In the face of peak oil clamoring, Cap and Trade threats to the economy and other bits of problems keeping us emotionally going, the oil business just keeps on with its incredible innovation. The news from Brazil with its giant offshore oil finds, China’s effort to buy into reserves worldwide and the incessant irrational price hunt from OPECs and axis of oil countries has if anything triggered a stronger focus by the world’s independent oil companies and their contractors, suppliers and research grantees to new innovations.
Many, the press and media included are convinced that oil is running out. Cheap oil is – it may well have run out. But even prices such as today’s $40 to $50 range stimulate a lot of activity. And makes much more possible that a decade ago seemed out of reach.
Brian Wang turned the most interesting claim of late up last week at nextbigfuture. There he briefly covers the ET Energy’s electro thermal technology. Should it pan out and be applicable to the full Alberta oil sands the math pushes the Alberta recoverable reserves to over 600 billion barrels. That works out to about a third of all the oil used since oil was first introduced to the world market. Or about 20 years supply at current consumption.
The factualness of the ET Energy claim is yet to prove up, but the ET Energy leader Bruce McGee did manage to get his authored results report published by World Oil magazine. With thirty years of research using electricity to free up the oil the claim is that now the technology is ready for mass deployment. The technology is series of electrodes dangling in each well. When they are turned on, they pass a current through the earth — like electricity through a stove element — and heat it up. The result: The bitumen oil, which is normally locked in sand as hard as rock, begins to flow — like molasses in a microwave. No huge mines needed, no greenhouse gas-spewing steam projects required. The test is showing energy out from energy in to be 24 or so to 1. That’s a pretty good deal. Here is a video about the process. (It only plays in Internet Explorer.)
What is astonishing would be the impact to the extensive heavy oil supplies around the world. For decades the market has sought the light oil, easy to refine, simpler to deal with and often as easy a drilling the hole and making sales. But the really big numbers are in the heavy oil reserves. Alberta in Canada, the Orinoco in Venezuela, the shales in Colorado and even heavy oils in the Middle East plus heaven knows what will turn up in Russia and other parts of the world, which lead the sensible observer to a comfortable oil supply picture.
The ET Energy technology is explained most simply by noting that electricity, in highly sophisticated conductor electrodes, is heating the oil to liquid temperatures without surface mining or heating water and then sending the steam deep under ground. The headline says this technology works at $26 a barrel prices. That’s a world changer.
The existing technology providers are not sitting on their hands. As Guy Chazan points out in the Wall Street Journal (well worth the click over) the benefit to the market of added recovery technology such that getting from say a 35% recovery rate to 50% would be worth about 1.2 trillion barrels, more than half of what’s been used to date as well as equal to today’s world proven reserves.
Much of the existing lighter oil isn’t in the sands of Alberta with its absence of solid rock formations so other techniques are in development. Industry watchers suggest that 20 years will go by before the recovery technology to gets to 50%.
The leading new technologies are heat, which might open the door to ET Energy’s technology or derivatives and chemistry. The chemistry can be both problem solving such as controlling heat or steam and water flooding or solvent activity to just make more oil moveable.
The hard facts are really hard on the peak oil community. Just as they try to scare people, some development will come out that lifts the recoverable reserve numbers again. A cynic might suspect that “Big Oil” saves these reserve increases just to pour cold water (oil?) on the alarmists, but they are publicly owned stockholder companies subject to rules and regulations such that the ability to manage that kind of thing is pretty limited. Besides, the companies’ share of the world’s reserve is under 10% in any case, making the difference nominal. Their potential to sell their skill and technology is also likely to grow considerably, something stockholders are going to want to know.
A classic example for the U.S. is Prudhoe Bay. When discovered the projection was less than 40% of the oil would be recovered. Today the expectation is 60% and sure to climb over time.
The oldest technology is still the most common. BP is said to get 60% of its production using water flood.
Support technology is also improving. Monitoring is real time in some locations. It can be called “4D” as it also includes the activity over time. This plus new sensors for temperature, pressure and flows positioned where it matters helps technicians and engineers to maximize both the recovery and the costs.
Computing power is a major component. IBM is leading with integration of hardware and developing software. The target is to a give the engineers recommendations in real time. With data complied over time, accumulated and then finally processed the delay introduces both the delay but misses opportunity. Timely decisions matter. Especially when oil is 4 times the price of a few years ago.
Consumers can rest easy about the supply. The awl bidness is on its game. The worry is the market, expanding faster than an industry can respond, being attacked for financial profiteering and the governments’ incessant attacks based primarily to assuage the special interests, but more in line with reality – to maximize the flow of funds to spend. Remember, governments also get a payoff when oil prices skyrocket.
So the next time the press and media go nuts on oil, keep in mind even as the finger is pointed at the oil business, its not the culprit. The culprits are governments with special interest angles to serve, money to extract and the truth about markets – they aren’t rational in short term views, only over long time frames.
Now if it were possible to sign up for next year’s and the year after’s priced gasoline by consumers, we might be able to force a little sense into the market. But voting for Congresses that have both houses controlled by one party with the President the same -isn’t going to help at all.
Oil will track along with natural gas. For example, in the Barnett shale of Texas, the U.S. Geological Survey estimated technically recoverable reserves of three trillion cubic feet in 1996. By 2008, the best estimate was 55 trillion cubic feet — a stunning 18-fold increase in what could be economically extracted from one area, thanks almost entirely to technological advance. More oil is coming, count on it.