Big Oil Find Not So Big

The trumpeted big oil find in the Gulf of Mexico is not what it is cracked up to be. Two very good articles are available. One is by Tom Whipple, "The peak oil crisis: Hyping Jack No. 2." The other is over at The Oil Drum, and is titled "Jack-2 and the Lower Tertiary of the Deepwater Gulf of Mexico."

The Whipple article is more readable, but lacks a lot of the technical detail of The Oil Drum article. The primary points regarding the find are:

1. This is not one deposit, but a number of potential smaller deposits.

2. Four of the test wells came up empty.

3. The quality of the oil is variable, and the oil in the western Gulf tends to be more sour than in the eastern Gulf. This means that the odds are that a (perhaps) significant portion of what is found and pumped my be of high viscosity and sulfur content.

4. These would be very deep wells, and that poses a number of problems such as
- high pressure
- high heat
- the well head is below 7,000 feet under the Gulf

5. Even doing test wells to determine if a pocket is pumpable is currently costing about $200,000 a day, and is expected to jump over $500,000 a day next year.

Another major problem is that these potential fields are right in the area that fuels Cat 4 and 5 hurricanes. That does not bode well for operations, and dramatically increases the liklihood of catastrophic oil spills (and the loss of extremely expensive oil rigs).

The long and short of it is that there is more hype than fact in the corporate media reports.

Posted by rowan at September 15, 2006 8:54 AM | [eMail this article!] |