In May 2006 I wrote, “I know about the “Peak Oil” theory that says we either have or are about the reach the point of diminishing returns regarding the world’s oil supply, but these recent discoveries suggest there is still plenty of oil to be found.” In that commentary I documented nearly a dozen new fields of oil and natural gas discovered since 1995.
So I wasn’t surprised when, on September 5, Chevron Corporation announced it had discovered new, huge reserves of oil some five miles below the surface of the Gulf of Mexico. The initial estimates were that these reserves “could boost U.S. oil reserves by 50 percent.”
Good news for Americans and good news as well for other oil companies such as BP, Anadarko Petroleum, and Exxon Mobil that have their own projects in progress. Indeed, two days later, Exxon Mobil announced that its Sakhalin-1 project offshore Russia had begun to export crude oil, the eighth startup within the past year.
Suffice it to say that the new Gulf of Mexico discovery rivals that of Alaska’s giant Prudhoe Bay oil field in 1968. President Bush may think we’re “addicted” to oil and, along with other politicians, call for oil “independency”, but the fact is we, like every other modern nation require oil for transportation, plastics, heating homes, and the countless other uses to which we put petroleum.
Recently, Abdallah Jum’ah, president and CEO of the state-owned Saudi Arabian Oil, better known as Aramco, said the world has the potential of 4.5 trillion barrels in reserves. At current levels of consumption, that’s 140 years worth of oil to power the world. Even at the lowest level of estimated reserves, there’s still enough until 2070 and does anyone believe we will not find more?
While the vast Middle Eastern reserves remain an important source of oil for the world, the geopolitical game just changed for the better as far as America is concerned. The Gulf of Mexico discovery insures a new degree independence and security. Think how much more we could achieve now that the twenty-five year old federal ban on offshore exploration has been lifted?
The next question is whether, for example, Florida will relent and permit more oil exploration and extraction off its shores instead of sitting around while China, in cooperation with Cuba, drills for oil? Indeed, potentially every state on the east and west coast of America could contribute to our oil independence by permitting this to occur.
The Consumer Alliance for Energy Security estimates that “The Outer Continental Shelf has enough natural gas to heat 100 million homes for 60 years and enough oil to drive 85 million cars for 35 years.”
Meanwhile, the estimated billions of barrels of oil trapped beneath Alaska’s ANWR are still waiting to be tapped! If we can just get the tree-huggers and their politician-pals to get out of way, we can all happily drive to grandma’s house for the next generation or two.
In the September 11th edition of U.S. News & World Report, reporter Bay Feng wrote that the map of central Asia is being pored over by governments and oil company executives who call it the hub and spoke. “The hub is the Caspian Sea and the spokes are the multiple pipe lines emanating from it, representing potential export routes for the vast oil and gas resources that lie beneath.”
Let me repeat “the vast oil and gas resources that lie beneath.” So, while Chevron was announcing vast new oil and gas resources in the Gulf of Mexico, one leading news magazine was devoting its pages to yet another area that promises more of the same. In fact, it is believed “to be among the world’s largest untapped fossil fuel resources.”
We’re talking about resources that are not subject to the threats that exist for those in the Persian Gulf area, the members of OPEC. Even Russia, the world’s second-largest producer and exporter of oil after Saudi Arabia, and the largest producer of natural gas, will feel the competition.
The new “Great Game” of central Asia is to wean the nations in the region from their dependency on Russia to export their oil and gas. For that you need pipelines. “That’s why U.S. officials,” wrote Feng, “have been pushing the $4 billion Baku-Tbilisi-Ceyhan pipeline, which opened with much fanfare in July and links Azerbaijan, Georgia, and Turkey.”
Places most Americans have never heard of and couldn’t find on a map hold tremendous potential to relieve worldwide dependency on Middle Eastern oil and gas. Kazakhstan, the largest nation in central Asia, “has three of the world’s richest hydrocarbon fields.”
Meanwhile, it’s worth remembering that predictions that the world was running out of oil date back to when it was discovered in 1874 in Pennsylvania. By 1920 geologists calculated the world had at best 60 billion barrels. By 1950, the world’s oil supplies were estimated at 2 trillion barrels. Prior to the discovery of vast new reserves in the Gulf of Mexico, the U.S. known reserves were calculated to meet domestic needs for anywhere from 38 to 75 years.
Peak oil? A world running out of oil in our lifetimes? I don’t think so.