they know there isn’t much oil is a waste of money. Nowadays, we have the practical equivalent of X-ray vision: sonic vision. Underground structures can now be “seen” quite well by analyzing seismic reflections with advanced computer algorithms. As a consequence of applying these techniques around the world, geologists now pretty much know where the oil is and isn’t, which is why oil companies aren’t spending much effort to contin ue looking (at least until higher oil prices make it worthwhile). As the chart above shows, oil discoveries peaked 50 years ago. We are now extracting over five times as much oil each year as we are finding . Not only are the new discoveries few and far between, but they have also become a great deal more expensive to make. In the 1930’s, it took the energy equivalent of one barrel of oil to discover over 1000 barrels of oil. Now it takes a barrel’s worth of BTUs to find 25 barrels. 166 This is because we have already found all the gigantic oil fields, and most of the smaller ones too. At today’s low oil prices, oil exploration now seems like “throwing good money after bad.” Instead, oil companies these days are spending most of their time and money on accessi ng what is called “tight oil.” Rather than tapping a reservoir of oil (because those have already been tapped) accessing tight oil involves drilling oil source rocks and using modern technology, such as horizontal drilling and hydraulic fracturing, to extr act the oil that hasn’t already managed to migrate into traditional reservoir beds. Tight oil drilling will almost always find oil, but the technology is expensive, and the risk of non-commercially viable wells is high. Because of this, the United States - from an oilfield service perspective – is like a pincushion. We have over 100,000 active oil wells in the USA – more than the rest of the world combined. Given the critical importance of oil to our way of life, what we are doing is effectively ‘draining America first’. We can stop looking for oil, because for the most part we already know where it is and where it isn’t. Just as when you are scrounging around for money, once you’ve checked your wallet, pockets, desk drawers, dresser drawers and couch, you might as well stop. At this point, finding a giant new oil reservoir is about as likely as finding a pot of Spanish gold doubloons sitting under your porch, or a huge diamond poking out of your cat’s litter box. Feel free to pause here and go have a look if you think it’s worth your time investment to do so. No? Exactly. Geologists are good at finding oil, and if they are declining to spend money to do so, it can only be because they’re pretty sure that there’s not much there worth pursuing. You m ay have heard about “new oil” in the press, but it isn’t new at all. We knew about it, but before the prices rose it was just too expensive to extract. It wasn’t so much new technology, as it was the higher price in recent years, that made these fields start to look promising.
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