2003 Report
According to MMS’ 2000 resource assessment of conventionally recoverable hydrocarbons in the Gulf, 65 billion barrels of oil equivalent total reserves have been produced, but 71 billion barrels of oil equivalent remain.
According to the MMS the undiscovered resource assessment is approximately:
For the western Gulf of Mexico, 37 billion barrels of oil equivalent.
For the central Gulf, over 92 billion BOE.
For the eastern Gulf, about nine billion BOE.
"Of course, our resources estimates are likely to be revised upwards due to new discoveries in entirely new geologic frontiers such as deep gas targets on the shelf," Oynes said.
History and quotes from: http://www.aapg.org/...
The Math:
71 + 37+ 92+ 9 = 209 Billion Barrels of Oil Remain in the Gulf
@ $60 Average/Barrel =
$12.5 Trillion Reasons to Continue Drilling in the Gulf of Mexico
Found it interesting to compare with two other promising areas garnering a great deal of excitement: The North Sea and Brazill
The North Sea:
It is a common perception that the North Sea is finished, but while some 40 billion barrels of oil and gas have been produced so far, an estimated 25 billion more barrels are still to come.
The stars have been aligning for the UK oil industry for some months. Earlier this year, the Department of Energy and Climate Change (DECC) received bids for 365 blocks in the 26th licensing round for exploration, the biggest show of interest from the industry since 1964.
Analysts believe this could generate £2bn in extra revenue for the Exchequer.
http://www.businessweek.com/...
2 billion pounds of revenue for the Exchequer from North Sea deep water drilling of 365 blocks. This just doesn't seem like a sufficient revenue stream capable of offsetting the risks, but what do I know.
Brazil, sometimes tagged The New Saudi Arabia. This is the oil hotspot if all the reports are accurate. Which is why the US will invest I assume:
The U.S. is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil's planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.
http://online.wsj.com/...
Actually, we are going to lend Brazil's state-owned company, Petrobras, $10 billion:
U.S. Ready to Finance Oil Drilling in Brazil
EFE News Services 8/5/2009
The U.S. government is prepared to provide up to $10 billion in loans to finance the development of massive hydrocarbon reserves off Brazil’s coast, a Brazilian official said Wednesday.
President Barack Obama’s national security adviser, Gen. James Jones, discussed the matter with officials this week during a visit to the South American country, Brazilian Planning Minister Paulo Bernardo da Silva told reporters.
He said the U.S. Export-Import Bank already has signed a letter of intent in that regard with Brazilian state oil company Petrobras.
The loan is equal in value to a similar credit line agreed to with the China Development Bank, also for exploiting Brazil’s "pre-salt" area, so-named because the estimated 80 billion barrels of high-quality crude in that new oil frontier lie far beneath the ocean floor under layers of rock and an unstable salt formation.
http://www.laht.com/...
What could possibly go wrong? $10 billion is chump change, right? It's just a tad more than the Health Care reform will cost for just one year whenever it's slotted to begin, right? Or equal to the recent $10 billion Emergency Education funding for ALL the states to share, right? Or it could have been used to provide a measly $25,000 for 400,000 long-term unemployeds to eek out a living for a year. Off topic.
Back to the diary at hand.
So, you and I are investing in Brazilian oil exploration. And Brazil owns 50% give or take of the revenues. Is it reasonable to ask what you and I will receive in return for our investment in Brazil's oil production? What's in it for you and me?
Why not invest these billions to clean energy here? Wind and solar as well as improving energy efficiency.
Dear Deficit Hawks: Can we afford to invest?
Deficit Hawks, is this more important that making sure America's retirees receive the SS/Medicare benefits they spent their working lives contributing to? I know, off topic. But is it a stupid question? Probably, but there is always money for Big Business and it seems all hell breaks out on the Hill when any money is to be spent on actual people, as in families, struggling without jobs.
Back to the topic:
Some interesting tidbits about offshore deep water drilling. I will share that more questions than answers arose in the research as there is conflicting information.
This is an FYI diary, not an opinion piece. I think you will enjoy learning some important facts about what is involved in the deep water dreams.
Brazil's oil was discovered in 2006/2007. How much?
The largest hydrocarbon find in the world since the Kazakh Kashagan discovery in 2000, Petrobras' discovery off the coast of Brazil at Tupi holds estimated recoverable reserves of 5 to 8 billion barrels of oil equivalent (boe). Discovered in July 2006, Tupi is Brazil’s largest discovery to date, located in block BM-S-11 in the Santos Basin, 155 miles (250 kilometers) from the southern coast of Rio de Janeiro.
The Noble Paul Wolff semisub drilled the exploratory well 1-BRSA-369-RJS in a water depth of 7,021 feet (2,140 meters) in 2006. The discovery was made beneath a 6,562-foot (2,000-meter) salt layer, which is located more than 9,843 feet (3,000 meters) below the surface.
