in a bold gesture highlighting its claim to a huge chunk of the frozen land. Other disputes involve Canada, the US, Denmark, Iceland and Norway.
Cairn’s find has attracted the attention of environmental campaigners who are furious that the untouched beauty of the Arctic is being put at risk in return for oil. Greenpeace’s ship Esperanza is already in the area in protest and has clashed with a Danish warship as it approached the 500-meter exclusion zone around the rig.
The movement is warning that the announcement signaled “grave news” and threatened the fragile Arctic environment, particularly in wake of BP’s Gulf of Mexico oil spill disaster. The group says a blowout like that at BP’s Macondo well in the Gulf could cause even more damage in Greenland as cold conditions would mean limited evaporation of the oil.
And Greenland would have very limited facilities to deal with any Arctic oil spill.
The age of oil may not have been over, yet the age of easy, cheap oil seems getting over slowly, yet surely — one can not avoid underlining here.
Comments
MICHAEL JONES
Aug 29, 2010 01:26
Report abuseFULANODETAL
Aug 30, 2010 22:20
Report abuseUNCLE B
Sep 4, 2010 00:27
Report abuseAmericans can't even handle metric measure and still use Imperial British units! How can we expect these great heavy fat assed over-weight, under-educated spoiled individuals with great military strength to fit into the 21st centuries high tech scene? They will annex Canada and rape her resources to maintain an impossible "Status Quo" in their homeland and they will make war wherever oil can be stolen in the world. These folks used nuclear bombs to prove a point to Japan just this ere! Beware the American with and empty gas tank ! Beware a hungry American! They already stuff 80%of world's resources in their mouths as it is!