Pesky Little Details You're Not Hearing Re. Chevron's Big Gulf Oil Find

[hatrack]

EDIT

1. The range of amount -- from 3 billion to 15 billion (in itself a huge range -- reserves of Exxon Mobile are around 14 billion barrels total) is comprised of no single field of more than 300 million barrels. An entire area of as much as 15 billion barrels with no "giant" over 1 Bn bar oil field is unusual. Oil discoveries tend to cluster with a giant (King) and several queens and even more jacks.

2. The area is very deep: 7000 feet of seawater and a further 20,000 feet below the ground. That is about 3 miles below the surface, in 1+ miles of deep water. The normal time to accurately estimate oil and gas field size is months. These fields are more challenging because of the extreme depths. It is therefore likely that very little is known with certainty about the potential reserves from a geological standpoint.

EDIT

7. Related to point #6, the announcement is reminiscent of the Mexican "huge oil discovery" announced last year, of a possible 10 billion barrels, which was quietly revised this year to around 43 million barrels, a downward revision of 99.57%. This similar "discovery" was made in Mexico last year a few months before the Mexican parliament was to vote on Pemex (state oil co)'s budget and rights to expand drilling. This illustrates the potential political pressure to announce oil and gas discoveries.

8. The wells are estimated to cost between $80M to $120M each, starting in 2010, and a completion time of 60 days. Payback period with gas at $7 is about 3 to 5 years (by my rough calculations). Although it is likely that some new technical issues will be likely be needed to be resolved as the depth is approaching record levels. Further, insurance rates at these depths in the Gulf will likely be very high – the rough payback period here doesn’t include insurance costs.

EDIT/END

More at:

http://www.energybulletin.net/20140.html

[raccoon]

1. Thanks for the heads up. K & R. nt

[dipsydoodle]

2. I had read elsewhere

that the economics of getting stuff out may be heavily biased by whatever happens to the price of oil. True or not ?

[soothsayer]

3. Still, it's a good argument that maybe some oil is abiotic

(the idea that oil is produced in the earth's magma, not necessarily of fossil origin, and that it is replenished regularly). It was an old Russian theory that's making the rounds again in some (kooky) circles

[bhikkhu]

8. if you look at the russian wells they base this on...

they are all very deep small producers. That is, expensive to drill and slow to produce. If abiotic oil is what they say it is, there is still not so much reason for optimism.

[hunter]

4. It was all an advertisement for Ford.

Their SUVs were sitting on the lots unsold.

I'm not kidding.

[Javaman]

5. Did you know? they plan on pumping the water out of the gulf. nt

[Dogmudgeon]

6. What ever happened to the 300 BLN barrels under Iraq?

I think that number got pruned severely downward, too.

There's plenty of "super-heavy" and rockbound petroleum, but it's quite expensive to process. It's similar to this five-mile-deep deposit. All the oil companies need is money, and lots of it.

Speaking of which, the price of gasoline is going down. Be sure to fill up before November 8th!

--p!

[bhikkhu]

7. As other recent publicized "super-giants"

the closer one looks, the smaller they get. Recall the press the Caspian sea got a few years back...only to have the reserve estimates and quality steadily diminish. It is this pattern of front page optimism and back page belated realism that skews so many people's views of the real oil situation.