The recoverable reserves were confirmed in September 2007 when a second well was drilled
http://www.subseaiq.com/...
But a new discovery offshore may prove to be much larger than Tupi:
Lima told reporters that Petrobras "may have discovered a huge petroleum field that could contain reserves large as 33 billion barrels," amounting to the world's third-largest reserve, according to his spokesman, Luiz Fernando Manso.
Brazil's current proven oil reserves are 11.8 billion barrels, according to the U.S. Energy Department. The U.S. has 21.8 billion barrels in proven reserves.
"You're talking about a reserve the size of total U.S. reserves," said Tim Evans, an analyst with Citigroup Inc. in New York. "It's a big, big number."
http://www.propertycommunity.com/...
That's curious. The American Association of Petroleum Geologists 2003 report referenced in the Intro above estimated much more than 21.8 billion barrels in proven US reserves in just the Gulf of Mexico. They estimated 72 billion proven, and 138 billion in undiscovered reserves in just the Gulf of Mexico.
For world leaders to speak of the need to reduce our use of carbon fuels in order to save the planet, there is little indication we are heading in that direction.
How much would it cost to buy off the oil/gas producers to just stop puncturing the salt sheets? Could we save money and the planet by doing so and then investing hugely in non-carbon fuel?
What is the AAPG's recent Brazil report have to say? If you read this article, there is much to be learned. Some snippets below. You can read the entire article here:
http://www.aapg.org/...
Cost to deepwater drill (pennies compared to potential revenues?):
It’s dicey work overall, and it carries a big price tag.
Tupi provides a good example of what the operators face.
Water depth there is about 7,000 feet, and the field occurs another 17,000 feet subsea under a massive salt sheet. In addition to the daunting technological challenges, Carvalhal noted the initial well at Tupi cost about $240 million and required a year to drill.
Some of the hazards:
For starters, there’s the challenge of drilling in the ultra-deepwater and taking the drill bit perhaps as much as a few miles beneath the seabed to penetrate a massive salt sheet, where extreme pressures and temperatures present major challenges for the operator and unwelcome surprises are not uncommon. Additionally, the salt presents a formidable deterrent to acquiring respectable quality seismic images.
The AAPG analysis of salt sheet drilling seems to conflict with this story which appeared in the Wall Street Journal. In this article, the details of improved imaging can be found:
Seismic technology contributed to successful sub-salt drilling in the GOM
July 28, 2009
Analysis by: Fred Aminzadeh
Analysis of: BP Heralds Gulf of Mexico Prospects
http://www.glgroup.com/...
Back to the AAPG report cited above, the new and improved imaging doesn't guarantee success:
Despite the potential for huge finds, they can be elusive.
ExxonMobil recently drilled a dry appraisal well on the Guarani prospect in the Santos Basin for a reported cost of $150 million. But it takes a bigger disappointment to scare off the big guys, so look for a third well to go down once the results of the drilling program are evaluated. Hess Corp. and Petrobras own a percentage of the block where the prospect is located.
I found the seemingly conflicting stories interesting.
Back to whether or not offshore drilling will continue for a few more decades.
Again, according to the AAPG report the answer is yes. The salt sheets will be punctured over and over again until every last drop of oil is extracted, or so it seems.
Brazil’s overall pre-salt resource reportedly may hold as much as 80 billion barrels of oil equivalent. It’s an impressive number, but tapping into the target reservoirs is fraught with hazards.
Petrobras recently met success drilling in the post-salt layer offshore in the Campos Basin where it discovered oil in carbonate reservoirs. Preliminary analyses reportedly indicate estimated recoverable volumes of 280 million barrels of light oil.
The trinity of Campos, Santos and Espirito Santo is where most everyone has been playing so far, Fryklund said, but other areas are ripe for exploration.
Geologists have said the pre-salt environment could extend the length of Brazil’s Atlantic coast.
Some folks have gotten so carried away in their exuberance over the vast potential for new oil production they’re calling Brazil the next Saudi Arabia.
That's a lot of oil and money. It doesn't look like the earth will be relieved of CO2 overload anytime soon. On the contrary, oil comsumption seems to be full steam ahead, and one of the remaining gushers of profits.
Somewhere I read that it will take over 20 years for all this oil to be extracted.
IMO, there's just too much money on the table for the powerful oil/gas industries to walk away from.
Back to the Gulf of Mexico
Dare we dream that we will offshore the offshore risks of deep water drilling from the Gulf to Brazil?
Probably not if there really is a potential of $12.5 Trillion in gross revenues still out there.
So, when you fly over the Gulf, picture trillions of dollar signs wafting from the deep into the air. Look out your airplane window and picture your plane engulfed in trillions of dollar signs.
Then ask: How many of the trillions of dollars will be used to improve the lives of all Americans? How much will be used to wean us off the use of fossil fuels? How many schools will improve? How much will be spent to improve access to health/dental care for all Americans? How much will be spent on real actions instead of the ever ongoing research projects that never seem to result in action?